INDUSTRY OVERVIEW
Distribution Transformers play a very important and vital role in delivering
electricity to the last mile. It can be rightly said that the Distribution industry is
bringing light in the life of the people. The thrust by the Indian Government to provide
quality power to each village and every household through various schemes of
electrification like DDUGJY/ IPDS/ RAPDRP/ Saubhagya has given a huge fillip to the demand
of distribution transformers all over India.
Further, For the rapid development of the domestic electrical equipment industry, such
as generation equipment (boilers, turbines, generators) and transmission &
distribution (T&D) and allied equipment like transformers, cables, transmission lines,
switchgears, capacitors, energy meters, instrument transformers, surge arrestors, stamping
and lamination, insulators, insulating material, industrial electronics, indicating
instruments, winding wires, etc. which encompassing the complete value chain in power
generation, transmission and distribution, a holistic Mission Plan launched by the
Department of Heavy Industry (DHI), Government of India, with support from IEEMA.
India Power & Distribution Transformers market was valued at USD 2065.4 million in
FY2020 and is anticipated to grow at a CAGR of over 6.89% in the next six years, owing to
the growing demand for power due to rapid increase in population, industrialization, and
urbanization. India being the 5th largest power producer in the world, in terms of
installed capacity, is calling for an increase in the market of power & distribution
transformer market.
Government is taking major steps to strengthen the power transmission &
distribution network and has undertaken initiatives such as UDAY for financial turnaround
of power distribution companies.
Opportunities:
In order to make growth in the industry, the government has launched schemes like
DDUGJY, IPDS and NEF for improving distribution sector since distribution sector is a link
between consumers and utilities. All these projects will lead to lot of demand of
transformers in coming 3 years. But only there must be properly and timely implementation
of these projects.
Other growth of the industry is based on the design. The design should be in such a way
that material required for manufacturing transformers should be available freely (many
suppliers) and less customized materials need to be ordered. The windings should be made
easy so that workmen find them easy to assemble. The other growth driver is coordination
between different departments (active path and tanks).
Threats
Indias transformer market is predominantly unorganised with many small participants
catering to the smaller distribution transformer markets. This makes the market more
competitive and price sensitive rather than quality.
Economic growth has stabilized and downside risks have fallen. The company will have
good opportunity to secure Projects orders. Although there is stiff competition in the
market, yet because of vide product range, innovation and Adoption of new technologies.
Company has taken various initiatives with an aim to address these concerns.
Ratio:
There is no Significant change in Financial Ratio as compared to the previous financial
year. In the Current year, the Return of Networth of the Company (767.65) compared to
113.16 in the Previous year. The Company earned loss in the current year which result into
showing the Negative result in Return on Networth of this year.
Product-wise performance:
During the Financial year 2022-2023, your Company has achieved Total Turnover of Rs.
420.25 Lac and has incurred Net Loss of Rs. (2293.56 ) Lacs.
The Company has Net Worth of about Rs. (1445.57) Lac as on March 31, 2023.
The Company has incurred losses during the year, mainly due to the fact that the nature
of business is working capital intensive and we mainly deal with State Electricity Boards
which are known for delayed payments. As payments are blocked with SEBIs, there is need
to borrow for short term to carry on operations, which impacts our profitability as high
interest payments are to be made.
OUTLOOK FOR THE COMPANY:
The demand of distribution transformers will keep on increasing due to increase in
generation capacity of both conventional and non-renewable sources due to increase in per
capita consumption of electricity and new avenues like electric vehicle charging stations
etc. The demand will also increase due to replacement of old transformers with energy
efficient transformers.
Large outlay by the Government on infrastructure projects and ambitious target of solar
and wind energy projects is likely to improve tender / enquiry in pipeline for potential
business. Initiatives such as UDAY, DDUGJY, aggressive renewable energy target, the new
hydro policy and the massive transmission connectivity plans is expected to gradually ease
competitive pressure. These reforms are ambitious. If executed properly, they could have a
significant impact on the sector in the next few years. With this background, the Company
looks forward to improve business in volume term in current year, but margin continued to
be under pressure in view of surplus capacity with organized sector players in industry.
As the number of competitors in the higher range of power transformers manufacturing is
very small, the board still foresees a bright future for the Company. However, the
targeted profitability will be achieved only after the Company meets the minimum
qualifying criteria set up by various utilities who happen to be our main customers.
RISK & CONCERNS
The major risk factors affecting the Company are over capacity in industry, non-lifting
of ready materials due to cash constraints at customers end building inventory and
liquidity issues, increase in receivable positions due to delay in payment by certain
customers, uncertainty in execution of low fixed price orders. The wide fluctuation of
rupee against US Dollars also affects margin since the key raw materials, viz. copper,
transformer oil, special steels for lamination, etc., are of import origin. Our future
results of operations could potentially be affected by the following factors:
Our ability to manufacture transformers as per the requirement of our clients;
Our ability to continuously operate and maintain our manufacturing facilities
optimally; Our ability to continue to source raw material at competitive rates;
Our ability to manufacture transformers using the latest technologies in terms of
modern materials, components and processes. Our ability to generate working capital funds
at reasonable interest rates.
HUMAN RESOURCES AND INDUSTRIAL RELATION:
The company has maintained very harmonious & cordial Industrial relations. There is
continuous emphasis on development of human resources through training. The issues
pertaining to workers are resolved in harmonious and in cordial manner through regular
interactions. We believe whatever we achieved from where we started our journey long back
is the result of efforts of our team. So, we consistently aim to provide a sustainable
environment for learning right from the stage of recruitment to retention.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Internal audit was carried out by firm of Chartered Accountants, who conduct the
audit on the basis of Annual Audit Plan. The processes include review and evaluation of
effectiveness of the existing processes, controls and compliances. It also ensures
adherence to policies and systems, and mitigation of the operational risks perceived for
each areas under audit. Significant observations including recommendations for improvement
of the business processes were reviewed by the Management before reporting to the Audit
Committee. The committee has reviewed the Internal Audit procedures, findings and status
of implementation of the agreed action plan.
DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGES OF 25% OR MORE AS COMPARED TO THE
IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALOGWITH DETAILED
EXPLANATION THEREOF
| Ratios |
2022-2023 |
2021-2022 |
% Change |
| Debtors Turnover |
0.27 |
0.12 |
124.47% |
| Inventory Turnover |
0.28 |
2.63 |
-89.33% |
| Interest Coverage Ratio |
NA |
NA |
NA |
| Current Ratio |
0.44 |
1.02 |
-57.06% |
| Debt Equity Ratio |
(2.56) |
6.01 |
-142.53% |
| Operating Profit Margin (%) |
-5.65 |
2.44 |
- |
| Net Profit Margin (%) |
(-545.75) |
38.30 |
-1523.91% |
| Net Worth |
(-1445.57) |
847.99 |
- |
| Return on net worth |
(767.65) |
113.16 |
- |
DETAILS OF ANY CHANGES IN RETURN ON NET WORTHAS COMPARED TO THE IMMEDIATELY PREVIOUS
FINANCIAL YAER ALONG WITH A DETAILED EXPLANATION THEREOF
The company has incurred loss Rs. (2663.97) lacs for the Financial year 2022-2023 as
compared to net Profit of Rs.612.84 for the previous financial year 2021-2022. In the
current year, the return on Networth of the company is (767.65) compared to 113.16 in the
previous year.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis Report, describing the Companys
objectives, projections and estimates, are forward-looking statements and progressive
within the meaning of applicable securities laws and regulations. Actual results may
differ materially from those expressed in the statement. Important factors that could
influence the Companys operations include global and domestic demand and supply
conditions affecting selling prices, input availability and prices, changes in government
regulations, tax laws, economic developments within the country and other factors such as
litigation and industrial relations.
| On behalf of the Board of Directors, |
| For Tarapur Transformers Limited |
| Sd/- |
| Suresh More |
| DIN: 06873425 |
| Chairman |
| Mumbai, 01st September, 2023 |
+91-9892691696
