Wires & Fabriks (S.A) Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSIONS & ANALYSIS REPORT 2023-24</dhhead>

INDUSTRY STRUCTURE & DEVELOPMENTS

The Company mainly deals in technical products for the Paper Industry. Currently the Paper Industry in India is growing at a steady pace. This growth is higher than that of 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 temporary setback due to the current economic conditions. However, Wind mills are performing satisfactorily. Market conditions are now recovering and the paper industry is expected to grow in sync with the broader economic recovery.

 

FUTURE OUTLOOK

The Expected completion of the Companys Expansion cum Modernisation Project in 2024-25, will make the Company ready for the future. 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 the need for continual technology upgradation are also compressing margins. Despite these challenges the Companys strong emphasis on Research & Development has led to an inherent technical strength, which helps the Company to maintain its leadership and protect its financial stability. The Company plans efficiently to mitigate all risks and concerns.

 

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

The Company has adequate internal control systems commensurate with the nature of its business & size of its operations. Internal Audit is conducted at regular intervals and encompass 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 Resources and Industrial Relations form the cornerstones 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 the 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 2023-24	FY 2022-23
i. Debtors Turnover	4.70	4.80
ii. Inventory Turnover	3.45	4.59
iii. Interest Coverage Ratio	1.30	1.27
iv. Current Ratio	1.34	1.49
v. Debt Equity Ratio	1.69	1.56
vi. Operating Profit Margin (%)	5.23	5.50
vii. Net Profit Margin (%)	1.37	1.24
viii. Return on Net Worth (%)	3.09	2.87

 

Return on Net Worth, Net Profit Margins and Interest Coverage Ratio has improved due to better utilization of resources and marginal increase in revenue of the Company. Utilization of parked funds for the project affected Current Ratio. Timely repayment of current repayment obligation of term loans resulted in improved Debt Equity Ratio. Marginally increased debtors marginally decreased Debtors Turnover Ratio. Increased level of inventory considering expected growth in exports and availability of shipping line/vessels during the year affected Inventory Turnover Ratio. Increase interest cost affected Operating Profit Margin.

 

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
Place: Jaipur	K.K. Khaitan	M. Khaitan
	Executive Chairman	Managing Director
Date: 28 May, 2024	DIN: 00514864	DIN: 00459612