hawa engineers ltd Management discussions

Return on Net worth ration is decreased due to decrease in net profit of the company.

Global Economy

Global economy growth is estimated to have slowed to 3.4% in 2022 amidst monetary tightening by central banks globally to tame inflation caused by Russian invasion of Ukraine which disrupted supply chain and led to steep surge in commodity and fuel cost triggering energy crisis in Europe and hampered economic activity. Frequent lockdown under its zero Covid policy to curb the spread of Covid-19 pandemic along with stress in the real estate market weakened economic growth in China. Aggressive monetary tightening by US Federal Reserve weighed on investment and economic activity and led to decline in business confidence. Global trade remains largely subdued due to global supply chain disruptions and bottlenecks in international freight movement along with weakening external demand.

VALVE INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Indian Engineering sector witnessed positive growth momentum on the back of increased government spending in core segments such as power, railways and infrastructure development as well as private sector investments in cement, steel, etc. However, the industry faced challenges in the form of higher commodity and fuel cost on the back of Russia-Ukraine conflict which disrupted supply chain. Also, Covid induced lockdowns in Chinas manufacturing and trade hubs impacted exports to the region. Nevertheless, the Engineering sector remained resilient despite these shocks due to supportive government policies such as Production Linked Incentive (PLI), increased focus on indigenisation, corporate tax rate cut, etc. along with increased capex outlay. Capacity creation in sectors such as infrastructure, oil & gas, power, mining, auto & auto components, steel, refinery, consumer durables etc, is driving growth of the Engineering industry. The Engineering sector in India enjoys competitive advantage in terms of manufacturing cost, technology, and innovation. There has been significant shift in share of industrial exports from developed nations to low-cost base countries like India over the last few years and the trend is expected to continue going forward.

Demand in the engineering sector is expected to remain healthy primarily on account of the Governments increased thrust on infrastructure development. The industry continues to invest in latest technologies and implement process automation as it focuses on improvement in efficiency and overall competitiveness and emerge as the preferred destination for highend complex engineering products. Capacity creation in the manufacturing sector along with technological improvement in manufacturing processes, diversification by global players away from China and supportive regulatory policies such as PLI bodes well for the growth of the industry. However, rising interest rates and concerns related to inflation and economic uncertainty could act as headwinds to growth prospects for the sector.

Global industrial gearbox market is expected to be driven by growing government investments for the development of power generation sector, growing construction activities and increasing automation across varied industries and applications. Moreover, the market is benefitting from increasing investment in renewable power generation, especially wind power, for addressing increasing energy needs and reducing reliance of fossil fuel-based power. The other factors driving the growth and development of global industrial gearbox market is the rapid utilization of industry 4.0 combined with various technologies such as internet of things and artificial intelligence. Rising usage of automated industrial gearboxes in various end use industries such as food processing, agriculture, automotive, and machinery is also supplementing the boost in global industrial gearbox market.

OPPORTUNITIES AND THREATS:

India is poised to grow faster than most of the large economies over the next decade giving rise to tremendous opportunities. The industry is staringat immense growth prospects in terms of exports, enhancing import substitution, expanding aftermarket offerings, developing data-enabled services and solutions, and offering new or modified features in line with constantly shifting market dynamics and changing OEM needs. The automotive value chain is likely to see significant shift to non-traditional sub-segments such as EVs, advanced driver assistance systems (ADAS), dataenabled services, etc. in the coming future. Adapting to the required changes to seize these upcoming opportunities, the auto component manufacturers will be in a strategic position to leapfrog into the global arena.

As uncertainties prevail in the global economy, the industry continues to face a range of business risks related to supply chain and changing customer preference. Delay in economic recovery, increase in commodity prices and forex volatility are some of the headwinds being confronted. Moreover, evolving regulatory and trade environment, technological changes and environmental regulation, continue to pose challenges to the sector.

SEGMENT-WISE PERFORMANCE:

There is no segment in the company.

OUTLOOK:

The Indian economy is expected to slow down to 6.1% in FY24 on the back of high rate and subdued external demand against a backdrop of the ongoing war between Russia-Ukraine. Benefits due to decline in commodity prices could be offset by subdued external demand leading to muted growth outlook for the manufacturing sector. Rising borrowing costs, demand uncertainty and global slowdown could delay pick-up in private investment. Also, the risk of resurgence of Covid-19 cases globally could pose additional downside risk. However, easing of inflationary pressures along with governments focus on capital spending could help in reviving demand.

RISKS AND CONCERNS:

Apart from the normal business risk, no major risk is foreseen.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has proper and adequate systems of internal controls. Internal audits and checks are carried out at regular intervals. An audit committee, and their adequacy.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The details of the financial performance of the Company appear in the Balance Sheet, Statement of Profit and Loss and other Financial Statements. Highlights for the year 2022-23 are as under:

(Amounts in rupees)

The financial performance of the Company has been explained in the Directors Report of the Company for the financial year ended 31^st March 2023 appearing separately.

HUMAN RESOURCES:

Human Resources are a key focus area of the Company. The Company endeavours to attract and develop the best talent available in each area of its operations. The Companys policy is to create a conducive environment for nurturing talent and developing the requisite skills needed to keep pace with the ever-changing needs of the market. Training is imparted to employees at all levels and covers both technical and behavioural aspects.

The Industrial Relations scenario during the year under review was smooth. The Company has an excellent track record in this regard and has maintained cordial relationships with all its employees.

CAUTIONARY STATEMENT:

Certain statements in the Management Discussion and Analysis describing the Companys views about the industry, expectations, objectives, etc. may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the statement. Factors like supply and demand situations, input prices and their availability, changes in Government regulations, economic developments, etc. may influence the Companys operations or performance.

By order of Board of Directors

Hawa Engineers Limited

Sd/-

Aslam Kagdi

Date: 14.08.2023 Chairman

Place: Ahmedabad DIN: 00006879