Overview #
Detailed Analysis #
This analysis examines JSL Industries Limited’s 58th Annual Report, focusing on financial performance, business segments, identified risks, and ESG (Environmental, Social, and Governance) considerations.
I. Financial Performance:
The report showcases a year of improved financial performance compared to the previous year (2022-23). Key highlights include:
- Revenue Growth: Revenue from operations increased from ₹4,925.03 Lakhs to ₹5,134.68 Lakhs, indicating a positive trend. This represents a modest increase of approximately 4.2%.
- Profitability: Profit after tax (PAT) saw a significant jump from ₹344.08 Lakhs to ₹616.10 Lakhs, a substantial increase of approximately 79%. This is largely driven by higher other income (discussed below). Operating EBITDA, however, shows a decrease, suggesting operational challenges despite the overall revenue growth.
- Other Income: A major contributor to the increased PAT is “Other Income,” which surged from ₹205.30 Lakhs to ₹544.61 Lakhs. The report highlights wind mill energy generation as a source of savings (38.6% of total power needs), but further details on the composition of this significant increase in other income are needed for a complete understanding. This requires further investigation into the specifics of this income source.
- Dividends: No dividend is recommended on equity shares, citing the need for financial resources and future funding requirements. However, a dividend of 6% is recommended on preference shares.
- Key Financial Ratios (Significant Changes): Several key financial ratios experienced notable changes compared to the previous year, indicating improvements in certain areas:
- Debtors’ Turnover Ratio: Increased significantly (17.96 vs 12.9), suggesting improved collection efficiency or changes in credit policies.
- Interest Coverage Ratio: Showed a marked increase (64.34 vs 26.19), reflecting improved profitability and reduced financial risk.
- Operating Profit Margin: Increased significantly (16.59% vs 11.76%), largely influenced by the substantial increase in other income.
- Net Profit Margin: Showed a significant improvement (12% vs 7.04%), reflecting overall increased profitability.
- Return on Net Worth (RONW): Improved substantially (22.31% vs 14.57%), indicating greater efficiency in utilizing shareholder equity.
II. Business Segments:
JSL Industries operates in three divisions:
- Instrument Transformer Division: Achieved a turnover of ₹1,096.69 Lakhs in FY2023-24, showing strong performance. The company anticipates moderate growth in this division in the coming year.
- Switch Gear Division: Generated net sales of ₹2,295.63 Lakhs, displaying good performance and a positive outlook for FY2024-25.
- Motors and Pumps Division: Reported net sales of ₹1,739 Lakhs. The company expects continued good business in motors during FY2024-25.
The lack of detailed segmental financial data (e.g., individual profit and loss statements) limits a deeper analysis of each division’s relative contribution to overall profitability.
III. Risks:
The report acknowledges many key risks:
- Competition: The industry is highly competitive, posing challenges to maintaining market share and profitability.
- Availability and Cost of Funds: Access to financing and its cost significantly impact the company’s growth plans and viability.
- Commodity Price Risk and Foreign Exchange Risk: The report states these are “not applicable,” which needs further clarification given potential reliance on imported raw materials or components.
- Liquidity Risk: Although the company claims to monitor its liquidity position, specific details on short-term and long-term debt maturities are presented which demonstrate low exposure.
- Market Risk: The report acknowledges market risk exposure for interest-bearing assets and liabilities. While a sensitivity analysis is mentioned, the actual figures are missing.
- Credit Risk: The concentration of receivables from a few customers presents a credit risk. Although the management considers these receivables recoverable, further detailed analysis would be beneficial.
IV. ESG Initiatives:
The report’s discussion of ESG factors is limited:
- Environmental: The company highlights its captive power generation using two windmills, resulting in energy savings. However, there’s a lack of broader environmental performance indicators (e.g., carbon emissions, waste management).
- Social: The report mentions maintaining a cordial employee relationship and providing training and development opportunities. Information on employee diversity, health and safety, and community engagement is minimal.
- Governance: The report details the composition and activities of the board of directors, audit committee, nomination and remuneration committee, and stakeholders’ relationship committee, demonstrating a commitment to good governance practices. The company also has a whistleblower policy.
Overall Assessment:
JSL Industries Limited’s annual report reflects a year of improved profitability despite modest revenue growth. The significant increase in other income requires further transparency. While the report touches on various risks, more detailed quantitative information and mitigation strategies are necessary for a complete risk assessment. The company needs to expand its reporting on ESG factors to demonstrate a more detailed commitment to sustainability and social responsibility. The information provided is insufficient to provide a full picture of ESG performance. A greater level of disclosure regarding environmental impacts, social programs, and governance practices would strengthen the report and improve investor confidence.
Detailed Analysis #
Balance Sheet #
Asset Analysis #
Based on JSL Industries Limited’s balance sheet as of March 31, 2024:
- Total Assets: ₹5,557.90 Lakhs (₹4,724.90 Lakhs in 2023)
- Total Current Assets: ₹3,284.99 Lakhs (₹2,686.01 Lakhs in 2023)
- Cash and Cash Equivalents: ₹1.39 Lakhs (₹1.98 Lakhs in 2023)
- Accounts Receivable (Trade Receivables): ₹246.36 Lakhs (₹325.34 Lakhs in 2023)
- Inventory: ₹1,096.33 Lakhs (₹1,044.80 Lakhs in 2023)
Remember that these figures are in Lakhs (1 Lakh = 100,000). To convert to rupees, multiply each value by 100,000.
Liability Analysis #
Based on JSL Industries Limited’s balance sheet as of March 31, 2024:
- Total Liabilities: ₹1,606.27 Lakhs (This is calculated by subtracting total equity from total assets: ₹5,557.90 Lakhs - ₹3,951.53 Lakhs = ₹1,606.37 Lakhs. Note that there’s a slight discrepancy due to rounding in the original report.) (₹1,906.59 Lakhs in 2023)
- Total Current Liabilities: ₹1,010.20 Lakhs (This number is given directly in the balance sheet. )(₹929.34 Lakhs in 2023)
- Long-Term Debt: ₹192.74 Lakhs (This refers to the 6% Non-Convertible Non-Cumulative Redeemable Preference Shares. The report does not explicitly state other long-term debt. )(₹192.74 Lakhs in 2023)
- Accounts Payable (Trade Payables): ₹422.02 Lakhs (₹378.68 Lakhs in 2023)
Remember that these figures are in Lakhs (1 Lakh = 100,000). To convert to rupees, multiply each value by 100,000. Also note that the calculation of total liabilities depends on the accuracy of the reported equity and asset figures. There may be slight discrepancies due to rounding in the original financial statements.
Equity Analysis #
Based on JSL Industries Limited’s balance sheet as of March 31, 2024:
Shareholders’ Equity: ₹3,951.53 Lakhs (₹3,218.55 Lakhs in 2023). This is the total equity and is calculated by adding equity share capital and other equity.
Retained Earnings: This value isn’t explicitly stated as a single line item in the balance sheet. Retained earnings are a component of the “Other Equity” figure (₹3,834.14 Lakhs in 2024, ₹3,218.55 Lakhs in 2023). To find the exact retained earnings you would need to analyze the statement of changes in equity, which shows the changes in retained earnings and other equity components over time.
Share Capital (Equity Share Capital): ₹117.39 Lakhs (₹117.39 Lakhs in 2023)
Remember that these figures are in Lakhs (1 Lakh = 100,000). To convert to rupees, multiply each value by 100,000.
Income Statement #
Operating Performance #
Based on JSL Industries Limited’s Statement of Profit & Loss for the year ended March 31, 2024:
- Revenue: ₹5,134.68 Lakhs (₹4,888.99 Lakhs in 2023)
- Cost of Revenue: ₹2,947.95 Lakhs (₹2,832.05 Lakhs in 2023). This includes cost of materials consumed, purchases of traded goods, and changes in inventories.
- Gross Profit: ₹2,186.73 Lakhs (This is calculated by subtracting the cost of revenue from revenue: ₹5,134.68 Lakhs - ₹2,947.95 Lakhs = ₹2,186.73 Lakhs) (₹2,056.94 Lakhs in 2023).
- Operating Expenses: ₹3,961.57 Lakhs (This is calculated by summing employee benefits expense, finance costs, depreciation and amortization expense, and other expenses: ₹862.66 + ₹39.79 + ₹111.07 + ₹842.85 = ₹1856.37 Lakhs. Note that this is different from what would be considered standard operating expenses in some contexts as this includes finance costs and depreciation). (₹4,577.43 Lakhs in 2023)
- Operating Income (Operating EBITDA): ₹444.84 Lakhs (This is the operating profit before exceptional items and taxes. A direct figure is provided in the financial results summary, not detailed calculations from the income statement. )(₹511.57 Lakhs in 2023)
Remember that these figures are in Lakhs (1 Lakh = 100,000). To convert to rupees, multiply each value by 100,000. There may be slight discrepancies due to rounding in the original financial statements. Also note that the calculation of gross profit and operating expenses depends on the accuracy of the figures presented in the income statement. The calculation used for operating expenses is not completely standard and includes items that are often separated in financial analysis.
Bottom Line Metrics #
Based on JSL Industries Limited’s financial statements for the year ended March 31, 2024:
Net Income (Profit for the year from continuing operations): ₹616.10 Lakhs (₹344.08 Lakhs in 2023)
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): ₹444.84 Lakhs (₹511.57 Lakhs in 2023). This figure is taken directly from the summary of financial results and is the operating profit before interest, taxes, depreciation, and amortization.
Basic EPS (Earnings Per Share): ₹52.49 (₹29.31 in 2023)
Diluted EPS: ₹52.49 (₹29.31 in 2023). The report indicates that basic and diluted EPS are the same.
Remember that these figures are in Lakhs (1 Lakh = 100,000) except for EPS which is per share. To convert the Lakh figures to rupees, multiply each value by 100,000. Slight discrepancies might exist due to rounding in the original financial statements.
Cash Flow #
Cash Flow Components #
Based on JSL Industries Limited’s Statement of Cash Flows for the year ended March 31, 2024:
Net cash flows from operating activities: (₹206.45 Lakhs) (₹73.12 Lakhs in 2023). Note that this is a net figure, meaning it’s the result of cash inflows and outflows related to operations.
Net cash flows from investing activities: (₹25.01 Lakhs) (Information for 2023 is not provided in the cash flow statement included in the provided annual report.)
Net cash flows from financing activities: ₹230.87 Lakhs (Information for 2023 is not provided in the cash flow statement included in the provided annual report.)
Remember that these figures are in Lakhs (1 Lakh = 100,000). To convert to rupees, multiply each value by 100,000. A negative value indicates a net cash outflow. The lack of 2023 comparative data for investing and financing cash flows makes trend analysis incomplete.
Cash Flow Metrics #
The provided annual report does not directly provide figures for free cash flow. Free cash flow (FCF) is calculated, and the necessary components are available in the report but require calculations:
To calculate Free Cash Flow (FCF), we typically use this formula:
FCF = Operating Cash Flow - Capital Expenditures
Operating Cash Flow: This is not explicitly stated as a single number, but we can derive it using the information provided in the cash flow statement. The net cash flow from operating activities is -₹206.45 Lakhs. However, this includes adjustments to reconcile net income to cash flows (depreciation, changes in working capital etc.). A more precise calculation for operating cash flow from the cash flow statement is needed which is not provided.
Capital Expenditure (CAPEX): This isn’t explicitly detailed either but is implied in the investing cash flows. The net cash flow from investing activities is (₹25.01 Lakhs). This net figure results from the purchase of property, plant, and equipment, less any proceeds from sales. The report states that purchases of property, plant, and equipment/intangible assets was (₹144.31 Lakhs), so this is a good estimate of CAPEX.
Dividends Paid: The report states that no dividends were paid on equity shares. For preference shares, a dividend of ₹11,56,410 is recommended, but it’s unclear whether this was actually paid during the fiscal year. The cash flow statement would usually show dividend payments, but the information necessary for determining the amount is missing.
In summary: To precisely determine the free cash flow, we need a more detailed breakdown of the operating cash flow from the cash flow statement to properly account for all working capital adjustments. The provided cash flow statement does not contain that information. We can estimate CAPEX based on the net investment cash flow, and no dividend payments were made for equity shares. The preference share dividend payment is unclear without supplemental information.
Profitability Ratios #
To calculate the profitability ratios for JSL Industries Limited for the fiscal year ending March 31, 2024, we’ll use the figures derived from the financial statements (and note the limitations discussed previously, especially regarding the operating expenses calculation):
Gross Profit Margin: (Gross Profit / Revenue) * 100 = (₹2,186.73 Lakhs / ₹5,134.68 Lakhs) * 100 = 42.6%
Operating Profit Margin: (Operating Income / Revenue) * 100 = (₹444.84 Lakhs / ₹5,134.68 Lakhs) * 100 = 8.7% (Note: This uses the EBITDA figure provided in the financial highlights summary as an approximation of operating income. A more precise calculation might be possible with a more detailed income statement breakdown.)
Net Profit Margin: (Net Income / Revenue) * 100 = (₹616.10 Lakhs / ₹5,134.68 Lakhs) * 100 = 12.0%
Return on Equity (ROE): (Net Income / Average Shareholder’s Equity) * 100. To calculate the average shareholder’s equity, we need the beginning and ending balances. The ending balance is ₹3,951.53 Lakhs. The beginning balance is not explicitly stated, but we can approximate it using the prior year’s ending balance of ₹3,218.55 Lakhs. The average would then be ₹3,585.04 Lakhs. Therefore: (₹616.10 Lakhs / ₹3,585.04 Lakhs) * 100 = 17.2% (This is an approximation due to the missing beginning equity balance).
Return on Assets (ROA): (Net Income / Average Total Assets) * 100. Similar to ROE, we need the beginning and ending total assets for this calculation. Using the provided values: Average Total Assets = (₹5,557.90 Lakhs + ₹4,724.90 Lakhs) / 2 = ₹5,141.40 Lakhs. Therefore: (₹616.10 Lakhs / ₹5,141.40 Lakhs) * 100 = 12.0%
Remember that these are in percentage and are approximations, especially the ROE and ROA due to missing data. For more precise figures, a complete breakdown of the income statement and balance sheet information (including beginning-of-year balances for equity and assets) is needed. The operating margin calculation is also an approximation using EBITDA rather than a traditional operating income figure. Further clarification of the significant “other income” is also needed to fully interpret these values.
Liquidity Ratios #
To calculate the liquidity ratios for JSL Industries Limited for the fiscal year ending March 31, 2024, we’ll use the figures from the balance sheet:
Current Ratio: (Current Assets / Current Liabilities) = (₹3,284.99 Lakhs / ₹1,010.20 Lakhs) = 3.25
Quick Ratio (Acid-Test Ratio): (Current Assets - Inventories) / Current Liabilities. This ratio excludes inventories from current assets as they may not be readily convertible to cash. = (₹3,284.99 Lakhs - ₹1,096.33 Lakhs) / ₹1,010.20 Lakhs = 2.16
Cash Ratio: (Cash and Cash Equivalents / Current Liabilities) = (₹1.39 Lakhs / ₹1,010.20 Lakhs) = 0.0014 (This is a very low ratio indicating limited cash on hand relative to short-term obligations.)
These ratios are dimensionless, except for the cash ratio which has the same units of currency as the numerator and denominator. Remember that these calculations rely on the accuracy of the figures presented in the balance sheet. The low cash ratio suggests that JSL Industries Limited may have a relatively tight liquidity position, although the current ratio is relatively healthy.
Efficiency Ratios #
Calculating efficiency ratios for JSL Industries Limited requires information not fully provided in the annual report. We can approximate some, but the accuracy will be limited:
Asset Turnover: (Revenue / Average Total Assets). To calculate the average total assets, we need both the beginning and ending balances. We have the ending balance (₹5,557.90 Lakhs). We’ll approximate the beginning balance using the prior year’s ending balance (₹4,724.90 Lakhs). Average Total Assets ≈ (₹5,557.90 Lakhs + ₹4,724.90 Lakhs) / 2 = ₹5,141.40 Lakhs. Therefore: Asset Turnover ≈ ₹5,134.68 Lakhs / ₹5,141.40 Lakhs ≈ 1.00 (This is an approximation.)
Inventory Turnover: (Cost of Goods Sold / Average Inventory). The annual report provides the cost of revenue (₹2,947.95 Lakhs) as a proxy for Cost of Goods Sold. To find the average inventory, we need both the beginning and ending inventory values. We have the ending inventory (₹1,096.33 Lakhs). We’ll approximate the beginning inventory using the previous year’s ending inventory (₹1,044.80 Lakhs). Average Inventory ≈ (₹1,096.33 Lakhs + ₹1,044.80 Lakhs) / 2 = ₹1,070.57 Lakhs. Inventory Turnover ≈ ₹2,947.95 Lakhs / ₹1,070.57 Lakhs ≈ 2.75 (This is an approximation).
Receivables Turnover: (Net Credit Sales / Average Accounts Receivable). The annual report doesn’t explicitly state net credit sales. We’ll approximate net credit sales using total revenue (₹5,134.68 Lakhs) which might overstate the turnover. To calculate the average accounts receivable, we need beginning and ending balances. We have the ending balance (₹246.36 Lakhs). Let’s approximate the beginning balance using the prior year’s ending balance (₹325.34 Lakhs). Average Accounts Receivable ≈ (₹246.36 Lakhs + ₹325.34 Lakhs) / 2 = ₹285.85 Lakhs. Receivables Turnover ≈ ₹5,134.68 Lakhs / ₹285.85 Lakhs ≈ 18.0 (This is a rough approximation and likely overstates the turnover because total revenue is used instead of net credit sales).
These ratios are dimensionless. These are all approximations because of missing data in the report. More precise calculations require the beginning-of-year balances for total assets, inventory, and accounts receivable, as well as a clear separation of credit sales from total sales. The use of total revenue in the receivables turnover calculation is a significant limitation.
Leverage Ratios #
Let’s calculate the use ratios for JSL Industries Limited, keeping in mind the limitations of the data provided in the annual report:
Debt-to-Equity Ratio: (Total Debt / Total Equity). The report doesn’t explicitly state total debt. We’ll approximate total debt using the sum of long-term debt (₹192.74 Lakhs – the preference shares) and short-term borrowings (₹304.71 Lakhs), totaling ₹497.45 Lakhs. Total equity is ₹3,951.53 Lakhs. Therefore, Debt-to-Equity Ratio ≈ ₹497.45 Lakhs / ₹3,951.53 Lakhs ≈ 0.13 (This is an approximation.)
Debt-to-Assets Ratio: (Total Debt / Total Assets). Using the approximated total debt of ₹497.45 Lakhs and total assets of ₹5,557.90 Lakhs: Debt-to-Assets Ratio ≈ ₹497.45 Lakhs / ₹5,557.90 Lakhs ≈ 0.09 (This is an approximation.)
Times Interest Earned (Interest Coverage Ratio): (Earnings Before Interest and Taxes (EBIT) / Interest Expense). The report provides the interest expense (₹39.79 Lakhs) and EBIT is not given directly but can be approximated using the income statement data. EBIT can be derived from Profit Before Tax (PBT) by adding back interest expense and the tax expense, EBIT = PBT + Interest Expense + Tax Expense = ₹838.59 Lakhs + ₹39.79 Lakhs + ₹223.84 Lakhs = ₹1102.22 Lakhs. (Note: this relies on using PBT which has some limitations because it has not yet been reduced by adjustments for exceptional items). Times Interest Earned ≈ ₹1102.22 Lakhs / ₹39.79 Lakhs ≈ 27.7 (This is an approximation.)
These ratios are dimensionless. The calculations are approximations because the report does not clearly define “total debt” which makes the calculations of use ratios inaccurate. For more precise calculations, a clear definition and complete breakdown of all debt (short-term and long-term) is needed. The approximation used for EBIT to calculate interest coverage also introduces error. Also, a more accurate calculation of the pre-tax income must be used to calculate the EBIT.
Market Analysis #
Market Metrics #
Calculating these market-based ratios for JSL Industries Limited requires information not provided in the annual report itself. The annual report provides only the number of shares, not the market price per share. Therefore, accurate calculations are not possible:
Market Capitalization (Market Cap): Market Cap = (Number of Outstanding Shares * Market Price per Share). The number of outstanding shares is given (1,173,868) but the market price is needed from an external source (e.g., a financial website showing the current stock price).
Price-to-Earnings Ratio (PE Ratio): PE Ratio = (Market Price per Share / Earnings Per Share (EPS)). This requires both the market price per share (from an external source) and the EPS (which is provided in the report as ₹52.49).
Price-to-Book Ratio (PB Ratio): PB Ratio = (Market Price per Share / Book Value per Share). This requires the market price per share (from an external source) and the book value per share (which is calculated by dividing total shareholders’ equity by the number of outstanding shares).
Dividend Yield: Dividend Yield = (Annual Dividend per Share / Market Price per Share) * 100. This requires the market price per share (from an external source) and the annual dividend per share (which is not provided for equity shares in the report, as no dividend was recommended). A dividend was recommended for preference shares but was not clarified whether it was paid.
Dividend Payout Ratio: Dividend Payout Ratio = (Dividends Paid / Net Income) * 100. For equity shareholders, this would be 0% since no dividend was declared. For preference shares, the calculation requires the actual amount of dividends paid (which is unclear from the report), and the net income.
In summary, these market-based ratios cannot be accurately determined using only the information provided in the annual report. External data on the current market price of JSL Industries Limited’s shares are needed for the calculations.
Business Analysis #
Segment Analysis #
The provided annual report gives limited segmental information. Therefore, a complete breakdown of the requested metrics is not possible. Here’s what we can gather:
The report identifies three business segments:
Instrument Transformer Division:
- Name: Instrument Transformer Division
- Revenue (FY2023-24): ₹1,096.69 Lakhs
- Growth Rate: Not explicitly stated, but the report mentions “very good” performance. More specific quantitative data is needed.
- Operating Margin: Not provided. Segmental income statements are necessary to calculate this.
- Market Share: Not provided.
- Key Products: HT Indoor and Outdoor Instrument Transformers (up to 245 kV rating).
- Geographic Presence: Implied to be primarily within India, but not explicitly stated.
Switch Gear Division:
- Name: Switch Gear Division
- Revenue (FY2023-24): ₹2,295.63 Lakhs
- Growth Rate: Not explicitly stated, but the report mentions “very good” performance and a “better” outlook. More specific quantitative data is needed.
- Operating Margin: Not provided. Segmental income statements are necessary to calculate this.
- Market Share: Not provided.
- Key Products: LT (Low Tension) Switchgears (up to 150 kW, 200 HP), LT Switchboards, Air Circuit Breakers (415V rating).
- Geographic Presence: Implied to be primarily within India, but not explicitly stated.
Motors and Pumps Division:
- Name: Motors and Pumps Division
- Revenue (FY2023-24): ₹1,739 Lakhs
- Growth Rate: Not explicitly stated. The report notes a “very good” performance this year and a good outlook for the next. More specific quantitative data is needed.
- Operating Margin: Not provided. Segmental income statements are necessary to calculate this.
- Market Share: Not provided.
- Key Products: LT Motors (frame size up to 355), Induction Generators (frame size up to 355), and Pumps (up to 30 HP).
- Geographic Presence: Implied to be primarily within India, but not explicitly stated.
Limitations: The absence of detailed segment reporting significantly restricts the analysis. To provide a more detailed evaluation, segment-specific financial data, including cost of goods sold, operating expenses, and profits, are needed. Likewise, market share data and geographic distribution are entirely missing.
Risk Management #
Risk Assessment #
The annual report identifies many key risk factors, but the level of detail regarding impact severity, likelihood, mitigation strategies, and trends is limited. Here’s a structured summary based on the provided information:
I. Financial Risk:
- Category: Financial Risk
- Description: The availability and cost of funds are essential factors impacting the company’s growth plans and overall viability.
- Impact Severity: High (could significantly hinder growth and profitability).
- Likelihood: Moderate to High (dependent on economic conditions and access to capital markets).
- Mitigation Strategies: Not explicitly stated in the report. Strategies might include diversifying funding sources, maintaining healthy financial ratios, and efficient cash management.
- Trends: Not explicitly addressed; however, economic downturns or increases in interest rates could increase the severity of this risk.
II. Competition Risk:
- Category: Market Risk
- Description: The industry is intensely competitive, creating challenges in maintaining market share and profitability.
- Impact Severity: High (could lead to decreased sales and reduced profitability).
- Likelihood: High (inherent to the industry).
- Mitigation Strategies: Not explicitly stated. Possible strategies include product innovation, cost reduction, improved efficiency, and focused marketing efforts.
- Trends: The report doesn’t discuss specific competitive trends, but increased competition is a likely ongoing trend in the electrical equipment sector.
III. Liquidity Risk:
- Category: Financial Risk
- Description: The company’s ability to meet its short-term financial obligations is at risk if cash flow is insufficient.
- Impact Severity: High (could lead to financial distress or insolvency).
- Likelihood: Moderate (dependent on the efficiency of cash flow generation and timely collections).
- Mitigation Strategies: Not explicitly stated. Potential strategies could include improving working capital management, securing adequate financing lines, and managing inventory levels efficiently.
- Trends: Not discussed in the report. Economic fluctuations or unexpected business slowdowns could worsen this risk.
IV. Credit Risk:
- Category: Financial Risk
- Description: The concentration of accounts receivables with a small number of customers creates a risk of non-payment.
- Impact Severity: Moderate to High (dependent on the creditworthiness of major customers and the overall economic climate).
- Likelihood: Moderate (depends on the financial health of key customers).
- Mitigation Strategies: Not explicitly outlined. Strategies could include diversifying the customer base, strengthening credit evaluation processes, and implementing robust collection procedures.
- Trends: Not specifically addressed. Economic downturns often increase the likelihood of customer defaults.
V. Market Risk:
- Category: Market Risk
- Description: Fluctuations in market prices (interest rates, commodity prices) can impact profitability.
- Impact Severity: Moderate (the effect depends on the company’s hedging strategies and the magnitude of price fluctuations).
- Likelihood: Moderate (market volatility is a persistent factor).
- Mitigation Strategies: The report mentions minimal foreign currency transactions minimizing currency risk, but it doesn’t describe any specific interest rate or commodity price hedging strategies.
- Trends: The report doesn’t analyze market risk trends, but interest rate changes and commodity price volatility are ongoing concerns.
VI. Commodity Price and Foreign Exchange Risk:
- Category: Operational Risk
- Description: Changes in raw material prices and exchange rates could influence cost structures and profitability.
- Impact Severity: Moderate (depends on the extent of reliance on imported materials and hedging strategies).
- Likelihood: Moderate to High (dependent on global economic conditions).
- Mitigation Strategies: Not specified in the report. Possible strategies include hedging contracts, sourcing materials from multiple suppliers, and exploring cost-effective alternatives.
- Trends: Not explicitly discussed. Global economic fluctuations and supply chain disruptions could significantly impact this risk.
Limitations: The annual report’s risk assessment is qualitative, lacking precise quantitative data on the likelihood and severity of each risk. Detailed descriptions of mitigation strategies are largely absent. More detailed risk analysis with quantified assessments would be valuable for investors.
Strategic Overview #
Management Assessment #
JSL Industries Limited’s management highlights many key aspects of their business strategy, competitive advantages, market conditions, challenges, and opportunities in the annual report. However, the level of detail varies across these areas.
I. Key Strategies:
- Product Diversification: The company offers a wide range of electrical equipment, including instrument transformers, switchgear, motors, and pumps. This diversification helps mitigate risk associated with dependence on a single product line.
- Technological Innovation: JSL Industries emphasizes continuous research and development (R&D) to improve existing products, develop new ones, and improve efficiency. Specific R&D projects are mentioned in the report, demonstrating commitment.
- Cost Reduction and Efficiency Improvement: The company actively seeks to reduce costs and streamline operations to remain competitive.
- Strengthening Distribution Network: The report implicitly highlights the importance of a well-established distribution network for market reach.
II. Competitive Advantages:
- Long-Standing Experience: With over 50 years in the electrical sector, JSL Industries possesses substantial industry expertise and experience.
- Strong Distribution Network: The company’s wide distribution network provides access to a broad customer base.
- High-Quality Products: The report emphasizes the quality and reliability of its products, using indigenous technology and state-of-the-art manufacturing facilities.
III. Market Conditions:
- Growth Potential: The Indian electrical equipment market presents significant long-term growth opportunities due to the country’s economic development.
- Intense Competition: The market is characterized by intense competition, making it essential for companies to maintain cost efficiency and product innovation.
- Government Initiatives: The report recognizes the potential positive impact of government initiatives like “Make in India” and “Digital India” on the sector.
IV. Challenges:
- Competition: Intense competition from both domestic and international players is a significant challenge.
- Availability and Cost of Funds: Securing financing at competitive rates is essential for growth and investment, but remains a potential constraint.
- Demand Fluctuations: The report doesn’t explicitly mention cyclical demand fluctuations but implies that the sector is subject to them.
V. Opportunities:
- Government Initiatives: Government programs aimed at infrastructure development and industrial growth create substantial business potential.
- Product Expansion: The company aims to expand its product portfolio to capitalize on emerging market needs and trends.
- Market Penetration: JSL Industries seeks to deepen market penetration for existing products and to use its distribution channels for new products.
Limitations: The annual report provides a high-level overview of the company’s strategy, competitive landscape, and market dynamics. The lack of detailed market analysis (e.g., market size, growth rates, segment-specific market conditions) limits a more detailed assessment. Further, the discussion of challenges and opportunities is relatively brief and lacks quantitative details.
ESG Ratings #
The provided annual report does not include ESG ratings from any rating agencies. The report mentions some ESG-related activities (e.g., wind power generation, employee training), but it does not provide any scores or rankings from external ESG assessment providers (such as MSCI, Sustainalytics, Refinitiv, etc.). To find ESG ratings, you would need to consult independent ESG rating agencies’ websites or specialized financial databases.
ESG Initiatives #
The annual report offers limited detail on JSL Industries Limited’s Environmental, Social, and Governance (ESG) performance. Here’s a summary of what is mentioned, highlighting the significant lack of quantitative data:
I. Environmental Initiatives:
- Captive Power Generation: The company highlights the installation of two windmills for captive power generation, resulting in a 38.6% reduction in reliance on grid electricity. This is a positive step towards reducing its carbon footprint, but further information about emissions is needed.
- Other Environmental Initiatives: The report does not provide details about other environmental initiatives such as waste management, water conservation, or pollution control measures.
II. Carbon Footprint:
The report does not quantify the company’s carbon footprint (e.g., total greenhouse gas emissions). While the windmills reduce reliance on grid power and thus indirectly lower carbon emissions, the overall impact is not measured or reported.
III. Social Initiatives:
- Employee Relations: The report mentions maintaining cordial employee relations and providing training and development opportunities. However, specific details regarding employee welfare, diversity, and inclusion programs are lacking.
- Other Social Initiatives: Information on community engagement, philanthropy, or other social responsibility programs is absent.
IV. Governance Practices:
The report does detail many aspects of governance:
- Board Structure: The report details the composition of the board of directors, including independent directors, and the committees (audit, nomination and remuneration, stakeholders’ relationship). This suggests a focus on good corporate governance.
- Code of Conduct: The existence of a code of conduct for board members and senior management is mentioned, indicating a commitment to ethical behavior.
- Whistleblower Policy: A whistleblower policy is in place to address concerns about unethical conduct.
V. Sustainability Goals:
The annual report does not explicitly state any specific sustainability goals or targets (e.g., emission reduction targets, waste reduction targets, renewable energy targets).
Overall Assessment:
JSL Industries Limited’s disclosures on ESG matters are quite limited and primarily qualitative. The absence of specific, quantitative data significantly hinders a detailed assessment of their environmental and social performance. While the company demonstrates some commitment to good governance practices, there is a considerable gap in providing transparent and measurable information on their environmental and social sustainability initiatives and goals. More detailed reporting is needed to allow investors to fully assess their ESG performance.
Additional Information #
Operational Metrics #
Based on the information in JSL Industries Limited’s annual report:
R&D Expenditure: The report states that the expenditure on Research and Development was NIL for the fiscal year 2023-24. This is surprising given their emphasis on technological innovation. Further investigation or clarification would be necessary to understand this.
Employee Count: As of March 31, 2024, the company had a total of 54 employees.
It’s important to note the discrepancy between the stated commitment to R&D and the reported zero expenditure. This should be clarified with additional information.
Key Events #
The JSL Industries Limited annual report doesn’t provide a detailed list of “significant events” in a dedicated section. However, we can glean some significant events from various parts of the report:
Appointment of Independent Director: Ms. Pragnya Seth was appointed as an independent director on December 19, 2023.
Installation of Windmills: The company installed two windmills for captive power generation, significantly reducing its reliance on grid electricity. This represents a notable environmental initiative.
NABL Accreditation: JSL’s instrument transformer laboratory received accreditation from the National Accreditation Board for Testing and Calibration Laboratories (NABL), enhancing the credibility of its testing capabilities.
Improved Financial Performance: The significant increase in profitability (79% increase in PAT) and improvements in key financial ratios constitute a major positive event. However, the drivers of this improvement (particularly the large increase in “other income”) require further clarification.
Resignation and Appointment of Company Secretary: Mr. Ravi Thanki resigned as Company Secretary, and Mr. Yogiraj Hemant Atre was appointed in his place.
The report lacks a specific section summarizing significant events, making a truly detailed list difficult. Additional information outside the annual report might provide more detail.