Keltech Energies Ltd - Annual Report 2023-24 Analysis

Overview #

Detailed Analysis #

This analysis examines Keltech Energies Limited’s (KEL) 2023-24 annual report, covering financial performance, business segments, risks, and ESG (Environmental, Social, and Governance) initiatives.

I. Financial Performance:

KEL reported a significant improvement in profitability during FY2023-24 compared to the previous year.

• Net Profit: Rs. 1,849.14 Lakhs (FY2023-24) vs. Rs. 1,104.73 Lakhs (FY2022-23), a substantial increase of 67%.
• Operating Profit: Rs. 3,516.53 Lakhs (FY2023-24) vs. Rs. 2,611.66 Lakhs (FY2022-23), a 35% increase.
• Earnings Per Share (EPS): INR 194.13 (FY2023-24) vs. INR 119.21 (FY2022-23), a 63% rise.
• Revenue: Rs. 45,428.04 Lakhs (FY2023-24) vs. Rs. 56,530.02 Lakhs (FY2022-23), a decrease of 20%. This revenue decrease despite higher profitability suggests improved operational efficiency and cost control.

Key Financial Ratios (Significant Changes Highlighted):

• Return on Equity (ROE): 21% (FY2023-24) vs. 16% (FY2022-23) - A +34% increase, indicating improved profitability relative to shareholder investment.
• Inventory Turnover Ratio: 8.65 (FY2023-24) vs. 12.01 (FY2022-23) - A -28% decrease, potentially indicating slower inventory movement or a strategic shift in inventory management.
• Trade Receivables Turnover Ratio: 8.17 (FY2023-24) vs. 10.41 (FY2022-23) - A -22% decrease, suggesting potentially slower collection of receivables.
• Net Capital Turnover Ratio: 14.90 (FY2023-24) vs. 29.74 (FY2022-23) - A -50% decrease, indicating a significant reduction in sales efficiency relative to capital employed.
• Net Profit Ratio: 4.32% (FY2023-24) vs. 2.12% (FY2022-23) - A +104% increase, showing a substantial improvement in profit margins.
• Debt Service Coverage Ratio: 2.84 (FY2023-24) vs. 2.30 (FY2022-23) - A +24% increase, implying improved ability to service debt.
• Return on Capital Employed (ROCE): 25.12% (FY2023-24) vs. 19.90% (FY2022-23) - A +26% increase, showing better returns on capital invested.

II. Business Segments:

KEL operates in two main segments:

• Explosives Division: Experienced a slight decrease in explosives sales (59,736 MT vs. 61,603 MT) due to unviable prices in the coal sector. However, traded goods, services, and exports in this sector showed growth. Detonator fuse sales remained relatively stable, while other accessories sales increased significantly due to expanded customer base and export orders.
• Perlite Division: Sales of perlite and perlite-based products increased by 12% (18,039 MT vs. 16,123 MT), driven by growth in filter-aid markets. The report highlights diversification efforts into new markets and the development of crop-specific products for the tissue culture industry.

III. Risks and Concerns:

The report acknowledges many key risks:

• Shortage of Skilled Labor: A common challenge in many industries, this could impact production and expansion plans.
• Competition: Competition in both domestic and international markets poses a threat to market share and pricing power.
• Stringent Government Regulations: The explosives industry is heavily regulated, requiring compliance with safety and licensing requirements. Non-compliance could lead to penalties and operational disruptions.
• Manufacturing Risks: The report mentions risks at various manufacturing locations, suggesting the need for continuous improvement in operational safety and efficiency.
• Market Risks: The company actively seeks expert advice to identify and mitigate market-related risks.

IV. ESG Initiatives (Corporate Social Responsibility - CSR):

KEL’s CSR activities focus on education, healthcare, and rural development. While the report details specific projects and expenditures (Rs. 20.15 Lakhs spent, exceeding the mandated 2% of average net profit), a detailed ESG framework beyond CSR is lacking in the report. There’s no mention of environmental impact assessments or specific targets, social inclusion beyond the CSR activities, or detailed governance practices beyond board composition and committee structures. The provided information is limited and lacks quantifiable metrics for detailed ESG analysis.

V. Overall Assessment:

KEL demonstrated strong financial performance in FY2023-24, showing significant profit growth despite a revenue decline. This highlights efficient cost management and operational improvements. However, the revenue decrease and some key ratio changes (inventory turnover, trade receivables turnover, net capital turnover) warrant further investigation into operational efficiency and sales strategies. The company acknowledges significant risks, especially in relation to regulations and competition. The CSR initiatives are positive, but a more robust and transparent ESG reporting framework is needed to fully assess the Company’s sustainability performance and long-term prospects. The report’s limited disclosures on various compliance matters with stock exchange regulations, resulting in penalties, also raises some concerns regarding corporate governance. Further detail on the nature of those violations would be beneficial for a complete evaluation.

Detailed Analysis #

Balance Sheet #

Asset Analysis #

Based on Keltech Energies Limited’s 2023-24 annual report:

• Total Assets: Rs. 22,267.62 Lakhs
• Total Current Assets: Rs. 14,495.06 Lakhs
• Cash and Cash Equivalents: Rs. 2,991.60 Lakhs
• Accounts Receivable (Trade Receivables): Rs. 4,815.61 Lakhs
• Inventory: Rs. 3,453.49 Lakhs

Important Note: These figures are presented in Lakhs (1 Lakh = 100,000). To get the values in Rupees, multiply each number by 100,000.

Liability Analysis #

Based on Keltech Energies Limited’s 2023-24 annual report:

• Total Liabilities: Rs. 12,311.33 Lakhs
• Total Current Liabilities: Rs. 10,978.64 Lakhs
• Long-Term Debt: Rs. 491.74 Lakhs (This excludes lease liabilities which are reported separately)
• Accounts Payable (Trade Payables): Rs. 6,458.00 Lakhs (This includes amounts due to Micro, Small and Medium Enterprises (MSMEs))

Important Note: These values are reported in Lakhs (1 Lakh = 100,000). To obtain the amounts in Rupees, multiply each figure by 100,000.

Equity Analysis #

Based on Keltech Energies Limited’s 2023-24 annual report:

• Shareholders’ Equity: Rs. 9,956.29 Lakhs
• Retained Earnings: Rs. 5,424.90 Lakhs
• Share Capital: Rs. 99.99 Lakhs

Important Note: These figures are in Lakhs (1 Lakh = 100,000 INR). Multiply each value by 100,000 to get the amounts in Indian Rupees.

Income Statement #

Operating Performance #

Based on Keltech Energies Limited’s 2023-24 annual report:

• Revenue: Rs. 44,934.36 Lakhs
• Cost of Revenue: Rs. 42,823.54 Lakhs (This includes cost of materials consumed, purchases of stock-in-trade, and changes in inventories)
• Gross Profit: Rs. 2,110.82 Lakhs (Revenue - Cost of Revenue)
• Operating Expenses: Rs. 6,374.18 Lakhs (This is the amount reported as “Other Expenses” in the statement of profit and loss, which represents operating expenses)
• Operating Income: Rs. 2,604.50 Lakhs (Gross Profit - Operating Expenses). Note: The report shows this as “Profit before exceptional items and tax”. There were no exceptional items reported.

Important Note: All figures are in Lakhs (1 Lakh = 100,000 INR). To convert these values to Rupees, multiply each number by 100,000. There might be slight discrepancies due to rounding.

Bottom Line Metrics #

Based on Keltech Energies Limited’s 2023-24 annual report:

• Net Income: Rs. 1,941.28 Lakhs
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): Rs. 4,192.62 Lakhs (calculated as Operating Profit + Depreciation and Amortization). Note that the report does not explicitly state EBITDA.
• Basic EPS: INR 194.13
• Diluted EPS: INR 194.13

Important Note: All monetary values are in Lakhs (1 Lakh = 100,000 INR). Multiply by 100,000 to get the amounts in Rupees. The EBITDA figure is a calculation based on the provided financial statements and may vary slightly depending on the specific items included in the calculation.

Cash Flow #

Cash Flow Components #

Based on Keltech Energies Limited’s 2023-24 statement of cash flows:

• Cash Flow from Operating Activities: Rs. 5,120.34 Lakhs
• Cash Flow from Investing Activities: Rs. -1,676.43 Lakhs (negative indicates a net cash outflow)
• Cash Flow from Financing Activities: Rs. -1,131.36 Lakhs (negative indicates a net cash outflow)

Important Note: These figures are in Lakhs (1 Lakh = 100,000 INR). Multiply each by 100,000 to get the amounts in Rupees.

Cash Flow Metrics #

Based on Keltech Energies Limited’s 2023-24 annual report, we can calculate the following:

• Free Cash Flow (FCF): This requires a calculation not explicitly provided in the report. A common calculation is: Free Cash Flow = Operating Cash Flow - Capital Expenditures. Using the figures from the statement of cash flows:

  FCF = Rs. 5,120.34 Lakhs - Rs. 913.49 Lakhs (Capital Expenditure from Investing activities) - Rs. 12.15 Lakhs (Capital Expenditure from Intangibles) = Rs. 4,204.70 Lakhs

• Capital Expenditure (CAPEX): Rs. 925.64 Lakhs (This is the sum of capital expenditures reported in the investing activities section of the statement of cash flows: Rs. 913.49 Lakhs for Property, Plant, and Equipment and Rs. 12.15 Lakhs for intangible assets.)

• Dividends Paid: Rs. 15.00 Lakhs

Important Note: All figures are in Lakhs (1 Lakh = 100,000 INR). Multiply by 100,000 to convert to Rupees. The free cash flow calculation is an approximation; other methods for calculating FCF might exist and lead to slightly different results. The provided figures in the report only show expenditure. In the statement of changes in equity, they show that 15 lakhs were paid in dividends.

Profitability Ratios #

To calculate the profitability ratios for Keltech Energies Limited for the fiscal year 2023-24, we’ll use the figures previously extracted from the annual report. Remember that all figures are in Lakhs (1 Lakh = 100,000 INR).

• Gross Margin: (Gross Profit / Revenue) * 100 = (2,110.82 Lakhs / 44,934.36 Lakhs) * 100 = 4.7%

• Operating Margin: (Operating Income / Revenue) * 100 = (2,604.50 Lakhs / 44,934.36 Lakhs) * 100 = 5.8%

• Net Profit Margin: (Net Income / Revenue) * 100 = (1,941.28 Lakhs / 44,934.36 Lakhs) * 100 = 4.3%

• Return on Equity (ROE): (Net Income / Average Shareholders’ Equity) * 100. To calculate the average shareholders’ equity, we need the beginning and ending balances. The ending balance is 9,956.29 Lakhs. Unfortunately, the beginning balance is not directly stated in the report and would require further calculations. Therefore, a precise ROE cannot be reliably calculated from the information provided.

• Return on Assets (ROA): (Net Income / Average Total Assets) * 100. Similar to ROE, calculating the average total assets requires information not readily available. Therefore, a precise ROA cannot be calculated.

Important Note: These calculations are approximations due to rounding in the original financial statements. The ROE and ROA calculations require further data from the report (beginning balances for shareholders’ equity and total assets) to be calculated accurately.

Liquidity Ratios #

To calculate the liquidity ratios for Keltech Energies Limited for the fiscal year 2023-24, we use the values previously extracted from the annual report. Remember that all figures are in Lakhs (1 Lakh = 100,000 INR).

• Current Ratio: (Current Assets / Current Liabilities) = (14,495.06 Lakhs / 10,978.64 Lakhs) = 1.32

• Quick Ratio: (Current Assets - Inventories) / Current Liabilities = (14,495.06 Lakhs - 3,453.49 Lakhs) / 10,978.64 Lakhs = 1.01

• Cash Ratio: (Cash and Cash Equivalents / Current Liabilities) = (2,991.60 Lakhs / 10,978.64 Lakhs) = 0.27

Important Note: These are approximations due to rounding in the original financial statements. A truly precise calculation would involve using unrounded numbers.

Efficiency Ratios #

Calculating Keltech Energies Limited’s efficiency ratios for FY2023-24 requires careful consideration of the information provided in the annual report. Remember that all monetary figures are in Lakhs (1 Lakh = 100,000 INR). We’ll also need to make some assumptions, and there is the potential for slight inaccuracies because of rounding in the original financial statements.

• Asset Turnover: (Revenue / Average Total Assets). To calculate this accurately, we need the total assets at the beginning of the fiscal year, which isn’t explicitly stated. An approximation can be made by using the year-end total assets, but this would be less accurate.

• Inventory Turnover: (Cost of Goods Sold / Average Inventory). The Cost of Goods Sold isn’t directly given, but it can be approximated. The annual report lists Cost of Materials Consumed as 30,408.84 Lakhs and Purchases of Stock-in-Trade as 1,878.97 Lakhs, giving a rough approximation of COGS as 32,287.81 Lakhs (30,408.84 + 1,878.97). The average inventory requires both beginning and ending inventory values. Only the year-end value is given (3,453.49 Lakhs). Using the year-end value as a proxy for the average would be a simplification.

• Receivables Turnover: (Revenue / Average Accounts Receivable). This calculation requires both beginning and ending values for accounts receivable, which are not provided directly. Using only the year-end value of 4,815.61 Lakhs as an approximation for the average will result in a simplified and potentially less accurate measure.

In summary: While we can approximate these ratios using the available data, they will be less precise than if we had the beginning-of-year balances for total assets, inventory, and accounts receivable. To obtain more accurate calculations, you would need to obtain these values directly from the company or through financial databases.

Leverage Ratios #

Let’s calculate the use ratios for Keltech Energies Limited for FY2023-24 using the figures previously extracted from the annual report. Remember that all monetary figures are in Lakhs (1 Lakh = 100,000 INR). There’s potential for minor inaccuracies due to rounding.

• Debt-to-Equity Ratio: Total Debt / Shareholders’ Equity = 2,402.26 Lakhs / 9,956.29 Lakhs = 0.24 or 24%

• Debt-to-Assets Ratio: Total Debt / Total Assets = 2,402.26 Lakhs / 22,267.62 Lakhs = 0.11 or 11%

• Interest Coverage Ratio: Earnings Before Interest and Taxes (EBIT) / Interest Expense. EBIT isn’t directly provided, so we’ll calculate it: EBIT = Profit Before Tax + Interest Expense = 2,604.50 Lakhs + 235.94 Lakhs = 2,840.44 Lakhs. Therefore: Interest Coverage Ratio = 2,840.44 Lakhs / 235.94 Lakhs = 12.04

Important Note: These are approximations due to rounding in the financial statements. A precise calculation would use the unrounded figures. Also, the interest expense used is from the statement of profit and loss, which includes lease interest. A more refined analysis might separate this interest from other interest costs, especially if using a stricter definition of debt (excluding lease liabilities).

Market Analysis #

Market Metrics #

Calculating these market-based ratios for Keltech Energies Limited requires information not included in the provided annual report. The annual report contains only the company’s financial statements; market data (share price, number of outstanding shares) is needed to compute these ratios.

• Market Capitalization (Market Cap): This is calculated as the current market price per share multiplied by the total number of outstanding shares. The annual report does not provide the current market price.

• Price-to-Earnings Ratio (PE Ratio): This is calculated as the market price per share divided by the earnings per share (EPS). We need the market price per share to calculate this.

• Price-to-Book Ratio (PB Ratio): This is calculated as the market price per share divided by the book value per share. The book value per share can be derived from the balance sheet (shareholders’ equity/number of shares), but we still need the market price per share.

• Dividend Yield: This is calculated as the annual dividend per share divided by the market price per share, expressed as a percentage. We need both the dividend per share (which can be obtained from the report) and the market price per share.

• Dividend Payout Ratio: (Dividends Paid / Net Income) * 100. Using the figures from the annual report: (15 Lakhs / 1,941.28 Lakhs) * 100 = 0.77%

In short, the annual report does not provide the necessary market data (share price) to calculate market cap, PE ratio, PB ratio, and dividend yield. Only the dividend payout ratio can be reliably calculated from the given data. This calculation is an approximation due to rounding in the original statement.

Business Analysis #

Segment Analysis #

Keltech Energies Limited’s annual report provides limited segment information, making a complete analysis challenging. The report identifies two operating segments but lacks detail in many areas. Here’s what can be gleaned:

Business Segments:

1. Explosives Division:

   • Name: Explosives Division
   • Revenue (FY2023-24): The report does not directly state the revenue of the Explosives division separately from the Perlite division, only the combined revenue from external customers (Rs. 43,797.20 Lakhs).
   • Growth Rate: Cannot be precisely calculated due to lack of explicit individual segment revenue for previous years. The overall company revenue decreased by 20% compared to the previous fiscal year but that does not translate directly to individual segment performance. The report states that sales of explosives decreased slightly.
   • Operating Margin: Not directly stated for this segment.
   • Market Share: Not disclosed in the annual report.
   • Key Products: Cartridge Explosives, Bulk Emulsion Explosives, Detonating Fuse, Other Accessories.
   • Geographic Presence: India (primarily), with some exports. Specific geographic regions within India are not detailed.

2. Perlite Division:

   • Name: Perlite Division
   • Revenue (FY2023-24): Cannot be precisely determined as the report only provides the combined external revenue, not the separate segment revenues.
   • Growth Rate: The report states a 12% increase in perlite and perlite-based product sales. This is a growth rate for sales volume, not necessarily revenue.
   • Operating Margin: Not directly stated for this segment.
   • Market Share: Not disclosed in the annual report.
   • Key Products: Cryogenic insulation, Industrial filter-aid, Horticulture products.
   • Geographic Presence: India (primarily), with possible exports. Specific regions are not disclosed in the report.

Limitations:

The annual report doesn’t provide a detailed segment breakdown of revenue, operating margins, or market share. This limits the accuracy of a detailed analysis. Furthermore, the geographic presence for both segments is only generally described as “primarily India” with some exports; more detailed information is required for a complete picture.

Risk Management #

Risk Assessment #

Keltech Energies Limited’s annual report highlights many key risk factors, but it lacks a structured assessment of impact severity, likelihood, and mitigation strategies. The report mainly lists the risk categories and a description. We can categorize and describe them, but a thorough risk assessment is not explicitly offered by the company.

Key Risk Factors:

I. Operational Risks:

• Category: Operational Risks
• Description: Shortage of skilled labor, risks in manufacturing processes at various locations, potential for disruptions in the supply chain, and safety concerns within the explosives manufacturing process.
• Impact Severity (Assessment): Potentially high, as labor shortages can hamper production, manufacturing issues could lead to accidents or production halts, and supply chain problems could disrupt operations. Safety incidents in the explosives industry can have severe consequences.
• Likelihood (Assessment): Moderate to high, depending on market conditions, the success of the company’s recruitment and training programs, and the effectiveness of safety protocols.
• Mitigation Strategies (from report): Infrastructure improvements, focus on training and employee skill development (especially safety training). Further details of mitigation are absent from the report.
• Trends: The demand for skilled labor is constantly increasing, as is the importance of robust safety measures in hazardous industries.

II. Market Risks:

• Category: Market Risks
• Description: Intense competition in both domestic and international markets, price volatility for raw materials (especially ammonium nitrate), and fluctuations in demand for explosives and perlite products due to economic conditions.
• Impact Severity (Assessment): High; intense competition can affect profitability and market share. Raw material price fluctuations directly impact input costs, and demand variations can lead to significant revenue fluctuations.
• Likelihood (Assessment): High; the explosives and perlite industries are inherently cyclical, influenced by broader economic factors. Competition is ongoing and intense.
• Mitigation Strategies (from report): The company seeks expert advice to understand and mitigate market risks; specifics are not provided. R&D is also cited to potentially improve competitiveness and potentially diversify the products offered.
• Trends: Globalization increases competition. Sustainability concerns might affect demand and regulations, leading to greater pressure on price competitiveness and environmental responsibility.

III. Regulatory and Legal Risks:

• Category: Regulatory and Legal Risks
• Description: Stringent government regulations concerning explosives manufacturing, licensing, safety, and environmental compliance; potential legal disputes and litigations; penalties for non-compliance.
• Impact Severity (Assessment): Very High; non-compliance with safety and environmental regulations can lead to severe penalties, operational shutdowns, and reputational damage. Legal disputes can be costly and time-consuming.
• Likelihood (Assessment): High; the nature of the explosives industry and increased focus on environmental regulations makes compliance a continuous and high-stakes challenge. The likelihood of legal disputes remains an inherent risk in any business environment.
• Mitigation Strategies (from report): The report indicates a commitment to regulatory compliance. Specific details on the mitigation strategies for handling legal disputes are not provided in the annual report.
• Trends: Increasing regulatory scrutiny and emphasis on environmental protection is a global trend.

IV. Financial Risks:

• Category: Financial Risks
• Description: Access to credit and financing, ability to manage debt levels, and potential for liquidity shortfalls.
• Impact Severity (Assessment): Moderate to High, depending on the company’s debt levels and its ability to secure affordable financing. Liquidity issues can severely impact operational capacity.
• Likelihood (Assessment): Moderate, influenced by market conditions and the company’s financial management practices.
• Mitigation Strategies (from report): Not explicitly detailed, although the report mentions monitoring net liquidity positions.
• Trends: Interest rate fluctuations and credit market conditions impact a company’s financing costs and access to capital.

Overall:

The annual report touches upon key risk factors but lacks a detailed risk assessment, providing only limited information on mitigating strategies and the probabilities and severity of these risks. A more robust risk management section in the next annual report would improve investor confidence and demonstrate best corporate practices.

Strategic Overview #

Management Assessment #

Keltech Energies Limited’s management discussion and analysis section highlights many key strategies, competitive advantages, market conditions, challenges, and opportunities. Here’s a summary:

I. Key Strategies:

• Focus on Exports: A major strategy for FY2024-25 is expanding exports of explosives and perlite products.
• Product Diversification: Developing new product lines, especially in perlite-based products tailored to specific customer needs (e.g., crop-specific products for the tissue culture industry).
• Capacity Expansion: Increasing production capacities in both explosives and perlite segments to meet growing market demand.
• R&D Investment: Continued investment in research and development to create innovative and competitive products.
• Safety Enhancement: Continuous improvement in safety protocols across all manufacturing operations and strengthening safety training programs.

II. Competitive Advantages:

• Quality and Consistency: A focus on maintaining high quality and consistency in products to gain customer loyalty and differentiate from competitors.
• Long-standing Relationships: Established relationships with public sector undertakings (PSUs) in the explosives sector provide a stable revenue stream.
• Integration: The company has some integration in its production process.

III. Market Conditions:

• Growth in Infrastructure: Government investment in infrastructure projects creates opportunities for growth in the explosives industry.
• Increasing Demand: There is steady increasing demand for explosives and perlite products in various sectors.
• Competition: The explosives and perlite markets are competitive, with pressure on prices and market share.

IV. Challenges:

• Competition: Intense competition, especially in the explosives sector, puts pressure on pricing.
• Raw Material Costs: The availability and cost of key raw materials (like ammonium nitrate for explosives) can be volatile and may impact profitability.
• Skilled Labor Shortage: A shortage of qualified personnel, especially in technical roles, might hinder growth.
• Stringent Regulations: The industry is subject to strict safety, environmental, and licensing regulations.

V. Opportunities:

• Infrastructure Development: Government initiatives in infrastructure development are expected to drive growth in demand for explosives.
• Export Market Expansion: Growing international demand offers significant opportunities to expand the company’s export sales.
• Product Diversification: Developing new perlite-based products can lead to greater market penetration and revenue diversification.
• Technological Advancements: Adopting new technologies in manufacturing processes can improve efficiency and competitiveness.

Overall:

KEL’s strategies focus on growth through exports, product innovation, and capacity expansion, aiming to use its established relationships and quality reputation. The company acknowledges the competitive nature of its markets and the challenges of regulatory compliance and securing skilled labor. Opportunities exist in infrastructure development and product diversification. The success of these strategies will depend on the company’s ability to effectively manage risks, especially in manufacturing safety and regulatory compliance.

ESG Ratings #

The provided annual report for Keltech Energies Limited does not include ESG ratings from any external rating agencies. The report includes a section on Corporate Social Responsibility (CSR), detailing some social initiatives, but this is not a substitute for a detailed ESG rating from a recognized agency. To find ESG ratings, you would need to consult specialized ESG data providers like Sustainalytics, MSCI ESG Ratings, Refinitiv, Bloomberg, etc., or search their databases using the company’s name.

ESG Initiatives #

Keltech Energies Limited’s annual report provides limited information on environmental and sustainability goals. The report focuses primarily on the company’s financial performance and corporate governance. While there’s a CSR section, it doesn’t offer detailed details on broader ESG matters.

I. Environmental Initiatives:

The report lacks specific details on environmental initiatives. The explosives and perlite industries have inherent environmental impacts, and the absence of specific environmental initiatives or targets in the report is a significant gap. There is no mention of a carbon footprint. Further information would be necessary to assess environmental performance.

II. Carbon Footprint:

The annual report does not disclose Keltech Energies Limited’s carbon footprint. This is a critical omission for a company operating in industries with substantial environmental impact.

III. Social Initiatives:

Social initiatives are primarily addressed through the company’s Corporate Social Responsibility (CSR) activities. These focus on:

• Education: Providing computers, uniforms, and water dispensers to schools in various locations.
• Healthcare: Providing medicines for tuberculosis patients and funding rehabilitation organizations.
• Rural Development: Providing funds to gram panchayats (village councils) and Anganwadi centers (childcare centers).

The report provides specific amounts spent on these initiatives but lacks detailed details about their impact and alignment with broader social sustainability goals.

IV. Governance Practices:

The annual report details corporate governance practices, including:

• Board Composition: The board includes a mix of executive, non-executive, and independent directors, with a specified percentage of independent directors.
• Board Committees: The report describes the composition and activities of the Audit Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee, Independent Directors Committee, and Corporate Social Responsibility (CSR) Committee.
• Code of Conduct: A code of conduct is in place for directors and senior management.
• Performance Evaluation: Annual performance evaluations are conducted for the board, its committees, and individual directors.
• Related Party Transactions: The report details transactions with related parties.

While these indicate a structured governance framework, a deeper dive into specific practices and their effectiveness would require further information.

V. Sustainability Goals:

The annual report does not explicitly state any specific, measurable, achievable, relevant, and time-bound (SMART) sustainability goals. This is a significant omission, especially given the environmental aspects of the company’s operations.

Overall:

Keltech Energies Limited’s annual report provides a limited view of its ESG performance. While CSR activities demonstrate some social commitment, the lack of transparency regarding environmental initiatives, carbon footprint, and specific sustainability targets is a notable weakness. More detailed ESG reporting would be beneficial to investors and stakeholders concerned about the environmental and social impact of the company’s operations.

Additional Information #

Operational Metrics #

According to Keltech Energies Limited’s 2023-24 annual report:

• R&D Expenditure: Rs. 74.31 Lakhs (This represents the total R&D expenditure, both capital and recurring. The report states that capital expenditure was NIL)
• Employee Count (Permanent): 262 as of March 31, 2024

Remember that the monetary figure is in Lakhs (1 Lakh = 100,000 INR). Multiply by 100,000 to obtain the amount in Rupees.

Key Events #

Based on the Keltech Energies Limited 2023-24 annual report, here are some of the significant events during the fiscal year:

• Changes in Key Personnel: Several changes occurred in key managerial personnel positions, including the resignation of Ms. Shalu Tibra as Company Secretary and Compliance Officer and the subsequent appointment of Ms. Poonam Choudhary to the same role. Also, Mr. Mahesh Vijay Wataney was appointed as Managing Director. There were also changes in the Board of Directors, with some directors resigning and others being appointed or re-appointed.

• Resignation of Directors: Mr. Ramesh Laxmanrao Chowgule and Mr. Ashvin Chadha resigned from their positions as Non-Executive Directors.

• Appointment of New Directors: Mr. Deepak Balkrishna Jadhav was appointed as an Independent Non-Executive Director.

• Related Party Transactions: The company entered into various transactions with related parties (detailed in the notes to the accounts). These appear to be normal business transactions but are nonetheless noteworthy.

• Financial Performance: The Company saw significant improvements in profitability despite a decrease in overall revenue. This improved profitability suggests that the company has focused on improving efficiency and cost controls.

• CSR Activities: The company undertook various CSR activities focused on education, healthcare, and rural development.

• Adoption of New Accounting Software: The company migrated to a new accounting software system.

• Dividend Declaration: The Board recommended a final dividend of Rs. 1.50 per share, subject to shareholder approval.

• Legal and Regulatory Matters: The report mentions various legal and regulatory matters, including pending litigations and interactions with tax authorities. These are ongoing and not yet resolved.

• Migration to New Accounting System: The company migrated to a new accounting software, which, according to the auditor’s report, improved the capabilities in regard to audit trails.

These are some of the key events; a detailed list would involve examining the detailed notes to the financial statements and other disclosures in the annual report.

Audit Information #

Auditor’s Opinion:

The independent auditor, CNK & Associates LLP, issued an unmodified (clean) opinion on Keltech Energies Limited’s financial statements. This means the auditors found the financial statements to be fairly presented in accordance with Indian Accounting Standards (Ind AS) and generally accepted accounting principles in India. However, the auditor’s report also highlighted key audit matters related to the provision for powder factor deduction and litigations.

Key Accounting Policies:

The annual report outlines many key accounting policies used by Keltech Energies Limited. These include:

• Property, Plant, and Equipment: Recorded at historical cost less accumulated depreciation and impairment losses. Depreciation methods vary by asset type.

• Capital Work in Progress: Valued at cost to date.

• Intangible Assets: Recognized when future economic benefits are probable and costs can be reliably measured. Amortized over their useful lives.

• Inventories: Valued at the lower of cost and net realizable value, using a weighted average cost method for raw materials and a first-in, first-out (FIFO) method for traded goods.

• Foreign Currency Transactions: Transactions are recorded at the exchange rate on the transaction date, and monetary items are translated at the closing rate.

• Financial Instruments: Classified and measured according to Ind AS 109, considering fair value through profit or loss (FVTPL), fair value through other detailed income (FVOCI), and amortized cost.

• Revenue Recognition: Revenue from sales of goods is recognized upon transfer of control; revenue from services is recognized when services are rendered.

• Employee Benefits: Short-term benefits are expensed when services are rendered; defined contribution plans are expensed as contributions are made; defined benefit plans (like gratuity) are accounted for using the projected unit credit method.

• Impairment of Assets: Both financial and non-financial assets are assessed for impairment, using the expected credit loss model for financial assets and value-in-use or fair value less costs to sell for non-financial assets.

• Provisions: Recognized when an obligation is present, probable, and reliably estimable.

• Leases: The company adopts Ind AS 116, classifying leases as either finance leases or operating leases. Right-of-use assets and lease liabilities are recognized for most leases, except short-term and low-value leases.

• Borrowing Costs: Directly attributable borrowing costs are capitalized; others are expensed.

• Segment Reporting: The company reports on two operating segments: Explosives and Perlite.

• Taxes: Both current and deferred taxes are recognized.

It is important to consult the detailed notes to the financial statements in the annual report for the complete and precise description of each accounting policy, including the specific methods and assumptions used. This summary provides only an overview of the key policy areas.