Voltamp Transformers Ltd Management Discussions.

The macro-economic environment became very challenging during the past year. While private sector capital expenditure was already muted prior to the onset of the Covid-19, the pandemic accelerated the slowdown further during a large part of the financial year with the GDP of India contracting by 23.9 percent in the quarter April-June, 2020. Following the nation-wide lockdown announced in March Rs 20, the Company manufacturing operations were temporarily halted. The priority of the Company was the safety and health of its employees and safe delivery of finished goods in transit.

With an easing of the nation-wide lockdown phase wise from May Rs 20 onwards, the supply chain continued disrupted, impacting the Companys factory operations. There were also challenges due to delays in inspection and dispatch of finished goods due to project sites closed. However, capacity utilization and product off take from the Companys factories improved during the last 4 months of the financial year.

The Government spending in the capital goods continued during the lockdown, though at a slower pace. Private sector spending was need based.

The Govt. of India has taken several measures to mitigate the distress caused by the pandemic by announcing stimulus packages, various reforms under Atmanirbhar Bharat Program i.e. Make in India, Digital India, Emergency Credit Line Guarantee Scheme, amendment in the Insolvency and Bankruptcy Code, Jal Jeevan Mission, Production - Linked Incentive (PLI) Scheme in the 13 key sectors for enhancing Indias manufacturing capabilities and enhancing exports. All these policy initiatives will eventually have positive impact on Companys business in medium to long term. The RBI has also taken several measures to support the economy including interest rate cuts. In spite of all measures, economic growth continued to moderate due to lack of demand from large industries and infrastructure sector. The credit growth has continued to be muted during the year as lenders and borrowers remain risk averse due to pandemic led uncertainty. The Second wave not only led to severe health hazards and fatalities relative to the first wave, but also obstructed the nascent economic recovery which had started gaining some pace after second quarter of the year.

The focus of the Company continues on driving profitable growth.


The Government of India has announced the National Infrastructure Pipeline which envisages massive investments in infra projects, is being expanded to cover 7400 projects. This program, as well as additional incentives announced by the Government as a response to COVID-19, is expected to accelerate capacity addition. Increasing electrification and industrialization and improving infrastructure will drive growth in power consumption. The growth of power sector has been a continuous focus area for the Government of India. In the National Investment Plan (NIP) of Rs 102 lakhs crore, power sector received 25% of the budget for the next 5 years. With robust initiatives by the Government and focus on clean energy and push for local manufacturing, the demand outlook for the Company business looks promising in medium to long term.

India has been witnessing an alarming resurgence in Covid-19 infections since March 21. Consequently several states have imposed lockdown / restrictive measures to curb the spread of virus. Worsening pandemic situation, localized lockdowns and slower than expected pace of vaccinations have darkened prospects of a nascent economic recovery and accentuated business certainty.

Economic growth prospects hinges on the effective control of pandemic and the relaxation of the restrictions that are in place across the various parts of the country. The restrictions are expected to ease gradually from June onwards. At the same time there is optimism that with higher proportion of the population getting vaccinated, there could be a turnaround in the economic activity as has been witnessed in other parts of the world.

The first quarter of the current year will not be easy as manufacturing activities got hampered on account of shortages of oxygen at sub vendors end and disruption of supply chain on account of restrictions put by various states to curb pandemic.

Presently manufacturing operations at factories started gradually on ease of restrictions but dispatch of finished goods is not moving at desired pace with delay in clearances/ payment release from customers end. In the current situation it is very difficult to comment on future scenario.


AN ACROSS-THE-BOARD rise in global commodity prices is leading to input cost pressures and is a growing concern, as it is not only expected to have a bearing on cost of infrastructure development in India but also have an impact on the overall inflation, economic recovery and policy making.

In what is being billed as a new commodity super cycle resulting from recovery in global demand (led by recovery in China and the US), supply-side constraints and loose monetary policy of global central banks, most commodities are on an unprecedented bull run that is expected to extend.


Commodity (Unit) May 1, 2020 May 7, 2021

% Rise

NSE Nifty Metal Index 1700 5500 223
Hot-rolled coil / HRC Steel* $478 $1519 217
Copper (per pound) $2.42 $4.83 99
Brent Crude (per barrel) $24.2 $68.27 182

Source : COMEX, National Stock Exchange* Contract of 20 short tonnes

Steel, the most commonly used input in construction sector and industries, is at all time highs, as most metals including base and precious metals prices have gone through the roof over the last one year.

With the economy amid a slowdown, such a sharp rise is a bit difficult to comprehend. Hot rolled coil steel futures prices, for instance, have shot up from around $450-500 in April-2020 to over $ 1500.

Prices of copper are also at all time high, surpassing the previous peak in February 2011. Copper futures on COMEX have more than doubled from $2.1 per pound on March 19, 2021. Bullish investors bet that demand for copper will increase further as the world economy recovers from Covid slumps and as investment into green energy sectors ramp up.

After bottoming out in April, Brent Crude oil price are also on a tear, nearing around $73 to a barrel with any potential rise above $75 being seen as taking it further up till $85 a barrel according to report in the business daily.

As India has outlined a big infrastructure development plan, the sharp rise in prices of steel and cement is a bit of a worry. For every percentage point growth in GDP, this would lead to a backward increase in cost on account of increase in price of steel and cement. Also, if we increase the cost of building infra, it will lead to increase in costing of the project and then the toll prices among others.

Recovery in big economies like China and the US are driving the prices of metals.


Profit Before Tax (PBT), Profit After Tax (PAT), and Sales and Services Income of the last five years.

The Company has achieved net sales and service revenue of Rs 692.30 Crores as compared to Rs 858.57 crores in the previous year and the PBT increased to Rs 140.46 crores as compared to Rs 113.35 crores in the previous year and PAT increased to Rs 111.21 crores as compared to Rs 88.93 crores in the previous year.


The major factors affecting future results of operations of your Company are the currency fluctuation, competitive pressures from local as well as recently entered International competitors, Govt. policies on power and infrastructure sectors and project implementation, large unutilized capacity in Industry, aggressive pricing, continuing and highly volatile raw material prices, Covid-19 pandemic and timely availability of imported raw materials at budgeted cost.


The Company continue its focus on development of human resources. The Company is a firm believer that its employee are its strength and the Company therefore respects individual rights and dignity of all its employees. The relations of the management with employees during the year continued to be cordial. Learning and development has been strengthened to bring value addition in the employee and to enhance team building leading towards success. The Company focuses on providing the employees, employee - friendly environment and culture and career growth opportunities.


The Company has in place, commensurate with the size and complexity of Companys business operation, effective internal control systems and policies for compliance of laws and to safeguard the interest of the Company. The Company maintains a system of internal controls designed to provide reasonable assurance regarding the efficiency and reliability of operations and for safeguarding the assets of the Company and for ensuring appropriate recording and reporting of financial information for ensuring reliability of financial controls and for ensuring compliance of applicable laws and regulations.

The internal financial controls are adequate and are operating effectively and there are proper systems in place to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

The internal audit covers a wide variety of operational matters and ensures compliance with specific standards with regard to reliability and suitability of policies and procedures.

The internal auditors report to the top management through CFO and continuously monitor adherence to laid down systems and policies. Services of internal auditors are being outsourced through established audit firm. The systems are regularly reviewed and modified for changes in operating and regulatory requirements.

The Audit Committee reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening the same from time to time.


Currently the Covid-19 pandemic seems to be the biggest threat to the power sector and the economy. The Covid-19 pandemic is a global humanitarian and health crisis, which continues to impact all our stakeholders: employees, customers, vendors, investors and communities in which we operate in. Covid-19 will be crucial parameter to watch while forecasting upcoming businesses opportunities. Unprecedent increase in major material prices is also a area of concern adversely impacting fixed price orders for transformers. 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.


The Company is debt free since many years and having a good amount of investments of its surplus funds in diversified portfolios, viz. debt and equity mutual funds, bonds, debentures, fixed deposits, PMS, tax-free bonds, etc. and the Company has efficient working capital management. The Company has a diverse industrial client base and not dependent on any particular industry segment or region to book orders. Continuity of senior level management staff in service with long duration allows the Company to handle larger volume of business with comparatively less risk.


In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector specific financial ratios.


Sr No. Ratios As at 31st March, 2021 As at 31st March, 2020 Variance Reason for variance
1 Debtors Turnover (no. of days) 84.62 69.48 21.79%
2 Inventory Turnover (no. of days) 83.79 63.09 32.80% Mainly because of lower turnover and delay in dispatch clearance from customers end.
3 Interest Coverage (no. of times) NA
4 Current Ratio (no. of times) 5.53 5.26 5.28%
5 Debt Equity Ratio 0.09 0.09 (0.35%)
6 Operating Profit Margin (%) 10.07 12.51 (19.52%)
7 Net Profit Margin (%) 18.37 13.07 40.54% Mainly due to increase in investment income
8 Return on Networth (%) 16.84 15.15 11.15%


Year ended 31 Mar (Rs in crores) FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Net Sales (A) 569.81 515.50 444.78 516.89 563.30 610.94 639.02 828.83 858.58 692.31
Expenditure (B) 528.09 481.32 429.81 497.14 525.89 550.75 573.00 735.25 744.84 615.28
EBITDA (C=A-B) 41.72 34.18 14.97 19.75 37.41 60.18 66.02 93.58 113.74 77.03
Interest & Bank Charges. (D) 0.48 0.49 0.37 0.30 0.43 0.51 0.56 0.00 0.00 0.01
Depreciation (E) 8.27 7.67 7.13 7.22 5.98 5.82 5.99 7.15 8.99 8.85
Other Income (F) 15.45 20.02 26.74 21.16 28.29 38.98 40.67 36.25 8.61 72.29
PBT (G=C-D-E+F) 48.42 46.03 34.21 33.39 59.29 92.83 100.14 122.68 113.36 140.46
Tax (H) 15.15 13.13 7.92 4.98 15.31 20.62 26.66 37.84 23.98 28.24
PAT (I=G-H) 33.27 32.90 26.29 28.41 43.98 72.21 73.48 84.84 89.38 112.22
Other Comprehensive Income/(Expense) (OCI) (J) (0.35) (0.11) 0.05 (0.44) (1.00)
TOTAL OCI (K=I+J) 33.27 32.90 26.29 28.41 43.98 71.86 73.37 84.89 88.94 111.22
Key Ratios (%) FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY 21
EBITDA Margin (L=C/A*100) 7.32 6.63 3.37 3.82 6.64 9.85 10.33 11.29 13.25 11.13
Net Margin (M=K/(A+F)*100) 5.69 6.14 5.58 5.28 7.43 11.06 10.79 9.81 10.26 14.55


Statements in this report on Management Discussion and Analysis relating to the Companys objectives, projections, estimates, expectations or prediction may be forward looking within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of future events. By their nature, forward-looking statements require the Company to make assumptions and are subject to change based on risks and uncertainties. Actual results might differ materially from those expressed or implied depending upon factors such as climatic conditions, global and domestic demand-supply conditions, finished goods prices, raw materials cost and availability, foreign exchange market movements, changes in Government regulations and tax structure, economic and political developments within India and the countries with which the Company has business and other factors such as litigation and industrial relations. The Company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.