Voltamp Transformers Ltd Management Discussions.


During the year to revive Indian economy and to boost investment, consumption and exports, the Govt. of India has taken various steps like reduction in corporate tax rates, increase in FDI limit for various sectors, easing of credit particularly for stalled real estate and power projects, speeding up the insolvency resolution process under Insolvency and Bankruptcy code. Just when it seems markets were recovering, an unprecedent calamity in the formof Covid-19 pandemic came and affected the economy of majority of the countries leading to forced lock down andtotal disruptions of all economic activities in India. To combat economic disruptions caused by lockdown, the Govt. ofIndia has announced various economic packages. It is expected that it will have its impact to bring economy back on track in reasonable period of time.

The financial year 2019-20 saw muted capital expenditure from corporate sector. No major investment happened in thermal power generation due to decline in pace of power generation, low capacity utilisation, subdued electricity demand, etc. There has been a progressive shift towards renewable sources. In the last 5 years, the share ofrenewable energy in the installed capacity has increased from 12% to 23%. However, the solar energy sector projects execution faces many challenges. The industrial activity slowed down during FY 20 led by decline in manufacturing activities. The production of capital goods contracted and infrastructure goods slowed down significantly. During FY20, Indian rupee depreciated by 9.3 % against USD.

Based on the initial assessments, India s growth is likely to slow down in near term but impact is not likely to be equal for all the sectors.


The Covid -19 health crisis have led to an unpredictable business climate in terms of demand and future outlook. Post Covid-19 the outlook is highly uncertain, the Company expects current year to be more tough and challenging compared to past. The economic environment in which Company is operating has created uncertainty for short term.The path back to normality after the health crisis subsidies, is likely to be slow.

In the current scenario the Company is adopting cautious approach in its current year Business Plan.In the evolving situation, the Company is taking balanced view on scaling up manufacturing operations, with anticipated delay of projects resulting in finished goods inventory buildup and payment delays as against achieving breakeven level volume to pay fixed costs. This is not time to chase business with out payment assurance. The management expects that these are short term challenges and believe that India s economic growth has the potential to bounce back once the Covid-19 pandemic settle.

The Company with its healthy balance sheet is well equipped to overcome present challenges and continue to pursue its long term growth strategy.

At present the enquiry pipeline is at reasonable level. Orders did get finalized during the lockdownperiod and subsequent period, of course at slow pace. New order finalization space in next 4 months will be need based. The Company has resumed execution of service orders. Over medium to long term many global MNCs are likely to consider diversifying their manufacturing operations from China to India with the Government push on attracting investment. This move offer good business opportunity for the Company as and when it materialize. Infra projects worth 102 lakhs crores in ten infrastructural projects announced by the Govt. of India and projects in data centres, smart campuses, coal based power plants installing system to meet with new environment norms and like will offer business opportunity in medium term.

As on date, orders available for execution in current year is at 471 crores (6918 MVA). Despatches in 1st quarter of current financial year is expected to be on lower side.


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 858.57 Crores as compared to 828.82 crores in the previous year and the PBTdecreased to 113.35 crores as compared to 122.67 crores in the previous year and PAT increased to 88.93 crores as compared to 84.89 crores in the previous year.


The Company continued to remain debt free during the year. The Company continued to focus on optimizing its working capital to improve cash position. The Company could leverage its cash availability position to get better terms from suppliers.The Company has maintained excellent relationship with its bankers and was able to enjoy favorable terms for various banking facilities. The Company has continued investment of surplus funds available, in various debt and equity schemes of mutual funds, fixed deposit with banks, debentures and bonds, PMS, tax-free bonds, etc. and earned a reasonable return on the same and the Company has also expanded its investment portfolio from time to time. The receivable position is at healthy level and majority of past issues got addressed .


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 powerand infrastructure sectors and project implementation, large unutilized capacity in Industry, aggressive pricing, continuing and highly volatile raw material prices, and timely availability of imported raw materials at budgeted cost. Deterioration of supply chain and demand due to pandemic Covid-19 will affect future operations of the Company.


The Company continue its focus on development of human resources. The Company is a firm believer that its employees are its strength and the Company therefore respects individual rights and dignity of all its employees. The relations of the managementwith employees during the year continued to be cordial. Learning and development hasbeen 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 Company s 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 recordingand 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 suggestsimprovement for strengthening the same from time to time.


The major risk factors affecting the Company are over capacity in industry, non-lifting of ready materials due to cash constraints at customers end building inventory and liquidity issues, increase in receivable positions due to delay in payment by certain customers and uncertainty in execution of low fixed price orders. 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 adiverse 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.