Southern Magnesium & Chemicals Ltd Management Discussions

The Company was set up to produce primary Magnesium Metal. However due to dumping magnesium metal from China we had to shift on focus to downstream products. Today we largely produce magnesium powders, turnings and also trade in magnesium metal ingots.

OPPURTUNITIES, RISKS, CONCERNS THREATS & OUTLOOK:

The Company has received orders worth over Rs 30 crores to be delivered over the next 12-15 months. Notwithstanding any unforeseen circumstances , we expect the coming year to provide even better results than the previous year

Due to the weaker rupee, there is a threat of increase in the raw material cost. Further, sourcing raw materials could also pose challenges. However, the company is striving to minimize the risks by constantly engaging with its suppliers

INTERNAL CONTROL SYSTEMS & ADEQUACY:

The Company has established an appropriate system of internal control to ensure that there exists a proper control over all the transactions and that all its assets are properly safeguarded and not exposed to risk arising out of unauthorized use or disposal. The Internal Audit is conducted at all divisions for all the key areas of business. The Internal Control System is supplemented by a programme of Internal Audit to ensure that the assets are properly accounted for and the business operations are conducted in adherence to laid down policies and procedures. The Internal Audit is oriented towards review of controls and operational improvements.

FINANCIAL AND OPERATIONAL PERFORMANCE:

Highlights of financial and operational Performance are given below:

(INR in Lakhs)

Particulars	2022-23	2021-22
Net Sales / Income from Operations	856.96	233.76
Other income	8.75	4.03
Expenses	377.34	187.33
Exceptional items	0	0
Net Profit (+) / (Loss) before Tax for the Period	488.37	50.46
Current Tax	128.98	6.66
Deferred Tax	7.63	3.76
Tax relating to previous year	1.22	0
Net Profit (+) / (Loss) for the Period	352.98	40.04

SEGMENT WISE OR PRODUCT WISE PERFORMANCE: NOT APPLICABLE HUMAN RESOURCES, INDUSTRY DEVELOPMENT RELATIONS:

Relations with the employees remained cordial in general throughout the year. In order to optimize the contribution of the employees to the Companys business and operations, in- house training is given to the employees to induce contribution to productivity increase and development programmes for all levels of employees have been devised. Occupational Health Safety and Environmental Management are given utmost importance. Total Number of people employed were 26 during the year under review.

SENIOR MANAGEMENT DISCLOSURES:

The Companys senior management makes disclosures to the Board relating to all material financial and commercial transactions as when they occur.

CAUTIONARY STATEMENT:

Statement in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be ‘forward-looking statements within the meaning of applicable\ securities laws and regulations and such forward-looking statements involve risks and uncertainties. Actual results could differ materially from those expressed or implied, important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the Countries in which the Company conducts business and other incidental factors. The Company undertakes no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise. Readers are cautioned not to place undue reliance on these forward looking statements that speaks only as of their dates.

Details of changes in key financial ratios:

Financial Ratios	2022-23	2021-22
Debtors Turnover	20.49 Times	13.49 Times
Inventory Turnover	4.22 Times	1.09 Times
Interest Coverage Ratio	443.68	9.44
Current Ratio	7.20	2.96
Debt Equity Ratio	0.03	0.40
Operating Profit Margin (%)	57.12%	26.38%
Net Profit Margin (%)	41.20%	18.72%
Return on Net Worth	55.21%	13.98%