Craftsman Auto Management Discussions

Management Discussion and Analysis:

Pursuant to Schedule V to the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015, a Management Discussion and Analysis Report covering business performance and outlook (within limits set by Companys competitive position) is given below:


Global Economy

According to IMF World economic Outlook (Apr-2024), Economic activity was surprisingly resilient through the global disinflation of 2022-23. As global inflation descended from its mid-2022 peak, economic activity grew steadily, defying warnings of stagflation and global recession. Growth in employment and incomes held steady, reflecting supportive demand developments including greater than expected government spending and household consumption and a supply-side expansion amid, notably, an unanticipated boost to labour force participation. The unexpected economic resilience, despite significant central bank interest rate hikes aimed at restoring price stability, also reflects the ability of households in major advanced economies to draw on substantial savings accumulated during the pandemic.

The pace of expansion is low by historical standards, owing to both near-term factors, such as still-high borrowing costs and withdrawal of fiscal support, and longer-term effects from the COVID-19 pandemic and Russias invasion of Ukraine, weak growth in productivity and increasing geo-economics fragmentation. Global headline inflation is expected to fall from an annual average of 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies. The latest forecast for global growth five years from now at 3.1 percent is at its lowest in decades.

Risks to the global outlook are now broadly balanced. On the downside, new price spikes stemming from geopolitical tensions, including those from the war in Ukraine and the conflict in Gaza and Israel, could, along with persistent core inflation where labour

markets are still tight, raise interest rate expectations and reduce asset prices. A divergence in disinflation speeds among major economies could also cause currency movements that put financial sectors under pressure.

Monetary policy remains focused on aligning inflation with the target to pave the path for sustained growth in the medium-term.

Indian Economy

According to RBI, Domestic economic activity continues to expand at an accelerated pace, supported by fixed investment and improving global environment. The second advance estimates (SAE) placed real GDP growth at 76 per cent for 2023-24, the third successive year of 7 per cent or higher growth.

From the supply side, industrial activity led by manufacturing continued its momentum. The purchasing managers index (PMI) for manufacturing displayed a sustained expansion in February-March, touching a 16-year high in March. Services sector exhibited broad based buoyancy with all sectors registering strong growth. The PMI services remained above 60 during February-March, suggesting sustained healthy expansion.

Automobile Industry in India

Automobile sales increased by 13.8 per cent (y-o-y) in March 2024, led by two wheelers and passenger vehicle sales. While tractor exports recorded robust growth, domestic sales showed some improvement.

The automotive industry is a highly competitive market which is witnessing growth owing to factors such as increasing disposable income, the availability of the financing options, rising urban population, close substitutes for each segment which are equipped with best technological advancements such as active and passive safety systems, comfort features, and high performing powertrains. The market also enjoys growth due to the dynamic Indian public transportation network and the growing logistic landscape.

According to Society of Indian Automobile Manufacturers (SIAM), The industry produced a total of 2,84,34,742 vehicles including Passenger

Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers, and Quadricycles in April 2023 to March 2024, as against 2,59,31,867 units in April 2022 to March 2023.The overall passenger Vehicles domestic sales increased from 38,90,114 to 42,18,746 units in FY-2023-24, compared to the previous year. The automobile domestic sales trend indicates that the two-wheeler segment has the highest sales volume of 1,79,74,365 units in the year 2023-24.

Automobile Industry Outlook

Key factors that are driving the automobile market include a growing population, increasing investments in the road infrastructure, growing logistics industry, and increasing popularity of SUVs. Indias annual production of automobiles in FY24 was 28.4 Million vehicles.

a. Commercial Vehicle (CV)/ Medium & Heavy Commercial Vehicles (MHCV)

Domestic Commercial Vehicle industry had a marginal growth to 0.97 Million units and within that, some drop was experienced in LCVs and SCVs due to degrowth in CNG segment. The growth in Commercial vehicles was also impacted due to migration to higher tonnage trucks which created higher payload capacity. India enjoys a strong position in the global heavy vehicles market as it is the largest tractor producer, second-largest bus manufacturer, and third- largest heavy truck manufacturer in the world.

b. Two-Wheeler (2W)

The two-wheelers segment dominates the market in terms of increase in volume by 13%, owing to a growing middle class and a huge percentage of Indias young population.

c. Passenger Vehicle (PV)

The Indian passenger car market shown 8.4 % volume increase (3.9 Million to 4.2 Million) in FY24 in comparison with Last year.

Aluminium Market

Global Aluminium Casting Market reached US$ 70.5 Billion in 2023 and is expected to reach US$ 125.7 Billion by 2031, growing with a CAGR of 75% during the forecast period 2024-2031.The aluminium casting market in India is forecasted to grow by USD 715 Billion during 2023-2028, accelerating at a CAGR of 8.5% during the forecast period.

As the automotive industry pivots towards energy efficiency and lightweight solutions, aluminium casting emerges as a pivotal player. Navigating environmental

concerns and leveraging the potential for lightweight vehicle applications, the aluminium casting market is poised to shape a sustainable future.

The automotive sector plays pivot role in the overall consumption of aluminium in India. After a stellar performance in FY23, automotive demand is expected to remain steady in FY 24 and in FY 25. In addition, the average quantity of aluminium used per vehicle in India remains significantly lower ~40 -50 Kgs compared to global average of ~160-200 Kg.

Industrial & Engineering Market

Infrastructure investments are expected to increase to USD 778.90 Billion in FY 2020-25, which will provide a significant boost to demand for capital goods. Under Budget 2023-24, capital investment outlay for infrastructure was increased by 33% to 10 Lakh Crores (USD 122 Billion) which would be 3.3% of the GDP

National Capital Goods Policy aims to increase industrial production of the sector to USD 100 Billion. It played a pivotal role for manufacturing to contribute significantly to MAKE IN INDIA. It also took steps to promote technology, skills, exports and common facility centres in an effort to strengthen the overall industrial infrastructure.

Storage Solutions Market

The Indian warehouse market is predicted to reach $34.99 Billion by 2027, with a CAGR of 15.64% from 2022.

The India industrial racking system market is valued at US$ 542.8 Million in 2022, and is projected to surge ahead at a CAGR of 10.3% to reach a market valuation of US$ 1.4 Billion by the end of 2032.

The Automated Storage and Retrieval System (ASRS) Market size is projected to reach a CAGR of 79% from 2022 to 2028. Automated storage & retrieval systems are inventory management systems commonly used in manufacturing centers, distribution facilities, and warehouses.

With a projected increase of over 16% in 2024, warehouse automation is swiftly evolving from an option to a vital necessity for maintaining competitiveness in todays business landscape. Innovations in areas such as Automated Storage and Retrieval Systems (AS/RS) are pivotal to the future of warehousing.


• Growing use of aluminium for light weighting, driven by EVs and stringent emission norms.

• Storage solution industry, especially in the area of ASRS where the Company emerging strong player offers strong growth potential.

• The growing presence of global automobile Original Equipment Manufacturers (OEMs) in the Indian auto components industry has significantly increased the localization of their components in the country.

• Initiatives by Government for promotion of automobile industry - Automotive Mission Plan 2026, Vehicle scrappage policy, CAFE norms, BS- VI norms, etc.

• Capex increase in the warehouse industry offer good potential for the storage segment.


• Highly competitive environment in the conventional storage segment may lead to margin pressure.

• Lower value-add in aluminium segment in EVs.

• Economic uncertainty: Based on the current and future market environment estimates, the base cost of material is expected to be volatile.


A relentless focus on cost management, fiscal prudence, value engineering and customer partnering has enabled the Company to record a creditable performance demonstrating its Engineering Advantage.

The Company is confident that it can utilise future opportunities and face future challenges with agility in order to meet the shareholders expectation of sustainable growth and profitability. The key focus areas are:

• Debt reduction and thereby savi ngs i n interest cost.

• Increasing the Value Addition per product

• To Sustain the EBITDA margins

• Retaining the existing Customer base and wallet share

• New Products/ Services from Existing Customer

• Enhance profitability in Aluminium and Storage Business

• Enhance the share of non-automotive business

• Diversification to broaden the base.


The Highlights of the Companys performance is provided below:

• Turnover grown by 8 % and stands at C3,20,779 Lakhs.

• PBT for the year stands at C26,550 Lakhs

• PAT for the year stands at C19,759 Lakhs

• EBITDA for the year stands at C65,617 Lakhs


Particulars Unit FY 2023-24 FY 2022-23 % Change
Debtors Turnover Times 8.30 8.99 (8%)
Inventory Turnover Times 4.28 4.65 (8%)
Interest Coverage Ratio* Times 4.24 5.74 (26%)
Current Ratio Times 1.03 1.15 (10%)
Debt Equity Ratio* Times 0.91 0.72 26%
Operating Profit Margin (%) % 13% 15% (13%)
Net Profit Margin (%) % 6% 8% (23%)
Return on Net Worth % 13 % 17% (24%)


Ratios Reason for changes
Interest Coverage Ratio Increase in interest cost (from C117 Crores to C155 Crores)
Debt equity ratio Increase in borrowings.


FY 2023-24

FY 2022-23

Segment Sales EBIT Sales EBIT
D Crores % D Crores %
Automotive Powertrain 1,558 19% 1,527 25%
Aluminium Products 917 14% 741 9%
Industrial & Engineering 732 6% 713 9%

Automotive Powertrain segment

• Craftsman is one of the leading players involved in the machining of critical engine and transmission components for M&HCV and tractors. The Company also serves off-highway & PV OEMs.

• Considering the potential in the off-highway components the Company focus on strengthening the presence in the space by creating facility and invest in the capabilities.

Aluminium Products segment

• Aluminum usage in expected to increase, driven by the structural trend of light weighting due to stringent emission norms. While India is lagging developed markets, faster adoption of emission norms and technology will drive increasing usage of aluminum in the Indian auto industry.

• Aluminum product segment has broadened wider with inclusion of DR Axion thereby on the consolidated basis it gives impetus to overall growth.

Industrial & Engineering segment

• The industrial & engineering segment is a well- diversified business segment. The major portion of revenue comes from high end products and subassemblies for contract manufacturing and Storage solution business.

• Despite being a late entrant in the storage solution business, the Company is one of the leading players in conventional storage and one of the prominent players in the nascent automated storage. In addition to strengthening its presence in e-commerce segment, we have secured business from other sectors such as pharma, auto, and cold storage, thereby helping to expand our addressable market.


The Company maintains adequate and effective internal control systems commensurate with its size and complexity. It also ensures that they are recorded in all material respects to permit preparation of financial statements in conformity with established accounting principles, along with the assets of the Company being adequately safeguarded against significant misuse or loss.

In the opinion of the Management, the Company has adequate internal audit and control systems to ensure that all transactions are authorized, recorded and reported correctly. An independent internal audit function is an important element of the Companys internal control systems. This is supplemented through an extensive internal audit programme and periodic review by the management and the Audit Committee. The internal control systems comprise extensive internal and statutory audits. The Corporate Governance practices instituted by the Company are discussed in detail in the chapter on Corporate Governance which forms part of the Annual Report.


The Risk Management Committee maintains an active oversight of the risk and the effectiveness of the risk mitigation strategies and plans put in place by the Company.

Identified key risks of the Company includes Strategic Risk, Operational Risk, Environment, Safety and Governance (ESG) Risk and Information & Cyber Security Risk.

The Company has a robust risk mitigation plan to minimize identified risks through continuous monitoring and mitigating actions as may be required.


Human Resource development continues to be our Top Focused area. The emphasis was on reskilling and upskilling to enable the teams in navigating change and remaining compliant with evolving processes. Industrial Relations with employees remained cordial throughout the year under review.

As on 31st March, 2024 the Company has employed 2500 permanent Employees and workmen.