Bhagwati Autocast Ltd Management Discussions

Annexure “4" to the Directors Report

(Pursuant to Regulation 34 of the SEBI (LODR) Regulation, 2015)

COMPANY PROFILE

Bhagwati Autocast Limited (BAL) is manufacturing Cast Iron (CI) & Spheroidal Graphite Iron (SGI) Castings having plant located at near Bavla, Ahmedabad. The Company is ISO 9001:2015 certified (BUREAU VERITAS).

OVERALL REVIEW

The Companys production was increased by 17.87% during the year ended March 31,2023, i.e.15165 (MT) as compared to the previous year production of 12866 (MT). In terms of total Revenue generated during the year are highlighted as follows:

(Rs. in lakhs)

	2022-23	2021-22
Sale of CI Castings	15059.36	11216.00
Sale of Patterns	36.50	0.00
Revenue from Operations	15095.86	11216.00
Other Operating Revenue	339.21	1.19
Other Income	7.02	9.41
Total Revenue	15442.09	11226.60

While detailed financial position and performance are available in the Balance Sheet, Statement of Profit & Loss, along with related notes forming part of the financial statements for the year 2022-23.

INDUSTRY STRUCTURE AND DEVELOPMENTS

As the Companys product range can be categorized in various tractor, automobile industry. It would be appropriate to take a look at the trends that are prevailing in relevant automobile sectors.

OUTLOOK, OPPORTUNITIES AND DEVELOPMENTS

Our Company is closely dependent on the growth of tractor industries and demand for tractors is highly dependent on the agriculture activity in the country and farmers income by way of minimum support price (MSP).

The Companys performance for current financial year in terms of EBIDTA is quite satisfactorily due to utilization of capacity and raw material prices. Also due to increase tractor demand, our customer will increase their production, which resulted in our full capacity utilization.

Factors like infrastructure development, and launch of new models by vehicle manufactures, changing buying pattern, replacement demand etc. overall improvement in economic fundamentals will be the positive drivers for tractor and automobile industries in the medium to long term. The optimistic outlook of tractor industries will give boost to the demand for auto components as well and as a component supplier.

THREATS, RISKS & CONCERNS

As your Company supplies components to tractor OE manufacturers, the Company would be directly affected by the factors impacting tractor industry. These would include issues like quantum of rains spread, Government policy on procurement, enforcement ofsafety / emission regulations, availability of credit, change in interest rates, commodity price trends,increasing intensity of competition etc.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has established procedures in place for internal control. The policies and procedureshave been laid down with an objective to provide reasonable assurance that assets of the Company are safeguarded from risks of unauthorized use / disposition and the transactions are recorded and reported with proprietary, accuracy and speed. These aspects are regularly reviewed during internal audit and statutory audit. The Company has also laid down adequate internal financial controls. Internal Audit Reports are reviewed by the Audit Committee of the Board from time to time. During the year, such controls were tested and no material weakness in their operating effectiveness was observed.

HUMAN RESOURCES

The Company has a highly committed, loyal and dedicated team. Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the Organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement. The Company promotes an atmospherewhich encourages learning and informal communication within the organization. Industrial relations were cordial throughout the year under review.

DETAILS OF SIGNIFICANT CHANGES IN THE KEY FINANCIAL RATIOS & RETURN ON NET WORTH

As per Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and pursuant to Schedule III of the Companies Act, 2013 (including any statutory modification(s) or re-enactment(s) thereof, for the time being in force), details of significant changes i.e. change of 25% or more as compared to the immediately previous financial year in Key Financial Ratios and any changes in Return on Net Worth of the Company including explanations therefore are given below:

Sr.No.	Particulars	FY 2022-23	FY 2021-22	Change in %	Explanation
1	Debtor Turnover	6.35	4.15	53.13	Increased due to increase in volume by 37%, and faster realization from customer
2	Inventory Turnover	24.00	18.64	28.74	Due to increase in volume, and strict control over inventory
3	Interest Coverage Ratio	10.76	(1.60)	772.61	Increase in Profitability due to increase in volume, and lower interest Cost
4	Current Ratio	1.59	1.19	33.69	Positive liquidity due to faster collection, and Increase in volume as also getting buying cost advantage from reducing credit term with vendor resulted in increase in Current Ratio
5	Debt Equity Ratio	0.31	0.68	(53.95)	No utilization of CC due to positive liquidity, and Repaying of Unsecured Loan including of Term loan
6	Operating Profit Margin (%)	7.91	(0.73)	1178.94	Good Capacity Utilization due to favorable demand from customer
7	Net Profit Margin (%)	5.11	(0.85)	699.17
8	Return on Net Worth	25.14	(3.46)	825.65

CAUTIONARY STATEMENT

Statement in the Management Discussion and Analy&s Report describing companys objectivesand expectations may constitute"forward looking Satements" based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized by the Company. Actual results might differ materially from those either expressed orimplied.

	By Order of the Board of Directors
	For, BHAGWATI AUTOCAST LIMITED
	Dr. Pravin N. Bhagwati
Place : Ahmedabad	Chairman
Date : 30/05/ 2023	DIN : 00096799