Dynamatic Technologies Ltd Management Discussions

FOR FY2024

BUSINESS OVERVIEW:

Incorporated in 1973, Dynamatic Technologies Limited (Dynamatic Technologies or the Company) is a manufacturer of highly engineered, mission critical products for the Aerospace, Metallurgy and Hydraulic industries. With futuristic design, engineering and manufacturing facilities in Europe and India, Dynamatic Technologies serves customers across six continents.

The Company is one of the worlds largest manufacturers of hydraulic gear pumps and automotive turbochargers, having held the leadership position in the hydraulic gear pumps market for over 45 years. Dynamatic Hydraulics commands approximately 80% of the Indian OEM tractor market and about 38% of the global tractor market. Dynamatic Technologies is a pioneer and leader in the private sector, both in India and the UK, in the manufacture of precision flight-critical and complex airframe structures and aerospace components. It serves as a Tier-I supplier to global aerospace OEMs and primes such as Airbus, Boeing, BEL, Bell Helicopters, Dassault Aviation, Hindustan Aeronautics Limited, and Spirit Aerosystems. The Company also produces high-precision, complex metallurgical ferrous components for performance-critical applications like turbochargers and exhaust manifolds, with advanced design and development capabilities to meet OEM needs.

Dynamatic Technologies facilities located in India (Bengaluru & Coimbatore), United Kingdom (Bristol & Swindon) and Germany (Schwarzenberg), are environmentally sensitive - green, lean, clean and aligned to our vision of CARE. The Company is vertically integrated, with its own alloy-making and casting capabilities as well as its own captive green energy sources.

Dynamatic Technologies operates in three business segments: Hydraulics, Aerospace & Defence and Metallurgy.

Hydraulics: Dynamatic Technologies is one of the largest manufacturers of hydraulic gear products in the world, with state-of-the-art manufacturing facilities in India (three locations), the United Kingdom, and Milwaukee, USA. This business unit designs and manufactures hydraulic gear pumps in both aluminum and cast iron, available in multiple frame sizes. The product range includes high-efficiency gear pumps, low noise pumps, high-pressure pumps, axial piston pumps, low torque high-speed hydraulic motors, plunger hand pumps, hitch control valves, rock shaft assemblies, power steering valves, and mobile control valves for global OEMs.

The business unit also manufactures bespoke, high-flow scavenging pumps, lube oil pumps, and water pumps for high-horsepower engines, which are used in off-highway vehicles, marine, and offshore equipment. Additionally, the Company designs and builds customized hydraulic solutions, from simple hydraulic pumping units to complex marine power packs, aircraft ground support systems, and turnkey industrial installations.

Equipped with advanced innovation and development centers in Bengaluru (India) and Swindon (UK), Dynamatic Technologies holds several patents and has a wealth of experience in application engineering and rapid prototyping capabilities. This allows Dynamatic Hydraulics to develop bespoke solutions for OEMs efficiently and effectively.

Aerospace & Defence: Dynamatic-Oldland Aerospace? (DOA) is a pioneer and leader in the Indian private sector for the manufacture of high-precision airframe and aerospace components. The Company boasts best-in-class infrastructure to meet the needs of global OEMs such as Airbus, Boeing, Bell Helicopters, Dassault Aviation, and Deutsche Aircraft. Domestically, it collaborates with defense sector PSUs like HAL and BEL.

The major products of the Aerospace & Defence segment include control surfaces such as wings, ailerons, and wing flaps, fuselages, doors, and other key flight-critical airframe structures like flap track beams. Over time, the Aerospace division has developed excellent capabilities in automated robotic machining and the production of five-axis components in aluminum, steel, and titanium. Additionally, the Company has expertise in advanced tooling capabilities.

Metallurgy: The Metallurgy division supplies highly complex parts to customers worldwide, producing intricate iron castings in sophisticated alloys for various industries. Operating one of the most modern foundries in Europe, the company develops and manufactures components used globally. By leveraging a high level of specialist education and the strategic advantages of its location, the company creates significant added value for its international customers.

RESEARCH & DEVELOPMENT

With three design laboratories spanning India and Europe, Dynamatic Technologies stands as a leading private R&D organization, boasting numerous inventions and patents. The Company has established a robust Intellectual Property (IP) strategy aimed at constructing an effective portfolio for future monetization, collaboration, and risk mitigation, with a keen focus on emerging technologies.

The Company holds various patents across countries such as India, the USA, the UK, Germany, and other European nations. In addition to these patents, the Company has registered 39 trademarks and has applied for multiple others in various jurisdictions including India, the USA, the UK, and other European countries. Dynamatic Technologies Limited (DTL) boasts a talented workforce comprising over 80 scientists and 600 engineers and technicians.

These experts bring their skills in Product Design and Validation, Simulation, Application Engineering, Mechanical Engineering, Advanced Computer-Aided Engineering, Computer-Aided Manufacture, Materials & Metallurgical Engineering, Fluid Dynamics, and Defence & Aerospace Research. The state-of- the-art JKM Science Center serves as a hub, integrating Design Engineering, Development, Prototyping, Metallurgical, and Manufacturing Infrastructure. This cohesive setup empowers the Company to comprehensively address the diverse needs of its global clientele.

The Dynamatic Hydraulics Research Laboratory in Swindon, UK, has advanced design knowledge, focused on the Mobile Hydraulics, best-in-class engineering capabilities and intellectual property with several patented products and designs. This facility provides testing and validation of new products for various OEM customers.

GLOBAL MACROECONOMIC SCENARIO

The world economy proved more resilient than expected in 2023, despite significant monetary tightening and lingering policy uncertainties globally. Economic expansion in the latter half of 2023 exceeded expectations in the United States and several major emerging markets, driven by higher-than- anticipated government spending and retail consumption. Stability in employment and income levels was enhanced by an unexpected surge in labor force participation. Despite considerable central bank rate increases aimed at price stability, the economy showed resilience, supported by households in advanced economies utilizing savings accumulated during the pandemic.

The IMF reports global economic growth of 3.2% for 2023. Developed economies grew by 1.6%, while emerging and developing economies achieved a 4.3% growth rate, thereby averting a global recession. Inflation decreased gradually across most regions due to interest rate hikes.

Meanwhile, economic expansion remains modest by historical standards, constrained by high borrowing costs, reduced fiscal support, and the ongoing impacts of the COVID-19 pandemic and geopolitical tensions. These factors have led to limited productivity growth and increased geo-economic fragmentation. [Source: IMF Report (April 2024)]

OUTLOOK

According to International Monetary Fund (IMF), the growth outlook for emerging economies is projected at 4.2% in 2024 and in 2025. In contrast, advanced economies are anticipated to expand by 1.7% and 1.8% in 2024 and 2025, respectively. While the world economy averted the worst-case scenario of a recession in 2023, a prolonged period of low growth looms large. Growth prospects for many developing countries, especially vulnerable and low-income countries, remain weak, making a full recovery of pandemic losses even more elusive.

New price pressures triggered by geopolitical tensions, including the ongoing tensions in Ukraine and conflicts in Gaza and Israel, could elevate interest rate forecasts and depress asset values, particularly where labor markets remain constrained and core inflation persists. Variations in the pace of disinflation across major economies may also provoke currency fluctuations that strain financial sectors. Monetary policy continues to focus on adjusting inflation to meet targets, setting the stage for sustainable growth over the medium term. Growth disappointments could also result from the real estate industrys worsening problems in China or, globally, from a disruptive shift to tax increases and spending cuts.

Source: IMF Report (April), UN Report INDIAN ECONOMY

Amidst a complex global economic environment and evolving geopolitical circumstances, Indias economic resilience continues to be a source of optimism. As the worlds fifth- largest economy, India is projected to retain its position as the fastest-growing major economy. During FY2023-24, Indias GDP growth remained relatively high at 7.8%, fueled by strong domestic demand, moderate inflation, a stable interest rate regime, and sufficient foreign exchange reserves. Furthermore, a strategic acceleration of economic reforms and increased capital expenditures facilitated construction activity and fostered significant employment opportunities within the country.

India effectively navigated inflationary pressures in FY2023- 24, which remain a significant challenge for many developed economies. The Consumer Price Index (CPI) inflation rate exhibited a slight decline, reaching 5.69% (provisional) in December 2023 compared to 5.72% in December 2022. The Reserve Bank of India (RBI) played a pivotal role by maintaining the policy repo rate at 6.50%, striving to achieve a balance between supporting economic growth and managing inflation. Additionally, Indias per capita Net National Income (NNI) at constant (2011-12) prices had an increase of 6.08%, rising from Rs 98,374 in FY2022-23 to Rs 1,04,550 in FY2023- 24. This growth in disposable income has resulted in a surge in household consumption across both urban and rural areas, thereby stimulating demand across various sectors.

On the supply side, industrial activity, particularly within the manufacturing sector, maintained its momentum. The Purchasing Managers Index (PMI) for manufacturing remained robust in February-March, achieving a 16-year high in March. The services sector also exhibited robust growth across all categories, with the PMI for services consistently exceeding 60 during the same period, indicating sustained and substantial expansion.

OUTLOOK

In 2024, India is well-positioned to retain its status as the worlds fastest-growing major economy. Leveraging the advantages of its favorable demographic profile and advancements in both physical and digital infrastructure, India boasts a promising future outlook. Strategic increases in capital expenditures, coupled with proactive government policy initiatives such as the Production Linked Incentive (PLI) Schemes, are poised to generate further economic growth. The IMF projects a consistent expansion of the Indian economy at 6.8% in 2024. Indias robust economic prospects establish a strong foundation for further acceleration in the years to come.

[Source: IMF and RBI]

INDUSTRY OVERVIEW AND SEGMENT DISCUSSION: HYDRAULICS:

Dynamatic Hydraulics? stands as one of the global leaders in hydraulic geared products manufacturing, boasting cutting- edge facilities in India, the UK, and the USA. The extensive product line encompasses a diverse array of solutions, including hydraulic gear pumps in aluminium and cast iron, axial piston pumps, motors, valves, and complete hydraulic systems. With a commitment to bespoke design tailored to each application, they cater to both domestic and international markets, offering unparalleled versatility and reliability. This comprehensive approach, coupled with a dedication to innovation and quality, solidifies Dynamatic Hydraulics? as a premier provider in the hydraulic industry, serving a multitude of sectors worldwide.

INDUSTRY OVERVIEW AND OUTLOOK:

FARM MECHANISATION:

The Indian agricultural machinery market is on a robust growth trajectory, projected to grow from USD 16.73 billion in 2024 to USD 25.15 billion by 2029. This growth is driven by favourable government policies, rising farm incomes and the increasing need for mechanization.

India is the worlds largest tractor market, having crossed the milestone of 1 million units and with a CAGR of around 6% over the past 7-8 years. Factors contributing to this growth include under penetration of farm mechanization, labor shortages and improved water availability due to consecutive good monsoon seasons. Government initiatives focused on rural infrastructure development, favorable support prices for major crops, and the push towards mechanization have promoted the industry. Additionally, the availability of tractor financing has further fuelled this expansion.

Farm mechanization plays a pivotal role in reducing cultivation costs and boosting productivity through efficient resource utilization. According to the National Bank for Agriculture and Rural Development (NABARD), powered machinery now contributes 40-45% to various farm activities.

Agriculture employs about 50% of Indias population and is a major source of income and raw materials for numerous industries. The need for modern farm equipment has surged due to the increased production of grains, cereals and oilseeds, necessitating intensive harvesting to maximize yield and minimize waste.

Looking ahead, the industry is set to benefit from the growing use of tractors in non-agricultural activities, rising international demand for Indian medium horsepower tractors and increased investments in global infrastructure development. These factors are set to drive continued growth in the tractor industry in the coming years.

CONSTRUCTION AND MATERIAL HANDLING:

The Indian construction equipment industry experienced a significant surge in FY2024, with sales reaching 135,650 units, marking a 26% increase from the previous fiscal year. This growth was driven by the governments infrastructure- led growth strategy, boosting demand across all major construction equipment segments. The industry had growth in both domestic and export markets, with domestic sales rising by 24% and exports by an impressive 49% year-on- year.

Earthmoving equipment was the largest segment, accounting for approximately 70% of total sales. Backhoe loaders and crawler excavators led the increase, with year-on-year growth rates of 55% and 35%, respectively. Material handling equipment, including pick & carry cranes and telehandlers, recorded a remarkable 61% increase in sales volume, contributing 14% to total construction equipment sales. Concrete equipment and road construction equipment also posted significant growth, with year-on-year increases of 19% and 40%, respectively. These achievements underscore the industrys robust performance, driven by heightened demand and government infrastructural initiatives.

Looking ahead, original equipment manufacturers (OEMs) are expected to invest INR 1,400-1,500 crore in capex during FY25. This investment will focus on debottlenecking, product development initiatives (such as CEV-V compliant equipment

and alternative fuel-driven powertrains), and localization efforts, as noted by ICRA.

However, the mining and construction equipment industry is projected to face a decline of 12-15% in FY2025. This is primarily due to an anticipated slowdown in sales during the first half of the fiscal, attributed to the Parliamentary Elections and the impact of the monsoon season on construction activities.

Dynamatics designs and builds pumps and motors for the construction equipment sector. Currently, the companys market share in this segment is restricted. However, we regard this sector as a significant opportunity to explore new products, applications and markets moving forward.

SEGMENT OVERVIEW:

Dynamatic Hydraulics manufactures high precision hydraulic products and solutions for tractors, construction equipment, material handling and machine tool industries. The Company has three state-of-art manufacturing facilities at Bengaluru for Geared Products- Pumps and Motors, Integrated Hydraulic solutions like hitch control valves, Rockshaft Assemblies and Power Units for defence applications. This manufacturing facility is supported by a very advanced design, R&D center and a rapid prototyping laboratory.

Dynamatic Hydraulics commands approximately 80% of the Indian OEM tractor market and about 38% of the global tractor market. It also designs and builds complete hydraulic solutions including hydraulic hitch control valve with draft control and complete rockshaft assembly for the agricultural tractors.

The Indian agricultural machinery market is on a robust growth trajectory, projected to grow from USD 16.73 billion in 2024 to USD 25.15 billion by 2029. This growth is driven by favourable government policies, rising farm incomes and the increasing need for mechanization.

Furthermore, with given growth potential in the construction equipment sector, Dynamatic is investing in the development of high pressure, heavy-duty cast iron pumps to cater to the construction equipment sector. These products are in various stages of development and testing, which will cater to the global OEMs. Some of these products will undergo production phase in coming years, with supplies to global OEMs and aftermarket.

Operational Performance (Rs in lakhs)

Particulars	FY2024	FY2023	Change (%)
Revenue	44,834	46,166	-2.89%
EBITDA	3,771	8,748	-56.89%
Margin %	8.4%	18.9%

The Hydraulics segment reported a decline in topline FY2024 due to de-growth in Tractor Production in India. Demand for tractors were down by 7.07% in FY2024 over FY2023 due to below average monsoon rains. For FY2025, the tractor industry is expected to resume growth in second half of the year which would provide the needed push to grow the hydraulics segment. Revenues for this segment decreased to Rs. 44,834 lakhs compared to Rs. 46,166 lakhs in the same period last year. EBITDA for FY2024 was Rs. 3,771 lakhs and Rs. 8,748 lakhs during last year.

Dynamatic Hydraulics? has successfully completed the re-certification audits by ULDQS India, to ISO: 9001 specifications for Quality Management System and also to ISO:14001 specifications for its Environmental Management System. The Company has also successfully completed IS0 45001 for occupational health and safety management systems (OHSAS).

Dynamatic Hydraulics? received a number of awards, listed below, at the National and State level in the FY2024. This is due to our relentless pursuit of excellence in everything we do.

Jun2023: 16^th National 3M competition, Reduction of K2 Cover Blow holes, Platinum, CII

Jun2023: 16^th National 3M competition, Auto marking on flushing machine, Silver, CII

AEROSPACE & DEFENCE:

INDUSTRY OVERVIEW AND OUTLOOK:

DEFENCE AEROSPACE:

Indias aerospace industry is projected for substantial growth, driven by increased activities in both the defence and civil aviation sectors. The surge in demand for large aircraft from prominent Indian carriers like SpiceJet and Indigo, combined with the increasing adoption of Powered by the Hour (PBH) contracts, is set to drive aerospace services and manufacturing operations within the country. Furthermore, Indias increased capital expenditure creates vast opportunities for both, emerging start-ups and established industry players in the defence aerospace arena.

The Indian Aerospace and Defence (A&D) industry is on a trajectory to reach approximately USD 70 billion by 2030, driven by a robust demand for advanced infrastructure and constant government support. The Ministry of Defence has set an ambitious target of achieving a turnover of INR 1.75 lakh crore in A&D manufacturing by 2025, including exports worth INR 35,000 crore. By April 2023, a total of 606 industrial licenses were issued to 369 companies operating in the defence sector. The Department of Military Affairs (DMA) has rolled out four Positive Indigenisation Lists, encompassing 411 military items. Additionally, to promote exports and liberalise foreign investments, the Foreign Direct Investment (FDI) in the defence sector has increased to 74% through the automatic route and 100% through the government route.

India is emerging as a key manufacturing hub, driven by global Original Equipment Manufacturers (OEMs) and their suppliers. The countrys technical expertise, talent pool and ability to produce high-quality products at competitive costs make it an attractive destination for aerospace component manufacturing. Indias strategic geographical position further facilitates indigenous manufacturing and export activities.

The young workforce in India is a critical asset for the A&D markets growth. Numerous private companies have made significant progress in establishing India as a preferred destination for aero structures, components, sub-assemblies and complex system assemblies. Leading global OEMs have formed joint ventures in India for manufacturing aerospace parts and assemblies, which are integral to various commercial and defence aircraft and helicopters. This dynamic environment underscores Indias potential to become a global leader in the aerospace and defence sectors. [Source: Invest India]

COMMERCIAL AEROSPACE:

Since mid-2020, the commercial-aerospace sector has shown modest but consistent growth as air travel demand began to recover from the decline caused by the pandemic. By December 2023, demand had rebounded to 97% of prepandemic levels, with projections indicating an annual growth rate of 5% to 10% through 2026. This resurgence is supported by an increase in new aircraft sales and aftermarket services. Airlines are prioritizing fleet renewal and rising air traffic levels are driving demand in the maintenance, repair, and overhaul (MRO) market, which is striving to meet the growing need for parts and maintenance services.

The civil aviation industry in India has emerged as one of the fastest-growing sectors in the country over the past three years. According to the International Air Transport Association (IATA), India is on track to become the worlds third-largest air passenger market by 2030, surpassing both the United States and China. The robust recovery in air travel has led to an increase in aircraft orders and aftermarket activities, with the number of airplanes expected to reach 1,100 by 2027.

During the period from April 2023 to January 2024, domestic passenger traffic reached 254.44 million, marking a 15.3% increase compared to the same period the previous year. International passenger traffic rose by 23.5%, reaching 57.57 million. Freight traffic at Indian airports has the potential to reach 17 million tonnes by FY2040. The Indian Civil Aviation MRO market, currently valued at approximately USD 900 million, is anticipated to grow to USD 4.33 billion by 2025, with a CAGR of 14 to 15 %.

To support this growing industry, the Indian government plans to invest Rs. 35,000 crores (USD 4.99 billion) over the next four years to enhance airport infrastructure. Initiatives such as UDAN-RCS, which promote regional air connectivity, further strengthen the Indian civil aviation sector, positioning it as a significant country in the global aviation landscape. [Source: Invest India]

SEGMENT OVERVIEW:

Dynamatic-Oldland Aerospace?, India, is a pioneer and a recognized leader in the Indian private sector for the development of complex aero-structures and manufacturer of aircraft parts and accessories. The Company is also vertically integrated to manufacture machined and sheet metal components, with soft and hard tooling, assembly jig manufacturing along with comprehensive engineering capabilities. The Aerospace & Defence Division has the largest infrastructure in the Indian private sector for the manufacture of complex aero structures. QMS is AS9100 approved, NADCAP approved for heat treatment, spot welding, non-destructive testing and metrology, the Company is also approved by major OEMs like Airbus, Boeing, Bell Helicopters, Deutsche Aircraft and Dassault Aviation. Further, it also caters to domestic requirements from major OEMs like Bharat Electronics Limited (BEL) & Hindustan Aeronautics Limited (HAL).

The Companys modern and state-of-the-art manufacturing facilities in India and the UK deliver high value to its customers, by seamless integration of highly skilled workforce for assemblies and sheet metal detail parts requiring artisanal capabilities and low cost of capital for manufacturing at the UK. The Company launched DOET - Dynamatic Operational Excellence and Transformation prevailing way to DTL 2.0 as the language of change for sustainable growth and increased value to the customers and shareholders.

The Company has delivered over 7,500 aircraft sets of Single Aisle Flap Track Beams till date and has successfully completed the A320 re-design of the Flap Track Beam with a Monolithic structure working closely with Spirit Aero Systems. Dynamatic Technologies is a Tier-1 Global Single Source manufacturer of Airbus A330 Flap Track Beams, the long-range aircraft variant. The Company is the largest single source manufacturer of the flap track beams in the world for Airbus. The Company is focused on developing capabilities in doors and large aero-structural assemblies and systems.

Operational Performance

Particulars	FY2024	FY2023	Change (%)
Revenue	51,009	43,737	16.63%
EBITDA	13,094	11,682	12.09%
Margin %	25.7%	26.7%

The Aerospace & Defence segment recorded a revenue of Rs. 51,009 lakhs compared to Rs. 43,737 lakhs in FY2023. The Indian Aerospace industry witnessed moderate growth supported by improvement in order execution and delivery. During the FY2024, the Aerospace segment reported a growth of 16.63% y-o-y driven by resilient performance of air transport industry. Commercial deliveries and ramp-up of parts for F-15EX Eagle has contributed to top line and FAI of Escape Hatch Door for Airbus A220 aircraft has led to new business opportunities. A strong order book by major aircraft producers will drive both defence and commercial demand once global supply chain issues are resolved. Segment EBITDA for the year was Rs. 13,094 lakhs, reported alongside Rs. 11,682 lakhs in FY2023.

AWARDS & ACCOLADES:

In FY2024, Dynamatic Technologies received industry wide recognition and won a few major awards:

JAN 2023: Two teams from DOA presented Improvement case studies and the teams won Par-Excellence, Excellence Awards. One team has performed a Skit on No Plastic which received great applause with tremendous enthusiasm in the 37^th National Convention on Quality Concepts (NCQC)-2023 Competition held at Nagpur

APRIL 2023: Three teams from DOA won Gold Award in the 6^th conclave on Pokayoke Competition at Bangalore Chapter

JUN 2023: Two teams from DOA won Par-Excellence Award in the 9^th National Conclave on 5S 2023 at Ahmedabad.

SEP 2023: Four Teams from Dynamatic Technologies won Gold awards in the 32^nd Chapter Convention on Quality Concepts (CCQC)-2023

Dynamatic Homeland Security?(HLS), unit develops advanced tactical Unmanned Aerial Vehicles (UAV) for modern day asymmetric warfare. The company is transforming the UAV industry through its use of advanced technologies and innovative applications. The unit is working on enhancing autonomy, endurance, and versatility of UAVs. HLS is integrating artificial intelligence and machine learning to its

UAVs to perform dynamic path planning and autonomous navigation in challenging environment. Company with its strong research capabilities is working on indigenisation of core UAV technology along with its international partners to develop new inhouse UAV structural design, Autopilot, Gimbal Payload, Ground Control Vehicle and Software, SAR Radar and advanced Electronic Warfare payloads.

METALLURGY:

INDUSTRY OVERVIEW AND OUTLOOK

In FY2024, the entire German industry faced significant challenges due to persistent inflation, geopolitical instability in Europe, the ongoing Russia-Ukraine conflict, and rising energy and material costs. Despite these hurdles, the German government introduced various protective measures to support companies grappling with escalating commodity prices and the energy crisis.

German SMEs have been particularly hard hit, often unable to fully pass on the significant rise in costs to end customers. However, the anticipated synergy effects from the relocation of products and industries from Asia back to Germany are expected to yield long-term benefits. Relocating production facilities from China to Europe will enhance the companys product base and drive business growth. Dynamatic Technologies remains committed to focusing on a high-margin product mix, scaling up existing products, performance-critical components, customer diversification, and capacity utilization in this segment.

Germanys automotive industry, a cornerstone of its industrial sector, continues to face significant challenges. However, Germanys reputation as a global leader in high- tech automotive products, including autonomous driving technology, positions it well for recovery. The combination of cutting-edge research, seamless value chain integration, and a skilled workforce underscores Germanys strength in the automotive sector. Despite the current environment, Germanys auto industry is poised to leverage its capabilities to drive future success.

SEGMENT OVERVIEW:

Eisenwerk Erla GmbH, Germany, a subsidiary of Dynamatic Technologies, is a preferred supplier of complicated and sophisticated castings to leading global OEMs. The companys most important customers in this segment are BMW, MAN, LIEBHERR, AGCO, Vogele, Borg Warner Turbo Emission Systems, Daimler and Rotax.

Eisenwerk Erla is expanding its production of castings for agricultural and road construction vehicles as well as for stationary and sports engines, which are part of the newly developing business model. With its long history and major investments, the company has become one of the best developed iron foundries in Europe. The Erla ironworks produces extremely complicated iron and steel castings in the most difficult materials. The high level of research and development expertise ensures the plants continued development as a modern foundry. Eisenwerk Erla continues to offer access to the latest technologies and global markets, which sets us apart from our competitors in this industry. The companys processing facilities are fully automated and utilise the latest technological innovations. This is the basis for high competitiveness and the opportunity to build on this expertise.

Particulars	FY2024	FY2023	Change (%)
Revenue	47,081	41,661	13.01%
EBITDA	2,467	1,714	43.93%
Margin %	5.2%	4.1%

Revenue for this segment was Rs. 47,081 lakhs compared to same period last year Rs. 41,661 lakhs. Segment EBITDA was Rs. 2,467 lakhs compared to Rs. 1,714 lakhs in FY2023.

In FY2024, the entire industry in Germany was severely affected by continuing inflation and instability in Europe, the ongoing Russia-Ukraine conflict and developments in energy and material costs. German SMEs are particularly hard hit in this regard and are generally unable to pass on the sharp rise in costs in full to the end customer.

The synergy effects from the announced relocation of products and industries from Asia back to Germany are expected to continue in the longer term. The relocation of production facilities from China to Europe will help to improve the companys product base and thus promote business growth. Overall, Dynamatic Technologies will continue to focus on a high-margin product mix, the ramp-up of existing products, performance-relevant components, customer diversification and capacity utilisation in this segment.

In view of the various challenges posed by the ongoing Ukraine conflict and the resulting inflation and supply chain crisis in Europe and especially in Germany, as well as the sharp and unpredictable rise in gas and electricity costs, Eisenwerk Erla has had to initiate protective measures on the basis of professional advice from experts.

For this reason, Eisenwerk Erla GmbH had applied for the "protective shield proceedings" in self-administration under German law.

The proceedings were successfully concluded in July 2024. The business operations of Eisenwerk Erla were not affected during this time and continued without restrictions. The majority of customers had supported this process by accepting the necessary price adjustments and continuing the business relationship.

Eisenwerk Erla is also implementing its transition plan to build up a further line of business for the manufacture of components for aircraft applications at the EEL site in addition to the existing production.

TECHNOLOGY & QUALITY:

Dynamatic Technologies being a Ter-I supplier for OEMs has continuously invested in technology to make the business more cost effective and world class. The Companys best practices include implementing lean manufacturing and continuous improvement programs. Dynamatic Technologies has also launched QSP - Quality, Safety & Productivity and DOET - Dynamatic Operational Excellence and Transformation, as its new business initiative to emphasise these aspects to the customer.

The Company has state-of-the-art inspection equipments like CMM and laser tracker, and high accuracy 5-axis machines which are one of the largest giga milling machines in the country. This giga milling machine is equipped with a special probing software system complying to Industry 4.0.

Dynamatic Technologies continues to maintain skill and competency of its direct and indirect work force using a software called CATI (Competency Assessment & Training Identification). The software is designed to map each of the employees skill level and training needs and enables the management to provide employee development programs that are necessary for the business growth and sustainability.

The Company has also established an in-house Skill Development Center to train and mentor new recruits. Having adopted a Government ITI under PPP, Dynamatic Technologies provides training to the students, preparing them to serve in any Aerospace and Defence industry in order to make the Make In India drive a great success.

In FY2023, Airbus Group awarded the Global Sustainability Award to the company as a recognition of the services in delivering the products during Pandemic and post-pandemic period.

In FY2024, Boeing Defence awarded the Company with Global Supplier of the year award as a recognition of its services in delivering the products with highest on time delivery and quality performance.

Dynamatic-Oldland Aerospace?, UK is a demonstrated leader in the development of exacting airframe structures and precision aerospace components. It has a unique state-of-the art facility at Swindon, possessing complex 5 axis with robotic machining capabilities for the manufacture of aerospace components and tooling. Dynamatic-Oldland Aerospace?, UK specializes in reverse engineering, re-engineering, fixture design and manufacturing. This division is a certified supplier to Airbus UK, GKN Aerospace Europe & USA, Spirit Aero Systems, Boeing, Magellan Aerospace, GE Aviation Systems and Leonardo. It is compliant with AS 9100 Rev D standards.

In addition, Dynamatic Technologies maintains accreditation for Environmental Management System (EMS) certification under ISO14001, Occupational Health and Safety Management System (OHSAS) certification under ISO45001, Information Security Management System certification under ISO/IEC 27001 and NABL-Competence of Testing & Calibration Lab accreditation to ISO/IEC17025.

Dynamatic Technologies offers its customers a comprehensive solution of high complex, highly skilled multi-axis machining from the UK and high value added, highly skilled sheet metal detail parts alongside assembly from India. This provides customers with offset credits and best value from two cost models.

ANALYSIS OF KEY RATIOS:

Particulars	FY2024	FY2023	Change %	Comments
EBITDA	15,941	18,126	-12.05%	The operating margins has impacted due to subdued performance of Hydraulics segment during the year owing to unfavorable monsoon conditions in India and a production pause in the UK to implement a major product design modification.
EBITDA Margins	11.2%	13.8%
Net Profit	12,181	4,279	184.67%
Net Profit Margins	8.5%	3.3%		Net profit has improved on account of exceptional gain from the sale of windfarm land.

 

Particulars	FY2024	FY2023	Change %	Comments
Debt Equity	0.6	0.8	-25.0%	Credit metrics improved on account of pre-payment of long term debt by utilising the proceeds from the sale of windfarm land and increase in net profit during the year.
Current Ratio	1.3	1.1	19.1%
Interest Coverage Ratio	1.5	1.7	-11.8%

 

Particulars	FY2024	FY2023	Change %	Comments
Return on Net Worth	18%	9.27%	97%	Due to increase in net profit during the year.
Return on Assets	7.75%	2.80%	177%
Return on Capital Employed	37.14%	11.76%	216%

 

Particulars	FY2024	FY2023	Change %
Creditors Turnover	3.22	2.82	14%
Debtors Turnover	5.1	5.6	-9%
Inventory Turnover	2.2	2.3	-4%

FINANCIAL CONDITION: Share Capital

Particulars	FY2024	FY2023	Change (%)
Share Capital	679	679	-
Reserves & Surplus	66,095	53,518	24%

As of 31^st March 2024, the Company has an authorized share capital of Rs 2,500 lakhs, divided into 2,00,00,000 equity shares of Rs10/- each and Rs 500 lakhs divided into 5,00,000 redeemable cumulative preference shares of Rs100/- each. The Companys issued, subscribed and paid-up equity share capital is Rs 679 lakhs.

The Reserves and Surplus were Rs. 66,095 as on 31^st March 2024, an increase amounting to Rs. 12,577 lakhs compared to 31^st March 2023

The change is attributable to:

Particulars	FY 2024
Profit for the year	12,181
Credit balance arising on consolidation	801
Other Comprehensive Income / (Loss)	410
Net Comprehensive Income for the year	13,392
Dividend Distribution	(815)
Net Movement in Reserve and Surplus	12,577

Borrowings:

Particulars	FY2024	FY2023	Change (%)
Long term borrowings	23,440	36,122	-35.1%
Short term Borrowings	22,376	25,718	-13.0%
Total	45,816	61,840	-25.9%
Lease Liability	12,693	13,514	-6.1%
Total	58,509	75,354	-22.4%

Fixed Assets:

Particulars	FY2024	FY2023	Change (%)
Property Plant and Equipment	57,292	44,338	29.2%
Intangible Assets	11,831	12,922	-8.4%
Capital work in Progress	998	7,852	-87.3%
Right-of-use assets	10,034	10,910	-8.0%
Total	80,155	76,022	5.4%

CAPITAL EXPENDITURE

During the year under review, the Company incurred capital expenditure of Rs. 8,217 lakhs for physical infrastructure and Rs. 483 lakhs for procurement of intangible assets. Significant investments have been made in building infrastructure, data security, information systems, and design and development activities, for the future benefits of the Company.

INVENTORIES:

The inventories of the Company mainly comprise of raw materials of Rs 12,178 lakhs, work in progress of Rs. 12,571 lakhs finished goods of Rs. 4,389 lakhs and stores and spares of Rs. 1,426 lakhs.

OPPORTUNITIES & THREATS:

Aerospace and Defence Sector Growth:

The Indian Defence sector, representing the second-largest armed force globally, stands at the forefront of a transformative era. As part of the Aatmanirbhar Bharat or Self-Reliant India initiative, the Defence and Aerospace sector emerge as key focal points, deriving significant benefits from indigenous manufacturing infrastructure and research and development. The Union Budget 2023-24 has allocated INR 1,62,600 Cr for defence services modernization and infrastructure, signifying a 6.7% increase over FY2022-23. The total budget allocation for the industry amounted to INR 5.94 Lakh Cr, reflecting a 13% surge from the preceding year. The Ministry of Defence aims for a turnover of INR 1.75 Lakh Cr in aerospace and defence manufacturing by 2025, inclusive of INR 35,000 Cr from exports. As of April 2023, 606 Industrial Licences have been issued to 369 companies in the Defence sector. To stimulate exports and garner foreign investment, FDI in the Defence sector has been elevated to 74% through the Automatic Route and 100% through the Government Route.

[Source: Ministry of defence, Government of India]

Focus on Civil Aviation:

Civil aviation stands as among Indias fastest-growing sectors, prospectively serving over 500 million domestic and international travellers by 2030 and potentially leading the global aviation market leadership by 2047. In 2022, domestic passenger numbers increased by nearly 50% upsurge, while international traffic had over a 150% surge. In the first half of 2023, domestic airlines transported more than 76 million passengers, reflecting a growth of over 32% year-over-year. The number of airports has expanded from 74 in 2014 to 147 in 2022, with a projection of 220 by 2025.

Indias Vision 2040 outlines ambitious development plans for the sector, comprising a five-fold increase in airport capacity to accommodate over a billion passenger trips annually. The Airports Authority of India (AAI), plans to privatize and optimize airport operations through public-private partnerships, integrating profitable and non-profitable airports.

Support from Government and Industry:

Infrastructure investments are anticipated to increase to USD 778.90 billion in FY2020-25, thus providing a significant boost to demand for capital goods. Under Budget 2023-24, the capital investment outlay for infrastructure was increased by 33% to 10 Lakh Crores (USD 122 billion), constituting 3.3% of the GDP The National Capital Goods Policy aims to increase industrial production of the sector to USD 100 billion, playing a pivotal role in fostering significant contributions to MAKE IN INDIA. It also took steps to promote technology, skills, exports, and common facility centers in an effort to fortify the overall industrial infrastructure.

Major aircraft manufacturers such as Boeing and Airbus view India as a vital market for exports and manufacturing, given the high demand for aircraft, strategic location, engineering capabilities, and competitive labor costs. Foreign OEMs are increasingly collaborating with Indian suppliers and SMEs to forge a robust aerospace ecosystem within the country. Companies in the U.S. also recognize significant opportunities in airport infrastructure, MRO projects, and the expansion of pilot and staff training facilities amidst ongoing airport privatization.

Growing demand for agricultural machinery and equipment:

The agricultural sector in India has had transformative changes over recent years, embracing modern technologies to enhance agricultural output and efficiency. The governments focus on farm mechanization, exemplified by initiatives like custom hiring centers and farm machinery banks, underscores this shift. Indias stature as a leading manufacturer of farm equipment such as tractors, harvesters, and tillers, combined with a strategic emphasis on improving farmers livelihoods, positions it for continued growth in this sector. Innovation in the farm machinery sector is poised to drive the next phase of agricultural growth in the country. The Government of India has been steadily encouraging mechanization through different policy interventions. The technologies that have evolved in the farm machinery sector in the last few years harbor enormous potential to realize the vision of the Make in India initiative, which promotes innovation and investment.

Investment in R&D:

The Indian Government has been increasing its investment in R&D to foster innovation and development of new technologies in the country. The Government has launched several initiatives in recent years to promote R&D in the country. The Make in India initiative, started in 2014, aims to promote manufacturing in the country and position it as a global hub for innovation. The Atal Innovation Mission strives to promote innovation and entrepreneurship, while the Smart Cities Mission aims to cultivate 100 smart cities in the country to promote sustainable development and R&D in various fields.

Diverse Product Portfolio and End Market Segments:

Dynamatic Technologies has a diverse product portfolio that spans across three key business segments: Hydraulics, Aerospace, and Metallurgy. This diversified approach ensures that the Companys performance remains relatively stable and not reliant on any single industry segment. Dynamatic Technologies continues to remain dedicated to advancing its technological and manufacturing capacities, particularly in its aerospace division. The company is poised to benefit from an expanded aerospace order book and anticipates that the growing demand in the Aerospace and Hydraulics sector will significantly enhance its overall performance.

Regulatory changes:

With regulatory environments tightening, particularly around environmental and safety standards, manufacturing complexities and costs are on the rise. Dynamatic Technologies leverages its extensive R&D capabilities and diverse product offerings to adapt and thrive under these new regulations. Government investments in infrastructure and the agricultural sector further amplify Dynamatics ability to capitalize on emerging opportunities, thereby reinforcing its market position.

RISKS & CONCERNS:

Global Economic Uncertainty:

Fluctuations in global markets, spurred by geopolitical unrest such as the conflicts in Ukraine, Gaza, and Israel, possess the potential to cause sudden spikes in prices and tighten labor markets, leading to increased interest rates and diminished asset values. Variations in the rate of disinflation across major economies might trigger destabilizing currency fluctuations, placing stress on financial markets. Additionally, rising raw material costs and higher interest rates render capital expenditures more burdensome. As a global entity in capitalintensive industries, Dynamatic Technologies faces significant risks from these uncertainties, which could adversely affect its operational performance.

Intense Competitive Landscape:

The business environment in which the Company operates is characterized by high competitiveness. The industry is marked by rapid evolution and high innovation, where competition remains intense and rigorous. Most OEMs maintain multiple suppliers for their products and do not prefer exclusive contracts and the inability to meet the cost and product demand of customers could influence business, financial condition, and results of operations. However, At Dynamatic Technologies, we value our long-standing relationships with our customers and strive to continuously engage with them. We offer high-quality products, competitive pricing, and adapt to their evolving needs, providing a valuable proposition.

Technological Evolution:

In an era where technological advancement is relentless, Dynamatic Technologies faces the continuous challenge of adapting to rapid changes to avoid obsolescence. The industries in which it operates are vulnerable to the swift evolution of technology, further intensified by the emergence of formidable domestic and international competitors. To mitigate this risk, Dynamatic Technologies heavily invests in its research and development capabilities. The companys dedicated R&D team is constantly engaged in exploring and integrating the latest technologies, enhancing product offerings to meet the dynamic demands of the market, thereby securing a strategic advantage over competitors.

Foreign Currency Fluctuations:

With operations spanning multiple countries, Dynamatic Technologies is exposed to the complexities of foreign currency exchange. Fluctuations in exchange rates can significantly impact financial outcomes. The company mitigates these risks through a comprehensive hedging strategy and by utilizing natural hedges. The company continuously monitors global currency trends, allowing for timely adjustments to its operational strategies. By striving to balance revenues and expenses in the same currencies, Dynamatic minimizes the effects of currency translation differences, thus safeguarding its financial resilience.

RISK MANAGEMENT:

Effective risk management is fundamental to the business activities of the group. While we remain committed to increasing shareholder value by developing and growing our business within our board-determined risk appetite, we are mindful of achieving this objective in line with the interests of all stakeholders.

The Company emphasizes on achieving the corporate strategic objectives by following best practices in Risk Management. It has formulated a risk management policy and has in place a mechanism to inform the Board Members through risk management committee about risk assessment and minimization procedures and periodical review to ensure that executive management controls risk by means of a properly designed framework.

Our policy is based on the following principles:

• The Board of Directors, Risk Management Committee and Management are responsible for monitoring internal risk management

• Effective risk management and internal monitoring will reduce the likelihood of errors, wrong decisions and surprises due to unforeseen circumstances.

• In order to thrive, an enterprise must take risks. The Management Board is responsible for determining the limits of what is acceptable (referred to as risk appetite).

• Line managers are responsible for the implementation of risk management for the processes for which they are responsible.

This mechanism is implemented as an integral part of our business processes across the Dynamatic Group Companies and includes recording, monitoring, and controlling internal enterprise business risks and appropriate actions are immediately taken to mitigate such risks.

QUALITY MANAGEMENT SYSTEM (QMS)

Dynamatic Technologies is always focused on achieving international quality standards for its products and services. In pursuit of this goal, Dynamatic Technologies has established a comprehensive QMS which encompasses all aspects of the business with a focus on establishing a quality assurance ecosystem that is designed to consistently deliver quality products and superior service.

To achieve product quality assurance, the Company focuses on excellence in-house production processes while ensuring that sub-tiers consistently produce components as per specifications.

Aerospace:

During FY2024, your Company has successfully completed the surveillance and re-certification audits to ISO: 14001:2015 standard for its Environmental Management System, Information Security Management System (ISO/IEC 27001:2022) and Occupational Health and Safety Management System (OHSAS) certification to ISO45001:2018. Your Companys QMS which is compliant to ISO: 9001 and AS9100 standards since 2006, has evolved and matured and is highly system driven and was audited by DQS and Novostar, India with ZERO major non-conformances.

Dynamatic Technologies is NADCAP accredited (accreditation for special processes in the aerospace and defence industry) for special processes like heat treatment, spot welding, nondestructive testing, measurement & inspection, and chemical conversion.

Hydraulics: Dynamatic Hydraulics? has successfully completed the re-certification audits by UL DQS India, to ISO: 9001 specifications for Quality Management System and also to ISO: 14001 specifications for its Environmental

Management System. The Company has also successfully completed ISO 45001 AUDIT for occupational health and safety management systems OHSAS. Certification to ISO 27001:2022 is also completed satisfactorily.

Metallurgy: In the FY2024, Dynamatic Technologies successfully confirmed again the level of AS9100 standards at the Eisenwerk Erla GmbH plant. The company successfully completed the recertification process in November 2023

The Dynamatic Quality Management System (DQMS) addresses the quality requirements set out by the global OEM. DQMS utilizes some of the best tools such as 5S, 8D, FMEA, APQP, Ishikawa, Business Process Re-engineering, Overall Equipment Effectiveness, Root Cause Analysis, Six Sigma, Statistical Process Control, Total Productive Maintenance, Visual Control, Learning-by-Doing and Employee Participation Program (EPP).

Lean Management concepts together with quality tools are being used on the shop floor by management to increase the overall equipment effectiveness (OEE) of the operations. This is achieved by reducing rejections, set-ups, cycle time and through effective material management. The EPP has resulted in the participation of employees in innovative activities and their contributions have resulted in continual improvements to work and work processes.

INFORMATION SECURITY MANAGEMENT SYSTEM (ISMS):

Dynamatic Technologies Limited has a well-established Information Security Management System (ISMS), against the international standards ISO/IEC 27001 certified by DQS India since March 2018 and recertified with latest version 2022 for Dynamatic-Oldland Aerospace and Dynamatic Manufacturing Limited. The standard addresses growing global cybersecurity challenges and improve digital trust, helps us to secure our vital information assets which are required for our business.

During the current year, the company has successfully completed all internal audits and customer audits on Information Security Management System. Over the years, with due training and awareness sessions, the system has matured, and data security measures are well established. Data security risks are all addressed in the ISMS Policies and Procedures. The Information Security Management System (ISMS) addresses the Data Security requirements and expectations of Aerospace customers like Airbus, Boeing, Bell, and HAL.

Datacentre is upgraded to high end "virtualization", wherein, virtual servers are configured and used for various applications, the performance has enhanced, and data storage is now more effective and reliable. Vulnerability Assessment and Penetration Tests (VAPT) are conducted yearly, and any vulnerability identified are addressed and fixed.

To protect the company data from ransomware, immutable backup of internal data and customer data is implemented. Emails are protected using unified security solution for users and devices. The solution protects against the most sophisticated attacks on email, collaboration applications, endpoints. This has enabled users to access mails and use features such as online meetings more effectively. Next Generation Anti-virus (NGAV) tools are implemented to safeguard company data from ransomware, viruses and malwares for our endpoints and servers. Next generation Firewall implemented to protect the network which has Intruder detection and Intruder prevention System (IPS/IDS), threat emulation to protect from all cyber threats.

To enhance effectiveness in our functional systems, SAP Infrastructure on the cloud is implemented. Functional users can access SAP application securely over the internet. Awareness training is continuously provided to all the employees on Data Security and Password Protection. Encryption has been adopted to ensure data security. Data transfers with customers and suppliers is through secured File Transfer Protocol. Having established a highly reliable measures, our IT system meets the customer expectations to share the technical information with the Company. Separate virtual servers for each customer are configured and maintained.

The Company has always ensured and protected IP rights of the customers. Cybersecurity posture is continuously updated and improved from time to time.

DIGITAL TRANSFORMATION: Dynamatic Technologies extended its SAP implementation to new functional area of Human Resources & Payroll in the financial year 202324. This project has helped the digital transformation of the entire HR department and streamline all the policies and procedures across India operations and we have integrated the SuccessFactors logins with Microsoft 365 active directory for single sign-on (SSO). Also, we developed and deployed multiple dashboards like Revenue, Procurement, Inventory, HR Costing for MIS reporting using Power-BI which is seamlessly integrated with SAP. We are also working on various automation and continual improvement projects, will help us to have better operational and cost efficiencies at group level.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal controls and systems serve multiple needs in any organisation. Well- designed internal control systems lay down the framework for day-to-day operations and provide guidelines for employees and most importantly, provide a certain level of security against the risks. The primary responsibility for the development and maintenance of internal control rests with an organizations management. Internal control evaluation involves everything management does to control the organization in the effort to achieve its objectives. Your Companys control system and procedures are regularly reviewed for relevance and effectiveness.

SUPPLY CHAIN MANAGEMENT (SCM) AND PRODUCTIVITY:

Dynamatic Technologies supply chain has a vision to provide flexible, sustainable and an efficient services and products lines delivered at right quality, right quantity, right place and on time to the Customers. Supply Chain evolves in each of the processes through continuous improvement and innovations thereby providing competitive advantage in the entire cycle of Operations.

At Dynamatic Technologies there is a continuous emphasis on digitisation of key processes thereby reducing dependencies and efforts in performing repetitive activities. Flexibility, reliability, compliance, and cost efficiency are the key drivers for our Supply Chain Management practices. In the process of achieving a matured Supply Chain the skillsets at each individual levels are being enhanced by providing opportunities to an individual to lead and meet or exceed business objectives. In order to further enhance the cost efficiency model, Dynamatic Manufacturing Limited has also been converted into an Export Oriented Unit (EOU). During the year, focus was laid on stabilisation of operations within the S/4 HANA ERP Systems developed.

• Supply Chain has supported multiple work transfers from Customer into your Company.

• Optimisation of Inventories on hand were performed for all Projects.

• Supply Chain along with the partners developed software to manage Supplier relationships effectively.

• Supply Chain are designing processes to have a proactive approach for challenges foreseen.

• Speed to market management tools like Just in Time (JIT) manufacturing and distribution, vendor managed inventory (VMI) of detail parts and efficient customer response.

• Improving quality and productivity within operational areas such as warehousing, logistics, inventory management and packaging

• Value Addition & Value Engineering (VAVE) involvement with suppliers to drive the cost down

• Supplier rating linked scheduling

• Supplier audits and onsite training

• Global tax minimization including transfer pricing & custom duties

• Integrated customer services cell to handle customer complaints and warranty claims

The Companys initiatives to leverage information technology in supply chain activities have resulted in improved efficiency through real-time information exchanges and processing. Dynamatic-Oldland Aerospace? has a 3-tier approach - Strategic, Tactical and Operational to ensure that the Supply Chain Management is operating efficiently and generating highest level of customer satisfaction at optimum cost. These measures have helped your Company improve cost and efficiency in a year, which was otherwise faced with global macroeconomic challenges.

ENVIRONMENT:

Environment & Safety stand foremost in the responsibility matrix of Dynamatic Technologies. It focusses on energy use, waste reduction, preventing pollution, conserving natural resources and ensuring safety of its employees and stake holders.

The Dynamatic campus at Aerotropolis has a well-managed green park. Dynamatic Technologies takes steps to ensure sustainable use of resources, maintain ecological balance, and take protective steps to minimise waste generation. A compassionate attitude towards the environment is an integral part of operations and the companys vision of sustainable and responsible growth.

The recharge wells established as part of rainwater harvesting in your Aerotropolis premises can absorb and contain more than a million litres of rainwater flowing down from the adjacent forest enriching the entire Aeropark industrial area.

The plants in the aeropark road median are also always drip irrigated assuring greenery.

Dynamatic Technologies Limited is an ISO 14001-certified company. The company is ensuring its environmental footprint, which is of utmost importance, especially given the growing awareness and stringency concerning environmental laws globally and the need for industries to responsibly account for their impact on the environment. Accordingly, the companys policies are aimed at optimising the usage of natural resources and implementing green technologies for production wherever possible. Wastewater treatment have been adopted at all plants to minimise water consumption and wastage, considering the fact that shortage of water is a growing concern in our country. All the manufacturing hangars of the company are naturally ventilated and solar power utilisation is encouraged. Use of "single use" plastic is avoided.

DOA teams selected for International Competitions for Quality Circles, both won Gold Medals for their presentations. The Lean and 6 Sigma projects, activities and training programs have helped in building such successful teams.

SAFETY AND HEALTH:

Assuring employees safety by reducing potential risks and ensuring total compliance across your entire organisation has been the motto of the management of Dynamatic Technologies. A comprehensive corporate safety manual has been developed identifying the responsibility of employees and management which serves as an induction kit to all employees. Well trained safety officers and divisional HR team provide the necessary awareness training to all. A comprehensive audit by an external agency was carried out last year on industrial safety, health & welfare activities of the company. This assures stake holders that no gaps exist in the system.

To realise its aim of zero incidents emphasis has been placed on making and implementing rules, training employees on preventive measures, and setting up fool-proofing measures on site. This is further complemented by the implementation of best-in-class engineering standards for design and project execution. This has enabled the company to keep workplace hazards to a minimum. The company also provides various health benefits, such as regular health check-ups and health- related awareness programmes, for the employees. These initiatives are conducted across all company facilities and are in line with the companys objective of maintaining a healthy and motivated workforce.

The company also undertakes activities that are focused on the health and safety of its employees on the shop floor. Awareness campaigns have been undertaken to enforce the use of personal protective equipment (PPE) at work. At the same time, the company has been successful in merging the EMS and OHSAS requirements into a common management system called IMS. This has avoided unnecessary duplication of work in monitoring and maintaining records. The facilities are also certified for ISO 45001 on Occupational Health and Safety Management Systems by DQS.

The challenges faced during the pandemic have brought in certain discipline amongst the employees. Although normalcy has been noticed everywhere, the proactive measures such as testing, tracking, etc. are being continued in the company and these Bio-labs and Pathology labs have been maintained

in house as a preventive measure. The bio-Lab is a NABL certified (ISO 15189:2012) and ICMR approved state-of- the-art Molecular Testing Lab. This lab is dedicated to its employees, stakeholders and industry partners. This lab has all necessary infrastructure and experienced Microbiologists, Research Scientists, and Laboratory Technicians.

The required devices in this regard, such as masks, face shields, hand gloves, and hand sanitizers, are being provided to all employees. To maintain safety at the workplace, sensor- based water dispensers are provided, and air fresheners are kept across all departments.

National Safety Week was celebrated in the plant, and a few events were conducted to raise awareness of safety while at work and while away from work. The safety committee ensures special sessions are conducted regularly and safety measures are initiated proactively in the company.

INDUSTRIAL RELATIONS:

Dynamatic Technologies is always focused on creating a harmonious and inclusive work environment where employees feel motivated to contribute towards the collective goal. This outlook involves not only providing our employees with the requisite perks and benefits but also equal opportunities for growth and skill development.

The company is committed to improving day-to-day work life for the employees through safe work practices, the use of personal protective equipment on the shop floor, and continuously educating the workforce through training programmes and demonstrations. The management team also works towards implementing industry best practices for safety and productivity across locations. On-site health care facilities, health and accident insurance coverage, medical feedback from experts, and support in maintaining special health requirements form part of the initiatives undertaken by the company.

The company wishes to put on record its appreciation of the cooperation extended and efforts made by all employees.

Further, in view of employee health & welfare we have tied up with 2 nearby hospitals in Peenya for all medical help and exigencies. We have introduced term life insurance for all employees, group parental insurance facility is extended for employee parents. Annual health check has been carried out every year.

DTL has introduced SAP HR modules to digitise and safely protect employee data and to manage employees attendance & leave availed data on real time basis in the system. The HR SAP system covers all the modules from hiring to retiring. The employee data is safely protected in servers and in cloud.

Reward and recognition of Employees: long term service award process to the workmen is continued. Those who have completed 15 years of continuous service have been rewarded with a Titan watch and those who have completed 25 years of continuous service have been rewarded with a gold coin with D Logo.

Employee Engagement: DTL celebrated family day on the pretext of Kannada Rajyotsava, conducted indoor and outdoor sports activities, cultural functions, and felicitation of retiring employees. DTL celebrated Womens Day on International Womens Day. Ayudha Pooja on during Dasara festival and Laxmi Pooja on Diwali. Celebrated Kannada Rajyotsava on 1^st Nov 2023 and National Safety week in March 2024.

Provided recreational centre to the employee refreshment at Unit 1 and 2 with facility for playing carrom, chess and table tennis to engage employees during breaks.

Initiated Employee Day-out and engagement with refresher training, flexi working hours for managerial categories to manage work life balance.

Provided on site safety training to all the employees across the Units.

The number of people employed as on 31^st March 2024 was 747. Industrial Relations were satisfactory during the year.

The Company wishes to put on record its appreciation of the co-operation extended and efforts made by all employees.

WORK CULTURE:

Human Resources (HR) at Dynamatic Technologies continued to play a pivotal role in managing, guiding, and motivating the companys workforce, and as a strategic partner, the function is aligned with the business needs. The company is always proud of its workforce, which is mature, involved, and identifies itself with the companys mission. The company is constantly focused on creating a conducive work environment through constant bilateral communication with the aim of achieving mutual growth. The company has put in place an HR development framework to ensure employees career progression and greater connection with the vision and mission of the company. This framework rides on multiple programmes and opportunities for individual training and development, skill upgrade schemes, a congenial atmosphere for labour-management relationships, and equal opportunities. HR policies, practices, and the work environment are constantly reviewed to make them current, inclusive, and enjoyable. The company also strives towards acquiring, developing, managing, and retaining the best talent in the market as we focus on optimising workforce productivity and achieving growth for all.

The focus of the HR team is to promote the recognition of merit and hard work across the work force. They also work towards improving transparency and trust across the organisation. HR teams work towards inculcating dynamic vision and values through training, sharing, inspiring, and celebrating to promote a sense of belonging amongst all the employees of the company.

Highlights for the Year:

A workshop on prevention, prohibition, and redressal of sexual harassment of women at the workplace was conducted, wherein, all employees participated, as a refresher training on Workplace Harassment.

Dynamatic has taken on board a qualified psychoanalyst as a wellness expert and has initiated one-on-one sessions to address the concerns and apprehensions of our employees, if any. A wellness camp was organized for all employees, wherein, topics like work-life balance, stress, and interpersonal relations were covered and were well received by the employees.

Womens Day was celebrated by giving away a memento to all the women employees, celebrating their strength and resilience in managing home and work with ease.

One of the executives from the operations team was selected by the Army War College, Indore, to participate in the two-week Higher Command Course (HCC) Industry Joint

Capsule. This course brought the armed forces and industry representatives together for face-to-face discussions and enhanced the industrys collaboration with the armed forces.

Birthday celebrations across all units were conducted to give special attention to the employees and make them feel valued and recognized. This also helps boost employee morale and retention.

Ayudha Pooja was traditionally celebrated during Navaratri in the month of October, recognizing the importance of maintaining tools and instruments that are used in operations.

Lakshmi Pooja was celebrated in the month of November during Deepavali, and Sankranti was celebrated in the month of January.

Christmas was celebrated by emphasizing the "Joy of Giving". Grocery, home needs, essentials, blankets, clothes etc were collected by all employees of DOA and presented to a local Old Age Home.

The Competency Assessment and Training Identification (CATI) software being used by the HR department captures the training provided to each employee. The total number of hours of training imparted is duly captured, and the effectiveness of such training is evaluated.

The 76^th Indias Independence Day was celebrated by hoisting the countrys flag and thereafter, we visited the local government school. School bags and other school essentials were distributed to the school children.

Kannada Rajyotsava was celebrated by hoisting the Karnataka Flag and honouring the state.

Family day "Drishti" was organised on 24^th February 2024. More than 3000 guests, which included employees and their families participated, making the event a grand success. Stalls showcasing the prototypes of the products manufactured in the Company were proudly displayed by the employees. Children enjoyed the activities and games. They were also recognized for their academic excellence by the MD. Quality month prizes and sports prizes were given away to the winners. The event closed with a grand cultural program by the employees.

International Day of Democracy was celebrated on September 15 to uphold and honor the values of democracy, which is one of the most popular forms of government in the world. We at DOA, pledged the preamble of the Constitution on September 15, 2023.

53^rd National Safety Day on 1^st March is an occasion for emphasizing the paramount importance of prioritizing safety across workplaces, communities, and organizations. It serves as a potent reminder of the need to prevent accidents, injuries, and fatalities, reinforcing the value of human life and well-being. The same was highlighted to all the employees.

The annual health checkup for all employees was done in the month of January 2024.

SAFE HARBOUR STATEMENT

Statements in this Management Discussion and Analysis contains "forward looking statements" including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Dynamatic Technologies future business developments and economic performance. While these forward-looking statements indicate the Companys assessment and future expectations concerning the development of business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from expectations. These factors include, but are not limited to, general market, macro-economic, governmental, and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with the Company, legislative developments, and other key factors that could affect the business and financial performance. Dynamatic Technologies undertakes no obligation to publicly revise any forward-looking statements to reflect future/likely events or circumstances, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with the Company, legislative developments, and other key factors that could affect the business and financial performance. Dynamatic Technologies undertakes no obligation to publicly revise any forward-looking statements to reflect future/likely events or circumstances.