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V-Marc India Ltd Management Discussions

182.15
(-4.46%)
Jul 19, 2024|09:44:26 AM

V-Marc India Ltd Share Price Management Discussions

India Cable Management market was growing steadily prior COVID-19 owing to growth in infrastructure projects across the country, especially the digital sector of the country. Energy projects has been the top priority in the economy due to its current inefficiencies and countrys growing energy needs. Furthermore, the lack of essential transport infrastructure is the main culprit in repelling much of the foreign investments that could have further boosted the overall economy, hence, transportation has also been a key focus area for the policymakers.

However, these projects got paused due to the disruptions in manufacturing, supply chain and shortage of raw materials coupled with the price hikes during the COVID-19 outbreak which resulted in severe decline in the cable management market in 2020, yet the market bounced back over two years with faster growth as the market is now working at full potential with projects resumed. Henceforth, the market is expected to fully recover and grow at a fast pace in 2023

Hence, the overall landscape of India cable management market growth is optimistic on account of the structural change it is going through in Industrial sector, rapidly growing transportation sector, robust digital infrastructure which is well supported by the growing energy sector of the country.

COMPANY OVERVIEW

V-Marc India Limited (V-Marc) is a specialized Control & Instrumentation cable company offering wide range of cable products to multiple industries. V-Marc has over 2 decades of rich experience and enjoys a strong brand image in the B2B segment. V-Marc designs, develops and manufactures a varied range of Power, Control, Instrumentation, Thermocouple Extension / Compensating and Communication cables. The companys manufacturing plants are located in Uttarakhand at 2 locations.

V-Marc is in the business of providing cost-effective and quality solutions for various electrical connectivity requirements. V-Marc has carved a niche in manufacturing of customized cables as per the customers specifications. Investments in infrastructure and various industries will prove to be a big positive for the company. V-Marc continuously strives to achieve higher efficiencies, cost control, better preventive maintenance and focuses on improving its product mix to attain economies of scale.

OPPORTUNITIES AND THREATS

Wire is a piece of metal that is used to carry electric current on the other hand, cable contain a number of wires inside a plastic or rubber which is used to carry electric signals. Copper, aluminium, plastics and alloys are the materials which are used to make these wires and cables. They are widely used in industries like defence and gas, oil, automotive etc. These days, due to increasing residences and houses in developing countries, there is an increase in the use of the wires and cables.

India Cable Management Market size is projected to grow at a CAGR of 11.2% during 2022-2028.The rapid growth in transport infrastructure of the country including railways, metros, tunnels, bridges and roads along with the rising power generation in the country which would also support the exponential growth the country is witnessing in its digital infrastructure, positions India as the most lucrative market for cable management as it would hinder the entanglement of wires and cables that would connect and support the overall infrastructure of the country. Furthermore, Indian railways which is now 80% electrified along with rising metro lines would have a significant contribution in the market expansion anticipated for coming years.

In addition to it, as the country is moving forward towards Industry 4.0 with a fast pace as it is well supported and compatible with the Indias robust digital infrastructure, cable management would soon be applied in smart factories to prevent entanglements of wires and cables that are essential to connect the cyber-physical systems and their seamless functioning.

RISKS AND CONCERNS

Finance Cost Risk: Finance Cost risk arises due to payment of high rate of interest & charges on term loans and other funds & non-fund-based facilities being availed by the company from banks and other financial institutions. The company tries to minimize this risk by keeping a check on the interest rates & charges charged by various banks & financial institutions and by swapping its long term/short term loans with banks/ FIs charging lesser interest rates and other charges.

Liquidity Risk: Liquidity risk is the risk that the company may be unable to meet short term financial demands. This usually occurs due to the inability to convert a security or hard asset to cash without a loss of capital or income in the process. The company manages the liquidity risk by ensuring the availability of adequate funds at all times to meet its liability obligations on before the due dates. Raw Material Availability and Price Fluctuations: Scarce availability and price-volatility in Companys Basic Raw Materials - Copper, Aluminium, Steel, and PVC etc. can severely impact the profits of the Company. To mitigate these risks, the Company inculcates MOUs with its suppliers, price escalation clauses for large orders and hedges these raw-materials on the commodity exchange. Foreign Exchange Risk: Foreign exchange risk is a financial risk posed by an exposure to unanticipated changes in the exchange rate between two currencies. Company may import a part of its raw materials, spare parts etc. and is also engaged in export of its products. To mitigate this risk, the company resorts to forward booking were deemed appropriate.

Human Resource Risk: In the absence of quality human resources, the company may not be able to execute its growth plans. To mitigate this risk, the company places due importance to its human capital assets and invests in building and nurturing a strong talented pool to gain strategic edge and achieve operational excellence in all its goals.

DETAILS OF KEY FINANCIAL RATIOS

S. No. Particulars Standalone Explanations
2022-23 2021-22
1. EBIDTA/Turnover (%) 11.06% 8.61% Due to better operating margin this ratio improves.
2. Debtors Turnover Ratio 4.04 3.58 Realization from customer is better in current FY in comparison to last year.
3. Inventory Turnover Ratio 2.48 2.27 This ratio is slightly better than last year ratio.
4. Interest Coverage Ratio 2.45 2.38 This ratio indicates company is able to pay interest in timely manner.
5. Current Ratio 1.23 1.38 This ratio declines due to increase in current liability.
6. Debt Equity Ratio 0.95 0.88 Increase in Borrowings has an impact on this ratio.
7. Operating Profit Margin (%) 10.03% 7.19% Due to improved margin this ratio is better in comparison to last year.
8. Net Profit Margin (%) 4.22% 2.76% Due to improved margin this ratio is better in comparison to last year.
9. Return on net worth (%) 13.11% 7.20% Due to better profit margin on product, it improves.
10. Book Value per share (Rs) 34.97 30.42 Book value per share increases due to increase in Equity Shareholders Fund.
11. Earnings Per Share (Rs)-Basic 4.58 2.19 Better profit, better EPS.
12. Earnings Per Share (Rs)-Diluted 4.58 2.19 Better profit, better EPS.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has implemented proper system for safeguarding the operations/business of the company, through which the assets are verified and frauds, errors are reduced and accounts, information connected to it are maintained such, so as to timely completion of the statements. The Company has adequate systems of Internal Controls commensurate with its size and operations to ensure orderly and efficient conduct of business. These controls ensure safeguarding of assets, reduction and detection of fraud and error, adequacy and completeness of the accounting records and timely preparation of reliable financial information.

The company gets internal audit and verification done at regular intervals. The requirement of having internal auditor compulsory by statue in case of listed and other classes of companies as prescribed shall further strengthen the internal control measures of company.

DISCLOSURE OF ACCOUNTING TREATMENT

These Financial statements of the Company are prepared in accordance with India Accounting Standards, notified under section 133 of Companies Act, 2013 read along with Companies (Indian Accounting Standards) Rules, 2015 as amended and other relevant provisions of the Act.

RISK MANAGEMENT

The Company has established a well-defined process of risk management, wherein the identification, analysis and assessment of the various risks, measuring of the probable impact of such risks, formulation of risk mitigation strategy and implementation of the same takes place in a structured manner. Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks on the operations of the Company. Necessary internal control systems are also put in place by the Company on various activities across the board to ensure that business operations are directed towards attaining the stated organizational objectives with optimum utilization of the resources.

The Company, through its risk management process, aims to contain the risks within its appetite. There are no risks which in the opinion of the Board threaten the existence of the Company.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS FRONT

Your Company has undertaken employees development initiatives, which have very positive impact on the morale and team spirit of the employees. The company has continued to give special attention to human resources and overall development.

CAUTIONARY STATEMENT

Certain statements in the reports of the Board of Directors and Managements discussions and analysis may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied since Companys operations are influence by many external and internal factors beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any of these statements on the basis of any subsequent Developments, information or events.

For and on behalf of the Board
V-Marc India Limited
sd/- sd/-
Place: Haridwar Vikas Garg Deepak Prabhakar Tikle
Date: August 18, 2023 DIN :05268238 DIN:09756849

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