Holmarc Opto-Mechatronics Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

e Global Scienti_c Instrument Market is valued at USD 42.94 billion and it is expected to grow by 4.4% to reach 60.60 billion by 2031. is market is a dynamic and diverse sector that encompasses wide range of equipment used for research, analysis and experimentation across various scienti_c disciplines. e market includes instrument such as Microscope, spectroscopy, chromatography systems, laboratory balances etc. ese instruments have a big role in advancing scienti_c knowledge, discoveries and innovations across industries. Increase in research and development activities, technological advancement, need for accurate measurement etc determine the growth of the market. Emerging economies are also becoming signi_cant players as they invest in scienti_c research infrastructure. Collaborations among academia, industry and government stimulate growth.

Analytical instruments are the tools used for qualitative and quantitative analysis of substances. A signi_cant share of the market is North America. Rapid economic growth, increasing health care expenditure and industrial growth make Asia – Paci_c region the fastest growing market. e market is driven by technological advancement and research and development activities. e policies of the Indian Government to promote

“Make in India” concept certainly encourage manufacturing of analytical instruments. According to IAIA, the market for analytical instrument is expected to have a strong growth in the coming years. e fund allocation by the government for the research and development in various sectors is increasing year by year. Analytical instruments are essential in every project to provide accurate and precise measurement. Growth of the healthcare sector also contributes to the growth of analytical instrument market in India. We expect the market to achieve a volume of 9.65 billion US dollars by 2032. is is possible because of the growing demand for quality control in every sector. Hence there will be increase in research and development and technological improvements.

OPPORTUNITIES AND THREATS

Opportunities:

1. Our readiness to make Customized products has been accepted by the major Research Stations and IITs in India. is, along with our adaptability to new technology gives mileage over the coming years.

2. e ‘Make in India initiative by the government is likely to present several opportunities in the engineering and capital goods sector in the upcoming years.

Threats:

1. Uncertain global economic environment.

2. Human Resources Risk: Your Companys ability to deliver value is dependent on its ability to attract, retain and nurture talent.

3. Government policies.

4. Irregular Power supply.

1. Product–Wise Performance

SL	Particulars	March 31,	March 31,	March 31,	March 31,
No.		2024	2023	2022	2021
1	Imaging Instruments	165.36	165.44	45.19	66.29
2	Measuring Instruments	114.36	38.32	11.88	24.36
3	Spectroscopy	162.56	121.72	118.75	98.1
4	Analytical Instruments	485.61	354.1	120.05	158.75
5	Lab Equipments	548.53	518.12	417.47	330.18
6	Physics Lab Equipments	360.95	246.84	230.67	170.76
7	Breadboards/tabletops/rails and	431.08	630.91	494.01	256.46
	carriers/Overhead shelf
8	Opto-Mechanics	337.51	343.53	288.87	148.53
9	Optics	183.64	59.57	83.32	37.31
10	Linear and Rotation stages	96.22	116.03	57.62	45.81
11	Motorized Linear and rotation	223.80	133	137.78	136.32
	stages
12	Industrial Automation	112.45	67.27	22.62	40.99
13	Others	20.25	16.22	11.94	4.95
_	Total	3242.31	2811.07	2040.17	1518.81

2. Outlook

Revenue from Operations of the Company for the _nancial year ended 31st March 2024 was at 3346.12 lakhs with an increase of Rs.442.45 Lakhs compared to previous year ie., growth was 15.24%. Pro_t before Tax stood at Rs.457.29 Lakhs as against 407.65 lakhs of previous year with an increase of 12.18%.

Our cash _ow is very strong and we want to be a debt free company.

	( Rupees in Lakhs)
Particw	31.03.2024	31.03.2023
Net Cash generated from Operating Activities	156.35	205.88
Net Cash generated/(used) from Investing Activities	-221.69	-20.64
Net Cash generated/(Used) from financing activities	733.00	-116.61
Net Increase /(Decrease) in cash and cash equivalent	667.66	68.62
Cash and Cash Equivalent at the beginning of the year	227.60	158.98
Cash and cash Equivalent at the End of the Year	895.26	227.60

Top 10 Clients

	_	2023-24		2022-23		2021-22		2020-21
Sl. No.	Name of Clients	Total Turn over	in % of Total Domestic sales	Total Turn over	in % of Total Domestic sales	Total Turn over	in % of Total Domestic sales	Total Turn over	in % of Total Dom- estic sales
1	Indian Institute of Science Bangalore Defence Institute of Advanced	103.08	3.88%	40.60	1.74%	73.32	4.23%	37.14	2.99%
2	Technology Pune Laboratory for Electro Optics	94.52	3.55%	_	_	-	-	_	_
3	System Bangalore Indian Institute of Technology	91.58	3.44%	41.07	1.76%	-	-	_	_
4	Madras	87.93	3.31%	68.80	2.94%	57.46	3.31%	26.73	2.15%
	Bhabha Atomic Research
5	Centre Mumbai Indian Institute of Technology	87.66	3.30%	_	_	71.50	4.12%	41.07	3.30%
6	Delhi Indian Institute of Space	70.49	2.65%	48.63	2.08%	51.87	2.99%	86.32	6.94%
7	Science and Technology TVM	54.65	2.05%	44.63	1.91%	-	-	-	-
8	Manipal University - Manipal	51.82	1.95%	_	_	-	-	-	-
9	Shree Enterprises - Kolkata	49.22	1.85%	74.11	3.17%	62.64	3.61%	34.81	2.80%
10	CAT - Indore	48.72	1.83%	48.23	2.06%	34.19	1.97%	80.86	6.50%
11	I I T - Bombay	-	-	104.50	4.47%	36.59	2.11%	-	-
12	J N C A S R - Bangalore Space Application Centre -	-	-	46.85	2.00%	-	-	-	-
13	Ahmedabad Integrated Cleanroom	-	-	37.01	1.58%	-	-	-	-
14	Technologies - Hyderabad	-	-	-	-	ALIGN=RIGHT>75.20	4.34%	-	-
15	IFRE-FCRA - Delhi	-	-	-	-	49.95	2.88%	-	-
16	Bharat Electronics -Bangalore	-	-	-	-	42.03	2.42%	-	-
17	MTI Corporation - U S A Agappe Diagnostic Limited -	-	-	-	-	-	-	49.08	3.95%
18	Pattimattom Multitech Automation -	-	-	-	-	-	-	29.30	2.36%
19	Jodhpur	-	-	-	-	-	-	27.11	2.18%
20	I I S E R - Tirupati - A.P	-	-	-	-	-	-	49.72	4.00%
_	_	_	_	_	_	_	_	_	_
_	Total	_	_	_	_	_	_	_	_
	Total Domestic Sales		2,660.00	_	2,338.46	_	1,734.12	_	1,243.83

We have 438 domestic customers and 98 foreign customers. e increase of clientele in 2023-24 is 20 domestic and 19 foreign.

3. Risk and Concerns

All businesses involve some degree of risk-taking to leverage emerging opportunities. Our business is subject to risks and uncertainties that could have short-term and long-term implications for the Company. Following are the few key risks and concerns in our business:

i. e scienti_c and engineering instruments industry is characterized by rapid technological change and innovation. e company may face the risk of its products becoming obsolete due to technological advancements, which could impact its ability to compete e_ectively in the market.

To mitigate this risk, the company may need to invest in research and development to develop new and innovative products that incorporate the latest technologies. e company monitors technological advancements closely and adapt its products and services to meet changing customer needs and preferences. Our ability to anticipate changes in technology and regulatory standards and to successfully introduce new and enhanced products on a timely basis is a signi_cant factor to remain competitive.

ii. e company may be exposed to risks associated with its business transactions with government entities or agencies. Transactions with government-owned or controlled entities and agencies may expose us to additional regulatory or other scrutiny. Contracts with government agencies are subject to uncertainties (including those associated with funding), procedural requirements, restrictions and regulations.

iii. Our business requires us to obtain and renew from time to time, certain approvals, licenses, registrations and permits. In particular, we are required to obtain certi_cate of registrations for carrying on certain of our business activities from the Government of India, the State Governments and other such regulatory authorities that are subject to numerous conditions. However, the Company closely monitors this checklist, and through its regular internal audits, it ensures that its manufacturing facilities are in compliance with local and international regulatory requirements.

4. We are dependent on domestic, regional and global economic and market conditions. Any slowdown in the Indian economy could harm our business, results of operations, _nancial condition and cash _ows. Also, a change in the government or a change in the economic policies could adversely a_ect economic conditions prevalent in the areas in which we operate in general and our business in particular

4. Internal Control Systems and Their Adequacy

e Company has in place an adequate internal audit framework to monitor the e_cacy of internal controls to provide independent and reasonable assurance to the Audit Committee and the Board of Directors on the adequacy and e_ectiveness of the organisations risk management, internal control of business processes, operations, _nancial reporting, and compliance. e framework is commensurate with the nature of its business, size, scale, and complexity.

e management regularly reviews reports of the internal auditors, and corrective and remedial actions are taken to strengthen the controls and enhance the e_ectiveness of the existing systems. Summaries of the reports and actions taken are presented to the Audit Committee of the Board.

5. Discussion on Financial Performance with respect to operational Performance

e highlight of our performance during the year 2023-24 is that we had participated in 111 bids invited by GeM (Government e Marketplace). Out of this we got orders for 59 worth Rs. 585.98 Lakhs. 20 bids were rejected because of our higher prices. We are L1 in 5 bids and expect orders. Technical evaluations of 11 bids are pending.

Our Export turnover has gone up by 74.95 lakhs (excluding deemed export) ie a growth of 16% over the previous year. We have added 12 more countries to our export kitty. Our Export to USA continues to be the highest in this year also. ere were 29 buyers from USA during the year 2023 -24. e most important aspect is that we are getting more and more orders from various universities in Australia, Canada, Denmark, Egypt, Israel, Mexico, Spain, Sweden, Switzerland, Turkey, UK, and USA Etc.

Most of the export orders were for Lab Equipments (Rs.216.96 lakhs), Analytical Instrument

(Rs.175.63Lakhs), Measuring Instrument (Rs.37.53 lakhs), Imaging Instrument (Rs.27.04 lakhs), Physics Lab Equipment (Rs.25.63lakhs), Linear and Rotation stages (Rs.24.5lakhs) and Industrial Automation (Rs.21.20lakhs).

We will put more e_ort in increasing the export to USA, the leading economy in the world, with the assumption that other countries will follow.

6. Material Developments In Human Resources / Industrial Relations Front, including number of people employed

e success of HOLMARC over these 3 decades is in its employee strength – in number as well as skill and technical understanding. e total strength at the end of FY 2023-2024 is 337 including 60 trainees. 24.33% of our employees are women. Our seniors are well experienced and innovative. ey are capable of taking any challenge in the application of Technology.

Our commitment to growth and development of our people is unwavering as we recognize that a talented and motivated workforce is essential for driving innovation and achieving organizational goals. We recognize that enterprises are built by their people and creating value requires strong focus on workforce. rough the lens of sustainable impact, we strive to create meaningful growth and positive change. We give training to every employee on di_erent aspects related to their nature of work.

During the year 2023-24, trainings were imparted to the employees engaging External Faculties in the following areas:

_ Safety

_ Quality Management

_ CNC Programme Setting

_ Optics Handling Electronics Production and

_ General Awareness which ran into 3784 hours.

Active engagement of the trainees in the training sessions, group discussions and the presentations that followed, demonstrated the e_ectiveness of trainings.

Another area of focus, in addition to work and trainings, is o_ering recreational activities to support employee well-being. We conduct celebration on the Annual Day and on the eve of Onam, with cultural activities and games wherein the families of the employees are also invited. ese celebrations reinforce the connections and foster a greater sense of belonging among the employees. Furthermore, a football tournament is conducted every year to enhance the camaraderie and competitiveness among the employees

7. Details of signi_cant changes (i.e. change of 25% or more as compared to the immediately previous _nancial year) in key _nancial ratios, along with detailed explanations therefore, including

Head	Ratio	Year ended 31-03-2024	Year ended 31-03-2023	change in%	Comment
1 Current Ratio	Total Current Assets / Current Liabilities	9.42	4.13	128.05%	Due to improved results from operations. Additionally, unutilised funds from public issue continue in the bank account.
2 Net Debt	Total Debt /				Reduction in debt equity ratio
Equity Ratio	Shareholders Equity	-	0.12	-100.00%	is on account of repayment of debt with surplus cash in the business
3 Debt Service Coverage Ratio	EBITD / (Net Finance Charges + Scheduled Principal Repayments of non-current borrowings and lease obligation (excluding prepayments)	41.50	9.14	353.92%	Improved pro_tability and reduced debt has resulted in improved debt service coverage ratio
4 Return on Equity	Pro_t after tax / Average Equity	0.19	0.36	-46.04%	Amounts utilised from the public issue are expected to yield bene_ts only in the subsequent _nancials years.
5 Inventory Turnover Ratio	Cost of goods sold OR sales / Average Inventory	13.50	15.65	-13.73%	_
6 Trade Receivable Turnover Ratio	Turnover / Average Trade Receivable	5.10	5.42	-5.93%	_
7 Trade Payables Turnover Ratio	Purchases / Average Trade Payables	21.23	23.12	-8.19%	_
8 Net Pro_t Ratio	Net Pro_t after Tax / Turnover	0.10	0.12	-16.36%	Pro_t after tax for the previous year includes prior period income.
9 Return on Capital Employed	EBIT / Capital Employed	0.20	0.33	-40.79%	Reduced due to increase in shareholders fund. Amounts utilised from public issue are expected to yield bene_ts only in subsequent _nancial years.
10 Return on Investment	Net gain / (loss) on sale or fair value changes of investments /Average investment funds in investments	NA	NA	NA	_
11 Return on Networth	Net Income/ Shareholders equity	0.14	.31	-54.83%	Reduced due to increase in shareholders fund. Amounts utilised from public issue are expected to yield bene_ts only in subsequent _nancial years.