jamna auto industries ltd share price Management discussions

Commercial Vehicle Industry overview

In FY2021-22, the demand of commercial vehicles was on a recovery track. The growth is supported by the overall economic recovery led by Governments push on infrastructure, pick-up in economic activities and replacement demands. Though, the demand is still buoyant recent hike in commodity and fuel prices can slow the demand. Covid-19 is still a concern for all as it continued to impact the economy with second and third wave of pandemic. In order not to be affected, the industry is adopting digitization on a large scale. Lessons from the past two years will also help keep operations afloat in a new wave.

Companys performance

During FY 2021-22 the Company maintained its share of business with major OEMs. Our cost rationalization is working well and the Company is in a good position to leverage cost reduction once the CV demands returns to pre Covid levels. Our thrust is on using the existing infrastructure to drive growth and de risk the model. Last year we launched our first 5-year plan named "Lakshya 50XT" with 4 key targets for FY-26 and we started executing our Lakshya 50XT. Products and markets diversification are two key components of Lakshya 50XT. We have received order for rotavator blades from Mahindra & Mahindra. The products are under development at Yamuna Nagar plant and supplies are expected to begin by January 2023. Our subsidiary company i.e. Jai Automotive Components Limited (JACO) is setting up a factory in Derabassi, Punjab on rent for manufacturing fabrication parts. The commercial production is expected to commence by July 2023. This allows us to enter a new product, segment, or market.

Construction of JACOs new factory in Indore to manufacture U-bolts, Spring Pin and Hanger Shackle is in progress and the products will be launched in the market by January 2024.

The first phase of machining products set up has been completed at JACOs Rudrapur, Uttrakhand factory and the commercial production will commence by January 2023. During the year under review, Jai Suspensions Limited a wholly owned subsidiary of the Company has started construction of a new factory at Adityapur, Jharkhand. The commercial production is expected to commence by June 2024.

During the year under review, we have got 37% revenue from new products. Our new product offering of Springs and Lift Allied received a good response in the market and during the year under review we have launched high consumption parts like Clutch, Bearing and Break Lining which has huge potential in the After Market. Implementation of retail model in After Market is on track. In After Market we are expanding our reach and range by selling directly to retail and launching high consumption products. We plan to sell these new products by leveraging our existing After Market structure. We are opening "JAI Shoppe" in major Trucking Center to showcase our product range and to get close to fleet owners.The first shopee will be launched in Delhi Transport Nagar.

The Companys long term credit rating is [ICRA] AA- (pronounced ICRA double A minus) and short term rating as [ICRA]A1+ (pronounced ICRA A one plus). Credit rating assigned to Commercial Paper (CP) issue of the Company is [ICRA] A1+ (pronounced as ICRA A one plus). The outlook on Long Term Rating is stable. During FY 2022-23 an interim dividend of Rs 0.50 per equity share was paid. A final dividend of Rs. 1 per equity share of Rs.1 each is also recommended by the Board of Director for approval in coming annual general meeting. With payment of the final dividend for the total dividend payout for FY 2021-22 would be 42.5% of the PAT, which is in accordance with Companys dividend policy and Lakshya plan. During the year under review, the Company has achieved RoCE of 26% (33% net off bill discounting).

Key Financials

Following are the key financials of the Company at standalone and consolidated levels. For details members are requested to see three years financial summary::

Rs. in Lakhs
Standalone Consolidated
Particulars Year ended March 31, 2022 Year ended March 31, 2021 Year ended March 31, 2022 Year ended March 31, 2021
Revenue from 164904.21 105270.66 171787.53 107947.84
EBITDA 21150.97 14106.49 23080.26 14239.28
PBT 17453.21 10265.11 19127.34 10088.18
PAT 13045.77 7671.81 14080.43 7296.29
Networth 68308.07 58871.67 68468.23 58000.80
Standalone Consolidated
Particulars Year ended March 31, 2022 Year ended March 31, 2021 Year ended March 31, 2022 Year ended March 31, 2021
Debtors Turnover (no. of days) 52.10 47.50 49.80 43.20
Inventory Turnover (no. of days) 82.40 89.70 84.90 94.20
Interest Coverage Ratio (in times) 92.8 24.2 69.5 18.0
Current Ratio (in times) 1.5 1.3 1.4 1.3
Debt Equity Ratio (in times) 0.2 0.2 0.3 0.2
EBITDA Margin (in %) 12.83 13.40 13.44 13.19
Standalone Consolidated
Particulars Year ended March 31, 2022 Year ended March 31, 2021 Year ended March 31, 2022 Year ended March 31, 2021
PAT Margin (in %) 8.08 7.43 8.40 6.86
Return to Net Worth (in %) 19.16 13.03 20.58 12.58

Risk Management

The key objective of our Lakshya 50XT is to enable future growth and reduce business risk through market and product diversification. The Companys risk management policy is governed and overseen by the Risk Management Committee, which regularly reviews key risks and monitors mitigation measures in a timely manner. Under the Risk Management Policy, a three-tier framework is established for risk identification, assessment, control, minimization and mitigation.

Internal Controls

The Indian industry has witnessed a major shift towards better internal controls with mandatory implementation of internal financial controls (IFC). The Company has put in place strong internal control, systems and processes and keeps reviewing their adequacy from time to time. The Company places strong emphasis on best practices in corporate governance. There is a strong system of both internal review as well as review by external independent auditors i.e. M/s Protivity, Risk and Business Consulting who carry very periodic audits of all locations and their reports are reviewed by Audit Committee.