<dhhead>CHAIRMAN’S STATEMENT</dhhead>
Dear Fellow Shareholders,
Hope all of you and your loved ones are keeping safe and in good
health.
I began the journey of Genus at a time when meters were
electro-mechanical by nature. The technological transformation, from electro mechanical to
electronic and now Digital, loT, Wireless and Artificial Intelligence (Al) based metering
solutions, has become the driving force for the growth of Genus. Currently, the metering
industry is witnessing the dynamics of that transformation, given the massive demand from
utilities for smart and prepaid metering solutions. There is no doubt that in the last
three decades, the metering industry has grown by leaps and bounds, locally and globally.
The on-going digitalisation of the power sector with AMI and Smart Meters is very crucial
and highly beneficial for the entire energy value chain from generation companies to
end-consumers. A robust AMI infrastructure having Smart Meters enables power utilities to
enhance their operational and financial performance by significantly improving billing and
collection efficiency and thereby reducing cumulative AT&C losses.
Currently, the metering industry faces a number of imponderables.
Foremost is availability of raw material and that too at a reasonable price. In FY 22, the
Indian metering industry continued to face severe shortage of semiconductors and other
electronic components due to the worldwide phenomenon of logistical and supply chain
issues in the wake of COVID-19 pandemic. The supply- demand mismatch resulted in
significant increase in prices of these key raw materials. This has severely hampered the
capacity utilization in FY 22. We expect both - the supply and prices of raw material - to
stabilize in the second half of FY 23, leading to significant uptick in revenue growth in
the coming financial years.
Standalone Financial Performance Highlights .
We have recorded revenue of Rs. 68,507 lakhs for FY 22, up by around
13% as against the previous year’s sales of Rs. 60,860 lakhs. Our EBITDA (excluding
other income) was Rs. 5,963 lakhs for FY 22 as against Rs. 10,193 lakhs in the previous
year. Our profit after tax (PAT) was Rs. 2,582 lakhs for FY 22 as against Rs. 5,116 lakhs
in the previous year. The earnings per share (EPS) came to Re.1. The astonishing increase
in raw material prices and lack of operating leverage due to lower capacity utilization
resulted in lower operating earnings and margins.
Dividend '
The Board has recommended a dividend of Re.0.25 (i.e. 25%) per equity
share of face value of Re.1 each for FY 22, which is in line with the dividend
distribution policy of the Company. The dividend is, however, subject to the approval by
the members in the annual general meeting.
Operational & Technological Excellence
As we embark on the journey of historic upgrade cycle of the Indian
metering industry, we are confident of meeting the highest industry standards. We are a
full-fledged vertically integrated company with backward and forward integration from the
conceptual designing of the product to final packaging - wherein we build everything
in-house. We have tool room, moulding machines, assembly lines, test labs and our own
software development infrastructure for providing end-to-end solutions. A full-fledged
R&D centre with world class equipment and manpower resources is our most significant
USP. It allows us to customize products to meet the specific needs of our clients in a
timely and cost-effective manner, making us a one-stop shop for all their metering needs.
We have developed our services capabilities alongside our technological capabilities so as
to provide end-to-end service solutions such as meter installation, meter servicing,
domain-related software, data analytics, HES & MDM solutions, and so on. This provides
us with an unparalleled competitive advantage over our competitors.
We have got the BIS license for Gas Meter, and thereby become the first
in India to have this certificate for the Gas meter. This also attests our technological
capability and preparedness for future business.
In June 2022, we won the prestigious "The Economic Times Energy
Leadership Award" for our contributions to the energy sector as an equipment
manufacturer.
Outlook
I feel enthused and elated with the way Indian government is working
strenuously on various reforms of the power distribution sector. In a recent development,
the government announced a marquee Rs. 3.03 trillion power distribution company (DISCOM)
reform scheme namely ‘Revamped Distribution Sector Scheme’ - Reforms-Based and
Results-Linked Scheme. Of this, half of the total funds of the scheme i.e. about Rs. 1.5
trillion are to be deployed for installation of smart meters. I strongly believe the
Scheme has potential to significantly shift the whole landscape of the Indian metering
industry with a likely multi-fold upsurge in industry size. This will surely result in a
significant transition in the Indian metering industry from conventional meters to smart
prepaid meters, allowing for better operating margins. Smart Meters are a value-added
product that is 3 to 4 times more expensive than traditional meters. They are also
escorted with a lot of allied and after-sales services. As a result, I anticipate higher
revenue inflow from service delivery towards smart meters, which typically have better
operating margins. All of this will alter the Indian smart metering industry's economic
dynamics in the coming years.
Given that context, I feel all efforts must be made to have indigenous
manufacturing capabilities for semiconductor and other raw materials for the entire power
sector so as to minimise dependence on imports. In line with the same, the government has
recently invited bids for setting up a manufacturing zone for power and renewable energy
sectors on pilot basis. The scheme/zone aims to promote local manufacturing to develop
products which are currently being imported on a huge scale. I feel this will go a long
way in creating a long-lasting impact in the entire power value chain.
Further, recently, the government sanctioned Rs. 76,000 crore under the
Production-Linked Incentive (PLI) scheme to encourage the manufacturing of various
semiconductor chips within India. This scheme comes amid shortage of semiconductor chips
in the global market, which has severely affected the production of meters, among other
electronic goods. I feel this would eventually put an end to the country’s dependence
on imports to meet its semiconductor needs.
The government has also increased the allocation for incentive schemes
such as the Modified Special Incentive Package Scheme (M-SIPS) for providing a boost to
the semiconductor as well as other electronics items.
We have been in the electricity metering business for more than two
decades. On the foundation of our inherent strengths, we hope to recreate our leadership
position in smart metering and prepaid metering business. As one of the largest players in
the Indian metering sector, we are well-positioned to benefit from the multi-fold increase
in the industry's size.
Within domestic geography, we have continuously received orders for
Smart Meters across multiple State Electricity Boards. Recently, we won one of the single
largest orders as an Advanced Metering Infrastructure Service Provider (AMISP) that
includes design of AMI system with supply, installation and commissioning of around 10
Lakhs Smart Prepaid Meters, DT Meter level energy accounting and FMS of these smart
meters. This order reaffirms our market position and capability as a technologically
advanced metering solutions provider. We are happy to add orders of Gas Meters, which will
diversify our order- book in the coming years. Our all-time high order book, continued
orders inflow and pipeline velocity give us confidence to achieve more milestones in our
journey in the coming years.
Adoption of smart metering is also growing fast in other regions of the
world. Since, we have achieved global competitiveness on the back of strong R&D work
on smart metering, Genus has been targeting Asia Pacific, Middle East and African regions,
where governments have come out with the power sector reform programs with adoption of
smart meters, advanced metering infrastructure and smart grid. We have engaged ourselves
in a thorough understanding of global standards, put all the desired certifications and
testing in place, and developed a supply chain with traceability and quality awareness.
Genus is continuously tracking available opportunities in the global markets with an aim
to extend our global footprint in the smart metering field. During the year under review,
we got some good orders from export markets that are lucrative as they come with better
margins. Going forward, we expect our export business to pick up rapidly.
Acknowledgement
I am grateful to my board colleagues for their brilliant management,
counsels and always being the strength of the Company during the year under review. I look
forward to their continued support.
I appreciate and value the contribution made by every member of the
Genus family.
On behalf of the Board of Directors, I want to thank you for your
continued trust, confidence, and support.
Warm regards,
Ishwar Chand Agarwal
Chairman
DIN:00011152
Jaipur, August 03, 2022