INDUSTRYSTRUCTUREANDDEVELOPMENTS:
GDP: The global fight against inflation, Russias war in Ukraine, and a resurgence of
COVID-19 cases in China weighed on global economy activity in FY 2022-23. According to the
estimate of national income released by the Central Statistics office (CSO) expects real
GDP growth in to be 7.0% and that of gross value added be 6.6%. India has shown remarkable
resilience to global headwinds in FY 2022-23 and remain in a sweet spot owing to its
strong macroeconomic fundamentals. Government initiatives such as Make in India,
production-linked incentive (PLI) scheme are expected to boost manufacturing and
accelerate economic growth. Along with this efforts by the RBI have led to an improvement
in the health and the financial sector and sharply accelerated credit growth driving high
tax collection. Inflation: 2022-23 saw the efforts of Covid abate significantly, with
citizens as well as businesses finally reverting to normalcy, however the flip side was
the impact of inflationary trends, supply chain disruption impacting commodity prices,
inflation remained high and for much of the year was above 6%. To combat this, the RBI
regularly raised its policy repo rate, starting May 2022, with cumulative increase being
250 basis points. Automobile Industry: In Financial Year 2022-23, worldwide sales of
Passenger Cars and Commercial Vehicles is 81.6 million, a de-growth of 1% over the
Financial Year 2021-22 sales of 82.7 million. Global Passenger Car sales reported a growth
of 1.9% and Commercial Vehicle sales reported a de-growth of 8.3%. The global auto
industry is still recovering from COVID-19 impact and is down by 11% from an all time high
in 2017. India has achieved 3 rank behind China and the United States of America in the
segments for passenger and commercial vehicles together. The long-term growth outlook for
the Indian auto industry is positive, driven by robust economic growth outlook, focussed
Government policies with vision for 2047, Government focus on road and infrastructure
development, increasing income levels, current low levels of vehicle penetration, rapid
urbanisation and a large, young and aspiring population. While the long-term outlook for
the Indian auto industry is promising, there has been some softening of demand for
automobiles during the period between F19 - F23, as compared to the previous ten-year
period of F09 - F19. Exports from India too have been impacted in this period. The Indian
auto industry is aware of the need for reducing dependence on imported oil, improving
safety on the roads and most importantly, the need for clean air. Over the years, the
industry has made significant investments in indigenisation of technologies in the
conventional vehicles space where meeting BS-VI in 3 years is an example. In FY 23, the
industry has implemented BS6.2 emission norms in the country. The Government of India
(GOI) has notified Electric vehicle technology and Hydrogen fuel cell technology as
advanced automotive technology under PLI (Production Linked Incentive) Scheme. The GOIs
ambitious scheme to expedite the adoption of electric vehicles - Faster Adoption and
Manufacturing of Electric Vehicles in India Phase II (FAME Phase II)-has been extended i.e
by 2 years i.e. up to 31 March, 2024. The Indian auto industry is making the necessary
investments and is focused on building capabilities in the EV space.
opportunities and threats: opportunities:
The Indian automobile industry, including both electric vehicles and internal
combustion engine (ICE) powered vehicles, is presently the fifth largest in the world and
is expected to become third largest by 2030. The industry contributes around 7.1 per cent
of Indias Gross Domestic Product (GDP) and 49 per cent of its manufacturing GDP. While
the automotive sector is valued at $ 222 billion, the net worth of the EV market in the
country is expected to be just $2 billion by 2023 and $ 7.09 billion by 2025. Eyeing the
emerging trends and steadily growing business prospects in the auto sector the central and
state governments have been introducing various facilitating policies to encourage more
investments. To foster the growth of the industry, the government has introduces
Production-Linked Incentive (PLI) Scheme in the Automobile and Auto Components sectors.
With a total outlay of $ 3.5 billion, the PLI scheme proposes financial incentives of up
to
18% to boost domestic manufacturing of advanced automotive technology products and
attract investments in the manufacturing value chain. The government of India have
undertaken multiple initiatives to promote manufacturing and adoption of electric vehicles
in India and has set ambitious targets for 30% EV penetration by FY 2030 and has also been
pursuing the use of alternate fuel like Hydrogen as alternative to battery.
Strong policy support initiatives and government focus on infra spending is creating
good opportunities for demand revival and growth. We see significant opportunities to
leverage the mega trends shaping the Indian automotive industry.
threats:
Prices of raw material items such as steel, Nickel and petroleum products have
generally risen in recent past and may significantly rise in the future. This may impact
the production cost of the Company, which may adversely affect the sales and profits of
the Company. The ongoing conflict between Russia and Ukraine could have an impact on our
business. United States, the United Kingdom and European Union members, issued broad
economic sanctions against Russia, including to prohibit certain trade activity with
certain Russian corporate entities, financial institutions, officials and oligarchs.
Increasing threat of commodity prices including energy cost will have the bearing on the
growth of the Auto Industry. This has also adversely affected the business of the
companies in United States and other western countries. This may have an impact on our
business as we have customer base in United States and other western countries.
segment Wise or Product Wise Performance:
The information in this regard is given in Note No. 34 of the Notes forming part of the
financial statements. outlook:
FY 2022-23 gone by saw India becoming the 3rd largest automobile market
after China and US. The Indian automobile industry is expected to sustain its growth
momentum in 2023 despite the challenges such as escalating input costs, increased cost of
ownership due to regulatory issues and higher inflation which can result in price hike of
vehicles. However, factors such as improved consumer demand, wide availability of credit
and financing options, population growth, and integration of wireless technology in cars
and popularity of EVs are likely to fuel the growth of the automotive industry. Increased
capital outlay of Rs 10 lakh crore on infrastructure development are also expected to
create opportunities for the automotive industry. Government policies such as Make in
India, Production Linked Incentive (PLI) scheme, Foreign Trade Policy (FTP) and schemes
such as Advance Authorization, and Export Promotion Capital Goods Scheme are expected to
boost manufacturing and export of automobiles.
risks and Concerns:
The automotive industry could be materially affected by the general economic conditions
and developments in India and around the world and investors reaction to such conditions
and developments.
The automotive industry, in general, is cyclical, and economic slowdowns in recent
years have affected the manufacturing sector in India, including the automotive and
related industries. Deterioration of key economic factors, such as the growth rate,
interest rates and inflation, reduced availability of competitive financing rates for
vehicles, implementation of burdensome environmental and tax policies, work stoppages and
increase in freight rates and fuel prices could materially and adversely affect Companys
sales and operations. We rely on third parties to source raw materials, parts and
components used in the manufacture of our products. At a local level, we rely on smaller
enterprises where the risk of insolvency is greater. In addition, for some parts and
components, we are dependent on a single source. Our ability to procure supplies in a
cost-effective and timely manner is subject to various factors, some of which are not
within our control.
Increases in commodities and input prices may have a material adverse effect on our
operations. Prices of commodity items such as steel, nickel and petroleum products have
generally risen in recent past and may significantly rise in the future.
We are exposed to operational risks, including cyber security risks, in connection with
our use of information technology.
I N eternal Control systems and their adequacy:
The Company has an adequate system of internal controls in place. It has documented
policies and procedures covering all financial and operating functions. These controls
have been designed to provide a reasonable assurance with regard to maintaining of proper
accounting controls for ensuring reliability of financial reporting, monitoring of
operations and protecting assets from unauthorised use or losses, compliances with
regulations. The Company has continued its efforts to align all its processes and controls
with global best practices.
financial Performance With respect to operational Performance:
The Company mainly manufactures automobile parts for heavy commercial vehicles as well
as passenger vehicles. The Company recorded net revenue from operations of Rs 36,706.67
Lakhs in FY 2022-23, 36.70% higher than Rs 26,852.22 Lakhs in FY 2021-22. The Profit
Before Tax for FY 2022-23 was Rs 829.13 Lakhs as compared to Profit Before Tax of Rs
733.56 Lakhs for FY 2021-22. The Profit After Tax for FY 2022-23 was Rs 687.94 Lakhs as
compared to Profit After Tax of Rs 687.65 Lakhs for FY 2021-22.
Material developments IN Human resources / Industrial relation:
The Company believes that the success of any organisation depends upon availability of
human capital. Our assets are our people who work to innovate beyond and challenge
established boundaries. Thus, employees are vital to the Company. We have favourable work
environment that encourages innovation and meritocracy. We focus on attracting the best
and brightest talent and the meritocracy is the sole criteria for selection. The Company
firmly believes that manpower is the most important asset, above all. The Company has good
cordial relation with trade union and employees representatives and views these
relationships as contributing positively to the success of the business. The total number
of employees of the Company as on March 31, 2023 stood at 362.
key financial ratios, standalone:
Particulars |
fY 2022-2023 |
fY 2021-2022 |
explanation |
| Debtors Turnover Ratio |
8.72 |
8.13 |
The ratios for the financial year 2022-23 are Stable as compared to
financial year 2021-22, as the Company has performed well in respect of sales as compared
to last year. |
| Inventory Turnover Ratio |
3.09 |
2.44 |
|
| Interest coverage ratio |
1.83 |
1.92 |
|
| Current Ratio |
1.18 |
1.26 |
|
| Debt Equity Ratio |
1.50 |
2.01 |
|
| Operating Profit Margin |
4.99% |
5.71% |
|
| Net Profit Margin |
1.93% |
2.56% |
|
| Return on Net Worth |
17.91% |
21.19% |
|
Cautionary statement:
Statements in the Management Discussion and Analysis describing the Companys
objective, projections, estimates, expectations may be "forward-looking
statements" within the meaning of applicable securities laws and regulations. Actual
results could differ materially from those expressed or implied. Important factors that
could make a difference to the Companys operations include, among others, economic
conditions affecting demand / supply and price conditions in the domestic and overseas
markets in which the Company operates, changes in the Government regulations, tax laws and
other statutes and incidental factors.
for and on Behalf of Board
|
Sd/- |
| Date: 14th August 2023 |
N k gupta |
| Place: Aurangabad |
(Chairman) |
|
DIN. 00062268 |
+91-9892691696
