FORWARD-LOOKING STATEMENTS
This document contains certain forward-looking statements based on the currently held
beliefs and assumptions of the Management of the Company, which are expressed in good
faith, and in its opinion and judgment, are reasonable. For this purpose, forward looking
statements mean a statements, remarks, or forecasts that address activities, events,
conditions, or developments that the Company expects or anticipates which may occur in the
future. Because of the inherent risks and uncertainties in the social and economic
scenarios, the actual events, results, or performances may differ materially and
substantially from those indicated by these statements. Artson
Engineering Limited (the Company) disclaims any obligation to update these
forward-looking statements to reflect future events or developments.
FY 23 OUTLOOK – A NEW BEGINNING
The Indian economy remained remarkably resilient to global challenges in FY 2022-23.
This is evident by robust domestic demand and upbeat investment activity. The COVID19
pandemic disrupted how the world does business. From retention of its workforce to
planning and closing of projects, FY 2022-23 has been a year of re-emergence and growth.
Covid has not been the only disruptor the world has seen. Geopolitical volatility renewing
the push for supply chain resilience and ‘Make in India, The trickle of commitments
towards ‘Net Zero creating a whole new multi-billion-dollar industry for green
technologies. The multiplier effect of governments infrastructure investments leading to
ever increasing demand for construction enablers. The re-discovery of river navigation in
India. The energy trilemma, the dizzying hights of global stock markets, the rising
interest rates in western economies that are beginning to hurt startups with great ideas
but that are not profitable enough yet. Last but not the least, the biggest disruptor of
them all, Artificial Intelligence (AI).
In such an environment, the Company has focused on consolidating and staying liquid
today, while positioning itself for the explosive growth around the corner by leveraging
its decades of track record. It has done so by improving its liquidity position by
rigorously pursuing its receivables, deferring expenses, and leaning on its promoter for
financial support where required. The Company also continues to drive organizational
change to deliver operational robustness while relying on a leaner structure. Company
intends to endeavour, establish, expand existing lines of business and foray into newer
related areas as below:
A. Green Hydrogen:
India is now poised towards reducing carbon footprint and aiming to become a carbon
neutral Country by 2070. National Green Hydrogen Mission Stated Outcomes projected by 2030
are:
• Development of green hydrogen production capacity of at least 5 MMT per annum
with an associated renewable energy capacity addition of about 125 GW in the country
• Over Rs. Eight lakh Crore in total investments
The Company sees a huge potential in the Green Energy Sector. With its decades of track
record in construction of cryogenic tanks (Relevant to hydrogen storage), double walled
tanks (relevant to ammonia storage), process equipment (relevant to balance of plant in a
green hydrogen set-up). The Company is one of the only few players in India that has all
the ‘infrastructure answers, except the electrolyser technology, where it is
actively seeking opportunities to align with the multiple large players investing top
dollars. The pipeline of Green / Grey hydrogen projects are continuing to grow, but actual
deployment is lagging. 680 large-scale project proposals worth USD 240 billion have been
put forward, but only less than 10% (USD 22 billion) have reached final investment
decision (FID). The urgency to invest in mature hydrogen projects today is greater than
ever. For the world to be on track for net zero emissions by 2050, investments of some USD
700 billion in hydrogen generation are needed through 2030 only 3% of this capital is
committed today.
B. Ship-Building Industry: industry and a flourishing tradeForcenturies,Indiahad enabled
flourishing by river and sea navigation. On January 13th 2023 when the
honourable Prime Minister flagged off the worlds largest river cruise of 3200 km from
Varanasi to Dibrugarh - across multiple river systems and multiple states - it heralded
the rejuvenation of inland waterways.
Indian Navy is in the process of modernization and increasing its fleet strength.
During the last five years, a total of 78 capital acquisition contracts for the Indian
Navy worth 571.6 bn were signed with Indian vendors. Navys acquisition plans for FY 24
and FY 25 include: 35 schemes worth 1,208 bn have been accorded Acceptance of Necessity
(AON) for acquisition. Out of these, 32 worth 1,163.8 bn are planned through Indian
vendors and only 3 schemes worth 44.2 bn are planned through global vendors. The
contracts for the schemes are likely to be signed in FY 24 and FY 25. Further, it was
stated that the total committed liabilities in FY 23 Budget stood at 1,208.9 bn.
Modernisation schemes for 1,992.52 bn and 2,505.7 bn are being processed for contract
conclusion over the nextfive . years
Further, according to Global Datas estimates, India is likely to spend $35.3bn on
procuring various types of naval vessels and surface combatants over 2023 2033. As a
result, this market in India is expected to register decent compound annual growth rate
(CAGR). Another demand centre for domestic shipbuilding is the ship repair and maintenance
industry. Given the strategic location of India in international sea routes, this segment
has huge potential for developing the shipbuilding industry. Globally, the ship repair
market is expected to reach nearly USD40 billion by 2028 while Indias current share is
less than one per cent. Latest off the press is the news that the global shipbuilding
industry is now committed to achieving net zero by 2050 that would entail a huge
investment in retrofitting existing fleet with greener technologies while retiring some
old and polluting ships and building new ones. With several years of shipbuilding
experience at GRSE Kolkata, the Company is well positioned to support shipyards across
India and the world achieve the challenging tasks above that might require an increase of
an order of magnitude in shipbuilding capacities. The Company is already in the process of
establishing its footprints in major shipyards in India. Moreover, the Company is in the
process of collaborating and entering an
MoU with GRSE for undertaking the profitable ship repairs/ re-fit and allied activities
at GRSE / GRSE KPDD/ elsewhere in India as a ship repair associate. This is an exciting
space aligned with our promoter groups objective of nation building and will be a big
growth driver in years to come.
C. Tankage & EPC:
The world market for tanks and vessels for all industries is more than $40 billion and
growing at a rate of
5% average per year. Oil storage tanks are required in the production, refining, and
distribution of petroleum products. Oil tank market will reach $224 million in 2028 and
growing at a CAGR of 5.7% from 2022 to 2028. The pressure vessel market can be expected to
be 25% larger than the tank market. Storage of Green H2 and Green Ammonia tanks will
further boost this segment.
The Company has Decades of rich experience and track record and is one of the firstin
India to build large tanks including construction of Cryogenic Storage Tanks / Double Wall
Tanks; Hydrocarbon / ATF Storage Tanks; Mounded Storage Bullets / Skid mounted equipment;
and Floating Roof Tanks.
D. Manufacturing and Fabrication:
Manufacturing activity has always been an Integral pillar to the economic growth of our
Country. More avenues for import substitutes, alternatives, and encouragement to scaling
of IPs are opening and the Company sees the future here. With slated infra growth and
expansions in Steel / Power Sector the Company foresees huge demand in heavy fabrication
requirements and the Company is positioning to explore these opportunities by way of
additional facilities, atomization, acquiring and upgrading skill set.
With the above encouraging circumstances, the Company will reposition to focus on
profitable business, will further explore to become one of the Companies providing
manufacturing and services preposition in the above new upcoming sectors. The Company will
cautiously follow the path of sustainable but profitablebusiness which will lead to
strengthening of balance sheet in the coming year.
RISK MANAGEMENT
The major identified risk areas for the Company are input cost pressure, rising wages,
availability of skilled manpower, contract execution delays due to cascading effect of
pandemic, stretched cash flows. The Company also seeks to protect its stakeholders
interests through a robust Project Risk Management (PRM) framework enabling it to match /
mitigate identified risk profiles with the expected returns before making any financial
commitment
The contracts cell of the Company oversees the risks that may have adverse effect on
the project cost and time schedule. The Operations and the Business Development teams of
the Company, take necessary steps to mitigate the risks by prudently bidding for tenders,
considering, the various risks which are likely to be involved in project execution and
making the business terms clear with the client before taking up the project. The Project
Review Committee of Board periodically monitors, evaluates, and reviews strategy to
eliminate and minimize risks in coordination with the respective departments.
ENVIRONMENTAL PROTECTION AND SUSTAINABILITY
As the Company operates in an increasingly resource-constrained world, being
environmentally conscious and efficient are keys to its operations. The Company has a
Corporate Environment, Health, Safety and Quality (EHSQ) Policy to articulate, guide, and
adopt an integrated approach towards implementing EHSQ objectives and the Company remains
committed towards the said policy. These established systems certified by reputed
certifying agencies have helped to monitor and manage our operations systematically,
safely and in an environment- friendly manner. The Company continues to abide by
regulations concerning the environment by allocating adequate investment and resources on
a continuous basis to adopt and implement pollution control measures. Our continuous
endeavour to go beyond compliance and conserve natural resources helps to march towards
attaining excellence in environmental management and efficient and sustainable operations
as well.
The Company has achieved 3 million safe man hours at the GRSE site, Kolkata; and 1
million safe man hours at IOCL Paradeep-2, Odisha. The Company has also received
recognition and appreciation from TPL for continual improvement and excellent performance
in Occupational Health, Safety & Environment for its projects.
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND OPERATIONAL PERFORMANCE
The financial position as on March 31, 2023, and performance of the Company during the
FY ended on that date is tabulated hereunder:
Overview of our results of operations:
Particulars |
2022-23 |
2021-22 |
| Gross Turnover (including Other Income) |
13,239.05 |
17,351.39 |
| Profit before Interest and Depreciation (EBIDTA) |
(958.93) |
757.21 |
| Finance Charges |
1017.25 |
1,076.85 |
| Depreciation and Amortization |
121.06 |
117.37 |
| Total Expenditure |
15336.29 |
17,788.40 |
Net Profit/(Loss) Before Tax (PBT) |
(2097.24) |
(437.01) |
| Less: Tax expense |
(253.57) |
(65.82) |
| Net Profit/(Loss) After Tax (PAT) |
(2350.81) |
(502.83) |
Particulars |
2022-23 |
2021-22 |
| Other Comprehensive Income |
(0.15) |
1.60 |
| Total Comprehensive income |
(2350.96) |
(501.29) |
| Balance of Profit brought forward |
(915.33) |
(414.10) |
| Balance available for appropriation |
(3266.29) |
(915.33) |
| Surplus/(deficit) carried to Balance Sheet |
(3266.29) |
(915.33) |
Particulars |
2022-23 |
2021-22 |
| Total Income |
13,239.05 |
17,351.39 |
| EBITDA |
(958.93) |
757.21 |
| EBITDA as % of total Income |
(7.24%) |
4.36% |
| PAT |
(2350.81) |
(502.83) |
| PAT as % of total Income |
(17.76%) |
(2.90%) |
In FY 2023, Company registered a total revenue from operation of 13,239.05 lakhs (FY
2022: 17,351.39 lakhs), a 23.7% decrease over previous year. The reduction in total
revenue was largely attributable to the legacy projects which are on closure stages.
Further, the loss incurred was mainly due to extended stay in certain high value projects
and cost increase in certain fixed price contracts.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Companys internal control system is commensurate with the nature of its business
and the size and complexity of its operations, which provide among other things,
reasonable assurance of authorization, recording and reporting of the transactions of its
operations in all material aspects. The internal control system is managed through
continuous internal audit by outside professionals, duly supported by respective teams.
The audit is carried out through an internal audit plan, which is reviewed in consultation
with the Audit Committee, which reviews the adequacy of internal control
Companys checksinthesystemacrossallsignificant operations. The Audit Committee
also meets the Companys Statutory Auditors to ascertain their views on the financial
statements, financial reporting system, internal control system and compliance to
accountingpoliciesandprocedures.Significantobservations made in the internal audit reports
on internal control process improvements and the status on implementation of recommended
measures are presented to and reviewed by the Audit Committee and the Board of Directors.
The Company also has a documented comprehensive internal control manual for all the major
processes, viz, payroll, contract labour, human resources, procurement and purchase of
material, fixed asset, inventory control, cash management and foreign exchange
transactions, etc., which have been designed to provide reasonable assurance with regard
to recording and providing reliable financial information, complying with the applicable
statutes, safeguarding of assets from unauthorized use or losses, authorization of
transactions and adherence to corporate policies.
HUMAN RESOURCES & INDUSTRIAL RELATIONS
The Human Resource (HR) strategy at the Company is focused on introducing a
performance-driven atmosphere in the Company, where innovation is encouraged, performance
is rewarded, and employees are motivated to realize the Companys goals. The Companys HR
department co-creates all HR strategies along with the Senior Management and the Board to
influence change, attract talent and build capabilities. The HR department responds to
varied human resources needs of the Companys business to enable the human strategic
advantage.
TALENT DEVELOPMENT AND EMPLOYEE ENGAGEMENT
Key components of talent development at the Company are initiating various skill and
leadership development program as well as creating a culture of continued employee
engagement. During the year, the Company organized 132 training programs with attendance
of 182 participants, covering 431 Training Man-days. Safety, Technical Trainings and
Compliances were some of the key topics covered during these programs.
TALENT DIVERSITY
The Company aims to create healthy talent and gender diversity. The Companys human
capital comprises of 148 employees (including 10 women) across its manufacturing units and
at various construction sites. 33.33% of the Companys human resources is below 35 years.
The Company is able to maintain an average employee tenure of 5.7 years with overall
average experience of 14.45 years and the annual attrition rate has been 38.3% in FY23.
The Companys has currently employed more than 70% of technically qualified workforce.
Registered Office |
By Order of the Board |
| 2nd Floor, One Boulevard, Lake Boulevard Road, |
For Artson Engineering Limited |
| Hiranandani Business Park, Powai, Mumbai - 400076, Maharashtra |
|
Phone No: +91 40 6601 8194; Email: investors@artson.net CIN:
L27290MH1978PLC020644; Website: www.artson.net |
|
| Date: 12th July 2023 |
|
| Place: Bengaluru |
Vinayak Pai Chairman |
|
DIN: 03637894 |
+91-9892691696
