MANAGEMENT DISSCUSSION AND ANALYSIS REPORT
INDIAN ECONOMY
The Indian economy displayed speedy and steady growth over the last year on the back of
various Government initiatives and reforms and challenges faced due to Corona virus
(COVID-19) and lockdown. The growth outlook was optimistic prior to the unexpected
COVID-19) outbreak. The outbreak of second wave and extension of relief package in various
forms has increased the budget deficiL Owing to the massive impact of COVID-19, all the
major economies of the world have gone through some form of lockdown or social distancing.
But mankind buckled up and pooled the resources together and our frontline warriors fought
hard, and various Government vaccination programmes proved to be major success in Tight
against this unprecedented outbreak. The Central government declared the Gross Domestic
Product (GDP) for the financial year 2021-22 stands at 8.7 per cent. Indias economic
growth in the current year is estimated to be 9.2 per cent, highest among all large
economies. For 2022-23, the Reserve Bank of India (RBI) has projected Indias GDP growth
rate to be 7.2 percent.
The Government has implemented various measures including free vaccination drive other
economic and essential reforms to overcome from the impact of this outbreak and accelerate
the growth, These measures were not limited to preventive health care and vaccination
doses but also to extend economic impact such as reduction in repo rates etc. During the
FY 2021-22, Government Announced stimulus package of Rs. 6.29 lakh crore to boost all
sectors and all classes of society and to increase liquidity, support and infrastructure
which will also help weaker section to reduce the impact of economic slowdown due to the
second wave.
OUTLOOK
The Govt, of India has taken various significant monetary and liquidity measures to
mitigate the adverse impact of COVID-19 and in order to mitigate and boost the economic
activities. The announcement of stimulus package expects to foster long-term employment
and opportunities that will strengthen the economy further in coming years. After the
successful implementation of vaccination drives, the Indian economy was ready to get back
in the race in short period of time. The Company expecting an accelerated growth in
business in coming years.
INDIAN PIPING INDUSTRY OVERVIEW
The domestic plastic pipes industry size is estimated at Rs. 315 billion; of which the
organized players account for 60% of the market share. Although the pandemic caused most
sectors to evaluate how they operate, the construction industry landed itself a unique
opportunity to innovate and grow. Organized players have topped industry growth as they
continue to gain market share from unorganized manufacturers. The integration in the PVC
pipe market is expected to accelerate. With limited supply and rising PVC resin costs, the
regional and unorganized players are expected to face significant sourcing and working
capital challenges in the coming years. The major driver leading to growth is Government
infrastructural spending, irrigation sector, replacement of aging pipelines, increasing
constructions and industrial production among others. There has been growing adoption in
PVC/CPVC pipes owing to its easy installation, corrosion and flame resistant,
environmentally sound and durability.
OPPORTUNITIES AND THE GOVERNMENT IMPETUS
The unorganized players in the plastic pipes industry were already finding it difficult
to gain advantage on the price and market outreach. After the COVID-19 scenario, the
companies with high debt and weak cash flow are bound to head towards consolidation
resulting in leading of market by organized players with opportunities to acquire regional
players at lower valuation.
THE GOVERNMENT IMPETUS
Har Ghar Nal Se Jal: The Government of India covered 8.7 Cr households under this
scheme, out of which 5.5 Cr households were provided tap water in the last two years.
Further, the government plans to allocate H 60,000 Cr to provide potable water to another
3.8 Cr households in FY 2022-23 under the Har Ghar Nal Se Jal programme.
It is very appreciating and praiseful to know that your Companys registered and place
of operations i.e. Burhanpur in Madhya Pradesh becomes the first "Har Ghar Jal"
certified district in the country, reaching from just 37% households of tap water
connections in August, 2019 to 100% in less than three years under the collective effort
and spirit of work of Govt, of India, MP Govt, and Jal Jeevan Mission.
Pradhan Mantri Krishi Sinchai Yojana (PMKSY): The government aims to enhance rural
prosperity by enhancing water availability to all agricultural farms, leading to higher
production and productivity.
CHALLENGES
Cost of raw material
The raw material prices increases to a great extent in this financial year also and the
production cost of the players operating in the industry also affected a lot. Moreover,
the increase in raw material prices impact the end users and pipe manufacturing players,
as the cost is to be passed down to the downstream industry users.
Risk Management
The Company has in place an effective risk management framework to primarily control
business and operational risks. The major risk areas are systematically and periodically
reviewed by the senior management. At various levels, comprehensive policies and
procedures will help to identify, mitigate and monitor risks. By taking such proactive
measures, the Company ensures that strategic business objectives are achieved seamlessly
in a steady and efficient manner. During the financial year under review, rating for fund
based facilities of the Company has been upgraded and revised from BWR BBB to BWR BBB+.
Further, your Company has an intricate Risk Management procedure which depicts
business risk and operational risks that are supported by policy framework.
Human Resource
The Human Resource division of the company plays a vital role in hiring, training,
managing and retaining employees to build a group of talented workforces. So that they can
reach their full potential and work diligently towards the growth of the organization. The
Company has created a level playing field space, whereon equal opportunities to all
employees is provided. With this belief, it has enhanced employee morale, boosted
productivity and reduced people absenteeism. As of March 31, 2022, the Companys total
work force is 420 employees.
Product Wise Performance
Companys major products are PVC, HDPE, Fittings and Trading. Performance of various
products at a glance is as under:-
|
|
(Rs. In lakhs) |
| Particulars |
2021-22 |
2020-21 |
| HDPE Pipe |
32.913.81 |
20.680.56 |
| PVC Pipe |
14.518.36 |
12,716.61 |
| CPVC fitting |
1.175.80 |
938.41 |
| Moulding fittings |
3.662.88 |
3.845.10 |
| Roto Water Tank |
59.65 |
- |
| RM Compound Sale |
742.18 |
2.087.41 |
| Trading Sale |
2.889.37 |
1.897.58 |
| Total |
55.962.05 |
42,165.68 |
| Add Sales of Services |
479.47 |
528.81 |
| Less excise duty |
- |
- |
| Add Sell Fit Charges |
|
_ |
| VAT/CST subsidy for Industrial promotion |
. |
. |
| Installation Charges |
|
- |
| Total revenue from operation as per audit report |
56,441.53 |
42,694.49 |
Note: - The Previous year figures have been regrouped/ reclassified wherever necessary
to make them comparable with current periods figure.
Internal Control System and their adequacy
The Company considers that internal control is one of the key supports of governance
which provide freedom to the management within a outline of appropriate checks and
balances. Texmo Pipes and Products Limited have a strong internal control framework, which
was instituted considering the size, nature and risk in the business. The Companys
internal control environment provide assurance on efficient conduct of operations,
security of Assets, prevention and detection of frauds/errors, accuracy and completeness
of accounting records, timely preparation of authentic financial information and
compliance with applicable laws and regulation. The Company uses SAP - Enterprise
Resources Planning software as its core IT system. The Internal Auditor is a Chartered
Accountant has been entrusted the job to conduct regular internal Audits at all the
units/Branches and report to the management the lapses, if any and submitted Report on
quarterly basis to the Board of Directors for their review and comments. To ensure
efficient Internal control system, the Company has a well constituted Audit committee who
at its periodical meeting, review the competence of internal control system and Procedures
thereby Suggesting improvement in the system and process as per the changes of Business
dynamics. The system and process are continuously improved by adopting best in class
processes, automation and implementing latest IT tools.
Discussion on Financial Performance with respect to operational performance
On a standalone basis your company recorded a turnover of Rs. 56,441.53 Lakhs for the
year ended 31J March, 2022 as against Rs. 42,694.49 Lakhs in the previous year
which shows an increase of 32.20 %.
On a standalone basis, the profit before interest, depreciation and tax for the
financial year is Rs. 3,357.42 Lakhs as against Rs. 2,582.94 Lakhs recorded in the
previous year. The profit before tax for the financial year stood at Rs. 1,968.84 Lakhs
compared to Rs. 1,440.79 Lakhs of the previous year. The profit after tax &
exceptional item for the financial year at Rs. 1.460.91 Lakhs compared to Rs. 1,123.08
Lakhs of the previous year.
On a standalone basis your company recorded Production of 38,623.22 MT for the year
ended 31 March, 2022 as against 36,115.66 MT in the previous year which shows an increase
to 6.94%.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:
Details of significant changes, i.e., change of 25% or more, as compared to the
immediately previous Financial Year in key financial ratio, along with detailed
explanation therefore:
| Sr. No. |
Particulars |
Ratio as |
Ratio as |
%of |
Explanationon, if any |
| i. |
Debtors Turnover |
12.67 |
9.65 |
31.25% |
Due to Increase in Turnover |
| ii. |
Inventory Turnover |
9.44 |
6.62 |
42.69% |
Due to Increase in Turnover, & Decrease in Inventories |
RETURN ON NET WORTH:
Details of change in Return on Net Worth as compared to the immediately previous
Financial Year as ollows:
| Sr. No. |
Particulars |
Ratio as on 31 March 2022 in |
Ratio as on 31 March 2021 in |
% of Change |
Explanations |
| i. |
Return on Net Worth |
12.04% |
10.52% |
14.49% |
Due to Price Fluctuation of FG & RM. Due to Increase of Sales |
Cautionary Statement
Some of the statements in this Management Discussion and Analysis, describing the
companys objectives, projections, estimates and expectations may be forward looking
statements within the meaning of applicable Laws and Regulations. Actual results might
differ substantially from those expressed or implied. Important developments that could
affect the Companys operations include changes in economic conditions affecting demand,
supply and price movements in the domestic and overseas markets in which your company
operates changes in the Government regulations, Tax Laws and other Statutes or other
incidental factors. The company assumes no responsibility in respect of forward-looking
statements, which may be amended or modified in future.
+91-9892691696
