Integra Engineering India Ltd Management Discussions.

Integra Engineering India Limited commenced its operations in 1987. Since then, the company expanded its operations adding products as well as manufacturing facilities. Spread over 26 acres and two locations, the current set up offers a unique blend of products to its core sectors in transport and power. The products in transport primarily cater to Indian Railways, both in Railway signaling& control and rolling stock. In addition to that, the company manufactures standard industrial enclosures for various segments.

The product range includes electro-mechanical relays, cable harnesses, wiring plates, fuse auto change over systems and a variety of mechanical enclosures used in trains and locomotives. In the financial year Research Design and Standards Organisation (RDSO) approved the companys new LED signal which has been added to the basket of products. In addition, your company has an entry in export market for the transport sector. Moreover, the latest version of I-panel as an alternate to existing products is gradually getting market acceptance.

The company offers specialized services to niche markets and has been able to promptly respond to market needs by developing products thatmeet specific customer requirements.

Industry structure and developments

To boost infrastructure, finance minister Nirmala Sitharaman announced 1.1 lakh crore allocation for Indian Railways in the Union Budget 2021. Of this, 1.07 lakh crore would be for capital expenditure, announced finance minister.

In Signaling & Telecommunication, there is a remarkable increase of 84.43% fund allocation in the current financial year than that of the last year i.e. 2020-21.

In the present financial year, Rs. 135.06 crore (PY Rs. 73.23 crore) have been allocated for Signaling& Telecommunication works to ensure even better safety and smooth train running.

In the present financial year, Rs. 75.33 crore have been allocated for Rolling Stock.

Government Initiatives

Indian Railways prepared a strategic National Rail Plan for India 2030, to reduce the logistic cost for industry by continuing to work on "Make in India" program. Metro lite and Metro Neo would be introduced as new technologies to cater to tier II and tier III cities. The plan focuses of safety, quality, and clean transport.

After the successful start of operation of Dedicated Freight Corridors (DFC), government plans to take up future DFC projects across the country. By December 2023, 100% electrification of broad-gauge route is expected.

All those initiatives offer new opportunities to the company.

Opportunity & Threats

With the continuation of major infrastructure policies and programs of the government, the focus will remain on augmenting and

strengthening the core sectors. The company will continue to capitalize on newer opportunities by offering its products and services to existing and new sectors to its current and new customers. This is in line with its drive to be the preferred choice for customers.

Measure taken so far as well as the ongoing measures enable the company to increase its competitiveness and offer wider range of products and services. The strategy has been to continue the focus on profitable growth through new product / service offerings and operational excellence.

2020-21 saw an unprecedented effect of Covid-19 pandemic with the lock down and the eventual closure of manufacturing facility for 62 days in the months of March, April and May 2020. As a result of the pandemic, the company has had its share of the downside of the economy. The pandemic has adversely affected the performance of the company in 2020-21 and may also in 2021-22 still affect the company in an unknown extent.

Despite the pandemic 2020-21, the company has been able to progress well with several projects in the planned manner building on opportunities it has been working on for some time.

Segment wise or products wise performance :

The company continues to consolidate its presence in its business sectors - specialized fabrication of products for electrical, power and signaling industry. During the F.Y. 2020-21, total turnover of the company was Rs.630,058 (000) compared to the previous F.Y. 2019-20, a total turnover of Rs.629,178 (000). The Company continues its drive to expand its product offerings for local markets and has made inroads in export markets as well.

Outlook

The current pandemic situation continues to cast its shadow on global economy. The measures taken on local / state / national level include temporary / voluntary / mandatory closures of public places and public transport. The lock down of April and May 2020 was a clear case of national priority of saving human lives over economic activity. The current year may also warrant similar decisions or measures.

The pandemic has affected companies across all sectors ranging from MSMEs to large corporates causing a substantial dent in their top line as well as bottom lines. The Reserve Bank of India has also indicated a highly uncertain future explaining various mixed signals from various sectors of the economy.

Your Company is not an exception to the current scenario and has also been affected. The results for 2020-21 have been lower than expected. However, the management is hopeful that in due course the country will either overcome the pandemic or come to terms in the new normal.

This could lead to a situation of revival of the economy - albeit at a pace difficult to forecast. Hoping that the infrastructure and its core sectors will bounce back to provide the much-needed stimulus to the economy, this could lead to a situation of demand exceeding supply in core sectors. Your Company is working to be prepared to meet the demands in such a situation.

The Company is confident of growth in the targeted sectors and continues working on maintaining its position as a leader in supply for rolling stock manufacturers of Indian Railways and introduce new

products. The sheet metal fabrication expects to grow by focusing on railway and metro sectors. In its endeavor to consolidate its market presence, the Company will also promote its Railway signaling products and continue to work towards the approval of new products. The company has added LED signal for signaling application as a new product after getting the approval from RDSO.

In addition, its planned to capitalizeon the new concept of "I-panel" enclosures by catering to specific requirement of industries like IT, Automation, Instrumentation and Electrical.

Risks & Concerns

In the current situation, the extended period of the pandemic is a major risk, and the company will continue to work closely with stake holders.

With a few states opting for lock downs in stages to prevent the spread of virus and aggravation of pandemic, industry may find it difficultin maintaining sustainability leading to substantial losses of revenue, profits and employment.

Internal Control Systems and their adequacy:

In FY 2020-21, the company has continued to work on a proper and adequate system of Internal Control commensurate with its size and the nature of its operations to ensure that all assets are safeguarded and protected against loss from un-authorised use or disposition and those transactions are authorised, recorded and reported correctly. The new system implementation has been successfully carried out and upgradation, as required, will continue in FY 202122. This enabled better and more effective monitoring and control of company operations and will further strengthen the systems.

The Audit of Internal control system is carried out by an Independent firm of Chartered Accountants on a half-yearly basis and corrective

actions are taken where shortcomings are identified. The Internal Auditors submit their half-yearly reports to the Audit Committee and the Board of Directors. Periodical MIS Reports are submitted to the Audit Committee and the Board for review. All the fixed assets of the company are physically examined and recorded at regular intervals.

The Board of Directors on the recommendation of the Audit Committee re-appointed M/s. Shah & Shah Associates, Chartered Accountants, Vadodara as Internal Auditors of the Company for the financial year 2020-21.

Discussion on financial performance with respect to operational performance

Your Company has achieved turnover of Rs.630,058 (000) for the financial year 2020-21 against the Companys turnover of Rs.629,178 (000) for the previous financial year 2019-20. Further, Company attained profit after tax of Rs.54,064 (000)in the F.Y. 2020-21.

Material developments in Human resources/Industrial relations:

The immediate past and current situation reiterates the companys belief that human resources are its most valuable assets. The Company continues to evolve policies and processes to cater to the dynamic requirement to focus, attract and retain the best talent in the industry. Continuous efforts are made to invest in the resources - infrastructure, technological and managerial. Keeping in mind the business challenges, the company invests in training and development of its teamto be a learning organization that supports operational excellence, continuous improvement, and rising standards of performance at all levels. With this in mind, the Company reviews the HR Policies from time to time as well as encourages employee engagement activities, employee benefits, trainings etc.

Details of significant changes

Sr. No. List of Ratios

Standalone

Consolidated

2020-21 2019-20 2020-21 2019-20
1 Operating Profit Margin Ratio (%) 13.36% 12.08% 13.36% 12.08%
2 Net Profit Margin Ratio (%) 8.58% 9.17% 8.58% 9.17%
3 Return on Net worth 15.66% 19.86% 15.66% 19.86%
4 Interest Coverage Ratio 11.97 11.72 11.97 11.72
5 Debt Equity Ratio 1.18 1.18 1.18 1.18
6 Current Ratio 1.89 1.89 1.89 1.89
7 Debtors Turnover Ratio 2.63 3.00 2.63 3.00
8 Inventory Turnover Ratio 4.18 4.26 4.18 4.26