V-Marc India Ltd Management Discussions

The wires and cables market in India comprises nearly 40 % of the electrical industry and is growing at a CAGR of 15 % as a result of growth in the power and infrastructure segments. The segment has been witnessing unprecedented growth on account of the boost provided by the recent policy and regulatory initiatives as well as government schemes.

The Indian cables & wires industry, along with fast-moving electric goods (FMEG) products, is estimated to be Rs 1.8 lakh crore in FY23.The industry offers huge growth potential and is estimated to report ~10% CAGR over the next few years, led by increased traction in the infrastructure and real estate sectors. The cables & wires industry constitutes ~39% of the electrical industry and forms a crucial part of the construction and infrastructure activities of the government and private players. Intensifying focus on infrastructure, strong traction in the real estate sector, an increase in electrification of villages, and rising nuclear families are expected to spur cable and wires industry growth. The cables & wires market reported -8% CAGR over FY14-23 and it is estimated to clock 12-14% CAGR over FY23-27 (INR1.2-1.3T).

India is now a net exporter of cables & wires. Additionally, according to our estimates, the industry should clock ~10% CAGR over the next few years, with higher growth estimated for cables & wires (12-14% CAGR until FY27E), water heaters, fans, etc. COMPANY OVERVIEW

V-Marc India originally a cable manufacturing company, has always been on a persistent quest for innovation. As pioneers in the field, we are committed to pushing boundaries and setting new standards through our froward- thinking approach.

Our team combined decades of engineering expertise for the development of MVCC cables that offer enhanced safety through superior insulation, minimizing the risk of electrical faults and ensuring reliable operation in diverse environmental conditions. This journey paved a path of exclusive compatible solution when our project execution team encountered numerous accessory installation and misalignment challenges. Being a leading MVCC manufacturer our team recognised the detrimental impact of mismatched technicalities on the life and durability of cables, our engineers year-long intensive R&D and anticipation for new product development came up with the revolutionary MVCC Accessories up to 33kv.

Our MVCC Accessories are designed in alignment of our MVCC cables resulting in ease of installation and compatibility like never experienced before as the Exclusive Single Point solution in the industry.

OPPORTUNITIES AND THREATS OPPORTUNITIES

• Increase in demand for LT and HT cables due to increased infrastructure projects.

• Growth in the exports revenues owing to V-Marcs increasing geographical existence and penetration.

• Increasing revenue share of the retail segment due to better working capital and higher profitability

• Increasing demand for wires and cables due to rapid urbanization and rural electrification.

• Strong demand in sectors like infrastructure, railway, power, data centers, housing, etc.

THREATS

• The global economic slowdown and disruptions in trade and sectors.

• Volatility in exchange rates and prices of raw materials.

• Increasing competition in the wires and cables industry.

• Fast-changing technology and constant need for upgradation.

• With increasing awareness of environmental sustainability, there is a growing emphasis on manufacturing and using environmentally friendly cables. This can be a challenge for manufacturers that need to adapt their processes and materials to meet these demands.

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 or 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

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.