Precision Wires India Ltd: Breaking Down the FY2024 Annual Report
Financial Statements: A Snapshot of PRECWIRE’s Numbers
The financial statements in the FY2024 annual report provide a clear view of Precision Wires India Ltd’s financial health. These include the Balance Sheet, Income Statement, and Cash Flow Statement, which together tell us how much the company owns, earns, and spends.
Balance Sheet
The Balance Sheet shows what the company owns (assets), what it owes (liabilities), and what’s left for shareholders (equity). In FY2024:
Total Assets:
The company’s assets grew, reflecting investments in machinery and inventory to support increased production. This suggests PRECWIRE is expanding its capacity to meet demand.
Liabilities:
Borrowings remained stable, but the company managed to reduce some short-term debt, indicating better cash management.
Equity:
Shareholder equity increased slightly, driven by retained earnings (profits kept in the business), showing confidence in future growth.
Income Statement
The Income Statement highlights the company’s revenue, expenses, and profits for FY2024:
Revenue:
Sales reached ₹4,093.86 crore, up from ₹3,321.00 crore in FY2023, driven by strong demand for wires and cables in industries like power and automotive.
Expenses:
Costs of raw materials (like copper and aluminum) rose due to global price increases, but the company controlled operating expenses effectively.
Net Profit:
Profit after tax was ₹90.0 crore, a modest increase from the previous year, showing steady profitability despite rising costs.
Cash Flow Statement
The Cash Flow Statement tracks how cash moves in and out of the business:
Operating Activities:
Cash from operations was strong, reflecting healthy sales and efficient collection from customers.
Investing Activities:
The company spent on new equipment and technology upgrades, signaling a focus on modernizing production.
Financing Activities:
PRECWIRE paid dividends to shareholders and managed debt repayments, balancing returns to investors with financial discipline.
Overall, the financial statements show a company that’s growing steadily, managing costs, and investing in its future while keeping debt under control.
Management Discussion and Analysis (MD&A): The Heart of the Report
The MD&A section is where the company’s management explains how the business performed, what’s driving its success, and what challenges lie ahead. It’s like a conversation with the company’s leaders, giving us a deeper understanding of their strategy, market position, and outlook. Let’s break it down.
Business Overview
Precision Wires India Ltd, based in Mumbai, has been making wires and cables since 1989. It serves industries like power, automotive, telecommunications, and more. Here’s a quick look at its business:
Products:
Insulated Wires:
Used in electrical appliances and motors.
Power Cables:
For electricity transmission and distribution.
Control and Instrumentation Cables:
For industrial automation and machinery.
Specialty Cables:
Custom cables for niche applications like railways and renewable energy.
High-Tensile Wires:
For heavy-duty industrial use.
Markets:
Domestic:
Supplies to major Indian industries, including power utilities and automotive manufacturers.
Exports:
Sells to countries in Asia, Africa, and the Middle East, contributing to 10% of revenue.
Manufacturing:
Operates multiple plants in India, with a focus on quality and innovation. The company uses advanced technology to produce high-grade wires.
Performance Highlights
Management highlighted several key achievements in FY2024:
Revenue Growth:
Sales grew by 23% to ₹4,093.86 crore, driven by strong demand in the power and renewable energy sectors.
Profitability:
Net profit reached ₹90.0 crore, up slightly from FY2023, despite higher raw material costs. The company improved efficiency to maintain margins.
Market Expansion:
PRECWIRE expanded its presence in the renewable energy sector, supplying cables for solar and wind projects.
Operational Efficiency:
Investments in automation reduced production costs and improved product quality, helping the company stay competitive.
Industry and Market Trends
The wire and cable industry is growing, fueled by:
Infrastructure Development:
Government investments in power grids and smart cities boosted demand for cables.
Renewable Energy:
The shift to solar and wind energy increased the need for specialized cables.
Automotive Growth:
The rise of electric vehicles (EVs) created demand for high-quality wires for batteries and charging systems.However, global supply chain issues and fluctuating raw material prices (especially copper) posed challenges.
Strategic Initiatives
Management outlined several strategies to keep PRECWIRE competitive:
Product Innovation:
The company launched new eco-friendly cables to meet sustainability demands, appealing to environmentally conscious customers.
Capacity Expansion:
New machinery was installed to increase production by 15%, targeting growing markets like EVs and renewables.
Export Push:
PRECWIRE aimed to grow exports to 15% of revenue by targeting new markets in Europe.
Cost Control:
By optimizing supply chains and negotiating better raw material prices, the company reduced cost pressures.
Risks
Management was candid about challenges facing the business:
Raw Material Costs:
Copper and aluminum prices are volatile, impacting production costs.
Competition:
Domestic and international competitors are offering lower-priced alternatives, pressuring margins.
Supply Chain Disruptions:
Global shipping delays and trade restrictions could affect raw material availability.
Regulatory Changes:
Stricter environmental regulations may increase compliance costs.
Opportunities
Despite challenges, management sees several growth opportunities:
Renewable Energy Boom:
India’s push for clean energy offers a growing market for specialized cables.
Electric Vehicles:
The EV market’s expansion creates demand for high-performance wires.
Infrastructure Projects:
Government initiatives like “Make in India” and urban development projects will drive cable demand.
Digitalization:
Increased automation in industries requires advanced instrumentation cables, a key product for PRECWIRE.
Future Outlook
Management is optimistic about FY2025, expecting:
Revenue Growth:
Aiming for 10-12% sales growth, driven by renewable energy and export markets.
Profit Margins:
Targeting stable margins by improving efficiency and passing some cost increases to customers.
Sustainability Focus:
Plans to launch more eco-friendly products and reduce the company’s carbon footprint.
Technology Investments:
Continued spending on automation and quality control to stay ahead of competitors.
The MD&A paints a picture of a company navigating challenges like rising costs and competition while capitalizing on growth in renewables, EVs, and infrastructure. PRECWIRE’s focus on innovation, efficiency, and market expansion positions it well for the future.
Auditor’s Report: A Clean Bill of Health
The Auditor’s Report, prepared by Shalin Divatia & Co., gives an independent opinion on whether PRECWIRE’s financial statements are accurate and fair.
Unqualified Opinion:
The auditors found no major issues, meaning the financial statements are reliable and follow accounting standards.
Key Observations:
The company’s accounting practices are consistent and transparent.
Internal controls (systems to prevent errors or fraud) are effective.
No significant discrepancies were found in the reported numbers.This clean report reassures investors that PRECWIRE’s financials are trustworthy.