autoline industries ltd sectoral share price Management discussions

As stipulated under the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion & Analysis forms an integral part of this Report.

World Economy Overview

The global economy is performing better than anticipated and demonstrating signs of resilience in 2023 after experiencing high market volatility from multiple headwinds in 2022. Despite the economic uncertainties and underlying inflationary pressures, the outlook for the global economy seems less gloomy in 2023. There is now a sense of optimism that inflation is gradually decreasing and acute stress in the banking sector had receded. Global headline inflation is expected to decrease from 8.7% in 2022 to 6.8% 2023 and 5.2% in 2024. Moreover, the rebounding of Chinas economy, improved functioning of supply chains, and the decrease in energy and food prices indicate an improvement in economic activity for 2023.

According to the International Monetary Fund (IMF), the global GDP increased by 3.4% in 2022 and is expected to grow at 3.0% in both 2023 and 2024. The growth of Advanced Economies (AEs) is expected to decline from 2.7% in 2022 to 1.5% in 2023 and 1.4% in 2024. Economic prospects for

Emerging Market and Developing Economies (EMDEs) are on average stronger than for Advanced Economies. The EMDEs grew at 4.0% in 2022 and are expected to grow at 4.0% in 2023 and 4.1% in 2024. Growth in emerging and developing Asia is on track to rise from 4.5% in 2022 to 5.3% in 2023.

The growth will be predominantly driven by the buoyant outlook for China and India.

Indian Economy Overview

The Indian economy is relatively insulated from global spillovers and remains a ‘bright spot in the world economy.

It continues to be among the fastest growing economies in the world. Indias real GDP growth is pegged at 7.2% in FY 2022-23 as against 9.1% in FY 2021-22 and reflects robust domestic consumption and lesser dependence on global demand. The real GDP (at Constant 2011-12 prices) in FY

2022-23 is estimated to value at Rs. 160.06 lakh crore, as against the First Revised Estimated GDP of Rs. 149.26 lakh crore in FY 2021-22. The Gross Value Added (GVA) grew at 7% in FY 2022-23 as against 8.8% in the previous year.

The accelerated pace of economic reforms has led to higher and sustainable growth of the Indian economy and strengthened its position in the world.

Despite the weakening external demand, the merchandise exports have registered the highest-ever annual exports of

US$ 447.46 billion with 6.03% growth during FY 2022-23 surpassing the record exports of US$ 422 billion in FY 2021-22. Indias IIP growth of 5.1% in FY 2022-23 shows modest growth in the industrial sector. Further, following the softening of global commodity prices, and successive hikes in the policy repo rate by 250 basis points in FY 2022-23 by the Reserve Bank of India (RBI), the consumer price index

(CPI) inflation decreased to 4.25% (provisional) in May 2023 against 4.70% recorded in April 2023.

Urban and rural economies are the key pillars of inclusive growth in India. Domestic economic growth is gaining strength and further traction in 2023. Due to the rising consumer incomes and purchasing power, there is a surge in household consumption, boosting the demand for goods and services across industries. Several factors such as the

Capital Expenditure of the Central Government in setting up of infrastructure, credit growth to the MSME sector and efficient inflation control measures by the RBI pushed Indian economy for a vibrant future.

Overall Outlook

India has a long runway for growth and the IMF projects the Indian economy to grow steadily at 6.1% in FY 2023-24 before rising to 6.3% in FY 2024-25. The economic growth is primarily driven by robust domestic consumption, abating of inflation, technology-enabled development, export growth, and revival in credit growth among others. Additionally, increased capital expenditure on infrastructure and the growth-enhancing policies such as the PLI schemes,

‘Make in India and ‘Atmanirbhar Bharat will strengthen the infrastructural and manufacturing base, lead to higher productivity, promote Indian products in the global markets and build a strong foundation for economic growth. With its strong fundamentals, massive demographic strengths, and multiple growth levers in place, the Indian economy is better positioned to navigate global headwinds in FY 2023-24 and sustain the growth momentum in the long term.

Indian Auto and Auto Component Industry

Indias automobile and auto component industry is one of the critical drivers of Indias economic growth. The Commercial vehicle market (MHCV and LCV) in India grew by 34.3% YoY in total industry volumes to 962,468 units from 716,566 units. The Passenger Vehicle segment, which includes passenger cars, vans and utility vehicles, registered a growth of 25%. The turnover of the industry grew 34.8% to US$ 33.8 billion during April-September 2022 compared to the first half of the previous year. According to the Automotive Component Manufacturers Association of India (ACMA) forecast, the

Indian automotive components industry is likely to maintain its growth trajectory and is expected to grow at 10-15% in FY

2023-24, driven by both domestic and export market demand despite the uncertainties in major markets of the USA and Europe. The auto component industry is projected to record

US$ 200 billion in revenue by 2026 and exports of auto components are expected to reach US$ 30 billion by 2026.

The Indian automotive industry has seen a healthy revival in

FY 2022-23, aided by a recovery in economic activities, global supply rebalancing and increased mobility. The industry is benefiting from new tailwinds, such as global supply rebalancing, strong domestic demand, and the governments strong push for domestic manufacturing. According to the Society of Indian Automobile Manufacturers (SIAM), the total automobile production increased to 25.93 million units in FY 2022-23 from 23.04 million units in FY 2021-22. The domestic sales for FY 2022-23 were 21.20 million units.

The Passenger Vehicles (PV) and Commercial Vehicles (CV) segments have recorded robust growth in volumes during FY

2022-23. Growth was driven by pent-up consumer demand, improved semiconductor chip supply, new launches and product upgrades from OEMs. The increase in sales of passenger vehicles in FY 2022-23 is strategically vital for

Autoline Industries Ltd., considering the ongoing setup of its new manufacturing facility at Sanand, Gujarat.

Further, Indias electric vehicle (EV) industry recorded robust growth with 1.17 million unit sales in FY 2022-23, aided by subsidies offered by the government and growing penetration of electric vehicles across segments.

Automobile Production Trends

Category	2017-18	2018-19	2019-20	2020-21	2021-22	2022-23
Passenger Vehicles	40,20,267	40,28,471	34,24,564	30,62,280	36,50,698	45,78,639
Commercial Vehicles	8,95,448	11,12,405	7,56,725	6,24,939	8,05,527	10,35,626
Three-Wheelers	10,22,181	12,68,833	11,32,982	6,14,613	7,58,069	8,55,696
Two-Wheelers	2,31,54,838	2,44,99,777	2,10,32,927	1,83,49,941	1,78,21,111	1,94,59,009
Quadricycle	1,713	5,388	6,095	3,836	4,061	2,897
Grand Total	2,90,94,447	3,09,14,874	2,63,53,293	2,26,55,609	2,30,40,066	2,59,31,867

(Source: Society of Indian Automobile Manufacturers)

Automobile Domestic Sales Trends

Category	2017-18	2018-19	2019-20	2020-21	2021-22	2022-23
Passenger Vehicles	32,88,581	33,77,389	27,73,519	27,11,457	30,69,523	38,90,114
Commercial Vehicles	8,56,919	10,07,311	7,17,593	5,68,559	7,16,566	9,62,468
Three-Wheelers	6,35,998	7,01,005	6,37,065	2,19,446	2,61,385	4,88,768
Two-Wheelers	2,02,00,117	2,11,79,847	1,74,16,432	1,51,20,783	1,35,70,008	1,58,62,087
Quadricycle	0	627	942	-12	124	725
Grand Total	2,49,81,312	2,62,66,179	2,15,45,551	1,86,20,233	1,76,17,606	2,12,04,162

(Source: Society of Indian Automobile Manufacturers)

Having witnessed a strong comeback from the COVID-led downturn, the Indian automotive industry is setting out on a journey with hopes for sustained growth momentum in 2023 amid the challenges such as high input costs, soaring fuel prices, higher interest rates, inflation, and new emission and safety norms. Factors such as sales of automobiles on digital platforms, wide availability of credit and financing options, population growth, integration of wireless technology in cars, and popularity of electric vehicles (EVs) will spur the growth of the automotive industry.

Government Initiatives and Achievements

The government has been taking proactive measures, including the ‘Make in India, Production Linked Incentive

(PLI) scheme, Foreign Trade Policy (FTP), and schemes such as Advance Authorization, Export Promotion Capital

Goods Scheme, etc. to boost the local manufacturing ecosystem and exports. Further, the government allowed

100% FDI through the automatic route for the auto sector. The FDI inflow into the Indian automotive industry during the period April 2000 - March 2023 stood at US$ 34.7 billion. The governments push to use rupees for international trade will also aid the growth in exports of automobiles and auto components. Further, an increased capital expenditure of

Rs. 10 lakh crore on infrastructure development including road construction augurs well for the industry.

Some of the governments key initiatives to bolster the growth of the auto and auto component sector are listed below:

Production Linked Incentive (PLI) Scheme

The government approved the Production Linked Incentive (PLI) Scheme for the automobile and auto component industry to boost domestic manufacturing of Advanced Automotive Products (AAT) with a budgetary outlay of

Rs. 25,938 crores. This scheme aims to overcome cost barriers, create economies of scale, build a robust supply chain in areas of AAT products, and attract investments in the automotive manufacturing value chain. A total of 115 companies had filed their application under this scheme. Out of 115, total 85 applicants (18 applicants under Champion OEM and 67 applicants under Component Champion) have been approved. Two OEM companies have been approved to be part of both schemes. The PLI scheme attracted a proposed investment of Rs. 67,690 crores as on December 2022. The governments push in the form of automotive PLI schemes to drive Indian manufacturers towards increased localization of advanced automotive technologies will not only propel the growth of the local

EV market but also boost exports of such advanced components from India.

Vehicle Scrappage Policy (V-VMP)

The Voluntary Vehicle Scrappage Policy or Voluntary Vehicle Fleet Modernization Program (V-VMP) aims to remove unfit and polluting vehicles from Indian roads and replace them with new, modern and fuel-

The Policy aims to de-register and scrap private vehicles older than 20 years and commercial vehicles over 15 years if they fail a mandatory fitness test. The policy targets the voluntary scrapping of ~1 crore unfit vehicles strictly based on their fitness, irrespective of vehicle age. Phasing out unfit and polluting vehicles will aid in achieving a lower carbon footprint in the country. The scrappage policy is effective from April 1, 2023 for heavy commercial vehicles (HCVs).

For other commercial vehicles and private vehicles, the policy will be effective from June 1, 2024.

The Union Budget for 2023-24 has laid special emphasis on vehicle scrapping policy by allocating adequate funds to scrap and replace old vehicles of both the Centre and state governments. The Centre has approved the scrapping of more than 9 lakh vehicles that are older than 15 years. According to the Minister of Road Transport and Highways

(MoRTH), 51 lakh light motor vehicles (LMVs) are older than 20 years, 34 lakh LMVs are older than 15 years and 17 lakh medium and large commercial vehicles are older than 15 years. The implementation of the policy would provide lucrative opportunities for the automotive sector by boosting sales of vehicles including heavy and medium commercial vehicles and EVs for fleet modernization. Over 11,000 vehicles were scrapped till March 31, 2023. A total of 11,025 vehicles (7,750 private and 3,275 government vehicles) have been scrapped till March 31, 2023 by the registered vehicle scrapping facilities, and further 2.6 Lakhs vehicles are expected to be scrapped in FY 2024.

Promotion of Electric Vehicles

The electric vehicle industry in India is picking pace with

100% FDI, new manufacturing hubs, higher incentives, and the governments push to improve charging infrastructure. EVs have increasingly become a preferred mode of transportation over internal combustion engine (ICE) vehicles due to enhanced energy security, reduced reliance on crude oil, better air quality, and lower greenhouse gas emissions. The government has reaffirmed its commitment to reduce carbon emissions and the transition to electric mobility and its mission for 30% EV penetration by 2030. Manufacturers of EVs and EV components are set to benefit from the exponential growth of the EV market.

In the Union Budget 2023-24, measures such as the elimination of customs duties on the import of capital goods and machinery used to manufacture lithium-ion cells for batteries used in electric vehicles (EVs) will result in reduction in input costs and encourage domestic production of lithium-ion cells. The reduction in basic customs duty is expected to deepen value addition, promote exports, augment domestic manufacturing and reduce the prices of EVs and make them affordable for the middle class in the country. It will also ensure the Advance Cell Chemistry

PLI scheme is well supported. Further, increased customs duty on imported vehicles, including electric models in semi-knocked down (SKD) and completely built unit (CBU) forms will encourage the OEMs to produce such vehicles domestically in India.

FAME-II Scheme

The government has extended the Faster Adoption and

Manufacturing of Electric and Hybrid Vehicles (FAME-II) scheme till 2024. The FAME scheme was launched in 2015 under the National Electric Mobility Mission Plan (NEMMP) to encourage electric and hybrid vehicle purchases by providing financial support. Phase-II (FAME-II) is a 3-year subsidy program, which aims at supporting the electrification of public and shared transportation: 7,090 electric buses, 5 lakh electric three-wheelers, 55,000 electric four-wheeler passenger cars (including Strong Hybrid) and 10 lakh electric two-wheelers. Under (FAME-II), total 7.43 lakh electric vehicles are incentivized.

The increasing adoption of electric vehicles (EVs) and hybrid models results in the growing need for EV infrastructure to support the EV demand. Under Phase-II of the FAME India

Scheme, Rs. 1000 crore is allocated for the development of charging infrastructure. The Ministry of Heavy Industries has sanctioned 2,877 electric vehicle charging stations in 68 cities across 25 states/UTs. Further, 1576 charging stations across 9 Expressways and 16 Highways under Phase-II of the FAME initiative have also been sanctioned.

Automotive Mission Plan (AMP)

The governments Automotive Mission Plan (AMP) 2016-26 aims to propel the Indian automotive industry. AMP 2026 aims to increase the GDP contribution of the automotive industry rise to over 12%, create additional ~65 million direct and indirect jobs in the sector, increase net exports of vehicles and auto components and implement end-of-life policy for old vehicles.

Advantage Robust Demand India

Growing young, working population and expanding middle class will remain the key demand drivers.

By 2025, 4 million EVS are projected to be sold each year and 10 million by 2030.

Export Opportunities

India is emerging as a global hub for auto components sourcing and the industry exports over 25% of its products annually.

India has a competitive advantage in auto components categories such as shafts, bearings and fasteners due to large number of players.

Favorable Policy Ecosystem

100% FDI is allowed through the automatic route in the auto sector. The government approved PLI scheme for auto sector.

(FAME-II) was launched to incentivize electric vehicle sales and boost manufacturing.

Competitive Advantage

Cost-effective manufacturing base keeps costs lower by

10-25% compared to operations in Europe and Latin America. India is the second largest steel producer in the world, hence has a cost advantage.

Company Overview and Growth Plan

Established in 1996, Autoline Industries Limited (herein referred as "Autoline" or "the Company") is a prominent Pune-based manufacturer and supplier of automotive components to Original Equipment Manufacturers (OEMs) and other automobile companies in both domestic and international markets. The Company is engaged in manufacturing sheet metal components, assemblies, and sub-assemblies including Foot Control Modules (FCM) and Parking Brakes (PBM), hinges, cab stays and cab tilts, and exhaust systems for large OEMs in the automobile sector. It caters to major global OEMs, supplying over 3,000 products for passenger cars and commercial vehicle segments and other non-auto segments. Autolines five manufacturing sites are supported by in-house design and engineering services and a commercial tool room.

The following are the major business divisions of the Company:

Concept, Style, Design, Analysis & Engineering Services

Automotive engineering services for product design, development and validation

Tool Room

Press tool design, formability analysis

Press tool manufacturing, jigs & fixture

Tools tryouts

Mechanical Assemblies

Pedal Control System

Parking Brake

Door Hinges, Jack Assemblies

Cab Stay and Cab Tilt

Medium and Large Stamping Assemblies

Complete Floor and Door Assemblies, Sub Assemblies

Load Bodies and Cross Beams

Exhaust Systems

Tubular Assemblies and Sheet Metal Stampings

The Company has been providing end-to-end engineering services for passenger and commercial vehicles for over

27 years. The Company provides various types of design, drafting, modeling, and analytical services to clients through Autoline Design Software Limited (wholly-owned subsidiary).

Catia, UG/NX, Pro-E/Creo, Hypermesh/Hyperform, NX

Nastran, Radioss, and other best-in-class tools are used for

CAD/CAE services.

India is the fourth largest producer of motor vehicles in the world and a prominent exporter of automobiles. for Various initiatives/schemes have been launched by the government to promote growth and attract investment and international companies to India. The governments increasing thrust on infrastructure development and promoting ease of doing business to make India a global manufacturing hub would benefit the players in the auto and auto component sector, including Autoline.

While growing business in India with traditional customers, the Company is in the process of making significant headway in diversifying the customer base. It has undertaken numerous initiatives viz. innovation, cutting cost through value engineering, reducing and controlling costs, overheads, etc. to optimize the utilization of resources and achieve sustainable business growth.

The Company takes complete responsibility to deliver quality products to customers on time by managing critical manufacturing programs through accurate project management techniques and by providing continuous supervision by qualified and competent technical assistance.

In its relentless efforts to deliver high-quality products, technological advancements, and superior customer service, Autoline has built a strong brand reputation in the domestic and international markets.

The management team took constructive efforts to turnaround the Company and some of the key initiatives undertaken during the year are highlighted below:

Introduced own EV products and catering to EV requirement

The Company has strategically diversified to EVs and forayed into the electric two-wheelers and three-wheelers market to benefit from the burgeoning EV industry.

It has successfully launched its E-cycles and has set up a wholly-owned subsidiary named ‘Autoline E-mobility

Private Limited(AEMPL) in March 2022 for augmentation of its E-products. AEMPL has developed eight variants of E-

Cycles in various frame sizes with the brand name "e-speed".

During the year under review, AEMPL has launched 4 new models i.e., 27.5 Inch Unisex, 26 Inches Cargo & Frame with integrated battery (front and rear wheel drives) – fully designed, developed and manufactured at the Autoline Unit of the Company, sold and serviced at Pan India network along with e-commerce presence.

These models include a 27.5 Inch Unisex which is perfect for daily commuting or leisurely rides through the park. There is also a cargo version with an integrated battery that features both front and rear-wheel drives. This model is ideal for those who need to carry groceries or other items while still enjoying the benefits of an electric-powered ride. 3 variants of E-cycles are safe, higher mileage per charge and ARAI certified. This will enhance the revenue from subsidy states.

During the year, AEMPL sold 650+ EV cycles, out of which major volumes have been sold in the second half of the year.

During the initial half-year, EV cycle sales were affected due to encouraging low-speed scooters sale by government norms. However, later in 2^nd half of the year, low-speed scooters were banned and the said is impacted positively on e-cycle sales and increased number of sales.

The Company is also catering to EV segments of commercial and passenger vehicles of the existing clients. As a result of its focused approach, the Company is receiving inquiries from major EV players. Moreover, the Company is also anticipating higher growth in the stamping tool manufacturing business and overseeing the possibilities to develop the new business and expand the existing business.

New Set-up at Sanand

The Company received an offer from Tata Motors Limited

(TML), one of its largest clients, to set up a manufacturing facility in Sanand, Gujarat to cater to its PV division. The Company has accepted the offer and working to set up a new plant (unit) on the leasehold land allotted by Gujarat

Industrial Corporation at Sanand. The Company targets to supply major sheet metal and fabricated parts for 2,40,000 vehicles per annum with an investment of Rs. 50 crores. The Board has approved Rs. 65 crores CAPEX investment for

Sanand Plant in coming two years with a capacity of 2,40,000 units per year. The execution will start from January 2024.

The Company has a strong client base including renowned names such as Tata Motors, Ashok Leyland, Mahindra,

Cummins, Daimler, etc. Backed by its well-placed business growth strategies and the strength of big presses and facilities, the Company is recognized as a preferred vendor by its major customers and the new set-up in Gujarat will benefit the Company to tap the customers of Sanand-Hansalpur-Vithalapur belt. The Company continuously strives to increase its client portfolio. TML is aiming to increase its overall production capacity substantially by leveraging the capacity at the Sanand plant. The Company currently, inter-alia, is catering to the EV requirements of TML for

Nexon Car and established a reliable vendor for the EV segment. It is optimistic to receive orders for upcoming EVs to be launched by TML.

Expansion of the existing unit at Hosur

The Company moved its manufacturing facility to Hosur,

Tamil Nadu and commenced production and started serving its clients. In order to exploit the EV market on a wide scale, the Company moved the current rented facility in Hosur,

Tamil Nadu, to larger premises during the year.

Cost optimization

The Company endeavored and resulted to reduce costs and improve the top line with diversification of the customer base to improve further profit margins. The Company has expanded its customer base and is determined to diversify into E-Vehicles, diversify customer base and enhance its product portfolio and continuously work towards the improvementofoperationalefficiencyand cost optimization.

Consolidation of Units

The Company has achieved consolidation of two more units in the first the non-core assets and use the proceeds for debt and cost reduction.

Revenue Growth

The Company has registered a 14% revenue growth in FY 2022-23 over FY 2021-22 by increasing the customer base and Passenger Vehicles continue to show increased volume. It is expecting volumes to continue to improve in all segments in FY 2023-24.

Automation in the Production line

Autoline is moving towards automation in the Production line which will helpefficiency by to increase operational increasing production volume, improve quality delivery and reduce dependency on direct labor. The Company has automated one of its lines as a pilot project, which has enhanced operational efficiency by 35%.

Capital Expenditure and Investments

During the year, the Company incurred Rs. 10.71 crores towards capital expenditure predominantly towards:

a) Improving manufacturing capacity and capability by installing press machine;

b) Automation in the manufacturing facility;

c) Design, software upgradation;

d) Machine replacement and maintenance capex for sustenance.

Consolidated Financial Performance

The Company delivered a strong performance in FY 2022-23 halfofFY2022-23withtheobjectivetomonetize with 14.30% growth in revenues. The revenue from operations during the financial year 2022-23 stood atRs. 64,975.01 lakhs compared to Rs. 56,843.32 lakhs the last year.

The Earning before interest, depreciation, exceptional items and income tax (EBIDTA) during FY 2022-23 stood at Rs. 4,108.46 lakhs compared to Rs. 4,788 lakhs in the last year.

The PAT after exceptional items stood at Rs. 1,053.5 lakhs compared to Rs. 769.4 lakhs the previous year, registering an increase of 36.92%. The Basic and Diluted Earnings per Share stood at 2.72 and 2.70 respectively registering an increase of 30%.

During the year, the Operating profit margin in FY 2022-23 was recorded at 5.7%. The Return of Net Worth (RoNW) ratio stood at 24.05% as compared to 30.28 % due to increase in capital.

Details of Significant Changes in Key Financial Ratios, if any (i.e., change previous financial year)

Pursuant to Schedule V read with the Regulation 34(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the significant changes in Key Financial Ratios (i.e. change of 25% or more as compared to the immediately previous financial year) with detailed reasons are provided.

The ratios for the years ended March 31, 2023 and March 31, 2022 (on Standalone Basis) are as follows:

Ratio	Numerator	Denominator	March 31, 2023	March 31, 2022	Variance Reason (%)
Current Ratio	Total current assets	Total current liabilities	0.57	0.56	2.31 Current ratio has improved as compared to previous year, mainly due to increase in receivables consequent to increase in volume.
Debt - Equity Ratio	Total debts	Shareholders equity	2.75	5.40	(49.08) Debt equity ratio has improved due to increase in total equity on account of equity issue and current year profits.
Debt Service Coverage Ratio	Earnings available for debt service	Debt service	1.35	0.57	134.54 Lesser repayment of long term debt in current year as compare to last year.
Return on Equity Ratio	Net profits after taxes	Average shareholders equity	0.28	0.30	(6.16) Company has posted a net profit of Rs.14.88 crores in current year as compared to net profit warrrant conversion resulting into decrease in ROE.
Inventory Turnover Ratio	Cost of goods sold	Average inventory	9.87	8.86	11.42 Average inventory has increased as compare to last year, higher consumption of materials has led to increase in turnover.
Trade Receivables Turnover Ratio	Net credit sales	Average trade receivables	7.11	7.56	(6.01) Increase in revenue vis-?-vis average receivables resulted into decrease in ratio.
Trade Payables Turnover Ratio	Net credit purchases	Average trade payables	7.25	6.30	15.09 Payables has increased as compare to last year, higher consumption of materials has led to increase in Purchase cost.
Net Capital Turnover Ratio	Net sales	Average working capital	(5.09)	(3.74)	36.28 Sales turnover has increased by 14% YoY, however net working capital remains negative.
Net Profit Ratio	Net profit	Net sales	2.30	1.32	73.88 Company has a net profit of Rs.14.88 crores in current year as compared to Rs.7.5 crores in previous year.
Return on Capital Employed	Earnings before interest and taxes	Capital employed	9.86	9.81	0.49 EBIT has decreased by almost 12% YoY & repayment of loan resulting into favourable ratio.
Return on Investment	Income from invested funds	Weighted average invested funds	0.31	0.31	0.70 -

The ratios for the years ended March 31, 2023 and March 31, 2022 (on Consolidated Basis) are as follows:

			31, 2023	31, 2022	(%)
Current Ratio	Total current assets	Total current liabilities	0.97	0.88	10.32 Current ratio has improved as compared to previous year, mainly due to increase in receivables consequent to increase in volume.
Debt - Equity Ratio	Total debts	Shareholders equity	1.24	1.89	(34.13) Debt equity ratio has improved due to increase in total equity on account of equity issue and current year profits.
Debt Service Coverage Ratio	Earnings available for debt service	Debt service	1.64	0.65	153.92 Lesser repayment of long term debt in current year as compare to last year.
Return on Equity Ratio	Net profits after taxes	Average shareholders equity	7.96	7.34	8.48 Company has posted a net profit crores in current year as compared to net profit of Rs.7.5 crores in previous year & equity warrrant conversion resulting into decrease in ROE.
Inventory Turnover Ratio	Cost of goods sold	Average inventory	2.99	2.53	18.05 While average inventory has remained same in line with last year, higher consumption of materials has led to increase in turnover.
Trade Receivables Turnover Ratio	Net credit sales	Average trade receivables	6.98	7.32	(4.64) Increase in revenue vis-?-vis average receivables resulted into decrease in ratio.
Trade Payables Turnover Ratio	Net credit purchases	Average trade payables	7.18	6.24	15.07 Payables has increased as compare to last year, higher consumption of materials has led to increase in Purchase cost.
Net Capital Turnover Ratio	Net sales	Average working Capital	(33.07)	(13.60)	143.11 Sales turnover has increased by 14% YoY, however net working capital remains negative.
Net Profit Ratio	Net profit	Net sales	1.62	1.35	19.81 Company has posted a net profit crores in current year as compared to net profit of Rs.7.5 crores in previous year & equity warrrant conversion resulting into decrease in ROE.
Return on Capital Employed	Earnings before interest and taxes	Capital employed	7.51	7.66	(1.98) EBIT has decreased by almost 12% YoY & repayment of loan resulting into favourable ratio.
Return on Investment	Income from invested funds	Weighted average invested funds	(5.12)	(5.05)	1.38 -

Corporate Social Responsibility (CSR)

The Company has voluntarily formed a CSR Committee to monitor and maintain its CSR activities. Since Autoline has suffered losses in recent years, the provisions of Section

135 of the Companies Act, 2013 relating to CSR activities are not applicable to the Company. However, the Company had undertaken various CSR Initiatives voluntarily such as tree plantation, donation of vital items, Blood donation camps, etc.

As a part of discharging its moral responsibility towards society, especially towards the Divyang (persons with disabilities) and in order to provide them an opportunity to become financially independent same time to bring them into the mainstream, the Company has voluntarily provided an employment opportunity to the Divyang (persons with disabilities).

Risks and Mitigation Strategies

Liquidity risk: sufficient liquidity may Theunavailabilityof adversely impact the working capital position, resulting in manufacturing disruption and may harm the Companys reputation. The Company is focused to deploy efforts to surplusboost revenue and profitability cash to meet its financialobligations. It also consolidated its manufacturing units and utilizing the proceeds to reduce its debt levels. It aims to further augment its working capital needs to meet the growth objectives.

Concentration risk:

The Company is concerned about the over-dependency on few clients and business segments. This over-dependency may pose a risk to the Companys business. To reduce the customer concentration risk and single segment risk, the Company has been proactively seeking new clients in

India as well as abroad and at the same time striving to increase its share of business with the existing customers.

The Company is expanding its Business Development team to approach the market in more dynamic way and to focus on new Customers as well as additional business from existing customers.

Rising input cost risk: High prices of key raw materials may lead to increased input costs, impacting the operations and profitability of the Company. It is focusing on raw material cost optimization through various means such as conversion cost reduction, efficiency supply chain improvement, automation, and material yield improvement. Any increase in the price of key safety and mock drill trainingraw materials, particularly steel, is passed on to customers to minimize the impact on profitability. The Company also concentrates on cut-to-size raw materials to reduce the conversion cost, scrap and other associated costs.

Raw material risk: Disruption in the procurement of raw materials on time may significantly impact the Companys operations and manufacturing cost. Since the Company relies on third-party vendors to purchase raw materials and other supplies, any negative impact on supply chain disruptions and raw material shortages may hinder its production. The Company ensures that the shortage does not significantly affect the supply chain and manufacturing output. It remains focused on ensuring the timely availability of raw materials and components and maintains long-term relationships with its vendors and customers.

Competition risk: The Company faces competition from existing and new players in the industry. Its inability to offer differentiated products with consistently superior quality and competitive pricing may negatively influence its market share and profitability. However, the Company benefits from its strong and long-standing direct relationships with many OEMs. It also consistently invests in automation, improvement in delivery systems, and innovative products of superior quality to gain a competitive advantage.

Macro-economic risk: The economy is facing headwinds in terms of inflation, high-interest rates, global slowdown, etc.

The economic slowdown or stagnation could directly and indirectly impact the Indian economy and all the sectors including the auto sector, resulting in demand compression and lower revenue for the Company. The Company is taking every precaution possible to mitigate the effects of such impact by adopting a conservative approach while aiming to benefit from the growth of the auto sector.

Environment, Occupational Health and Safety (EHS)

The Company believes in "Safety First" and always ensures the health, safety and security of its employees at the workplace. It has a well-defined Environment, Health and

Safety (EHS) framework across all functions and employees, from the shop floor to senior management strictly follow safety standards and perform tasks safely. The Company also conducts training and awareness programs throughout the year for the employees to enhance their skills and capabilities and provide them with the newest industry knowledge to manage the task with passion to excel.

The Company adheres to the best safety standards in its manufacturing facilities and has an impressive record of the safest operating conditions in the industry. It regularly forconducts fire-fighting, the operators and staff. It also includes worker training in accident prevention, response and emergency planning, as well as the usage of protective clothing and equipment. Additionally, paramedical staff and emergency medical equipment are available in the Company to deal with industry-specific health and safety issues among the employees. The Companys EHS management involves organizing activities and procedures for recognizing workplace potential risks, which aids to reduce accidents and exposure to hazardous chemicals and conditions.

The Company has hired a dedicated safety awareness of safety. The safety fostering a safety-conscious workplace environment.

Every year, the Company celebrates safety week to reiterate its commitment to ensure a safe workplace. During the year, various training sessions were conducted by highly qualified and experienced professionals on vital subjects like First aid training, Behavioural-based Safety training,

‘5S and Workplace safety at regular intervals. Mock drills and various competitions covering safety in all aspects of life such as health safety and workplace safety were also conducted during the year.

Although the Environmental, Social and Governance (ESG)

Report is not mandatory for the Company, it has started checking the ESG preparedness Audit to know where it is standing. The Company will start implementing the ESG principles in the coming years. and cost-

Quality

The Company fosters a culture of relentless improvement and strives to protect its reputation as a superior quality supplier by emphasizing on maintaining and improving its quality control. Its manufacturing facilities are highly automated wherever required. The safety protocols are diligently maintained and quality standards are being strictly monitored. The Companys quality system is upgraded on an ongoing basis to bring it up to and maintain the global standard. The Company meets all the customers quality standards and customer-perceived quality is produced at workstations by adding "poka yoke" to avoid complaints.

16949The Company has obtained QMS certification-

(created by The International Automotive Task Force

(IATF) members). It has also received quality certifications in the areas of TQM and QMS. It is certified quality systems such as TS16949, OHSAS 18001, ISO 14001, Formal Q (Volkswagen), QSB (General Motors),

MONOZUKURI & ASES (Renault-Nissan), Formal Q (FORD).

Additionally, the Company employs a variety of other quality control measures, such as quality awareness, training, and involvement of all Shop floor team quality targets, regular and preventive maintenance of dies and other machines to produce high-quality parts, periodic review of supplier quality performance and escalation, etc.

The Company regularly invests in technological upgrades to achieve consistency in product quality and strives to consistently improve its product variety, product quality and efficiency, resulting in client satisfaction.

Internal Control Systems

The Company has an efficient and structured internal control system commensurate with the size and nature of its business. The Companys policies and procedures are well-framed and encompass the design, implementation, and maintenance of effective internal financial controls.

Internal audits are conducted by external auditors and they audit all aspects of business based on audit programs established by the Audit Committee. The audit reports are reviewed and addressed quarterly by the Audit Committee in the presence of Auditors.

The Company ensures the optimal utilization of resources and the accurate reporting of financial transactions and strict compliance with applicable laws and regulations. The Board prepares and approves detailed annual and capital budgets for all of its functions yearly, and the committee monitors the process. The Company has replaced the Microsoft Dynamics AX 2009 with SAP ERP. It is a low-cost and effective ERP system for strengthening the organizations internal control system. With the support of modern ERP and other constant upgrades, the Company is in a better position to augment effectivenessoperational of overall operational controls.

Human Resources

The Company considers its employees as the most valuable asset and integral to its growth and business sustainability.

It believes that its human resources can propel the Company forward on its path to success. Its human resource management has been a continual process in which various methods are constantly embraced and utilized to achieve optimum performance. During FY 2022-23, the Company undertook various initiatives to boost employee morale, ensure the sustained welfare and well-being of its employees and create a conducive work environment.

The Company provides pre-joining health checkups to the new employees and welcomes them with joining kits with the aim of continuous training of itswithvarious employees for the enhancement of their skills and capabilities. In order to demonstrate the qualities of true leadership, various seminars and training programs were conducted by internal as well as external professionals for the Senior Management team. To create awareness on one of the crucial aspects of membersinordertomeet day-to-day life, i.e. Finance, one exclusive training on the subject of "Finance for Non-finance" was conducted by highly qualified and experienced professionals. Further, the Company conducts training on various topics including technical as well as behavioral sessions by expert trainers. It also encourages and engages internal personnel in skill-sharing sessions to give training in their relevant field.

It helps in sharing knowledge and information as well as the personality development of the concerned employee.

The Company is in the process to revive and redesign its

Gurukul training facility to train the new comers, contract workers before putting them in the manufacturing facilities and to upskill the on roll employees. The Company is driving Performance Management System (PMS) to foster performance-oriented culture across the organization. It has implemented various HR policies such as Reward

& Recognition, Advance salary, PMS policy, Star Award

Policy, Attendance Policy, Employee Health Benefit Scheme,

Accident policy, Death Benevolent fund, etc. to maximize the potential of its employees. In addition to the availability of self-funded Mediclaim known as the ‘Autoline Employees

Health Benefit Scheme, the Company also sponsors/ organizes programs and activities for the betterment of its employees such as annual health check-ups, birthday celebrations, sports events, cultural events, etc.

Human Asset Division (HAD) representatives maintain interaction with individuals within the group of employees through different forums and committees to maintain transparent work culture. The Company is planning to develop internal trainers to impart customized training programs for the development of skills of the employees. It has also initiated Balance Score Card/KRAs to closely monitor the individual employees functional performance to foster a performance-driven organization. The Companys average total employee strength stood at 829 as on 31^st March 2023.

Cautionary Statement

The statements contained in this Annual Report, including the Directors Report and Management Discussion and Analysis may include forward-looking statements within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectations regarding future events. The Companys actual results, performances, or achievements may differ materially from any future results, performances, or achievements that may be expressed or implied, given that the Companys operations are influenced by numerous external and internal factors beyond the control of the Management. These forward-looking statements are subject to certain risks and uncertainties, including but limited to, economic conditions affecting demand/supply and price conditions in the market, changes in government regulations and policies, raw material availability and prices, competitive pressures, and other incidental factors. The Company cannot guarantee the accuracy or achievement of these statements, assumptions, and aspirations. The Company assumes no obligation to publicly update, change, or revise any forward-looking statements in light of later events or developments.