dynamatic technologies ltd Management discussions

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 and has held the leadership position in hydraulic gear pumps market for over 45 years. Dynamatic Hydraulics has approximately 80% share of the Indian OEM tractor market and about 38% of the global tractor market. Dynamatic Technologies is a pioneer and leader, amongst the private sector, in both India and the UK, for the manufacture of precision flight critical, and complex airframe structures and aerospace components. It is a Tier-I supplier to the global aerospace OEMs and Primes such as Airbus, Boeing, BEL, Bell Helicopters, Dassault Aviation, Hindustan Aeronautics Limited and Spirit Aerosystems. The Company also manufactures high precision, complex metallurgical ferrous for performance critical components such as turbochargers and exhaust manifolds and has advanced design and development capabilities to support the 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 three state-of-art manufacturing facilities located in India and a facility each in the UK and Milwaukee, USA. This business unit designs and manufactures hydraulic gear pumps in both aluminium and cast-iron in multiple frame sizes. Range of products include 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, very high flow scavenging pumps and lube oil pumps, and water pumps for high horsepower engines, which find applications on off-highway vehicles, marine and offshore equipment. The Company also designs and builds customized hydraulic solutions, from simple hydraulic pumping units to complex marine power packs, aircraft ground support systems to turnkey industrial installations. The division is equipped with advanced innovation and development centres in Bengaluru (India) and Swindon (UK) and holds several patents to its credit. With rich experience in application engineering and rapid prototyping capabilities, Dynamatic Hydraulics can develop bespoke solutions for OEMs in quick time.

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 has best in class infrastructure for catering to the needs of global OEMs such as Airbus, Boeing, Bell Helicopters, Dassault Aviation. Domestically, the Company is working with the defence sector PSUs such as HAL and BEL. The major products of the Aerospace & Defence segment are control surfaces such as wing, ailerons and wing flaps, fuselages, and other key flight critical airframe structures such as flap track beams. Over the period, the Aerospace division has developed excellent capabilities in automated robotic machining, five axis components in aluminium, steel, and titanium. The Company has also expertise in tooling capabilities.

Metallurgy: The Metallurgy division supplies performance critical parts for global manufacturers. It produces high precision, complex metallurgical ferrous castings for different applications in several industries. The Company possesses state-of-art manufacturing facility in Germany. Dynamatic Technologies can vertically integrate the competence and locational advantages of its facilities to deliver greater value to its customers.

RESEARCH & DEVELOPMENT

With three design laboratories across India and Europe, Dynamatic Technologies is a leading private R&D organization, with several inventions and patents to its credit. The Company has defined an Intellectual Property (IP) strategy to build an effective portfolio for future monetization, collaboration, and risk mitigation, focusing on future technologies.

The Company owns various patents in countries including India, the USA, the UK, Germany, and other European countries. Besides the patents mentioned above, the Company has registered 39 trademarks and applied for multiple others in various countries including India, the USA, the UK, and other European countries. DTL employs over 80 scientists and 600 engineers and technicians with expertise 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 brings together Design Engineering, Development, Prototyping, Metallurgical and Manufacturing Infrastructure enabling the Company to comprehensively address the needs of its global customers.

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

In 2022, the global economy was impacted by a series of disruptions that further worsened the impacts of the pandemic. The geopolitical turmoil in Eastern Europe added to the crisis, causing a surge in oil and commodity prices, which aggravated the already high inflation levels worldwide. This escalation of geopolitical tension also resulted in increased financial instability. Adding to this, bank collapse in the United States in the first half of March 2023, caused ripple effects across global financial markets. While the initial impact on economic activity appears to be under control, markets are anticipated for more stringent financial conditions.

These challenges and resulting inflationary pressures prompted many developed and developing countries to implement assertive monetary policies aimed at tightening financial conditions. Major central banks in developed nations raised interest rates rapidly to control inflation. However, this led to capital outflows and currency depreciation in developing countries, which further intensified their balance-of-payment pressures.

Outlook*

The weakening consumer confidence and investor sentiment, driven by higher interest rates and diminished purchasing power, have clouded the world economys near-term growth. The April 2023 International Monetary Fund (IMF) report indicates the global output growth at 3.4% in 2022. However, this growth rate is expected to further decline to 2.8% in 2023, before rising to 3% in 2024.

Emerging markets and developing economies are suffering the consequences of global spill overs, despite being bystanders. The outflow of capital and depreciation of currencies have led to elevated costs of external funding, augmented levels of debt, and endangered their already struggling recoveries. Concerns over lingering supply chain disruptions have rattled commodities and financial markets.

The outlook for emerging economies is projected to be 3.9% in 2023 and 4.2% in 2024. On the other hand, advanced economies are expected to grow by 1.3% and 1.4% in 2023 and 2024 respectively. However, full economic revival seems to be further away, but collaborative efforts between businesses and governments across borders and industries will help us navigate this difficult period and emerge more robust and resilient.

Indian Economy

With the global economy in disarray, India, too was impacted. As the Ukraine conflict continues to impact the global GDP, India is projected to remain robust with a growth rate of 5.9% in 2023, according to the IMF report. This growth rate is slightly lower than the estimated 6.4% in 2022, as higher interest rates and a global slowdown weigh on investment and exports. However, India remains one of the fastest-growing major economies, supported by strong private consumption and capital investment.

India was on the verge of a strong recovery from the pandemic-induced health crisis when the geopolitical tensions disrupted the countrys growth trajectory. This led to a consequent sharp rise in commodity prices, including oil and food. However, the Indian government was prompt to act against inflation, and even though the short term is turbulent, the impact on the long-term outlook is expected to remain marginal. India has shown remarkable economic resilience, managing to mitigate external imbalances caused by the conflict without impeding its growth momentum. Moreover, the countrys inflation rate remained within its tolerance range, in contrast to several advanced nations and regions.

Outlook**

It is anticipated that India will experience a rapid increase in economic growth in the financial year 2024 due to a robust distribution of credit and capital investment. The growth will be driven by the extensive development of digital platforms and various government initiatives including the Production-Linked Incentive (PLI) schemes, which aim to stimulate manufacturing output. The Government has allocated Rs. 8,083 crores towards the PLI scheme. The majority of this funding will be directed towards large-scale electronics manufacturing, including mobile devices, pharmaceuticals, automotive and auto components, as well as food processing.

INDUSTRY OVERVIEW AND SEGMENT DISCUSSION: HYDRAULICS:

Dynamatic Hydraulics? is one of the worlds largest manufacturers of hydraulic geared products with state-of-art manufacturing facilities located in India, the UK, and the USA. This division manufactures widest range of hydraulic gear pumps in aluminium and cast iron in multiple frame sizes, pressure and flow ratings and designed bespoke for each application, Axial Piston Pumps, High speed low torque motors, hand pumps, Hitch control valves, Rock shaft assemblies, Lube and water pumps, Mobile control valves, Steering Units, and complete hydraulic solutions for the Indian and overseas markets.

Industry Overview and Outlook: Farm Mechanisation:

The tractor production in India in FY 2023 recovered marginally over the volumes produced in FY 2022. The industry witnessed a growth rate of approximately 7%. The volumes, however, remain encouraging, with India accounting for roughly 45% of global tractor volumes produced in this period. While a large percentage of these tractors are sold and used within India, there is a gradual increase in exports of these mid- horsepower tractors manufactured in India.

Over the past few years, there has been significant progress in agriculture mechanization in India. A considerable number of farmers have transitioned from traditional animate sources to mechanical equipment to power their farming activities. This shift can be attributed to various factors, including easy availability of credit, government incentives, increased agricultural productivity, the emergence of contract farming, and rising rural incomes. The farm mechanisation in India is roughly around 50~52% compared to Europe and the USA where it is more than 85%. So, we have a huge headroom for growth, and this will drive the demand for tractors and other equipment for the sector in India.

Looking ahead, the growth of the tractor industry is expected to moderate in FY2024, with projected low single-digit year-on-year growth. However, there is still ample room for farm mechanization in India, and the industry is expected to benefit from the increasing use of tractors in non-agricultural activities, rising demand for Indian medium horsepower tractors from other countries, and higher investments in global infrastructure development. These factors are likely to fuel the growth of the tractor industry in the near future.

Construction and Material Handling:

The Indian Construction Equipment industry (CE) recorded an excellent 26% YoY growth with sales crossing the one lakh unit mark in FY2023. CE sales in Q4 of FY2023 (Jan-Mar 2023) increased by 23% over Q4-FY2022 and by 22% over Q3-FY2023. The significant growth in FY2023 was driven by all four sub-segments of CE industry, except Road Construction Equipment, which recorded a slight de-growth of 3%. A total of 77,164 units of Earthmoving equipment were sold in FY2023, a 23% jump in sales as compared to 62,629 units sold in FY2022. the Material Handling Equipment segment recorded an impressive 47% growth, driven by a 25% surge in sales volume of pick and carry cranes, accounting for more than 80% of the total sales in this category. A significant increase in tele-handler sales was also witnessed with 713 units sold in FY2023 compared to 342 units in FY2022. Enhanced government focus on infrastructure development and the steady revival of the real estate industry were other factors that contributed to the growth of the industry and resulted in higher demand for construction equipment during the year. [Source: ICEMA] Going forward, a strong recovery is anticipated during FY2023 on the back of low base effect as well as an enhanced export potential and the governments continued thrust on infrastructure development through National Infrastructure Pipeline, Gati Shakti Masterplan, National Monetisation Plan, constitution of National Bank for Financing Infrastructure and Development (NaBFID). However, with increasing raw material prices such as steel, bitumen and cement, the industry may experience some margin pressure.

Dynamatics designs and builds pumps and motors for construction equipment sector. At present market share of the Company is very limited in this segment. Going forward, we look forward to this sector as a good opportunity to explore new products, new application, and new markets.

Segment Overview:

Dynamatic Hydraulic 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.

The Company market share witnessed an increase in FY2023 from 75% to 80% in the organized Indian tractor industry. 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 tractor industry might witness a low single digit growth in FY2024 owing to below normal monsoon levels forecast. However, there is an increasing global demand for mid-size tractors produced in India. Industry will thus witness a steady growth in exports.

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.

During the FY2023, the Hydraulics segment recorded a healthy top line growth of 9% compared to last year coupled with significant improvement in the profitability for the period. The margin enhancement was driven by development of new products, addition of new applications, resulting in better product mix. Continuous process improvement measures further help improve efficiencies and margins.

Operational Performance

(Rs in Lakh)

Particulars	FY2023	FY2022	Change (%)
Revenue	46,166	42,366	9.0%
EBITDA	8,748	7,318	19.5%
Margin %	18.9%	17.3%

The Hydraulics segment reported a robust performance during the year driven by increasing demand from agriculture and non-agriculture sector demand for tractors. EBITDA margins for the segment improved by over 168 basis points compared to last financial year.

Looking forward, the year 2024 is expected to report a moderate growth in India and UK. However, higher commodity prices, inflation, power surcharge and removal of subsidy on power by the UK Govt., will test our margins in UK.

Awards & Accolades:

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 FY2023. This is due to our relentless pursuit of excellence in everything we do.

May 2022: One Gold Award in CII Poka Yoke Competition July 2022: One Gold Award in CII National Kaizen competition July 2022: One Silver Award in CII National Kaizen competition August 2022: Two Gold Award for Quality Circle, QCFI November 2022: One Platinum Award in CII National Kaizen Competition December 2022: Star Champion Award for Kaizen Competition, CII

December 2022: Excellence Award, National convention for Quality circle, QCFI

January 2023: Gold Award in Poka Yoke competition, CII

Customer Awards

November 2022: Sharing best practises award by Ashok Leyland

AEROSPACE & DEFENCE: Industry Overview and Outlook: Defence Aerospace:

Aerospace and Defence (A&D) industry has shown signs of a strong rebound in 2022, but supply chain challenges and talent shortages continue to limit the industrys growth. Furthermore, the Russian and Ukraine war disrupted global supply chains, especially for critical metals and rare earth elements, and exacerbated fuel price volatility. Inflation remains a challenge for the entire industry. However, increased aircraft and military orders indicate continued growth in 2023. Indias defence expenditure ranks third globally, aiming to export $15 billion worth of equipment by 2026, showcasing its evolving capabilities in the global defence market. Till April 2023, a total of 606 Industrial Licences have been issued to 369 companies operating in Defence Sector. A testament to this progress is the defence manufacturing sectors commendable surge in production, escalating from $10.9 billion in FY21 to an impressive $11.85 billion in FY22. Foreign Direct Investment (FDI) equity inflow in the defence sector for April 2000-June 2022 stood at US$ 13.16 million, as per data released by the Department for Promotion of Industry and Internal Trade (DPIIT). Over the next 5-7 years, the Government of India has committed to an ambitious plan of allocating $130 billion for fleet modernization across all armed services. This remarkable investment highlights the governments unwavering determination to equip its armed forces with cutting-edge technology and reinforce its defence capabilities.

Commercial Aerospace:

Economic recovery for the civil aviation industry gained momentum in 2022 on the back of the COVID-19 vaccine rollout and rising demand for air travel. As passenger traffic exceeds pre-pandemic levels, strong increases in new commercial aircraft orders signal growth continuing in 2023. Indias aviation sector has made significant strides in its recovery, with a fully recovered state from the pandemic shock. In the fiscal year 2023, India recorded an impressive 236.71 million air traffic movements, marking a significant increase compared to the previous year. As a result, India is on track to become the worlds third-largest air passenger market by 2030, surpassing both the United States and China

[Source: International Air Transport Association IATA].

The strong recovery in air travel is leading to increased aircraft orders and aftermarket activity. The number of airplanes is expected to reach 1,100 planes by 2027. Between FY2016 and FY2022, freight traffic increased at a CAGR of 2.52% from 2.70 MMT to 3.14 MMT. Freight traffic stood at 2,390,320 tons in FY23 (April-December 2022). Freight traffic on airports in India has the potential to reach 17 MT by FY40. The Indian Civil Aviation MRO market, at present, stands at around USD 900 mn and is anticipated to grow to USD 4.33 bn by 2025 increasing at a CAGR of about 14-15%. To accommodate this booming industry, the government plans to invest Rs. 35,000 crores ($4.99 billion) over the next four years and further develop airport infrastructure. With initiatives such as UDAN-RCS promoting regional air connectivity, the Indian civil aviation sector is ready to take flight, solidifying its position as a dynamic force in the global aviation landscape. Leading global commercial aerospace original equipment manufacturers (OEMs) estimate that global passenger traffic will return and exceed to 2019 levels by the end of 2023 or early 2024. This could, in turn, result in production ramp-ups to remediate the growing backlog and drive industry revenue in 2023.

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, nondestructive testing and metrology, the Company is also approved by major OEMs like Airbus, Boeing, Bell Helicopters and Dassault. 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 has 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 7,000 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. Going forward, the Company is focused on developing capabilities in large aero-structural assemblies and systems.

Awards & Accolades:

In FY2023, Dynamatic Oldland-Aerospace? received industry wide recognition and won a few major awards: MAY 2022: Won the Platinum Award for ‘Most Innovative Covid Response category organized by HR Association India, part of World HR Federation JUN 2022: Won 4 Par Excellence Awards in the 8th National Conclave on 5S -2022 Competition at Goa, organized by QCFI (Quality Circle Forum of India).

AUG 2022: Won 11 Gold awards in the 31st Chapter Convention on Quality Concepts (CCQC)-2022, organized by QCFI. SEP 2022: DTL team participated in the 5th SMED Competition-2022 and Won Gold Award.

SEP 2022: At the 7th Edition of the Poka-Yoke Competition 2022, which was held on September 29 and 30, a DTL team presented a case study and Won the First Prize Award in the Medium Scale, Manufacturing category.

NOV 2022: Won 2 Gold awards in the 47th International Convention on Quality Control Circles (ICQCC) Competition at Jakarta Indonesia organized by IQMA Indonesia, which for the very first time.

NOV 2022: DTL Team participated in Skit and Slogan Competition organized by Boeing India and won 2nd prize in the Skit Competition.

"How you Drive Ethics and Compliance Related to Quality (Product and Process)" was the theme of the Quality Month (Skit Competition).

DEC 2022: Won 2 Par-Excellence Awards in the 36th National Convention on Quality Concepts (NCQC)-2022 Competition held at Aurangabad organized by QCFI and got selected for the international level competition, which will be held in Nov2023.

FEB 2023: Won Gold in National Awards for Manufacturing Competitiveness (NAMC) 2022 organized by IRIM

MAR 2023: Dynamatics team participated and won the Golden Peacock prestigious award for National Training from Institute of Directors.

Operational Performance:

(Rs in Lakhs)

Particulars	FY2023	FY2022	Change (%)
Revenue	43,737	36,014	21.4%
EBITDA	11,682	9,899	18%
Margin %	26.7%	27.5%

During FY2023, the Indian Aerospace witnessed moderate growth supported by improvement in order execution and delivery. The Aerospace segment reported a growth of 21.4% y-o-y in FY2023 driven by resilient performance of air transport industry. Ramp-up of assemblies for F-15EX Eagle and Commercial deliveries of Escape Hatch Doors for Airbus A220 aircraft will start in the coming quarters and will contribute to the topline and new business opportunities. In addition, Dynamatic Manufacturing Limited, 100% wholly owned subsidiary of the company, a center for excellence for detail parts has started the operations and ramp-up will start in the coming years. A strong order book by major aircraft producers will drive both defense and commercial demand in the forthcoming year. The strategy for the Aerospace business is to focus on sheet metal and detail parts to enhance margin levels.

Dynamatic Homeland Security? offers cutting edge security products and technologies such as unmanned aerial vehicles, manned - unmanned ground vehicles. These solutions are aimed at enhancing the potential customers capabilities in countering modern day security threats. The Company has industrial defence production licenses from the Ministry of Commerce & Industry, Government of India for the manufacture of drones (unmanned aerial systems). These solutions are being customised for use in non-military applications like farming, mapping, cargo, search and rescue, medical. This will give us far bigger canvas to offer our solutions and will drive growth in the coming years.

METALLURGY:

Industry Overview and Outlook

Due to the economic slowdown in demand in global markets since 2019, the impact of the Corona pandemic and the Russian war of aggression on Ukraine, and as a result of persistent supply shortages of certain inputs and raw materials, passenger car sales and production were adversely affected in 2022. The foundries as suppliers for the automotive industry were challenged in different ways last year. On the one hand, the demand for e-cars was higher than expected and there were long waiting times. On the other hand, production figures for combustion cars in Europe were reduced. Thus, the ordering behaviour of the automotive industry was subdued. The biggest problem for the foundry was the increased cost of energy and materials, which was unsustainable without customer support. The sum of the problems led to a reduction in the companys turnover.

Segment Overview:

Eisenwerk Erla GmbH, Germany, a subsidiary of Dynamatic Technologies, is a preferred supplier of precision, complex metallurgical products to leading global OEMs. The major clients of the Company in this segment are BMW, MAN, LIEBHERR, AGCO, Borg Warner Turbo Emission Systems, Daimler and Rotax. Eisenwerk Erla is growing in casting parts for Agriculture and Road construction vehicles which are part of the re-designing business model. With a history of over 630 years, Eisenwerk Erla possesses one of the finest ferrous foundries in Europe, capable of manufacturing extremely intricate ferrous castings in exotic metallurgy. It also has strong R&D capabilities with patented technologies. Eisenwerk Erla continues to provide access to the latest technology and the European markets, which differentiates us from our peers in this industry. The Companys machining facility is fully robotized which incorporates the latest technological innovations. It will allow Eisenwerk Erla to increase its competitiveness in manufacturing high-value precision parts of BMW.

Operational Performance:

(Rs in Lakhs)

Particulars	FY2023	FY2022	Change (%)
Revenue	41,661	46,501	-10.4%
EBITDA	1,714	2,032	-15.6%
Margin %	4.1%	4.4%

During the FY2023, Metallurgy segment has been impacted strongly by unprecedented inflation & instability in Europe caused by Russia - Ukraine conflict and other supply chain challenges. During the FY2022, the Metallurgy segment saw a decrease in production after the peak of the Covid-19 pandemic and followed by supply chain interruptions. However, with the Companys continued focus on margin expansion, low-margin product rationalisation continued during the year.

The automotive industry showed resilience during the last year which supported the moderate top-line growth of the segment. Over the longer term, the Company expects to derive further synergies. The shift in production facilities from China to Europe will help improve the Companys product base and in turn drive business growth. Overall, Dynamatic

Technologies continues to focus on a high-margin product mix, a ramp-up of existing products, performance-critical components, customer diversification and capacity utilization for this segment.

During the FY2023, Eisenwerk Erla GmbH had applied for the "protective shield process" through self-administration under German Laws. Considering the various challenges due to the ongoing Ukraine conflict and resultant inflation and supply chain crisis in Europe and more specifically Germany, and the steep and unpredictable increase in the cost of gas and electricity, Eisenwerk Erla, based on professional advice from experts, initiated the aforesaid corporate protective measures.

During this process, the business operations of Eisenwerk Erla were not impacted and continued without any restriction, and most of the customers supported Eisenwerk Erla by agreeing to corrective price adjustments before the competent local court of Chemnitz, Germany. An administrator was commissioned to draw up the resolution plan, and in three months, the management of Eisenwerk Erla and the administrator were able to draw up a resolution plan and present it to the creditors, which was accepted by the court. 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 Tier-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.

Boeing Defense spotlighted the company as a Resilient Supplier as a recognition of the services in delivering the products amidst the global supply chain challenges.

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 underISO14001,OccupationalHealthandSafetyManagement 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:

An analysis of key ratios for the period under review is as follows:

(Rs in Lakhs)

Particulars	FY2023	FY2022	Change %	Comments
EBITDA	18,126	16,923	7.11%	Increase in revenue supported by new product, the margin enhancement driven by change in product/project mix along with base price revision.
EBITDA Margins	13.78%	13.50%	27 bps
Net Profit	4,279	3,206	33.47%
Net Profit Margins	3.25%	2.56%	69 bps

 

Particulars	FY2023	FY2022	Change %	Comments
Debt Equity	0.8	1.3	(19.92%)	Improvement as result of equity infusion and profitability during the year.
Current Ratio	2.3	1.9	22.05%
Interest Coverage Ratio	1.7	1.6	8.26%

 

Particulars	FY2023	FY2022	Change %
Return on Net Worth	9.27%	8.55%	72 bps
Return on Assets	2.80%	2.28%	52 bps
Return on Capital Employed	11.76%	10.44%	133 bps

 

Particulars	FY2023	FY2022	Change %
Creditors Turnover	2.8	2.9	(3.09%)
Debtors Turnover	5.6	6.1	(8.35%)
Inventory Turnover	2.3	2.6	(11.28%)

FINANCIAL CONDITION:

Share Capital

(Rs in Lakhs)

Particulars	FY2023	FY2022	Change
			(%)
Share Capital	679	634	7.1%
Reserves & Surplus	53,518	37,507	42.7%

As of 31st March 2023, 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. During the year under review, preferential allotment was made to non-promoter persons, and owing to which the current Companys issued, subscribed and paid-up equity share capital has increased to Rs 679 lakhs. The Reserves and Surplus was Rs. 53,518 lakhs, as on 31st March 2023, an increase amounting to Rs. 16,011 lakhs compared to 31st March 2022.

The change is attributable to:

(Rs in Lakhs)

Particulars	FY 2023
Profit for the year	4,279
Securities premium from the issue of equity shares	11,246
Credit balance arising on consolidation	1,011
Total	16,536
Other Comprehensive Income / (Loss)	(335)
Dividend Distribution	(190)
Total	(525)
Net Comprehensive Income for the year	16,011

Borrowings:

(Rs in Lakhs)

Particulars	FY2023	FY2022	Change
			(%)
Long term borrowings	36,122	37,806	-4.45%
Short term Borrowings	25,718	16,541	55.48%
Total	61,840	54,347	13.79%
Lease Liability	13,514	14,323	-5.65%
Total	75,354	68,670	9.73%

Fixed Assets:

(Rs in Lakhs)

Particulars	FY2023	FY2022	Change
			(%)
Property Plant and Equipment	44,338	44,399	-0.14%
Intangible Assets	12,922	12,587	2.66%
Capital work in Progress	7,852	1,454	440.03%
Right-of-use assets	10,910	11,535	-5.42%
Total	76,022	69,975	8.64%

Capital Expenditure:

During the year under review, the Company incurred capital expenditure of Rs. 9,084 lakhs for physical infrastructure and Rs. 127 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. 9,934 lakhs, work in progress of Rs. 14,644 lakhs finished goods of Rs. 4,195 lakhs and stores and spares of Rs. 1,215 lakhs.

OPPORTUNITIES:

Aerospace and Defence Sector Growth: The Indian Government has been actively promoting self-reliance in defence and aerospace manufacturing which will bring greater opportunities for new orders. Both military and commercial aerospace sectors have good growth potentials in India. In 2022-23, the total allocation of the three forces was Rs. 593,538 crore (~ USD 72.38 bn) in Union Budget 2023. Total global military expenditure increased by 3.7% in real terms in 2022, to reach a new high of $2,240 bn [Source: SIPRI Military Expenditure Database] and considering current scenario it is expected to grow further in coming years. As major world economies continue to strengthen their militaries in response to geopolitical tensions. [Source: Ministry of Defence, Government of India]

Focus on Civil Aviation: The civil aviation industry in India has experienced significant growth in the past three years, making it one of the fastest-growing industries in the country. The MRO industry stands at around $900 mn currently and is anticipated to grow to $4.33 bn by 2025 increasing at a CAGR of about 14-15%. India has plans to develop civil aviation in the country through regional connectivity for its tier-2 cities. The Government has launched UDAN Scheme for this purpose and has targeted to operationalize 1,000 UDAN routes and to revive / develop 100 unserved & underserved airports, heliports, and water aerodromes by 2024 [Source: Invest India]. This new initiative in collaboration to existing initiatives is favourable for the global OEM and related manufacturers.

Growing demand for agricultural machinery and equipment: There have been significant changes in India in the context of agriculture over the decades and many new technologies have been developed. Traditional farmers are also using the latest solutions and trends to improve production in the food value chain. It includes the adoption of new technologies and various farm equipment to increase farmer efficiency and produce more crops. Many initiatives have been undertaken to enhance productivity, reduce wastages and increase farmers income. These initiatives, coupled with a focus on farm mechanization such as the establishment of custom hiring centres, farm machinery banks, and high-tech hubs in different states, have also been undertaken. India is among the largest global manufacturers of farm equipment like tractor, harvesters, and tillers. The Governments focus on the sector and farmers quality of life is expected to further drive growth in this industry.

Preferred Sourcing Destination: A stronger collaboration between the Government and the private sector under the Atmanirbhar Program is expected to provide a boost to economic growth. With rising demand and the Indian economys ability to leverage this for sustained technological advancement, India has the potential to become a preferred sourcing destination. Furthermore, ‘China plus One strategy adopted by leading global investors have also supported the trend. Various global tier-1 suppliers have also announced plans to increase their procurement from India.

Investment in R&D: The Indian Government has been increasing its investment in R&D to encourage 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, launched in 2014, aims to promote manufacturing in the country and make it a global hub for innovation. The ‘Atal Innovation Mission is aimed at promoting innovation and entrepreneurship, while the ‘Smart Cities Mission aims to develop 100 smart cities in the country to promote sustainable development and R&D in various fields.

Strong Technology and Manufacturing Platform:

Dynamatic Technologies is always committed to enhance its existing capabilities and with that focus it has made significant investments, particularly in the Aerospace segment. The Companys performance is expected to benefit from the ramp up in the order book of the Aerospace segment. In addition, strong momentum for hydraulics segment is also anticipated to contribute significantly to the Companys performance.

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 is relatively stable and not reliant on any single industry segment. The Company has a well-balanced mix of high-growth and stable end markets. Going forward, Dynamatic aims to further strengthen its existing product portfolio while also diversifying into products that offer attractive growth and profitability prospects.

Regulatory changes: The current regulatory environment is becoming increasingly stringent with respect to environmental and safety standards, resulting in higher costs and greater complexity for component manufacturers across various industries. However, Dynamatic Technologies, with its extensive product portfolio and strong research and development capabilities, is well-positioned to leverage these challenges and capitalize on new industry opportunities. Furthermore, Government investments in infrastructure and agriculture sector will also help Dynamatic Technologies to capitalize on the prevailing opportunities.

RISKS & CONCERNS:

Global Economic Uncertainty: The European upheaval with the Ukraine crisis has yet again tampered with global growth. This conflict has pushed up the price of crude oil and commodities, disrupted the supply chain, and aggravated the inflationary environment across the world and impacted the pace of recovery. These external factors, combined with the increase in raw material prices and high-interest rate scenarios, have made capital expensive in most of the industries. As a global Company operating in capital-intensive sectors, Dynamatic Technologies is vulnerable to these external factors, and continued instability could impact the Companys performance.

Competition: The business environment in which the Company operates is highly competitive in nature. The industry is one of the rapidly evolving and highly innovative industries, where competition is tough 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 longstanding 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 Changes: In todays rapidly changing technological landscape, it is imperative for companies to keep up with advancements and anticipate emerging trends to stay relevant. Additionally, the industries in which the Company operates in, face challenges in the form of technology obsolescence due to the dominance of emerging domestic and international competitors. Dynamatic Technologies recognizes the risks posed by technological advancements and has always placed a strong emphasis on R&D and product innovation. The Companys dedicated R&D team continually monitors the evolving technological landscape, allowing the Company to efficiently adopt new technologies and upgrade existing ones to meet customer needs. In addition, the companys access to cutting-edge technologies serves as a significant advantage, differentiating it from its peers.

Foreign Currency Fluctuations: Due to the Companys global operations, Dynamatic Technologies is subject to various foreign currencies and its related volatilities. Given the nature and scale of the business, fluctuations in foreign exchange rates can have an impact on the Companys financial performance. To mitigate these risks, the Company has a strong hedging process and a policy in place. It also leverages natural hedges where possible. Dynamatic Technologies continuously monitors exchange rates relevant to its geographies and takes suitable actions to offset adverse changes, such as adjusting selling prices and costs. Additionally, the Company aims to match its revenue and expenses in the same currency to minimize cross-currency exposure and translations.

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 FY2023, your Company has successfully completed the surveillance and reaudits to ISO: 14001 specifications for its Environmental Management System, Information Security Management System (ISO/IEC 27001) and Occupational Health and Safety Management System (OHSAS) certification to ISO45001. 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 non-conformance. Dynamatic Technologies is NADCAP accredited and maintains merit of 18-14months (accreditation for special processes in the aerospace and defence industry) for special processes like heat treatment, spot welding, non-destructive 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 IS0 45001 AUDIT for occupational health and safety management systems OHSAS.

Metallurgy: During the FY2023, Dynamatic Technologies has confirmed level for the AS9100 standards at Eisenwerk Erla GmbH facility. The Company completed the re-certification process successfully in November 2022.

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-Oldland Aerospace? 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 periodically once every 3 years. During the current year, the company has successfully completed the routine internal 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. The Data Centre are 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. To ensure Business continuity, backup of the entire data in the server is maintained at a different location outside Dynamatic Technologies premises. The Company has moved from on-premises mail system to a robust cloud-based mail system. This has enabled users to access mails and use features such as online meetings more effectively. 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 system and 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. Apart from maintaining and upgrading the system, data security features are enabled for remote access where it can be effectively used for data centre resources.

SAP Implementation: In line with the digital transformation strategy and evolution, during the year, Dynamatic Manufacturing Limited, subsidiary of Dynamatic Technologies has successfully implemented SAP S/4HANA. With this implementation, the entire Indian operations are now on common ERP platform. The new system, once implemented globally, 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 efficient services and product lines delivered at the right quality, quantity, place, and time to the customers. The supply chain evolves in each of the processes through continuous improvement and innovations, thereby providing a competitive advantage in the entire cycle of operations.

At Dynamatic Technologies, there is a continuous emphasis on the digitization 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 mature supply chain, the skillsets at each individual level are being enhanced by providing opportunities for individuals 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), and all Indian aerospace operations are now 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 customers into your company.

• Optimisation of inventories on hand was performed for all projects.

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

• Supply Chain is designing processes to have a proactive approach to 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 and 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 and customs 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 the highest level of customer satisfaction at optimum cost. These measures have helped your company improve cost and efficiency in a year that was otherwise faced with global macroeconomic challenges.

ENVIRONMENT:

Dynamatic Technologies always plans and executes actions to ensure the protection of the environment and the conservation of energy resources, while at the same time focusing on the health and safety of all its employees. 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.

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. Techniques such as rainwater harvesting and wastewater treatment have been adopted at all plants to minimise water consumption and wastage, considering the shortage of water is a growing concern in our country.

The new factory at Devanahalli is constructed with thermal roofing and thermal walls to conserve the energy required to cool the interiors. The design also ensures 100% harvesting of rainwater. This enables the adoption of systematic and quantifiable approaches and techniques to minimise the impact on the environment.

In line with the recent government directive to prevent the usage of single-use plastic, a street play was written and performed by our employees. As part of our sustainability project, this play was performed for all our stakeholders. This unique awareness programme brought better understanding among the employees, and we could turn our factory into a No Plastic Zone. Besides, Dynamatic Technologies took up "No Plastic Usage" as one of its sustainability targets. We received the Platinum Award 2022 for "Most Innovative COVID Response" from the Human Resources Association of India (HRAI).

For our continued support to our OEMs during the pandemic, we were also adjudged the first winner of the Global Sustainability Award bestowed by Airbus.

Dynamatic Technologies teams were selected for international competitions for quality circles, and both teams participated and won gold medals for their presentations. Lean and Six Sigma projects, activities, and training programmes have helped build such successful teams.

SAFETY AND HEALTH:

Dynamatic Technologies is focused on creating and ensuring a healthy workplace free from occupational hazards to realise its aim of zero incidents. To achieve this vision, emphasis has been placed on making and implementing rules, training employees on preventive measures, and setting up foolproofing 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.

Despite the pandemic ravaging industries, we could maintain normalcy with proactive measures. Testing, tracking, isolating, treating, vaccinating, etc. All government guidelines were adhered to by the company to mitigate the spread of the virus. 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. Special sessions were conducted to raise awareness about COVID-19 pandemic preventive measures such as wearing PPE, COVID-19 tests, and vaccinations.

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.

Dynamatic Technologies has undertaken initiatives such as conducting frequent swab tests by setting up a trained medical team and enforcing COVID-19 appropriate behaviours. Dynamatic Technologies has brought out its own COVID-19 SOPs in line with the guidelines issued by MHA to contain the spread of the virus. Dynamatic Technologies has set up a sophisticated bio-security lab approved by NABL and managed by highly qualified and skilled personnel, which helps in identifying positive cases on the same day and allowing further containment measures to be taken.

In response to the shocks of the recent pandemic, the company is also allocating resources for the development of current and potential leaders to build new skills to function effectively in the new work environment.

An activity centre is established as a place for refreshment for employees during their leisure time. This activity centre is used for playing indoor games like table tennis, carrom, badminton, and chess.

The number of people employed as of March 31, 2023, was 769. Industrial relations were satisfactory during the year. The company wishes to put on record its appreciation of the cooperation 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:

All female employees of the company were given training on "womens safety," wherein topics such as self-defence techniques, stress drills, basic strikes, and defense were addressed. A workshop on prevention, prohibition, and redressal of sexual harassment of women at the workplace was conducted.

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 at the Sheraton Grand Bangalore Hotel at Brigade Gateway on 13th March 2023. All the women employees of the Hydraulics and Aerospace Divisions participated. Some of the women employees were recognized as achievers in their field, and they were honored with the Nari Shakti Award.

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.

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.

Once again, Dynamatic Technologies won the prestigious Golden Peacock National Training Award - 2023, which was awarded in Dubai.

To build and encourage team spirit, an inter-division football tournament was held, wherein every project or department was represented by a team. Almost 27 teams participated, and the Boeing Project team won the coveted JKM Rolling Trophy, 2023.

The 75th year of Indias independence was celebrated, and all our employees participated in this event. The flag was hoisted by MD and CEO at midnight on August 14, signifying the independence our country got 75 years ago. All employees were proud to be part of this great event.

The employees, machines, and all other equipment were moved into Dynamatic Manufacturing Limited and to Dynamatic Aerotropolis. This was a huge activity of shifting, which was done smoothly.

Kannada Rajyotsava Celebration. To bring cohesiveness amongst the employees and uplift belongingness, Kannada Rajyotsava, the native celebrations, were held, in which all the employees participated, making it a grand success. Along with Kannada Rajyothsava, an annual family day for DOA was held, calling it "Drishti," a vision. Employees and their families had a fun day witnessing cultural activities and getting a chance to meet and interact with the MD and CEO. Dynamatic Technologies has been active in social welfare activities as part of its corporate social responsibilities, wherein it has supplied food to the police department for all required events and also provided masks during the COVID outbreak.

SAFE HARBOUR STATEMENT

Statements in this Management Discussion and Analysis contains "forward looking statements" including, but without limitation, statements relating to the implementation b 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.