Macro-economic overview
Global real GDP is forecasted to grow by 2.3% in 2023, down from 3.3% in 2022. Despite
rapid monetary tightening, inflation still persists in many key economies, owing to job
market resilience despite severe labour shortages. Therefore, monetary policy is likely to
remain restrictive throughout most of 2023, despite financial stability concerns. 1
As per the latest estimates by the International Monetary Fund, the global GDP growth
rate is 3.4% in CY22 showing resilience towards recessionary fears. On account of these
headwinds, supply chain disruptions were also rampant. Moreover, due to geopolitical
conflicts, crude oil prices soared, global trade was impacted and inflationary pressures
worsened. To rein in inflation, central banks across the world, including the US Federal
Reserve, responded with synchronised rate hikes.
Despite concerns of a mild global recession, Indias
economyhasmaintaineditspositionasoneofthefastest-growing major economies in the world.
According to the National Statistical Offices third advance estimates, the economy is
projected to have grown by 7.2% during FY23, despite facing challenges such as high
inflation, escalating commodity prices, and disruptions in global trade due to ongoing
geopolitical conflicts.2
There is cautious optimism in India despite the global economic slump since economic
signs point to a promising future. India has managed to keep up its development pace
despite the challenges, as evidenced by a variety of important indicators, including as
GST income, direct tax collections, growth in railway freight, E-Way Bills, air traffic,
and PMI figures.
Outlook
The war between Ukraine and Russia has triggered a crisis that can slow down the global
growth forecast and add to inflation. Given this situation, our input costs are expected
to see a continued inflationary pressure. Fortunately, our global OEMs have predicted a
stable demand for our products. The GDP of India is predicted to grow a little above 6%
and the segments where OEM products are required is expected to contribute favourably to
our business. It is expected that the Petro segment will perform well for your company in
the domestic environment.
Industry overview
The global high performance alloys market size reached USD 9.0 billion in 2023. Looking
forward, IMARC Group expects the market to reach USD 11.6 billion by 2028, exhibiting a
growth rate (CAGR) of 4.76% during 2023-2028.3
Global alloy manufacturing is mostly concentrated in Europe, the United States, and
China. The three regions hold about 80% output of master alloy market. As for consumption,
Asia-Pacific is the largest consumer followed by North America, with 21% consumption
share.
Threats and opportunities
The conflict between Ukraine and Russia has created instability, particularly in the
supply chain of metals that are important to us, such as nickel and chrome, which has a
cascading effect on stainless steel scrap. Fuel prices shot up, which adversely impacted
our overall manufacturing and logistics costs. The management team of your Company was
alert enough and had plans to mitigate some of these challenges.
Looking forward, the Petro segment is expected to contribute to the sizeable growth of
your Company as we expect to get more orders due to many planned maintenance shutdowns in
refineries and petrochemicals. It is an opportunity that your Company is well placed to
benefit from.
The management has been also working on a well-calibrated strategy of increasing its
market share of OEM customers with the right product offerings.
Outlook
One of the major factors favourably impacting the market is the significant increase in
the usage of high- performance alloys in the defence industry to improve operational
efficiency. In addition, there is a rise in the demand for next-generation aircraft and
for the manufacture of jet engine fuel nozzles. High performance alloy sales are
subsequently increasing globally as a result of this.
Business overview
Uni Abex Alloy Products Limited, incorporated in 1972, is a part of the Neterwala Group
which has varied interests in geology, oil and gas, software, engineering, and
environment.
It is an industry innovator, top producer, and exporter of centrifugal and static
castings in heat, wear and corrosion resistant stainless steel alloys, and it has a strong
track record of delivering vital components to businesses in a variety of market
categories.
Despite the tough business environment, the Company was successful in growing its
business from INR 136.67 crores in FY22 to INR 163.99 crores in FY23, with a year-on-year
growth of 20%.
Financial performance
The Companys total income for FY23 (Gross sales and other incomes) stood at INR 166.2
crores as against INR 137.5 crores for FY22 (growth of 20% YOY). The PBIDT and PAT for
FY23 stood at INR 30.1 crores and INR 18.5 crores as compared to INR 21.7 crores and INR
12.3 crores, respectively for FY22 (growth of 39% and 50%, respectively YOY).
The key performance and financial ratios for the years FY23 and FY22 and variations in
percentage between the two years are:
The significant performance and financial ratios for the year 2022-23 include Net
Working Capital to Sales of 34%, Inventory to Sales of 24%, Receivables to Sales of 11% as
compared to that of the previous years 30%, 27% and 17%, respectively. The improvement in
the ratios is due to better working capital management.
Debtors Turnover was 10.3, Inventory Turnover was 2.01, Interest Coverage was 32.9,
Current Ratio was 2.34, Debt Equity was 0.13 as compared to that of the previous years
6.7, 1.58, 32.61, 1.80 and 0.18 respectively.
The improvement in debtors turnover was due to close monitoring of debts and its
collection. Interest coverage ratio improved primarily on account of better working
capital management and increase in profit. Further, Debt Equity ratio improved due to
increased net profit margin as Operating Profit Margin was 18% and Net Profit Margin was
11% as against previous years 16% and 9%. Net Profit Margin improved during the year due
to improvement in operational efficiencies and better sales realisation as compared to the
last year despite of increase in RM cost. The Return on Net worth improved to 22.7% vs
18.7% in the previous year.
Risks and concerns
The Company has established a strong risk management framework that guarantees an
effective reporting and compliance with laws and regulations. It generates confidence of
foreseeing and mitigating the risks proactively. The Board of Directors provide written
principles for overall risk management, as well as policies covering areas, such as
foreign exchange risk, interest rate risk, market risk and credit risk.
It also covers the form of fluctuations in the supply chain pricing of fuel, energy
costs, essential raw material, demand fluctuations and so on.
The Company works on an ongoing basis on cost optimisation and process improvement
exercises. Further, it has deployed, multiple monitoring and review systems to mitigate
these risks in a timely and effective manner.
Corporate social responsibility
Uni Abex Alloy Products Ltd actively embraces corporate social responsibility (CSR)
initiatives by collaborating with a wide range of organizations to promote skill
development, education, and enhanced healthcare facilities for children, women, and senior
citizens. These endeavors exemplify their dedication to creating a positive and
sustainable impact in the communities where they operate. By wholeheartedly embracing CSR,
Uni Abex Alloy Products Ltd makes substantial contributions to the betterment of society,
while simultaneously supporting social, economic, and environmental well-being.
Infrastructure development
Uni Abex places a strong emphasis on the significance of Corporate Social
Responsibility (CSR) and acknowledges its influence on their stakeholders and the
community they serve in. The Company dedicates its CSR funds to various activities in the
field of education, healthcare and skill development. Your company contributed to the
Maneckji and Shirinbai Neterwala Foundation (Trust) which spends it on supporting
educational and healthcare initiatives across various regions. Your company also started a
community healthcare center in association with FPAI, which successfully runs with a
footfall of around 30-35 patients per day.
This year your company embarked on a noteworthy project in collaboration with Swami
Vivekanand Youth Movement (SVYM) whose primary objective is to establish palliative care
and skill development programs in the surrounding area of Dharwad village.
Human resource
The Company considers its human capital as its core strength. Training programs,
workshops and seminars are conducted to upskill the Companys personnel to keep pace with
the growth and development of the Company and provide opportunities for personal and
professional growth. The Company also strives to provide a conducive and healthy work
culture. In line with the future roadmap of the Company, necessary plans are in place to
augment its human capital.
As on 31st March 2023, the total number of employees on the rolls of the Company stood
at 95.
Internal control adequacy
The standard operating procedures (SOPs) covering business operations have been
established with inbuilt system of internal checks and balances duly supported by a robust
ERP software. The SOPs are continuously modified and augmented as and when necessary.
These procedures ensure that the transactions are properly authorized, validated and
reported and that the assets of the Company are safe guarded. Additionally, the Company
has laid down policies, which are well-documented. The internal auditors conduct audits of
all aspects of business to assess the effectiveness of existing internal control systems.
The recommendations of the internal auditors are implemented. The statutory auditors also
verify the adequacy of the internal financial controls as well as compliances with the
applicable laws and statutory regulations.
The Audit Committee, with an Independent Director as its Chairman, meets quarterly with
the Management, internal auditors, and statutory auditors to review the internal audit
reports and to address the exceptions, if any.
Cautionary statement
Some statements in this Report are forward-looking statements and are based on the
optimism reflected by various Government policies, initiatives and companys various
growth strategies. Current war situation between Russia and Ukraine is putting uncertainty
in business environment. The Companys performance is based on these caveats, and it is
therefore cautioned that the actual results may differ from those set out or implied
herein.
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