INDUSTRY STRUCTURE AND DEVELOPMENTS:
The Indian economy, in 2022, continued to emerge out of COVID-19 impacted decline, the
year started with the Omicron wave, which affected the early months, followed by the
Ukraine war, which halted the stabilisation of raw material prices, and in many cases, the
prices reversed and took an upward trend to global headwinds. The Indian economy grew with
a Gross Domestic Product (GDP) rate 6.8% in FY 2022 as against GDP growth for previous FY
2021 which was 8.7%. The slowdown of the GDP rate is in line with the global economic
slowdown. Global growth is set to lose momentum as monetary policy actions tighten
financial conditions and as consumer confidence weakens with the rising cost of
livelihood. Inflation remains elevated and persistent across countries as they grapple
with food and energy price shocks and shortages.
Impacted by supply-side challenges, total automobile dispatches during the last
financial year has been grown adequately in all segments, Demand of two-wheelers and
entry-level cars have been raised amid rising vehicle and fuel costs. As per the data
released by the SIAM, scooters sales grow by 14% to 50,24,255 units with Two Wheeler
motorcycles sales grow by 5% to 1,01,27,790 units. During the year, passenger vehicle
sales during Financial Year ended December 31, 2022 stood at 31,33,020 units, up 19%,
mainly driven by a 40% growth in sales of utility vehicles. The Commercial Vehicles sales
for the last year grew 38% to 933,116 units.
4W Market Sales for CY 2022
The domestic sale of Passenger Vehicles including Vans increased by 23% in CY 2022 over
the period of last year & the export sale of Passenger Vehicles increased by 20% in CY
2022 over the period of last year.
Overally the industry registered the growth of 23% in CY 2022 over the period of CY
2021.
2W Market Sales for CY 2022
The domestic sale of Two-wheelers- Motorcycles & scooters increased by 8.21% in CY
2022 compared to CY 2021 & the export sale of Two-wheelers- Motorcycles & scooters
decreased by -8.74% in CY 2022 over the period of CY 2021.
Overall the industry registered the growth of 7% in CY 2022 over the period of CY 2021
for 2W segment.
Domestic & Export Motorcycles & Scooters
OUTLOOK:
The Automobile sector is expected to a very strong growth in FY 2023 on a weaker base
and very strong consumer demand in all segments. Post COVID there is a strong pent-up
demand in all segments and we expect the industry to maintain very strong volume growth.
We expect Passenger Vehicle segment to report more than 12% Growth in FY 2023 with
order back log supporting the demand. Supply chain bottlenecks will remain most important
factors for manufacturing.
Commercial vehicle segment is expected to grow more than 15-18% in FY 2023 with very
strong government infrastructure spend and base line capex returning for the sector.
We expect the 2 & 4 wheelers vehicles industries will try to stabilise around the
current output levels and will turn the corner for better perspective in FY 2023. We
expect the industry to report in 5-7% volume growth in FY 2023. Stronger farm income and
normalcy in rains will also help to attain the growth.
EXPANSION PROJECT:
Production of the new line (MAC-5) started in our extended production land named as
Factory-2 In FY 2022. MAC5 line is the latest line of the Enkei Group, and EWIL will be
the first base to introduce full-line installation at overseas bases that will bring
change and evolution in the history of EWIL. In parallel, the installation of a new
painting line is near to complete in FY 2022. Company expects that, starting
the operation of the new painting line will make major changes and evolve by expanding
the production capacity of 4W painting as well as smoothing the logistics between internal
processes.
In addition, the next project planned after the start of MAC5 operation is considering
the conversion of the existing MAP3 line to MAT. The company is planning to promote
further expansion of production capacity.
SWOT ANALYSIS:
Strength
Upgradation of production process with an adequate mix of newly implemented
technologies, installation of machineries and experience of the Companys personnel.
Weakness
High energy cost, Labour Cost and increased of price of raw material which may lead to
increase the carrying cost and working capital interest cost, are the major constraint for
the Company.
Opportunities
Consistent support through various policies and interventions of the Government.
Further, the increasing traction received by electric vehicles coupled with increasing
demand for design elements in vehicles such as alloy wheels. Strong government focus on
manufacturing industry and MSMEs with policies like PLI scheme, Make-in-India, Ease of
doing business, Atmanirbhar Bharat, etc.
Threats:
Steep rise in raw material and energy costs, economic slowdown both in domestic and
international markets, may be the hindrances for the growth of the Company.
FINANCIAL OVERVIEW:
Key financial ratios applicable to the Company
| Name of Ratio |
FY 2021 |
FY 2022 |
% Change |
| Debtor Turnover |
9.11 |
10.41 |
14.26 |
| Inventory Turnover |
9.16 |
11.54 |
25.90 |
| Interest Coverage Ratio |
1.26 |
0.94 |
-25.54 |
| Current Ratio |
1.03 |
1.03 |
0 |
| Debt Equity Ratio |
0.70 |
0.60 |
-14.88 |
| Operating Profit Margin Ratio |
8.06% |
6.76% |
-16.16 |
| Net Profit Margin Ratio |
3.61% |
0.56% |
-84.52 |
| Return on Net worth |
9.41% |
11.23% |
19.38 |
Significant changes i.e change of 25% or more as compared to FY 2022 is observed in:
Inventory Turnover Ratio: During FY 2022, inventory turnover ratio was improved due
to increase of operating revenue by 47% to Rs 6634.91 Million in compare to previous year
Rs 4505.27 Million.
Interest Coverage Ratio: In FY 2022 total interest cost was increased as compared
to previous year mainly because of foreign exchange loss due to increase of JPY currency
rate
in the last quarter during the Financial Year. In addition to above the repayment of
loan was also increased in compare to previous year due to various stipulated terms of
repayment of ECB Loans. The Operating Profit before Interest and Depreciation (EBID) has
been increased in line with increased revenue. The Company is continuously strived to
increase the Operating revenue and profit and to reduce the interest cost by way of
repayment of long-term loans, to improve more in the interest coverage ratio.
Net Profit Margin Ratio: During: In FY 2022, the Company has made a good operating
Profit before interest and Depreciation (EBID) in compare to last Year. the total interest
cost was increased due to increase in JPY currency rate and the total Depreciation cost
was increased due to addition of capital expenditure in Factory 2 facility. Hence the Net
profit was decreased which caused decrease in net profit margin in compare to last year.
The Company is continuously strived to increase the Operating revenue and profit and to
reduce fixed cost by way of repayment of long-term loans, to improve more in the Net
profit Margin.
RISK AND CONCERNS:
The Companys business is exposed to many internal and external risks and it has
consequently put in place robust systems and processes, along with appropriate review
mechanisms to actively monitor, manage and mitigate these risks. Some of the key existing
and emerging risks affecting the Company are as follows:
| Risks Type |
Key Risks |
Impact on EWIL |
Mitigation |
| Strategic Risk |
Long term growth dependent on capacity expansion |
Capacities utilisation across the plants are inching up gradually and with business
environment turning favorable growth in long term will be dependent on Capacity addition. |
The Company has installed the new production unit i.e. MAC 5 facility and is in
process to increase the capacity utilisation across the Plant, in line with the increased
demand from the customers. |
| Operation Risk |
Supply chain disruption. |
The raw material (Paint & Aluminium) accounts for 60-65% of the cost, poses a key
risk as it may be subject to supply disruption and market price volatility. |
The Company maintains significant integration of raw materials for it operations. To
achieve greater raw material security, the company enters into long term MOU with the
supplier. The Company is in process to develop domestic suppliers for uninterrupted
production of the company. |
|
Employee Productivity and retention |
Employee involvement and productivity is one of the key factors to be competitive in
industry. Being a labour intensive sector employee welfare assumes significance. |
Company has strong commitment towards creating and providing safe working environment
for its employee and stakeholders. Focused approach to retain key talent through multiple
initiatives including providing cross functional access and experience. |
|
|
|
Focus on employee engagement: Increased focus on offering learning opportunities with
allocation of funds for training requirements. |
| Risks Type |
Key Risks |
Impact on EWIL |
Mitigation |
| Financial Risk |
Currency Volatility |
Volatility in currency exchange movements resulting in transaction and translation
exposure |
Quarterly assessment of foreign exchange exposure and strategy to mitigate any risk
relating to such exposure, by Audit Committee at the time of review of Financial result of
the Company. |
|
Debt Burden |
The Companys outstanding indebtedness in an adverse environment can have significant
impact on financial flexibility and business as a whole. |
Close monitoring of debt profile and continuous effort to bring the cost in line with
industry. Continuous effort to maintain the impeccable credit history. Quarterly review of
financial leverage and efforts are on to move towards industry benchmark. |
|
Credit Risk |
Customer Default can pose a significant challenge and impact the bottom line of the
Company |
Systems are in place to assess the credit worthiness of new as well as existing
Customers. |
| Legal Risk |
Regulatory Environment and Compliance |
The Company is subject to numerous laws and regulations and contractual Commitments.
Any failure to comply with same may impact the Company adversely. |
The Company has policies systems and procedure in place with a strong commitment from
the Board and the Executive Committee towards Compliance. |
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
Your Company has a robust internal control system in place, adequate for the size and
complexity of the organisation. A comprehensive review of all internal control systems
have been carried out to monitor Companys expanding size and resulting needs and
compliance with the legal obligations and the Companys policies & procedures. This
ensures high degree of system-based checks and control and continuous monitoring of the
effectiveness of the controls.
An independent agency has been appointed for auditing internal control system in
consultation with statutory auditors. Suggestions, improvements, concern points of
internal auditors consider by audit committee and get implemented according to
instructions of committee.
The audit findings and managements resolution plans are reported on quarterly basis to
the Audit Committee of the Board, headed by a Non-executive Independent Directors.
Based on its evaluation, the Audit Committee has concluded that the internal financial
controls were adequate and operating effectively as of December 31, 2022.
HUMAN RESOURCES:
Operating in a people-intensive sector, the Company understand that human capital plays
a pivotal role in its everyday functioning. The Companys belief is Commit to
achieve your Goal To achieve this, the Company undertakes various measures to hire,
train and retain the best talent. Owing to its belief of inclusive growth for its
employees, the Company undertakes extensive learning and development measures. Further, a
committed management team ensures that system has adequate space, freedom, guidance to
bring out the full potential of employee and adequate opportunities for personal growth of
employee within the organisation. Continues monitoring and periodic review keep the system
updated and reward policy makes smooth functioning of system.
As on December 31, 2022, there were 499 permanent employees on the payroll of the
Company.
CAUTIONARY STATEMENT:
The Management Discussion and Analysis Report containing your Companys objectives,
projections, estimates and expectations may incorporate certain statements, which are
forward looking within the meaning of applicable laws and regulations. The statements in
this Management Discussion and Analysis Report could differ materially from those
expressed or implied elsewhere. Important factors that could make a difference to the
Companys operations include raw material availability and prices, cyclical demand and
pricing in the Companys principal markets, changes in governmental regulations, tax
regimes, forex markets, economic developments within India and the countries within which
the Company conducts business besides other incidental factors.
+91-9892691696
