wires & fabriks s a ltd share price Management discussions


INDUSTRY STRUCTURE & DEVELOPMENTS

The Company mainly deals in technical products for the Paper Industry. The Paper Industry in India is generally growing at a rate higher than the GDP of the Country. This growth is higher than that of Chinas and many other Asian countries. Present per capita paper consumption in India being low, it is bound to increase, resulting in increased production of paper and increased consumption of companys products. The same is true in the case of other Asian countries. Our products requiring tailor made services offer us a great opportunity both by way of geographical advantage & local expertise.

OPPORTUNITIES & THREATS

Growth in the Paper Industry can be predicted with certainty. Besides growth in the domestic sector, growth opportunity also exists in the export sector, as Asia is the fastest growing region in the world for the paper sector. Besides domestic competition, competition from overseas suppliers may increase due to various developments in the Indian Economy. However, the Company has maintained its leadership due to continuous thrust on modernization & technology up-gradation.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

Products for the Paper industry had a brief setback in the current economic scenario. Wind mills are performing satisfactorily. Adverse impacts of Covid on the paper industry are still visible. However, the market conditions are now improving. The paper industry is expected to grow in sync with the economic growth.

FUTURE OUTLOOK

In order to meet the growing demands of both the domestic and foreign markets, the Company planned another expansion cum modernisation project during the year. This would enhance the production capacity of the Company and will in turn help to serve more customers. This will make the Company prepared for the future and improve the performance in the coming years.

RISKS & CONCERNS

Reduction in growth rate of Indian Paper Industry and increased competition both from domestic and overseas suppliers and fluctuations in foreign currency rates are main areas of concern. Costly equipments and constantly upgrading technology reduces margins. However, the emphasis on Research & Development has led to an inherent technical strength, which helps the Company to maintain its leadership and bottom-line. The Company plans efficiently to mitigate all risks and concerns.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

The Company has adequate internal control procedure commensurate with the nature of its business & size of its operations. Internal Audit is conducted at regular intervals and covers the key areas of operations.

DISCUSSIONS ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company closed last financial year with increased turnover and profits. The Company plans to further strengthen the areas where more improvement opportunities exist and aims to achieve better financial results in the coming years.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

Human Resource and Industrial Relations form an important part of any organization, business, or economy. The Company continues to give its high attention to its Human Resources. Various initiatives were successfully implemented during the year. Industrial relations continue to be cordial.

FINANCIAL RATIOS

The details on key financial ratios are produced below which enables to measure Companys operational efficiency, liquidity, stability and profitability, giving management, investors and other stakeholders more relevant information than raw financial data and to take better strategic, operational & financial decisions by using the widely popular, and arguably indispensable, technique of ratio analysis.

FY 2022-23 FY 2021-22
i. Debtors Turnover 4.80 3.72
ii. Inventory Turnover 4.59 5.66
iii. Interest Coverage Ratio 1.27 1.20
iv. Current Ratio 1.49 1.62
v. Debt Equity Ratio 1.56 1.91
vi. Operating Profit Margin (%) 5.50 2.83
vii. Net Profit Margin (%) 1.24 0.97
viii. Return on Net Worth (%) 2.87 2.11

Return on Net Worth, Operating Profit, Net Profit Margins and Interest Coverage Ratio has improved due to increase in revenue of the Company. Utilization of parked funds for the project affected Current Ratio. Timely repayment/prepayments of term loans with better utilization of borrowed working capital funds resulted in improved Debt Equity Ratio. Better realization resulted in improvement of Debtors Turnover Ratio in spite of increased turnover. Increased level of inventory due to deliberate procurement considering dearth of containers and availability of shipping line / vessels during the year affected Inventory Turnover.

CAUTIONARY STATEMENT

Some of the statements made above are stated as required by applicable regulations. While they are based on the data available and the bonafide judgment of the management, the actual results may be affected by various factors, which may be different from what your management envisages in terms of future performance & outlook.

For and on behalf of the Board

K.K. Khaitan M. Khaitan
Place: Jaipur Executive Chairman Managing Director
Date: 25 May, 2023 DIN: 00514864 DIN: 00459612