Emmforce Autotech Ltd Management Discussions

REPORT BUSINESS OVERVIEW

Our company is engaged in the business of manufacturing niche automotive drivetrain parts like Differential Housings, Differential Lockers, Differential Covers,4WD Locking Hubs, Spindles, Axles & Shafts, Gear Shifters, Yokes, Differential Spools, Differential Tools and various differential forged / cast parts primarily for 4-wheel Drive and performance racing vehicles. The company has been engaged in exports ever since its inception. We have established itself as a manufacturer of Drivetrain Parts in India and is one stop shop for quality cost competitive drivetrain parts and providing out-of-the-box solutions to its customers through designing and development of complex / special parts.

We offer fully integrated engineering solutions from conceptualization, development and validation to implementation and manufacturing of our products. The conceptualization stage involves acquiring market intelligence, assessing customer requirement and formulating customized strategy for individual customers. The development phase includes product designing, material procurement and processing. This is followed by the validation phase, which involves prototyping, testing and feasibility analysis. Our in-house manufacturing and implementation competencies include forging, machining, fabrications, heat treatment, surface finish, logistics, quality and testing, design and validation.

FINANCIALS

The financial performance of the Company for the financial year ended March 31, 2025 is given in the directors report.

SWOT Analysis

Strengths:

• Our diverse product range of drivetrain parts manufactured under one roof gives us a market edge from most of the competitors.

• A number of the parts manufactured by us are niche with very limited competition

• Strong Long Term Customer relationships and Diverse Customer base allows to understand the upcoming requirements of the customers and helps us upsell / cross sell.

• New products in the pipeline for development are also very niche and highly scalable

• Integrated Manufacturing facilities and modern machinery helps us reduce the lead time of the customer and reduce dependence on outsourcing processes.

• Experienced Management and Skilled employee base

• Strong R&D and automation capabilities inhouse gives us an edge over competition

• Strong Engineering, Product Development and technological capabilities help us in enhancing our product range and improve manufacturing processes.

• Sustained Financial Performance and Strong Financial Position

• Proactive, market and customer centric approach of the management helps the company retain its customer base.

Weaknesses

• Low bargaining power with suppliers as some parts that we make have low volume of sales Opportunities

• Huge Growth Potential in our product segment with global OEMs and large product distribution companies.

• Huge Growth Potential in untapped segments like Agriculture, Off Highway, EV, railways, defence etc.

• Huge Potential to grow in untapped territories like Europe, South America, Africa, Middle East, Asia Pacific and India

Threats

• Increased Competition from Local & Big Players may come

• Major change in Government Policies to curb exports

• Geo-political crisis between India and the countries we export to.

OUR CLIENT BASE

Our reach and presence in the industry can be comprehended by looking at our distinguished list of clienteles. They have been dealing in their respected disciplines from years. Our clients are spread across wide variety of sectors. Our strategy is to seek new customers and at the same time secure additional engagements from existing customers by providing timely and improved services.

We believe that our current capabilities and plans will ensure that we are well positioned to attract and develop new customer relationships. Business from new customers is accepted upon consideration of factors such as alignment of capabilities and customer expectation, volume of business and future business, potential for close partnership with long-term association, and an analysis of upfront costs.

INDUSTRY STRUCTURE & DEVELOPMENT

Indias auto component industry is an important sector driving macroeconomic growth and employment. The industry comprises players of all sizes, from large corporations to micro entities, spread across clusters throughout the country. The auto components industry accounted for 2.3% of Indias GDP and provided direct employment to 1.5 million people. By 2026, the automobile component sector will contribute 5-7% of Indias gDp. The Automotive Mission Plan (2016-26) projects to provide direct incremental employment to 3.2 million by 2026

INFORMATION TECNOLOGY

Our company constantly upgrades its technology both in terms of hardware and software. This also helped installing a good management information system for the management to get timely information for decision making.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Our Company has built adequate systems of internal controls towards achieving efficiency and effectiveness in operations, optimum utilization of resources, and effective monitoring thereof as well as compliance with all applicable laws The internal control mechanism comprises a well-defined organization structure, documented policy guidelines, predetermined authority levels and processes commensurate with the level of responsibility.

HUMAN RESOURCES

Our Company believe that our employees are key contributors to our business success and its ability to maintain growth depends to a large extent on our strength in attracting, training, motivating and retaining employees. We focus on attracting and retaining the best possible talent. Our Company looks for specific skill-sets, interests and background that would be an asset for its kind of business.

Our manpower is a prudent mix of the experienced and youth which gives us the dual advantage of stability and growth. Our work processes and skilled resources together with our strong management team have enabled us to successfully implement our growth plans.

SALES AND MARKETING

In the fast-paced world of business, where customer satisfaction is paramount. The synergy between their sales and marketing operations creates a seamless experience for customers, ensuring that they receive everything they need, precisely when they need it. This customer-centric approach is the cornerstone of success of Emmforce.

COMPETITION

The automotive component industry is extremely competitive. We do face competition from manufacturers of a few of the items that we manufacture. Our high focus on R&D and Engineering supported by highly customer centric approach, reduced lead times, a big range of products that we offer to each customer with low volumes and small minimum order quantities keeps the competition at bay. Our customer retention ratio is very high as we have been able to bestow so much faith in the minds of our customers due to high quality of our products, ethical business practices, ability to pick up complex projects and deliver to their expectations.

Unlike other players in the automotive parts where they are highly dependent on OEMs where competition is very high, our company has made a special space in 4WD and performance racing industry for drivetrain parts where product quality requirements 120

are far stringent then OEM parts, parts are complex, volumes are low by learning the art of managing low batch production parts in an efficient way and offering innovative solutions to customers where they can have an edge in the market over their competition.

RESPONSIBILITY FOR THE MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Board of Directors have reviewed the Management Discussion and Analysis prepared by the Management. Statement in this report of the Companys objective, projections, estimates, exceptions, and predictions are forward looking statements subject to the applicable laws and regulations. The statements may be subjected to certain risks and uncertainties. The Company assumes no responsibility in respect of forward looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

OTHER KEY INDICATORS

The key ratios as per the latest amendment to Schedule III are as below:

Details of Ratios		H. Year ended 31.03.2025	Year ended 31.03.2024	0/ % Variance
(1) Current Ratio (Times)	Ratio	2.43	1.31	85.31
Current Assets	Numerator	62,86,21,350	43,08,28,816
Current Liabilities	Denominator	25,89,44,619	32,88,73,254
(2) Net Debt Equity Ratio (Times)	Ratio	0.30	1.47	(79.75)
Debt capital (Long term borrowings+Short term borrowings)	Numerator	23,70,65,746	28,29,50,034
Shareholders Equity (Total Equity)	Denominator	79,73,18,927	19,26,60,606
(3) Debt service coverage ratio (Times)	Ratio	3.95	2.20	79.63
Profit after tax+Finance costs+ Depreciation and amortization expenses+Loss/(Gain) on sale of Property Plant & Equipment+Exceptional items	Numerator	15,17,64,754	6,06,49,157
Finance Costs + lease payments+Scheduled principal repayments of long term borrowings	Denominator	3,84,57,604	2,76,06,006
(4) Return on Equity (%)	Ratio	13.29	22.14	(39.98)
Profit after tax (PAT)	Numerator	10,59,72,363	4,26,60,606
Shareholders Equity	Denominator	79,73,18,927	19,26,60,606
(5) Inventory turnover ratio (in days)"	Ratio	21.46	38.95	(44.89)
Revenue from operations	Numerator	87,43,37,448	41,15,32,990
Average Inventory (Opg Inventory+Clg Inventory/2)	Denominator	10,25,51,532	9,42,86,735
(6) Debtors turnover ratio (in days)	Ratio	50.67	85.28	(40.58)
Revenue from operations	Numerator	87,43,37,448	41,15,32,990
Average trade receivables (Opg + Clg Trade Receivables/2)	Denominator	24,21,03,701	20,64,55,938
(7) Trade payables turnover ratio (in days)	Ratio	39.17	96.77	(59.53)
Total Purchases	Numerator	51,70,96,529	25,80,22,625
Average Trade Payables (Opg + Clg Trade Payables /2 )	Denominator	11,06,71,111	14,68,80,386
(8) Net capital turnover ratio (in days)	Ratio	24.95	60.06	(58.45)
Revenue from operations	Numerator	87,43,37,448	41,15,32,990
Working Capital+current maturities of long term borrowings	Denominator	11,92,22,018	14,53,84,009
(9) Net profit ratio (%)*	Ratio	12.12	10.37	16.92
Profit for the year	Numerator	10,59,72,363	4,26,60,606
Revenue from operations	Denominator	87,43,37,448	41,15,32,990
(10) Return on Capital Employed (%)"	Ratio	17.68	19.98	(11.53)
Earning before interest and taxes	Numerator	16,17,21,855	6,60,77,862
Tangible Net Worth + Total Debt + Deferred Tax Liabilities	Denominator	91,49,50,956	33,07,34,847
(11) Return on investment (%)	Ratio	-	-
Income generated from invested funds	Numerator	-	-
Time weighted average invested funds in investments	D e n o mi nator	3,20,00,000	3,20,00,000