SP Refractories Management Discussions


Industrial Structure and Developments:

SP Refractories Limited, a National Stock Exchange EMERGE platform Registered Company (formerly known as SP Refractories Private Limited) is engaged in manufacturing and supplying of high quality refractory material made using premium grade cement aggregates and other raw material wherein the final product is used by iron, steel and construction industries. The Company has almost 16 (Sixteen) years of experience in the refractory sector.

Our product refractories are composite materials used in large volume in extreme, usually corrosive environments in equipment, such as, furnace lining, molten metal storage and tapping for high temperature materials processing and other applications in which thermo chemical properties are of critical importance. Refractories are therefore facilitating or enabling materials and are essential to successful operations of any core industry in which high temperature applications are involved.

The total income of Company stood at Rs 2,724.27 Lakhs in the current year as compared to Rs. 3,152.74 Lakhs in the previous year.

Opportunities and Threats:

Major Opportunities for the Company are as follows:

  • Rise in new geographical markets of different cities of the India and all over the world.
  • Increase in emerging technologies.
  • Long experience of the promoters in the industry;
  • We follow the Quality standards which are followed by leading companies working in the same segment.
  • Track record of successful execution of projects.
  • Experience across various Industry Vertical.

Major Threats/ Challenges to the Company are as follows:

  • Technology dependency
  • Integration with various technology
  • Manpower retention

Outlook:

Further, the Management is hopeful that Company will register even higher growth rate in future as the Corporate. The Company is working rapidly and looking forward for opportunities to grab more and more business and develop its business activities in such a way by minimizing its risk of losing business through others, the positive results of which will be seen in the years to come.

Risk and Concerns:

Increase in labour cost due to migration, higher levies, and change in Govt. Policies/ Laws of land, etc. may also affect profitability of the Company.

Internal Control System and their adequacy:

The Company has adequate and efficient internal control system, which provides protection to all its assets against loss from unauthorized use and ensures correct reporting of transactions. The internal control systems are further supplemented by internal audits carried out by the respective Internal Auditors of the Company and Periodical review by the management. The Company has put in place proper controls, which are reviewed at regular intervals to ensure that transactions are properly authorized, correctly reported and assets are safeguarded.

Segment wise or product-wise performance:

The Company is presently engaged in single segment of manufacturing and supplying of high quality refractory material and the performance of Company for the financial year 2022-23 is summarized below:

(Rs.in Lakhs)

Particulars 31/03/2023 31/03/2022
Revenue From Operations and Other Income 2,724.27 3,152.74
Net Profit/Loss before Interest, Depreciation and Tax 148.52 199.64
Less: Finance Cost 40.99 40.90
Net Profit/Loss before Depreciation and Tax 107.53 158.74
Less: Depreciation and amortization for the year 24.33 22.42
Net Profit/Loss before exceptional and extraordinary items and tax 83.2 136.32
Less: Exceptional Items 00.00 0.00
Profit before extraordinary items and tax 83.2 136.32
Less: Extraordinary Items 00.00 0.00
Profit before tax 83.2 136.32
Less: Tax Expenses
i. Current tax expense 23.71 39.36
ii. Deferred tax Liability/(Assets) 0.00 0.00
iii. Tax for Earlier years (2.08) (1.49)
Profit/Loss for the period from continuing operations 61.57 98.45
Profit/Loss from discontinuing operations 00 0.00
Tax expense of discontinuing operations 00 0.00
Profit/Loss from discontinuing operations (after tax) 00 0.00
Profit/Loss transferred/adjusted to General
Reserve
Basic earnings per equity share 3.44 6.56
Diluted earnings per equity share 00 0.00

Discussion on financial performance with respect to operational performance:

The companys financial performance during the financial year 2022-2023 can be improved in next financial year by aggressively focusing on sales. There has been slight decrease in a profit of the company as compared to previous year due to increase in depreciation as the company has installed capital assets.

Further, the Management is hopeful that Company will register even higher growth rate in future as the Corporate.

The Total income of the Company stood at Rs 2,724.27 Lakhs in the current year and Rs. 3,152.74 Lakhs in the previous year. The Company made a net profit of Rs.61.57 Lakhs for the year ended March 31, 2023 as compared to the net profit of Rs. 98.45 Lakhs in the previous year.

Material development in Human & Other Resources / Industrial Relations Front:

The Company considered their employees as the most important assets. Building capabilities of Human Resources is one of the top priorities of the organization. The Company always believes in the ideology of team building and Employees welfare. The Company continues to empower its people and provide a stimulating professional environment to its officers to excel in their respective functional disciplines.

The industrial relations of the Company continue to remain harmonious and cordial with focus on improving productivity and quality.

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore:

Ratio FY 2022-23 FY 2021-22 Change % Reason for change
Debtors Turnover 5.63 6.08 (7.40 %) Amount from Debtors has recovered in less time as compared to P.Y resulting in decreasing Debtors Turnover Ratio
Inventory Turnover 6.74 12.4 (45.65 %) Cost of material consumed during the year is less as compared to P.Y and also inventory holding increased at the end of year as compare to P.Y.
Interest Coverage Ratio 3.03 4.78 (36.61%) Profit during the year is less than P.Y but finance cost slightly differ from last year resulting in decreasing Interest Coverage Ratio.
Current Ratio 1.92 2.22 13.51 % Change is due to change in working capital of the company
Debt Equity Ratio 0.61 0.61 - -
Operating Profit Margin (%) 4.56 13.00 (64.92%) Entities revenue from operation decreases as compared to last year but expenses does not decrease in same proportion resulting in decreasing Operating Profit Margin(%).
Net Profit Margin (%) 2.26 3.00 (24.67 %) Entities revenue from operation decreases as compared to last year but expenses does not decrease in same proportion resulting in decreasing Operating Profit Margin(%).
Return on Net Worth 6.89 16.74 (58.84%) Return on Net Worth decreases due to decreasing profit margin the reason for which is same as for decreasing net profit margin(%).

Disclosure of Accounting Treatment:

In the Preparation of Financial Statements, Company has followed accounting principles generally accepted in India.