BUSINESS OVERVIEW:
Our Company was originally incorporated under the provisions of The Companies Act, 1956
as Sparc Systems Private Limited on September 14, 1989, with the Registrar of Companies,
Maharashtra. In the Financial Year 1994, the Company was converted from Private Limited
Company into a Public Limited Company vide Extra-Ordinary General Meeting held on December
03, 1994, and in pursuance of which the private word had been deleted from the name of our
Company, effecting the name change to Sparc Systems Limited, and a fresh certificate of
incorporation consequent upon change of name was granted by the Registrar of Companies,
Maharashtra on January 18, 1994. Sparc Systems Limited was engaged in the business of
Software and Hardware Electronic Security Solutions. Its Equity Shares got listed on
January 22, 1996, with BSE.
During the FY 2021-22, Mrs. Shobha Anant Hegde, M/s. Electrex International Pvt Ltd and
M/s. Electrex Power Tools Pvt Ltd (hereinafter collectively referred to as
"Acquirers") acquired 13,25,738 equity shares of face value of Rs. 10/- each
fully paid of the company aggregating to 27.12% of total share capital, vide an open offer
made in compliance with the provisions of Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeover) Regulations, 2011. After the said
acquisition, the erstwhile promoters ceased to be promoters of the company and Mrs. Shobha
Anant Hegde, M/s. Electrex International Pvt Ltd and M/s. Electrex Power Tools Pvt Ltd
became the new promoters of the Company.
With the change in management, the Company changed its line of business from dealing in
Software and Hardware Electronic Security Solutions i.e. office automation tools to
Manufacturing and Trading in Power Tools, Electricals, Metals and Metal Products. The said
change in the nature of business was approved by the shareholders through Postal ballot on
November 29, 2021.
Consequent to change in the business activities and in order to keep the name of the
Company in consonance with the new business activities, the Company changed its name from
"Sparc Systems Limited" to its present name "Sparc Electrex Limited".
The said change of name was approved by shareholders through Postal ballot on November 29,
2021 and a fresh certificate of incorporation dated January 13, 2022, consequent on such
change of name was issued to our Company by the Registrar of Companies, Maharashtra.
INDUSTRY STRUCTURE AND DEVELOPMENT
The infrastructure sector is growing rapidly, especially in emerging economies such as
China, India, South Africa and Brazil. According to India Brand Equity Foundation (IBEF),
India is expected to become third largest construction market globally by 2023.
Infrastructural development projects include projects dealing with the development of
roads, railways, airports, energy, utilities, commercial and residential buildings. Rapid
infrastructure development will lead to increased demand for various power tools such as
electric drill machine, hammer drill, impact driver, electric screwdriver and many more.
Power Tools are highly adopted by industries such as construction, aerospace, automotive,
shipbuilding and energy. Homeowners also utilize them for various residential
applications. These factors are expected to propel the Indian Power Tools market growth
over the forecast period. The global Indian Power Tools market is expected to reach a
market valuation of US$ 13306.41 million by 2032.
OUTLOOK ON OPPORTUNITIES:
The Management believes that the power tool market is expected to develop due to
countrys booming industrial sector. The Indian economy has expanded drastically in recent
years and is projected to continue growing strongly over the next few years due to
increasing FDI equity inflows in automotive, construction, medicines, pharmaceuticals and
other sectors. In addition, the Government has taken several aggressive measures, such as
the Make in India campaign which is likely to fuel the expansion of the power tool market
in India during the coming years.
The company is taking all efforts to improve its sales and to improve the quality of
its products to get more orders at competitive rates. The Company has managed a to strike
a deal with Hyundai Corporation Holdings Co., Ltd, Korea, wherein the Company has entered
into an Exclusive Trademark License Agreement which will help the Company for developing,
producing, sourcing, selling, marketing and distributing the Power Tools and other related
auxiliary activities in India under the brand HYUNDAI. Now our Company will be able to
launch a variety of Power Tools like Drills, Impact Drills, Rotary and Demolition Hammers,
Cutters, Angle Grinders, Circular Saws, Planer, Jigsaw, Chop Saw, Miter and Table Saw,
High Pressure Washers, Industrial Vacuum Cleaners, Abrasives, Cutting and Grinding Wheels,
Saw Blades, Drill Bits etc under "HYUNDAI" brand. The agreement will help the
Company to face its competitors aggressively and will help the Company in achieving higher
sales and better margin in the future. Barring unforeseen circumstances, the company is
confident of achieving better results in the coming year.
OUTLOOK ON THREATS, RISKS AND CONCERNS:
The expansion of the power tool market in India is anticipated to be hampered by the
increasing competition from Chinese imports. Due to their competitive prices, industrial
tools made in China have a sizable part of the Indian market. Increase in the power tools
market in India is also anticipated to be slowed by the ever-changing costs of key inputs.
Power tools are made from various materials such as steel, wrought iron, copper, plastic
and more. The market value of these resources is highly sensitive to changes in the cost
of these components.
Infrastructure sector performance is closely linked to economic recovery and its
monetary policies. The Reserve Bank of India has so far maintained accommodative stance as
it tries to support economic recovery. However, going ahead we expect to see monetary
tightening as the central bank tries to control inflation in the country.
The sector is heavily dependent on manual labour. During the pandemic, the sector was
badly hit due to labour availability issues. Hence, there is a need for development of
technologically less labour intensive alternative methods of construction.
The sector is also a highly regulated sector and any unfavorable changes in government
policies and the regulatory environment can adversely impact the performance of the
sector. Retrospective policy changes and regulatory bottlenecks may impact profitability
and affect the attractiveness of the sector and companies operating within the sector.
INTERNAL CONTROL SYSTEMS AND ADEQUACY:
The Company has an Internal Control System commensurate with the size, scale and
complexity of its operations. The scope of the Internal Audit is decided by the Audit
Committee and the Board. To maintain its objectivity and independence, the Board has
appointed an Internal Auditor, which reports to the Audit Committee of the Board on a
periodic basis.
The Internal Auditor monitors and evaluates the efficacy and adequacy of Internal
control Systems in the Company, its compliance with operating systems, accounting
procedures and policies for various functions of the Company. Based on the report of
Internal Auditor, management undertakes corrective action wherever required and thereby
strengthens the control further.
The Company has policies and procedures in place for ensuring proper and efficient
conduct of its business, safeguarding of assets, prevention and detection of frauds and
errors, accuracy and completeness of accounting records and timely preparation of reliable
financial information.
SEGMENT-WISE PERFORMANCE:
The Company operates in two segments which comprises of Manufacturing of Electrical
Tools & Service and Trading. During the year, the revenue from operations amounted Rs.
484.80 Lakhs.
FINANCIAL PERFORMANCE:
During the financial year 2022-23, the total revenue on standalone basis decreased to
Rs. 525.83 lakhs as against Rs. 1507.32 lakhs in the previous year with a decline of
65.11%. The Profit after tax (PAT) for the current year is Rs. 69.65 lakhs as against Rs.
211.76 lakhs in the previous year, a decrease of 67.11 %.
The management of the Company is very optimistic regarding performance of the Company
in future and are taking effective steps to improve the performance of the Company through
growth in revenue, managing cost, strategic marketing, increasing brand awareness and
brand equity through advertisement campaign. The company has been focusing on
strengthening its foothold and up scaling its capabilities to undertake opportunities
arising in the sector.
PERFORMANCE OF THE BOARD AND COMMITTEES:
During the year under review, the performance of the Board & Committees and
Individual Director(s) based on the below parameters was satisfactory:
a) Most of the Directors attended the Board meeting;
b) The remunerations if payable to executive Directors are strictly as per the company
and industry policy.
c) The Independent Directors are entitled to receive sitting fees. However no sitting
fees were paid during the year.
d) The Independent Directors contributed in the Board and committee deliberation and
business and operation of the company.
e) Risk Management Policy was implemented at all critical levels and monitored by the
Internal Auditor, who reports to the Board and Audit committee.
HUMAN RESOURCES:
Your Company firmly believes that its human resources are the key enablers for the
growth of the Company and are an important asset. Hence, the success of the Company is
closely aligned to the goals of the human resources of the Company. Employee relations
during the period under review continued to be healthy, cordial and harmonious at all
levels and your Company is committed to maintain good relations with the employees
KEY FINANCIAL RATIOS:
In accordance with the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 as amended, the Company is required to give details of significant
changes (changes of 25% or more as compared to immediately previous financial year) in
financial ratios are as follows:
| Sr. No. Ratios |
F.Y. 2022-23 |
F.Y. 2021-22 |
% Change |
Numerator |
Denominator |
| 1 Current Ratio |
1.22 |
1.11 |
9.59% |
Sum of Current Assets |
Sum of Current Liabilities |
| 2 Debt-Equity Ratio |
0.59 |
0.61 |
-3.22% |
Sum of Borrowings |
Sum of Shareholders Fund |
| 3 Debt Service Coverage Ratio |
NA |
NA |
NA |
Profit after tax but before Depreciation and interest |
Sum of Interest & repayment of Debt as per Cash Flow |
| 4 Return on Equity Ratio |
1.40 |
4.26 |
-67.11% |
Profit after tax |
Sum of Shareholders Fund |
| 5 Inventory Turnover Ratio |
3.26 |
21.98 |
-85.17% |
Turnover |
Sum of Inventory |
| 6 Trade Receivables Turnover Ratio |
1.33 |
7.75 |
-82.86% |
Turnover |
Sum of Trade Receivables |
| 7 Trade Payables Turnover Ratio |
2.05 |
7.85 |
-73.86% |
Purchase |
Sum of Trade Payable |
| 8 Net Capital Turnover Ratio |
1.14 |
3.70 |
-69.17% |
Turnover |
Sum of Shareholders Fund |
| 9 Net Profit Ratio |
0.14 |
0.16 |
-10.80% |
Profit after tax |
Turnover |
| 10 Return on Capital Employed |
0.12 |
0.39 |
-70.29% |
EBIT |
Sum of Shareholders Fund and Sum of Borrowings |
| 11 Return on Investment |
0.10 |
0.37 |
-72.16% |
Profit after tax |
Sum of Shareholders Fund and Sum of Long Term Borrowings |
CAUTIONARY STATEMENT:
The above Management Discussion and Analysis contains certain forward-looking
statements within the meaning of applicable security laws and regulations. These pertain
to the Companys future business prospects and business profitability, which are subject
to a number of risks and uncertainties and the actual results could materially differ from
those in such forward-looking statements. The risks and uncertainties relating to these
statements include, but are not limited to, risks and uncertainties, regarding a
fluctuation in earnings, our ability to manage growth, competition, economic growth in
India, ability to attract and retain highly skilled professionals, time and cost over runs
on contracts, government policies and actions with respect to investments, fiscal
deficits, regulation etc. In accordance with the Code of Corporate Governance approved by
the Securities and Exchange Board of India, shareholders and readers are cautioned that in
the case of data and information external to the Company, no representation is made on its
accuracy or comprehensiveness though the same are based on sources thought to be reliable.
The Company does not undertake to make any announcement in case any of these
forward-looking statements become materially incorrect in future or update any
forward-looking statements made from time to time on behalf of the Company.
| For and on behalf of the Board of Sparc Electrex Ltd |
|
| Sd/- |
Sd/- |
| Shobith Ganesh Hegde |
Suresh Vishwanathan |
| (Whole Time Director) |
(Director) |
| DIN: 02211021 |
DIN: 02310679 |
| Mumbai, August 12, 2023 |
Mumbai, August 12, 2023 |
+91-9892691696
