him teknoforge ltd share price Management discussions

Him Teknoforge Limited is a leading name in the manufacture of auto and tractor components in domestic as well as international markets. With consistent commitment to superior quality and on the strength of robust performance of its products, Him Teknoforge Limited has earned national and international acclaim and appreciation.

Our products include transmission gears, pins, axles, shafts, propeller shaft components, non-gears component, fork-lift parts, off-road parts and many more.

Global Economy

The landscape of the global automobile sector is undergoing a transformation. Intelligent mobility and ACES (trends in Autonomous, Connected, Electric and Shared vehicles) have disrupted business models of automotive companies.

The global automotive industry in previous2-3 years has witnessed a slowdown amidst these and other disruptions.

Automobile Industry - Structure & Development

India is considered to be the worlds 4th largest automobile industry, ahead of Germany. It is on its way to becoming the 3rd largest, riding on rapid economic development, rising urbanization, burgeoning middle class, supportive regulations and the Governments strong push for growth in the form of the Aatma Nirbhar Bharat and other initiatives.

The Government aims to develop India as a global manufacturing as well as a research and development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) centres, as well as a National Automotive Board to act as facilitator between the government and the industry.

The domestic automotive industry has been adopting new technology and capabilities in order to keep pace with the changing global landscape. The diversified nature of the domestic automotive mdustry not only provides scale, but also the risk-hedging ability to face market vagaries.

Opportunity and Threats

Opportunity

The industry is supported by factors such as the availability of low- cost skilled labour and low-cost steel production. Indias automobile industry has the potential to generate up to USD 300 billion in revenue by FY 2026, generating 65 million additional jobs and contributing over 12% to Indias GDP.

The Governments push to develop India as a global manufacturing and R&D hub is also lending heavy support to the automobile sector.

India is fast being recognised as a hub for high-quality managerial talent too. Domestic players have been leveraging local talent for driving innovation through R&D centres, driving growth in the medium to long-term. In the next few years, the automobile sector is expected to record robust growth, given the infrastructure push from the Government and schemes like PMGSY.

The opportunities generated by the disruptions are changing the competitive game for players willing to step beyond their traditional roles and engage with customers in a new and digital environment.

Threats

The presence of a large number of players, domestic as well as multinational, in the automobile industry, results in intense competition. Moreover, the Government of Indias aim to propel the Indian Automotive Industry to be the engine of the "Make in India" programme will intensify competition as existing entities will have to compete with established as well as new entrants into the market, which enjoy some privileges under the "Make in India" initiative.

Segment-wise or products-wise performance

The operations of the Company are limited to one segment, namely automotive components.

Business Operations

The Company has fully functional units located in Vadadora- Gujarat, Baddi- Himachal Pradesh and Pithampur - Madhya Pradesh.

While it continues with its legacy of operational efficiency, factors such as technological advancements and product innovation continue to be its key drivers of differentiation. Enhanced productivity through retrofitting and refurbishing of machines and optimizing efficiencies at various levels has enabled the Company to achieve an improved performance and gain a competitive edge.

Resource Upgradation

The Company has undertaken retrofitting and reconditioning of old conventional machines. This has significantly improved efficiency and considerably enhanced throughput. Besides, investments have been made to replace certain machines with state-of-the-art versions to increase productivity and reduce downtime.

Technology Upgradation

The Company has undertaken multiple efforts to upgrade its technological base. The plants have commissioned new machines in key areas like gear cutting, forging presses and heat treatment. These latest generation machines have boosted efficiency and the quality of output.

Outlook

Looking ahead, we plan to continue expanding our portfolio of Automotive products and strategically expand our design and manufacturing capabilities. We are also working specifically on developing our manufacturing capabilities.

In the area of manufacturing, we also envisage implementing additional measures to improve processes and create transparency with the strategic introduction of modern systems. We are also working specifically on developing our manufacturing capabilities and processes to support further growth.

Him Teknoforge continues to maintain its robust reputation among its clients and in the market for its products. The management is confident that with an improvement in the economic environment and further developments within the organization, the ongoing investments will deliver the expected benefits. These developments will form the foundation for the Companys ability to tap into opportunities for continued expansion and positive development of the business over the next few years.

Risks & Concerns

Your Company regularly evaluates and reviews potential risks on account of various factors such as government policies, natural/ man- made disasters and political risks. Apart from these, the Company is exposed to changes in foreign exchange rates and commodity prices, global competition, technological changes, high dependency on a few customers. Any change in laws & regulations, whether domestically or internationally could also affect the business and financial condition of your Company.

The management of your Company has put in place adequate risk management systems to minimize and/or eliminate the adverse impact, if any, of these risks.

Internal Control Systems and their adequacy

The Audit of Internal Control Systems is carried out by an independent firm of Chartered Accountants on a quarterly basis and corrective actions are taken where shortcomings are identified. The Internal Auditors submit their quarterly reports to the Audit Committee and the Board of Directors. All the fixed assets of the company are physically examined and recorded at regular intervals.

Discussion on financial performance with respect to operational performance

Your Company has achieved turnover of Rs.. 40645.80Lakhs for the financial year 5022-2023 as against turnover of Rs. 1068.09 Lakhs in the previous financial year2021-2022. Further, the Company earned a profit of Rs.883.07 Lakhs in the 2022-2023 as compared to Rs. 883.07Lakhs in FY 2021-2022.

Material Developments in Human resources/Industrial relations front, including number of people employed

We regard human resources as our most valuable asset and proactively review and evolve policies and processes to attract and retain good people. We also make continuous efforts to upgrade the knowledge and skills of our present employees. As new business challenges emerge, we will remain a learning organization that supports operational excellence improvement and rising standards of performance at all levels. During the financial year 2022-2023 the total number of persons employed with us were 1191.

Details of significant changes in financial ratios:

Details of significant changes as compared to the immediately previous financial year in key financial ratios, along with detailed explanations there for, including:

Particulars	F.Y. 2021-2022	F.Y. 2022-2023
(i) Debtors Turnover	6.66	7.13
(ii) Inventory Turnover	2.46	2.71
(iii) Interest Coverage Ratio	2.35	1.14
(iv) Current Ratio	1.34	1.37
(v) Debt Equity Ratio	0.93	0.85
(vi) Operating Profit Margin (%)	10.77	10.30
(vii) Net Profit Margin (%)	2.51%	2.63%

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:

Particulars	F.Y. 2021-2022	F.Y. 2022-2023
Return on Net Worth	5.53	6.18

Disclosure of Accounting Treatment:

The financial statements for the year ended 31st March, 2023 have been prepared as prescribed in accounting standards and accounting policies and have been followed consistently. There is no change in treatment of the said accounting standards & accounting policies, therefore, no explanation by the management is required for the same.

	For and on behalf of Board
	Sd/-
	Vijay Aggarwal
Place: Baddi	Chairman
Dated:14.08.2023	DIN:00094141