Hind Rectifiers Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Companys major business continues to be with Indian Railways, with a strong legacy and brand image. Technology-based products for Locomotives & Coaches continue as a major strength of the Companys business operations.

Although the primary customer continues to be Indian Railways, however, the Company is putting increased focus on developing new products for private rolling stock manufacturers, and the industrial sector by upgrading and expanding existing product lines. The Company has made strategic tie-ups in the railway and industrial sectors to grow in new sectors, applications, and also geographies. The Companys marketing operations in Sweden have successfully developed new business in the European and South American markets.

Industrial business is likely to be increased considering the growth anticipated in various international and domestic projects in the power sector and also infrastructure development planned by the Government of India. The Company has been certified for aerospace standards, and registered with defence organizations, and which is likely to bring an additional revenue stream in coming years.

In terms of competition, there is a good mix of SMEs, large companies, and multinationals players in the market for our various product lines in the railway as well as industrial product segments.

INFRASTRUCTURE AND NEW PRODUCTS DEVELOPMENT

The Company has concentrated on the development of infrastructure for larger production volume for existing products and manufacturing facilities for new products like Propulsion Systems, Traction Motors, HVAC systems, Passenger Information, and Pantry systems.

Considering the addition of a new plant and products, the focus on securing approvals for plant and new products, and launching the new products will be a main focus for the Company.

OPPORTUNITIES AND THREATS

The Company has a strong brand and leadership position in the market for locomotives and railway coaches equipment along with the industrial rectification and pollution control equipment with updated technology.

While opportunities are emerging with new developments in the Railway segment backed by enormous resources of in-house R&D coupled with new manufacturing facilities, the Company can take lead considering the brand name and leadership position in the market, however, increased number of competitors and falling selling prices is a threat for existing product lines.

The Company being an established supplier and with the strong brand name in both industrial and railway sectors, market penetration for any new product is possible with existing and new customers.

Development of new products in a shorter period and competing with larger players, who have technology from their parent company, remains a challenge.

OUTLOOK

The government has aggressively increased Electric Locomotive production, electrification of new routes, and modernization of railway facilities which has increased market demand. There is growth potential to increase our market share of existing products, and introduce new products in a dynamically changing market.

Furthermore, railways have introduced more Distributed Power Rolling Stock (DPRS) like Vande Bharat Trains, and also private manufacturers of rolling stock for which the Company will have to adapt and develop new design of equipment as well.

RISK AND CONCERNS

Regular products required by Railways are witnessing increased competition in the market, with falling selling prices in the reverse auction due to the recent policies of Railways during the current year is a big concern. This is seriously affecting our plans and we have to rely more on new developments to compensate the revenue loss.

Some product lines in the Industrial segment are also affected with the increased competition from the unorganized sector with shrinking margins. Delayed payment inflows from railways and other customers have led to increase in working capital and very conservative financial support from Banks for completion of development activities and expansion of business volume remain a matter of concern.

SEGMENT WISE / PRODUCT WISE PERFORMANCE

The Company operates in a single segment i.e. engineering goods yet we have undertaken diversification of end products through intensive in-house R&D facilities for different applications and strategic associations.

The Company has broadened its product mix for Indian Railways targeting all the segments of 3 Phase Locos, and Coaches and has been listed for approvals to establish more business opportunities. New product developments by in-house R&D are a planned strategy for improving the Railway segment.

Our specialized products for specific applications in Pollution control, Electroplating, and Electrochemical processes are well stabilized in the industrial segment. The Company has undertaken compliance to international standards for industrial range of products, like CE for Europe. Our capability of offering custom-built designs is an added advantage for our brand.

INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY

The Company continues to follow an effective system of internal control ensuring the accurate, reliable, and timely preparation of accounting information, securing the assets and interests of the Company with due compliance with various laws and regulations. Internal audits and checks are ongoing processes within the Company.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Companys financial performance has improved during the financial year 2023-2024. The Company is continuously putting efforts to achieve better results with effective monitoring of operational costs.

Considering the plan of Indian Railway and improved inquiry from the industrial sector the Company expects further improved performance in the coming years.

DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company recognizes that Human Resources are an extremely important and critical and long-term investment. The Companys top management honours the dignity of each individual irrespective of the position and highly values the feelings and emotions of the people. Industrial relations with the Union are cordial and peaceful. The Company has made all efforts to retain competent talent with a focus on training.

PERFORMANCE REVIEW

During the financial year ended March 31, 2024, revenue from operations increased to Rs. 51755.25 lakhs as against Rs. 35909.94 lakhs in the preceding year. The Profit after Tax for the financial year ended March 31, 2024 is Rs. 1251.03 lakhs as against loss after tax is Rs. 636.29 lakhs in the previous year.

Particulars	As at 31st March 2024	As at 31st March 2023	Change (%)	Reasons for change in ratios more than 25%
(a) Current Ratio (In Time)	1.21	1.23	(1.63)
(b) Debt-Equity Ratio (In Time)	1.08	0.94	14.89
(c) Debt Service Coverage Ratio (In Time)	1.60	0.92	73.91	The Debt Service coverage ratio increased due to increase in profitability during the year.
(d) Return on Equity Ratio (in %)	10.59	(5.81)	(282.27)	The return on equity (ROI) increased due to increase in net profit after tax during the year.

 

Particulars	As at 31st March 2024	As at 31st March 2023	Change (%)	Reasons for change in ratios more than 25%
(e) Inventory turnover ratio (no. of days)	67	86	(22.09)
(f) Trade Receivables turnover ratio (no. of days)	55	69	(20.29)
(g) Trade payables turnover ratio (no. of days)	47	63	(25.40)	Trade payables turnover ratio reduced due to payment made to trade payables.
(h) Net capital turnover ratio (In Time)	14.36	10.51	36.63	The net capital turnover ratio increased due to increase in turnover during the year.
(i) Net profit ratio (In %)	2.42	(1.77)	(236.72)	The net profit ratio increased due to increase in net profit after tax during the year.
(j) Return on Capital employed (In %)	12.04	(0.26)	(4730.77)	The return on capital employed increased due to increase in profits during the year.

 

For and on behalf of the Board of Directors	Pradeep Goyal	Suramya Nevatia
Place : Mumbai	Chairman	Managing Director & CEO
Date : May 28, 2024	DIN: 00008370	DIN: 06703910