Atlas Cycles Haryana Ltd Management Discussions

ANNEXURE-1

(for year ended 31st March, 2024)

FORWARD LOOKING STATEMENTS

This report contains forward-looking statements, which may be identified by the use of words like plans, expects, will, anticipates, believes, intends, projects, estimates or other words of similar connotation. All statements that address expectations or projections about the future, including, but not limited to statements about the Companys strategy for growth, product development, market position, expenditures, and financial results, are forward-looking statements. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to amend, modify or revise any forward-looking statement, on the basis of any subsequent developments, information or events.

INDUSTRY OVERVIEW

The Bicycles market in India has been experiencing steady growth in recent years, driven by various factors such as customer preferences, trends in the market, local special circumstances, and underlying macroeconomic factors.

Industry And Market Highlights: The Bicycles market in India is anticipated to witness a significant surge in revenue, with projections indicating a staggering amount of ^318.90bn by the year 2024.

• Moreover, this growth trajectory is expected to continue, with a projected annual growth rate (CAGR 2024-2029) of 6.69%.

• As a result, the market volume is estimated to reach ^440.80bn by 2029.

• In terms of unit sales, the Bicycles market in India is forecasted to witness a substantial increase, reaching a total of 25.21m bicycles units by 2029.

• These promising figures indicate a growing demand for Bicycles market within the country.

• Furthermore, the volume weighted average price of the Bicycles market in India is anticipated to be ^14.08k in 2024.

• This figure reflects the average price of Bicycles market across the market, taking into account various factors such as brand, quality, and features.

• On a global scale, it is worth noting that China is expected to generate the highest revenue in the Bicycles market, with a staggering amount of ^1,027 bn projected for the year 2024.

• This further emphasizes the significant growth potential and market opportunities within the Bicycles market industry.

• Indias bicycle market is experiencing a surge in demand due to increased awareness of health and environmental benefits.

Market Structure: The bicycles market covers all types of bicycles including road and racing bicycles, off-road bicycles, special purpose bicycles, electrical bicycles, hybrid bicycles, as well as bicycle supplies. However, motorcycles, scooters, mopeds, secondhand bicycles, as well as bikes purchased by bike-sharing services are not included.

Customer preferences: In India, bicycles have long been a popular mode of transportation, especially in rural areas where they are often the primary means of getting around. However, in recent years, there has been a shift in customer preferences towards bicycles as a form of exercise and leisure activity. With increasing health consciousness and a desire for a more active lifestyle, many Indians are now opting for bicycles as a way to stay fit and enjoy outdoor activities. This change in customer preferences has led to a surge in demand for bicycles across the country.

Trends in the market: One of the key trends in the Indian Bicycles market is the growing popularity of electric bicycles. With concerns about pollution and rising fuel prices, many Indians are now looking for alternative modes of transportation. Electric bicycles offer a greener and more cost-effective solution, making them an attractive option for both urban and rural consumers. This trend is expected to continue driving the growth of the Bicycles market in India. Another trend in the market is the increasing demand for premium bicycles. As disposable incomes rise and consumers become more brand-conscious, there is a growing demand for high-quality, stylish bicycles that offer a superior riding experience. This has led to the entry of several international bicycle brands into the Indian market, further fueling the growth of the premium segment.

Local special circumstances: Indias vast population and diverse geography present unique challenges and opportunities in the Bicycles market. In rural areas, where road infrastructure is often poor, bicycles are a practical and affordable mode of transportation. Additionally, government initiatives such as the promotion of cycling as a means of reducing congestion and pollution have also contributed to the growth of the Bicycles market in India.

Underlying macroeconomic factors: Indias rapidly growing economy and increasing urbanization have had a positive impact on the Bicycles market. Rising incomes and changing lifestyles have led to an increase in discretionary spending, with more people willing to invest in bicycles. Furthermore, the governments focus on promoting manufacturing and the "Make in India" initiative has encouraged the establishment of bicycle manufacturing units in the country, leading to increased availability and affordability of bicycles. In conclusion, the Bicycles market in India is experiencing growth due to changing customer preferences, trends such as the popularity of electric bicycles and premium segments, local special circumstances such as poor road infrastructure and government initiatives, and underlying macroeconomic factors such as rising incomes and urbanization. As these factors continue to drive demand, the Bicycles market in India is expected to witness further expansion in the coming years.

M/s Atlas Cycles (Haryana) Limited is a Public Limited Listed Company having presence in bicycles segment with a track record of more than 70 Years, having established brand both in Indian as well as International Market. The company is engaged in manufacturing of bicycles and bicycles components.

OPPORTUNITY AND THREATS

The areas of strength are promoters having long track record, rich experience and adequate manufacturing infrastructure with latest technology and strong dealers network. Atlas Brand is well accepted both in Indian as well as International Market and one of the largest cycle manufacturers in the world. However, the areas of weaknesses: Rising input cost i.e. prices of sheets, strips, tyres, tubes and other related chemicals are governed by external forces including its trend in International Market. Product obsolescence vis-a-vis nonacceptance of model could adversely affect the revenue stream and profitability. Further these are the major areas under business risk, promoters risk, and financial risk and so on.

PRODUCTWISE PERFORMANCE

The Company has a recognized Research and Development center recognized by the Government of India which is continuously working on development of new models and upgrading the present models. The Company has introduced a number of new models in the market keeping in view the market trend and customer preference for fancy bicycles. Further Atlas has widened its product range and the Company is concentrating and researching more and more on Fancy cycles for satisfying changing needs of youth.

OUT - LOOK

India is the second largest manufacturer of bicycles in the world. Unlike the developed nations where bicycle is used primarily for health & recreational purposes, India needs bicycles for socio-economic

empowerment of 1/3rd of its populations. Growth in population, health consciousness and socioeconomically sustainable rural development are most important demographic trends promoting bicycle as the obvious choice of transportation in future. Out of the total quantity sold, approximately 55% bicycles are roadsters 25% fancy and about 20% meant for kids. With rising income of the middle class, fancy and kids segment will grow at a much faster pace as compared to normal roadster cycles.

SEGMENT WISE PERFORMANCE

Bicycle industry has continued to show a growth of around 4 to 5% during last two years inspite of general slowdown in the economy. Standard bicycle segment which contributes around 55% of the total sales is growing marginally as compared to Fancy and Kids segments which are growing at 7 to 8% every year. Fancy cycles with features like disc breaks, shockers, alloy wheels and gears are driving the sales particularly in metro and mini-metro cities. With rising income of the middle class, fancy segment especially the kids segment is showing a very healthy growth.

RISK AND CONCERNS

Small manufacturers from unorganized sectors are increasing their market presence every year. With little infrastructure and low over heads, they are able to supply bicycles at a very low price as compared to the organized sector because of which profitability of the industry is under stress. Though they are not supplying very good quality product and their after sales service is not comparable, but because of the price advantage, their sales volume is increasing every year.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

To achieve effectiveness and efficiency of operation, reliability of financial reporting and compliance with applicable laws, rules, and regulations and compliance of significant policies, the Company has a well defined system of internal control throughout the organization. The internal audit department regularly probes the deficiency in operation of internal control and suggest ways to rectify such deficiencies. To improve efficiency and internal control Company has introduced Microsoft- Navision 2009, an Enterprise Resource Planning

(ERP) system. Due to the total integration, there is a consistent flow of accurate and easy to access data within all the departments. The Company has adequate systems of internal control to provide reasonable assurance that assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorized, recorded and reported properly.

FINANCIAL PERFORMANCE

The Company has achieved a turnover ^ 635.81 Lacs in FY 2023-24 compared to ^ 173.15 Lacs during the previous year.

HEALTH SAFETY AND ENVIRONMENT

Atlas is fully committed to the safety, health and well-being of its employees and to minimizing the environmental impact on its business operations. A safe and healthy environment is maintained and appropriate steps are taken with the object of minimizing the environmental impact on all processes and practices. The Company has a range of policies on quality, safety and health aspects to guide the employees work practices, actions and decisions. The Company strives to continuously improve the effectiveness of its policies and the employees are encouraged to contribute their mite in this direction. All employees are obliged to ensure that they fully understand all policies and do fully comply with the requirements.

HUMAN RESOURCE AND INDUSTRIAL RELATIONS

One of the "Key" reasons for the exponential growth of Atlas is undoubtedly its "People". The Company has always provided an open and challenging work environment, wherein the staff members get an opportunity to rapidly gain and assimilate knowledge. Creativity and dedication of all the employees represent ithe most precious assets of the Company. For the growth of the organization, the human resource function has an important role to play not only in identifying and recruiting suitable individuals, but also in developing and rewarding its employees. As such, we have remained focused on strengthening human capital through continuous training and development and by upgrading skills of employees to meet the Companys objectives. The Company has a union free environment and the industrial relations scenario continued to be stable during the year.

DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR, INCLUDING:

There has been significant changes in the Financial Ratios of the Company. The key Financial Ratio are as below:

S.No. Particulars	FY 2022-23	FY 2023-24	Reasons for difference
I Debtors Turnover	1,079.35	41.99	Improved, as old debtors have been either provided for or written off.
lI Inventory Turnover Ratio	655.30	60.21	it is improved as Obsolete Inventory written off.
Ill Interest Coverage Ratio	(506.63)	18.70	improved as the Company just started the business
Iv Current Ratio	0.38	0.28	-
V Debt Equity ratio	(0.28)	0.02	Due to revaluation of Companys land.
Vi Operating Profit Margin Ratio	(l,350.27)	(786.94)	Operating profit slightly improved as the Company has started activities.
Vii Net Profit Margin Ratio	(1,345.65)	8.45	Net profit margin increased as the Company sold its non-productive land.
Viii Return on Net worth	71.56	0.14	Company just started its activities

CAUTIONARY STATEMENT

Statements in the Directors Report & Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions 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 operation include raw material availability and prices, cyclical demand and pricing in the Companys principal market, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factor.

APPRECIATION

Your Directors express their warm appreciation to all the employees working at various units for their diligence and contribution. Your Directors also wish to record their appreciation for the support and cooperation received from the dealers, agents, suppliers, bankers and all other stakeholder.

CHANDER MOHAN DHALL

Whole Time Director

(DIN: 01398734)

DES RAJ DHINGRA

Director

(DIN:01202968)

Date: 30th May 2024

Place: Sahibabad