1. Industry Structure and Development
India has a diverse industrial landscape, and the pneumatic products
industry is an important part of it. The industry is composed of several players,
including manufacturers, suppliers, distributors, and service providers. Indias pneumatic
products industry has grown significantly in recent years, driven by a strong demand from
various industries such as automotive, manufacturing, construction, and healthcare.
Duncan offers a wide range of pneumatic products, including Solenoid
operated Directional control valves, Linear and Rotary actuators, and valve Automation
Systems. These cater to various applications such as compressed air systems, control
systems, automation systems, and others.
Indias pneumatic products industry has been experiencing steady growth
due to various factors, such as the increasing demand for automation in industries, the
rise in manufacturing activities, and the growth of the automotive and construction
sectors. Additionally, the Indian governments initiatives to promote manufacturing and
industrial development have contributed to the growth of the industry.
In terms of market segmentation against Duncan Engineering product
lines, the Power sector is the largest consumer of Duncan pneumatic products in India. The
manufacturing sector and construction industry are also significant users of pneumatic
products. Moreover, the process sector is expected to be a potential market for Duncan
pneumatic products in the coming years, as there is a growing demand for indigenous
pneumatic products.
To support the growth of the pneumatic products industry, the Indian
government has introduced several initiatives, including the Make in India campaign and
the National Manufacturing Policy. These initiatives aim to promote local manufacturing,
increase investments, and develop infrastructure to support the growth of the
manufacturing sector in India.
In conclusion, Indias pneumatic products industry is poised for
significant growth in the coming years, driven by increasing demand from various
industries, government initiatives, and a favorable business environment. The industrys
diverse players and range of products offer ample opportunities for growth and
development.
2. Opportunities and Threats
A. There are several opportunities for pneumatics and valve
automation products in India:
i. Growing Industrial Sector: India has a rapidly growing
industrial sector, with increasing automation and use of process control systems. This
provides a significant opportunity for the growth of pneumatics and valve automation
products, as they play a crucial role in controlling and regulating various industrial
processes.
ii. Infrastructure Development: The Indian government has
announced several large-scale infrastructure development projects, such as smart cities,
highways, and ports. This presents a significant opportunity for the growth of pneumatics
and valve automation products, as they are an essential component of modern
infrastructure.
iii. Healthcare Sector: The healthcare sector in India is
growing rapidly, with increasing investments in medical infrastructure and technology.
Pneumatics and valve automation products are essential components of advanced medical
equipment, which presents an opportunity for growth in this sector.
iv. Energy Efficiency: There is an increasing awareness of the
need for energy efficiency in India, and pneumatics and valve automation products can play
a crucial role in reducing energy consumption in industrial processes.
v. Automotive Sector: The Indian automotive sector is growing
rapidly, with increasing demand for vehicles and associated components. Pneumatics and
valve automation products are critical components of automotive manufacturing processes,
which presents an opportunity for growth in this sector.
vi. Agriculture Sector: India has a large agricultural sector,
which presents an opportunity for the growth of pneumatics and valve automation products.
These products can be used to automate various agricultural processes, such as irrigation
and crop harvesting.
vii. Government Initiatives: The Indian government has launched
several initiatives to promote local manufacturing and increase investments in the
manufacturing sector. This presents an opportunity for the growth of pneumatics and valve
automation products, as they are essential components of various manufacturing processes.
In conclusion, Indias growing industrial sector, infrastructure
development, healthcare sector, focus on energy efficiency, growing automotive and
agriculture sectors, and government initiatives provide significant opportunities for the
growth of pneumatics and valve automation products in the country.
B. Threats for pneumatics and valve automation products in India:
There are several threats for pneumatics and valve automation products
in India:
i. High Competition: The pneumatics and valve automation products
market in India is highly competitive, with several domestic and international players.
This can make it challenging for new entrants to establish themselves in the market.
ii. Economic Uncertainty: India is a developing country with a
volatile economy, which can create uncertainty for businesses operating in the country.
iii. Technological Obsolescence: Pneumatics and valve automation
products require constant innovation and upgradation to stay relevant in the market.
Failure to do so can lead to technological obsolescence and loss of market share.
iv. Price Sensitivity: The Indian market is highly
price-sensitive, and customers often prioritize affordability over quality. This can
create challenges for companies that are focused on producing high-quality pneumatics and
valve automation products.
v. Lack of Skilled Workforce: The availability of skilled
workforce is a significant challenge for many businesses in India, including those in the
pneumatics and valve automation industry. Companies may struggle to find skilled
technicians and engineers, which can impact product quality and innovation.
vi. Regulatory Challenges: The Indian regulatory environment can
be complex and challenging to navigate, with several compliance requirements and
bureaucratic procedures. This can create delays and increase costs for companies operating
in the pneumatics and valve automation industry.
In conclusion, high competition, economic uncertainty, technological
obsolescence, price sensitivity, lack of skilled workforce, and regulatory challenges are
significant threats for the pneumatics and valve automation products industry in India.
Company must navigate these challenges effectively to succeed in this market.
3. Segment wise or product-wise performance
The companys business activity falls within a single primary business
segment viz., "General Engineering Products". Details of its performance is
given under the head, Discussion on financial performance with respect to operational
performance.
4. Outlook
Next few fiscal years are going to be crucial for the Company as it
look to expand its product basket in pneumatics. New Product Development (NPD) is one of
priorities of the Company. The company will concentrate on allocating its resources to
develop an experienced team of professionals and work on a roadmap to introduce new
products in market. Customization remains as one of core strengths of the Company, so it
will continue to customize its products to cater the needs of customers. The Company is
also looking putting focused approach on exports in coming fiscal year by putting
dedicated team at work.
With increasing emphasis on automation, quality control, safety and
efficient & renewable energy, fluid power technology should continue to expand in
India. Factors such as rapid industrialization in emerging economies, automation and
growing demand for industrial material handling equipment are expected to drive the
pneumatic market across the world. With significant global capital spending expected in
pharmaceutical and its allied industries in the wake of pandemic, these industries are
likely to witness significant growth in the upcoming period.
However, the industry is also likely to face some challenges, including
high competition, price sensitivity, regulatory challenges, and technological
obsolescence. Companies in this industry must navigate these challenges effectively to
succeed in the market.
Overall, the outlook for pneumatics and valve automation products in
India in fiscal year 2022-2023 is positive, with significant growth opportunities in
various sectors. However, the company must remain agile and innovative to stay ahead of
the competition and capitalize on these opportunities.
5. Risks and Concerns
Risk, which is the manifestation of business uncertainty affecting
corporate performance and prospects, is an integral part of business. The Company follows
a defined and exhaustive risk management process, which is integrated with its operations.
This enables the Company to identify, categorise and prioritise operational, financial,
and strategic business risks. To address the identified risks, the Company continues to
spend significant time, effort, and human resources to manage and mitigate such risks.
6. Internal Control Systems and their adequacy
The Company has adequate internal control systems, which includes
internal financial controls, the efficacy of which is continuously monitored and updated
when required internally. The internal Auditors monitor the compliance of the same.
The Companys internal control system ensures that assets are
safeguarded, established regulations are complied with and pending issues are addressed
promptly. The Audit Committee reviews reports presented by the internal auditors on a
routine basis. The committee makes note of the audit observations and takes corrective
actions, if necessary. It maintains constant dialogue with statutory and internal auditors
to ensure that internal control systems are operating effectively.
7. Discussion on financial performance with respect to operational
performance
A. Analysis of the profit and loss statement
i. Revenues: Revenues from operations registered a 25.69 %
growth from Rs. 5576.81 Lakh in FY 21-22 to Rs. 7009.52 Lakh in FY 22-23.
ii. Margins: EBITDA for the year was Rs. 1456.29 Lakh as against
Rs. 983.36 Lakh in FY 21-22. EBITDA margin of the Company increased to 20.78 % from 17.63
% in FY 21-22. The net profit margin of the Company was Rs. 990.35 Lakh in FY 22-23
compared to Rs. 624.47 Lakh in FY 21-22. The margins for the year were increased by 58.59
%.
B. Analysis of the Balance Sheet
i. Sources of funds: The capital employed by the Company
increased to Rs. 4809.85 Lakh as on 31st March 2023 from Rs. 3784.89 Lakh as on 31st March
2022 owing to internal accruals.
The net worth of the Company increased 26.57 % to Rs. 4641.04 Lakh as
on 31st March 2023 from Rs. 3666.87 Lakh as on 31st March 2022.
ii. Applications of funds: Fixed assets (gross) of the Company
increased 2.02 % from Rs. 3165.66 Lakh as on 31st March 2022 to Rs.3229.47 Lakh as on 31st
March 2023.
iii. Working capital management: Total Current Assets of the
Company increased by 42.85 % from Rs. 3242.95 Lakh as on 31st March 2022 to Rs. 4632.62
Lakh as on 31st March 2023. Current Assets included current investment and cash and bank
balance of Rs. 2883.98 Lakh in FY 22-23 compared to Rs. 1571.00
Lakh in FY 21-22 due to the deployment of funds into short term
Investments.
Inventories, including raw materials, work-in-progress and finished
goods, among others, increased to Rs. 1054.28 Lakh on 31st March 2023 from Rs. 936.22 Lakh
as on 31st March 2022 due to higher production. Trade receivables as at 31st March 2023
were Rs.595.68 Lakh compared to Rs. 578.88 Lakh as at 31st March 2022.
8. Human Resources and Industrial Relations
The Company employed 168 officers and workmen as on 31st March 2023.
Increase in the value of human capital through the development of individual and
collective competencies helped the Company stay in step with market developments and
requirements. The Company has a policy to regularly run programs and projects on skill
development and upgradation of employee competence. Programmes of knowledge sharing were
conducted; employees are encouraged to attend external programs as required to enhance
their perspective of emerging standards. Several innovative ideas received from employees
were implemented, resulting in enhance quality, cost optimisation and productivity.
The Company generally enjoys cordial relationship with its staff and
workers. The Company management has entered into wage revision agreement with the
recognised workers union on September 24, 2021, for a period of 3 years effective
from April 1, 2021, to March 31, 2024.
9. Key Financial Ratios
A. 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 is given below:
| Sr. No. Particulars |
FY 2022-2023 |
FY 2021-2022 |
% Change |
Explanation |
| 1. Debtors Turnover |
11.94 |
9.62 |
24% |
- |
| 2. Inventory Turnover |
3.83 |
3.68 |
4% |
- |
| 3. Interest Coverage Ratio |
10.79% |
11.78% |
-8% |
- |
4. Current Ratio |
3.08% |
2.45% |
26% |
Current ratio has improved to
3.08 primarily on account of increase in value of inventories & investment. |
| 5. Debt Equity Ratio |
0.02 |
0.02 |
17% |
- |
| 6. Operating Profit Margin (%) |
20.78 % |
17.63% |
18% |
- |
7. Net Profit Margin (%) |
14% |
11% |
26% |
Net profit ratio has increase
mainly due to increase in profit and revenue during the year. |
B. Details of any change in Return on Net Worth as compared to the
immediately previous financial year along with a detailed explanation thereof.
Sr. No. Particulars |
FY 2022-2023 |
FY 2021-2022 |
% Change |
Explanation |
| 1. Return on Net Worth |
21% |
17% |
25% |
Net Worth ratio has increase mainly due to
increase in profit and revenue during the year. |
10. Disclosure of Accounting Treatment:
Where in the preparation of financial statements, a treatment different
from that prescribed in an Accounting Standard has been followed, the fact shall be
disclosed in the financial statements, together with the managements explanation as
to why it believes such alternative treatment is more representative of the true and fair
view of the underlying business transaction.
The Accounts for the year have been prepared as per Indian Accounting
Standards (Ind AS). The current year and previous year figures have been re-stated
accordingly. No treatment different from that prescribed in Ind AS has been followed by
the Company.
11. Cautionary Statement
This statement made in this section describes the Companys
objectives, projections, expectation, and estimations which may be ‘forward looking
statements within the meaning of applicable Securities Laws and Regulations. 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
realised by the Company. Actual results could differ materially from those expressed in
the statements or implied due to the influence of external factors which are beyond the
control of the Company. The Company assumes no responsibility to publicly amend, modify or
revise any forward looking statements based on any subsequent development, information, or
events.
|
On behalf of the Board of
Directors of Duncan Engineering Limited |
|
Akshat Goenka |
Arvind Goenka |
| Place: Noida |
Managing Director |
Non Executive Director |
| Date: 16.05.2023 |
DIN: 07131982 |
DIN: 00135653 |
+91-9892691696
