Operational Overview
Jainex Aamcol Limited is a leading manufacturer of gear hobs and
special cutting tools, inspection tools & precision accessories under the brand
"Aamcol and is a part of Jainex Group. Jainex Group is a conglomerate
with offices in all the leading cities of India. Jainex Group deals with steel, gear
cutting tools, pneumatic brake systems for railways, and has a turnover of US$ 20 million.
The Company has been catering to a wide range of customers including
automobile industries, industrial and special gearbox manufacturers, machine tool
manufacturers, and many others. The Companys product range includes Various Hobs for
different applications such as Spur / Helical Gears, Chain Sprocket & Timer Pulleys,
Worm Gears, Cutters, and other Inspection Tools & Precision Accessories. By producing
international quality products, the company has not only saved countrys foreign exchange
but also generated it by exporting its products.
The objective of this report is to convey the Managements
perspective on the external environment and market, as well as strategy, operating and
financial performance, material developments in human resources and industrial relations,
risks and opportunities, and internal control systems and their adequacy in the Company
during the Financial Year 2022-23. This should be read in conjunction with the Companys
financial statements, the schedules and notes thereto and other information included
elsewhere in the Annual Report. The Company continued its strategic focus on enhancing
process efficiency, product quality and customer connect. With an emphasis on manpower
training, automation and product innovation, the Company strengthened its positioning in
the marketplace.
Productivity Enhancement
The Company undertook an array of measures for productivity enhancement
like retrofitting/ reconditioning and automation, improvement in use of high-speed cutting
tools and cycle time improvement to improve productivity.
Safety Measures
Being a safety conscious organization, the Company imbibes safety
across various functions of the entire plant operation. In order to protect the health of
workforce at the shop floor level, it curtails the use of hazardous material inside the
plant premises.
ECONOMIC OVERVIEW Global Economy
Due to the COVID-19 pandemic, the global Gear Hobbing Machine market
size is estimated to be worth US$ 665.3 million in 2022 and is forecast to a readjusted
size of US$ 776 million by 2028 with a CAGR of 2.6% during the forecast period 2022-2028.
Fully considering the economic change by this health crisis, Vertical Gear Hobbing Machine
accounting for % of the Gear Hobbing Machine global market in 2021, is projected to value
US$ million by 2028, growing at a revised % CAGR from 2022 to 2028. While Automobile
segment is altered to an % CAGR throughout this forecast period.
Globally, the gear hobbing machine industry market is not that
concentrated as the manufacturing technology of gear hobbing machine is relatively matures
than some high-tech equipment. But some enterprises, like Gleason, Liebherr, CHMTI,
Mitsubishi Heavy Industries and EMAG are well-known for the wonderful performance of their
hobbing machine and related services. At the same time, Europe and USA are remarkable in
the global gear hobbing machine industry because of their technology status of gear
hobbing machine.
The consumption volume of gear hobbing machine is related to downstream
industries and global economy. As there will always be some uncertain in the global
economy in the following years, the growth rate of gear hobbing machine industry may not
keep that fast. But it is surely forecasted that the market of gear hobbing machine is
still promising.
The product average price declined in the past few years due to the
technology development, the average price will keep the trend in the few future years due
to increasing mature manufacturing technology and lowing cost of raw materials.
Although the market competition of gear hobbing machine is fierce
globally, there are many enterprises can obtain considerable profit from the manufacturing
and marketing of gear hobbing machine and that is the reason that we believe there will
also be enterprises enter this market. But it is suggested that enterprises those have
plans to enter this industry have careful analysis of this market and the advantages or
disadvantages of themselves.
Indian Economy
India has emerged as the fastest growing major economy in the world and
is expected to be one of the top three economic powers in the world over the next 10-15
years, backed by its robust democracy and strong partnerships. Indias nominal gross
domestic product (GDP) at current prices is estimated to be at Rs. 232.15 trillion (US$
3.12 trillion) in FY2021-22. India is the third-largest unicorn
base in the world with over 83 unicorns collectively valued at US$
277.77 billion, as per the Economic Survey.
India is expected to be the third largest consumer economy as its
consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behavior and
expenditure pattern, according to a Boston Consulting Group (BCG) report. It is estimated
to surpass USA to become the second largest economy in terms of purchasing power parity
(PPP) by 2040 as per a report by Price water house Coopers.
INDUSTRY OVERVIEW
Domestic Auto-Components Industry
Indias auto component industry is an important sector driving
macroeconomic growth and employment. The auto components industry accounted for 2.3% of
Indias GDP and provided direct employment to 1.5 million people. By 2026, the
automobile component sector will contribute 5-7% of Indias GDP. From FY16 - FY22, the
industry registered a CAGR of 6.35% and was valued at US$ 56.50 billion in FY22. Due to
the high development prospects in all vehicle industry segments, the auto component sector
is expected to see double-digit growth in FY22. The industry is expected to reach US$ 200
billion by FY26.
Due to high development prospects in all segments of the vehicle
industry, the auto component sector is expected to rise by double digits in Fy22.
Auto-components industry accounts for 7.1% of Indias Gross
Domestic Product (GDP) and employs as many as 5 million people directly and indirectly. A
stable government framework, increased purchasing power, large domestic market, and an
ever-increasing development in infrastructure have made India a favorable destination for
investment.
The Government of Indias Automotive Mission Plan (AMP) 2006-2026
has come a long way in ensuring growth for the sector. Indian Automobile industry is
expected to achieve a turnover of US$ 300 billion by 2026 and will grow at a CAGR of 15%
from its current revenue of US$ 74 billion.
In November 2020, the Union Cabinet approved PLI scheme in automobile
and auto components with an approved financial outlay over a five-year period of Rs.
57,042 crore (US$ 8.1 billion). In September 2021, the Indian government issued
notification regarding a PLI scheme for automobile and auto components worth Rs. 25,938
crore (US$ 3.49 billion). In February 2022, the government has received investment
proposals worth Rs. 45,016 crore (US$ 6.04 billion) from 20 automotive companies under the
PLI Auto scheme. This scheme is expected to create an incremental output of Rs. 2,31,500
crore (US$ 31.08 billion).
Government has come out with Automotive Mission Plan (AMP) 2016-26
which will help the automotive industry to grow and will benefit Indian economy in the
following ways: -
• Contribution of auto industry in the countrys GDP will rise to
over 12%.
• Around 65 million incremental numbers of direct and indirect
jobs will be created.
• End of life Policy will be implemented for old vehicles.
Over the next decade, this will lead to newer verticals and
opportunities for autocomponent manufacturers, who would need to adapt change via
systematic R&D. As per ACMA forecasts, automobile component export from India is
expected to reach US$ 80 billion by 2026. With shift in global supply chains, the Indian
global automotive component trade is likely to expand at ~4-5% by 2026.
The Indian auto-components industry is set to become the third largest
in the world by 2025. Indian auto-component makers are well positioned to benefit from the
globalisation of the sector as export potential could be increased by up to US$ 30 billion
by 202IE.
Opportunities, Threat and Mitigation Strategies:
Being a manufacturer of components for end-user industries, the Company
is prone to market vagaries with rapid technological development and unique economic
cycles. In addition, the regulatory and macroeconomic environments have a direct impact on
the business. The Company has been quick to respond to any market challenges, thus making
smart come backs. The Company has in place a robust mechanism to preempt merging risks and
take meaningful corrective actions in a timely manner. Some of the key risks that may
emerge are enlisted below, with the corresponding mitigation measures that can be adopted
by the Company.
Product Risks:
Risk: The Company supplies to leading brands which have strict
norms and insist on adherence to compliance with quality and technical standards for auto
components used as raw materials. The Company has to ensure superior precision and
quality, as the product quality directly impacts the reputation and profitability.
Mitigation: The Company invests in maintenance and up gradation of
its manufacturing facilities and in employee
Financial Risks:
Risk: The Company is exposed to changes in foreign exchange rates,
interest rates, credit availability and liquidity.
Mitigation: Our Company is currently having a large pool of
customer base and has planned to diversify its base and is working accordingly. Our
Company is not only working towards client diversification but also business
diversification.
skill development. It also follows various quality and productivity
enhancing initiatives to maintain competitiveness. Regular feedback from clients aids in
mitigating product quality risk. Adequate product liability insurance is also in place to
safeguard the interests of the Company.
Market risks:
Risks: The Company derives most of its revenue from few large
customers. Any glitch in the customer relations with them will have an adverse impact on
the Companys revenues pass-through clauses enables the Company in ensuring timely,
regular and adequate supply of raw materials.
Mitigation: Our Company is currently having a large pool of
customer base and has planned to diversify its base and is working accordingly. Our
Company is not only working towards client diversification but also business
diversification.
Technology Risks:
Risk: The Company supplies to reputed OEMs that are abreast with market
changes on the technology front. These marquee players are constantly on the look-out for
quality supplies with superior efficiency. The Company is challenged to promptly respond
to the evolving demands and also needs to be prepared to face the risk of technological
obsolescence.
Mitigation: Our Company is well focused on modernization and
technology up gradation and has been a forerunner in terms of adding new and advanced
gears to the industry.
Regulatory Risks:
Risk: The Company is exposed to changes in laws, regulations, policies
and other Governmental actions including those affecting environmental matters, employee
welfare, safety, wastage emissions.
Mitigation: The Company has a dedicated compliance team which the
Company has in place adequate hedging mechanisms and closely monitors macro policy changes
to foresee any likely movements in interest rates.
Raw Material Risks:
Risks: Input costs being a primary cost for the Company, they have a
significant impact on the financials of the organisation.
Mitigation: Robust procurement policy, expertise in inventory
management, understanding of price fluctuation and long-lasting relationships with
suppliers including foresees any regulatory changes and developments in laws that govern
it and its clients. It takes course corrections in a timely fashion to avoid any such
major disruption.
Segment wise or Product-wise Performance
The Companys segment-wise performance for the financial year
2022-23 is as under:
(Amt. in Lakhs)
| SI. No. |
Segment |
Performance |
| 1 |
Gear Hobs |
1415.31 |
| 2 |
Milling Cutters |
352.44 |
| 3 |
Spline Gauges |
152.06 |
Internal Control Systems and their Adequacy
The Company is committed to good corporate governance practices and has
well-defined systems and processes covering all the corporate functions and units. It also
has an Internal Audit Process to provide reasonable assurance regarding the effectiveness
and efficiency of operations, safe-guarding of assets, reliability of financial records
and reports and compliance with applicable laws and regulations. The Company has an
elaborate system of identifying key business risks and taking mitigating steps.
In order to be future-ready, the Company is focused on creating an
organizational culture which is built on a strong foundation of agility and innovation.
Well-documented policies and procedures enable the Company to strictly
adhere to all applicable procedures, laws, rules and statutes. Any variance from budgetary
allocations are promptly reported and corrected to ensure strict compliance.
The Audit Committee of the Board oversees the Audit function through
regular reviews of audit findings and monitoring corrective actions taken on the same.
Discussion on Financial Performance With Respect
to Operational
Performance
During the financial year 2022-23 under review, there was increase in
the turnover of the Company as compared with the previous year i.e. from Rs. 1876.69 Lakhs
to Rs. 2023.96 Lakhs. The Company has reported Net Profit of Rs. 124.44 Lakhs against Net
Profit of Rs. 144.83 Lakhs in the previous year.
SUPPORT SYSTEMS
The Company is constantly focusing on enhancing its process efficiency,
product quality and customer connect. The Company believes that the employees are not
a resource but the most valuable assets of the Company and will play a
key role in its future growth.
Planned efforts are made to develop and retain talent. The Company
provides growth opportunities to internal talent by assigning them higher responsibilities
with suitable exposure and training. The Company undertakes various training and
development programmes regularly in order to upgrade its human resources and keep them
abreast of the changing requirements.
Cautionary Statement
Statements in this Management Discussion and Analysis and
Directors Report describing the Companys objectives, projections, estimates and
expectations might be construed as ‘forward looking statements within the
meaning of applicable laws and regulations. Actual results may differ substantially or
materially from those expressed or implied by the forward looking statements due to risks
or uncertainties associated therewith depending upon significant changes in political and
economic environment, economic conditions, government policies and other incidental
factors, environmental standards, tax laws, litigation and labour relations. Readers are
cautioned not to place undue reliance on these forward-looking statements.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS
for Jainex Aamcol Limited
Place: Aurangabad Date: 12/08/2023
Kunal Bafna Whole-time Director DIN: 00902536
Mohanlal Zumbarlal Kothari Managing Director DIN: 01486305
+91-9892691696
