hind rectifiers ltd Management discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Companys major business continues with Indian Railways with strong legacy and brand image. Technology-based products for Locomotives & Coaches continue as major strength of the Companys business operations.

Although the primary customer continues to be Indian Railways, however, the Company is putting increased focus on developing new products for private rolling stock manufacturers, and Industrial sector by upgrading and expanding existing product lines, besides growth of new business for the European market through marketing operations from Sweden.

Industrial business is likely to be increased considering the growth anticipated in various international and domestic projects in power sector & also infrastructure development planned by the Government of India. The Company has been certified for Aerospace standards, and registered with Defence organizations, and which is likely to bring a additional revenue stream in coming years.

There is a good mix of SMEs, Large Companies and multinationals players in the market for our various product lines.

INFRASTRUCTURE AND NEW PRODUCTS DEVELOPMENT

The Company has concentrated on the development of infrastructure for larger production volume for existing products and manufacturing facilities for new product development like Propulsion Systems, Traction Motors, Transformers, HVAC systems and Battery Chargers.

Considering the addition of new plant and products, the focus on securing plant approvals, and launching new products will be a main focus for the Company.

OPPORTUNITIES AND THREATS

The Company has a strong brand and leadership position in the market for the equipments of 3Ph locomotives and LHB coaches along with the pollution control and environmental protection equipment with updated technology.

While opportunities are emerging with new developments in the Railway segment backed by enormous resources of in-house R&D coupled with new manufacturing facility, Company can take lead considering the brand name and leadership position in the market, however, increased number of competitors and fall in price is a threat for existing product lines.

The Company being an established supplier and with the strong brand name in both industrial and railway sectors, market penetration for any new product is possible with existing and new customers.

Development of new products in a shorter period and competing with a larger player, who is having technology from their parent Company, remains a challenge.

OUTLOOK

The government has aggressively increased Electric Locomotive production, electrification of new routes, and modernization of Railway facilities which has increased market demand. However railways is introducing more Distributed Power Rolling Stock (DPRS) like Vande Bharat Trains, and also private manufacturers of rolling stock for which the Company will have to adapt and develop new design of equipment as well.

RISK AND CONCERNS

Regular products required by Railways are witnessing increased competition in the market with falling selling prices in the reverse auction due to the recent policies of Railways during the current year is a big concern. This is seriously affecting our plans and have to rely more on new developments to compensate the revenue loss.

Some product lines in the Industrial segment are also affected with the increased competition from the unorganized sector with shrinking margins. Delayed payment inflows from Railways have led to increase in working capital and very conservative financial support from Banks for completion of development activities and expansion of business volume remain matter of concern. Current global shortage of semiconductors & electronic components is also affecting our ability to meet On Time In Full (OTIF) deliveries.

SEGMENT WISE / PRODUCT WISE PERFORMANCE

The Company operates in a single segment i.e. engineering goods yet we have undertaken diversification of end products through intensive in-house R&D facilities for different applications.

The Company has broadened its product mix for Indian Railways targeting all the segments of 3 Phase Locos, and Coaches and has been listed for approvals to establish more business opportunities. New product developments by in-house R&D are a planned strategy for improving the Railway segment.

Our specialized products for specific applications in Pollution control, Electroplating, and Electrochemical industries are well stabilized in the industrial segment. Our capability of making custom-built designs is an added advantage for our brand.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

The Company continues to follow an effective system of internal control ensuring the accurate, reliable, and timely preparation of accounting information, securing the assets and interests of the Company with due compliance with various laws and regulations. Internal audits and checks are ongoing processes within the Company.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The companys financial performance during the year was adversely affected due to reduction in turnover, higher material cost ratio and increased finance cost.

Considering the plan of Indian Railway & improved inquiry from industrial sector Company expects an improved performance for the upcoming year.

DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company recognizes that Human Resources are an extremely important and critical and long-term investment. The Companys top management honours the dignity of each individual irrespective of the position and highly values the feelings and emotions of the people. Industrial relations with the Union are cordial and peaceful. The Company has made all efforts to retain competent talent with a focus on training.

PERFORMANCE REVIEW

During the financial year ended March 31, 2023, revenue from operations decreased to Rs. 35909.94 lakhs as against

Rs. 37210.06 lakhs in the preceding year. The Loss after Tax for the financial year ended March 31, 2023 is Rs. 636.29 lakhs as against profit after tax is Rs. 779.85 lakhs in the previous year.

Particulars	As at	As at	Change	Reasons for change in
	31st March 2023	31st March 2022	(%)	ratios more than 25%
(a) Current Ratio (In Time)	1.23	1.46	(15.75)	-
(b) Debt-Equity Ratio (In Time)	0.94	0.7	34.29	The Debt Equity ratio
				increased due to Increase
				in debt and decrease in
				profitability
c Debt Service Coverage Ratio (In Time)	0.92	1.40	(34.29)	The Debt Service coverage
				ratio reduced due to
				increase in debt and
				decrease in profitability
(d) Return on Equity Ratio (in %)	(5.81)	7.53	(177.16)	The return on equity (ROI)
				reduced due to recognition
				of exceptional (notional)
				expenses during
				FY 2022-23 and decrease
				in profitability.

 

Particulars	As at	As at	Change	Reasons for change in
	31st March 2023	31st March 2022	(%)	ratios more than 25%
(e) Inventory turnover ratio (no of days)	86	71	21.13	--
(f) Trade Receivables turnover ratio (no of days)	69	76	(9.21)
(g) Trade payables turnover ratio (no of days)	63	55	14.55
(h) Net capital turnover ratio (In Time)	10.51	7.2	45.97	The Net Capital Turnover ratio decreased due to Decrease in turnover and increase in inventory.
(I) Net profit ratio (In %)	(1.77)	2.1	(184.29)	The Net profit ratio reduced due to recognition of exceptional (notional) expenses during FY 2022-23 and decrease in profitability.
(j) Return on Capital employed (In %)	(0.26)	9.89	(102.63)	The return on capital employed reduced due to recognition of exceptional (notional) expenses during FY 2022-23 and decrease in profitability.
For and on behalf of the Board of Directors

 

Place : Mumbai	Pradeep Goyal	Suramya Nevatia
Date : May 26, 2023	Chairman	Managing Director & CEO