Bhagwati Autocast Ltd Management Discussions.

(Pursuant to Regulation 34(2) 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 decreased by 14.57% during the year 13611 (MT) as compared to the previous year production of 15932 (MT). In terms of total Revenue generated during the year is highlighted as follows:

(Rs. in Crores)
2019-20 2018-19
Sale of CI Castings 98.85 119.23
Sale of SGI Castings 0.01 0.24
Sale of Patterns 1.64 0.49
Revenue from Operations 100.50 119.96
Other Operating Revenue
Other Income 0.12 0.04
Total Revenue 100.62 120.00

While detailed financial position and performance are available in the Balance Sheet, Statement ofProfit &Loss, along with related notes forming part of the financial statements for the year 2019-20.

INDUSTRY STRUCTURE AND DEVELOPMENTS

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

OUTLOOK, OPPORTUNITIES AND DEVELOPMENTS

As the rural sector not too much affected by CoVID-19 pandemic and good crops better minimum support price (MSP) and also the government initiative for much income not affected. 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 that invariably dependent on the monsoon season.

Factors like infrastructure development, and launch of new models by vehiclemanufactures, changing buying pattern, replacement demand etc. overall improvement in economic fundamentals will be the positive drivers for tractor andautomobile 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, theprospects of Companys business also looks good.

THREATS, RISKS & CONCERNS

As your Company supplies components to tractor OE manufacturers, the Companywould be directly affected by the factors impacting tractor industry. Thesewould 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 aresafeguarded from risks of unauthorized use/disposition and the transactions are recorded and reportedwith proprietary, accuracy and speed. These aspects are regularly reviewed during internal audit andstatutory 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 (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 2019-20 FY 2018-19 Change in % Explanation
1 Debtor Turnover 3.42 4.07 -15.86 N.A.
2 Inventory Turnover 16.35 19.25 -15.03 N.A.
3 Interest Coverage Ratio 4.49 6.28 -28.48 Interest coverage decreased because profit before interest and tax lower as compared to previous year.
4 Current Ratio 1.53 1.38 11.41 N.A.
5 Debt Equity Ratio 0.98 1.13 -13.40 N.A.
6 Operating Profit Margin (%) 3.90 4.89 -20.27 N.A.
7 Net Profit Margin (%) 2.14 3.08 -30.54 Net profit margin decreased because of the reduction in profit before tax and deferred tax and decrease in turnover around 19.46 Crs.
8 Return on Net Worth 8.06 14.85 -45.74 Return on net worth decreased because there is low profit margin and Net profit has also gone down during the year.

CAUTIONARY STATEMENT

Statement in the Management Discussion and Analysis Report describing companys objectives and 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
Place : Ahmedabad Dr. Pravin N. Bhagwati
Date : 19/06/ 2020 Chairman & Managing Director
DIN : 00096799