Jaykay Enterprises Ltd Management Discussions

A) INDUSTRY STRUCTURE & DEVELOPMENT

• Global economic overview

Despite the global economic challenges, Indias GDP is projected to surpass 7.2% in FY 2023-24 as per "Indian Economy: A Review", after three consecutive years of contraction (2020-21 onwards). India is poised to become the third largest economy, in the next three years with a GDP of US$ 5 trillion. The macroeconomic stability has given rise to the growth of the Indian economy as seen in robust foreign exchange reserves, growth in foreign direct investment (FDI), lower current account deficit and moderate inflation. As the World economy recovery is anticipated, the momentum of Indian economic growth is also anticipated to increase and remain one of the strongest economies. The growth in the Indian economy and also the turbulence in the global security environment have given a boost to the defence spending.

• Indian Economy Overview

In the interim budget for FY 2024-25, the Government has allocated Rs 6.21 Lakh Crore to MoD, an increase of 4.7% over the previous year. The capital allocation, which relates to modernization and infrastructure development of the Armed Forces has been increased from Rs 1,62,600 Crore in FY 2023-24 to Rs 1,72,000 Crore in FY 2024-25, with an increase of 5.8% over the previous year.

The Governments plan to foster jointness among the services by consolidating the demand of three services to bring in flexibility and re-appropriate the funds among the services based on inter services priority and for faster decision making and better utilization of capital budget.

To financially strengthen DRDO in developing new technology, 13,208 Crore has been allocated for capital expenditure. The Government has come out with a new initiative to expedite indigenisation in defence and to provide impetus to innovation by launching a new scheme to strengthen Deep-Tech for defence. The scheme has 1,00,000 Crore corpus for Deep Tech for long-term loan to tech savvy youth/ companies and tax advantage to start-ups.

• Organization and Business Overview

Jaykay Enterprises Limited (JKE), part of J K Organisation and part of the 140 years old diversified JK conglomerate owes its name to Late Lala Juggilal Singhania and his son Late Kamlapat Singhania, a dynamic personality with a broad vision. Inspired by the cause of Swadeshi movement of Mahatma Gandhi, and driven by the zeal to set up an Indian enterprise, Lala Kamlapat Singhania founded J.K. Organisation in the 19th century ushering in a new industrial era in India. The process of industrialization was worthily and successfully carried by Sir Padampat Singhania in fulfilling the vision and dream of his father and grandfather and made J.K. Organisation as one of the largest private sector groups in India. The Company was incorporated under the name ‘J.K. Investment Trust Limited and functioned primarily as an investment Company. It ceased to be recognized as investment trust Company in 1959. In 1960 the Company changed its name to J. K. Synthetics Limited subsequently the name was changed to Jaykay Enterprises Limited.

JKE initially engaged in the business of manufacturing nylon and acrylic fibers and later went into Registrar and Share Transfer Agent activities.

Presently, the Company has diversified itself into Additive Manufacturing systems, Proto typing, powder metallurgy, large scale Digital manufacturing, Reverse Engineering, Plant modelling, In the area of defense & Aerospace we areas of engineering products across various industry verticals, software designing and development, manufacturing of parts and accessories used in defence and aerospace sector, our work includes composite applications, Under water mines ,machining for aerospace sector.

Precision Manufacturing for Aerospace and Defense

At JKE, we are experts in high-precision manufacturing, designed to meet the rigorous demands of the aerospace and defense industries. Our advanced facility and strict quality standards assure superior performance and dependability. JKE has been a key player in the defense sector, providing high- precision components, subsystems, and systems for various defense and aerospace programs. We have significantly contributed to strategic missile programs through the provision of machined components and subassemblies. Our proficiency also includes systems integration for diverse defense programs, backed by our cutting-edge in-house facilities.

Commitment to Quality

At JKE, quality is our utmost priority. Our rigorous quality assurance processes ensure that every product meets the highest standards of performance and reliability. Our dedicated team of experts works tirelessly to deliver outstanding results on every project.

B) OPPORTUNITIES AND THREATS- SWOT ANALYSIS

SWOT Analysis is the tool to assess internal strengths and weaknesses of the organization as well as to identify potential opportunities and threats in its external environment. The SWOT analysis of the company is as follows:

C) SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company has consolidated its business focus into specific dedicated opportunities. The Company along with its Subsidiaries, Associates and/or LLP is primarily engaged in the following business portfolio:

(i) Defence & Aerospace- Machining and Manufacturing of precision-turned components and all varied types of engineering goods for the Defence, Aerospace along with trading and dealing in various kinds of products related to Defence, Aerospace and allied industries; and

(ii) Digital & Advanced Systems- Additive manufacturing including 3D Printing, providing technical consultancy services, 3D Scanning, Reverse Engineering, plant modelling, design, development, and marketing of 3D printers, advance systems and software products for 3D and allied activities.

As on date of this report, the Company has 4 subsidiaries including one step down subsidiary,1 Associate Company and 1 Joint Venture in the form of LLP.

? Incorporation of two Wholly-Owned Subsidiary Companies (WoS) : The Company had incorporated

\ two WoS i.e. JK Defence & Aerospace Limited on July 03, 2023 with the object to undertake the business of manufacturing of precision turned components and all type of engineering goods for the defence, aerospace and other allied industries and JK Digital & Advance Systems Private Limited on July 27, 2023 with the object of carrying on the business of 3D printing and advanced systems, research and development services and other allied activities.

? Neumesh Labs Private Limited:

Neumesh Labs Private Limited has as established a Centre of Excellence (COE) in Bengaluru, the COE has state of the art EOS Software, Machines & Practices of cutting-edge 3D technology. Further Neumesh has developed a 3D printer JKPrint500, which was unveiled in IMTEX 23 Fair in Bengaluru. The product has received enthusiastic market response. Neumesh is also developing a lower price 3D printer which will be targeted at the mass market.

? Allen Reinforced Plastics Private Limited:

In order to further expand and to allow the integration of existing business plans in a synergistic manner, your Company, through its wholly owned subsidiary i.e. JK Defence & Aerospace Limited ("JK Defence") has increased the stake of company in 2024 from 76.41% to 80.87% equity stake in Allen Reinforced Plastics Private Limited (Allen) which is engaged in the business of designing development, manufacturing, and testing of advanced composite engineering products made or composed of fibre glass, glass mat, plastic, resins etc. applications in defence/aerospace/logistics & electrical industries.

Allen indigenously develops and supplies critical components to key defence projects in the country, such as BrahMos, Pinaka, SMILE, Akash missiles etc. to defence undertakings such as DRDO, ISRO, OFB, BHEL, BDL among others.

? JK Phillips LLP:

JKE has entered into an Agreement with Phillips Machine Tools India Private Limited, a subsidiary of Phillips Corporation, USA, to form and constitute a Limited Liability Partnership under the name and style of JK-Phillips LLP pursuant to the Limited Liability Partnership Agreement dated December 20, 2023. The Company has made a capital contribution of Rs 1,00,000/- (Rupees One Lakhs Only) in the LLP and holds 50% of the right to share profit in the LLP. This LLP has been formed to carry out the business of trading and distribution of Advance systems which includes CNC machines, lathes, hydraulic press, 3D printers, moulding machines and accessories originally produced by Phillips and other manufacturing/ trading activities including after-sales services

Note:

1. With effect from January 31, 2024, the entire business of Silvergrey Engineers, a Partnership Firm, has been merged into the Company by way of acquisition of 100% stake. Uptil December 31, 2023, JKE was holding 99% stake in Silvergrey.

2. JKE acquired 76.41% stake in Allen Reinforced Plastics Private Limited on July 09, 2023, through its wholly owned subsidiary "JK Defence & Aerospace Limited". Further, JK Defence & Aerospace Limited (JKDAL) has, on June 02, 2024, acquired partly paid equity shares in Allen Reinforced Plastics Private Limited through subscription of 1,94,03,363 Equity Shares (partly paid) under Rights Issue announced by Allen. Post payment of full subscription money, JKDAL will hold 92.92% stake in Allen.

The in-house Research and Development department enables to achieve cost and leadership. The strong team keeps itself regularly updated to adapt to the latest technologies.

D) INDUSTRY OUTLOOK

• Defense & Aerospace Sector outlook is very positive owing to huge requirements from the domestic market. The A&D market in India is estimated to reach around US$ 70 bilion by 2030. With a focus on indigenization by GOI the sourcing from within the country will increase many fold resulting in great opportunities for companies in this sector.

• The digital manufacturing market is witnessing a rise due to the increasing prominence of additive manufacturing (AM) and 3D printing technologies. These innovative techniques enable the production of complex and customized components with greater speed and efficiency compared to traditional manufacturing methods. Additive manufacturing not only reduces material waste but also offers design flexibility and the ability to create intricate structures that were previously challenging or impossible. The growing adoption of 3D printing in industries such as aerospace, healthcare, and automotive is reshaping production processes, fostering innovation, and driving the demand for digital manufacturing solutions

The additive manufacturing market in India is increasing slowly but surely. The GOI has already come up with a policy. The early entrants will have an advantage over others. The application of this technology globally has entrenched Defense & Aerospace, Health care and oil & Gas Sector.

Digital manufacturing will lead the global manufacturing sector in a decades time.

E) RISKS AND CONCERNS

• The major risks and concerns for the Company are:

• Dependency on limited customers for new contracts.

• Competition from domestic and foreign players.

• Risk of natural disasters and pandemic.

• Global Geo Politics.

F) INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

In our view, our Companys Internal Financial Controls affecting the financial statements are adequate and are operating effectively. The company has developed a robust internal control framework which ensures the operations being carried effectively and are aligned to the strategic goals.

The internal control framework is intended to ensure correct, reliable, complete and timely financial reporting and management information.

During the financial year under review, adequate financial controls are established and tested for operating effectiveness through ongoing management monitoring and review process. These are also independently validated by the Internal Audit Function.

G) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the Company is given separately in Directors Report.

H) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT INCLUDING NUMBER OF PEOPLE EMPLOYED

The Human Resource strategy of Jaykay Enterprises Limited is based on the firm belief that our people are our most important assets and is focused on shaping our talent for tomorrow.

The Companys transparent working environment wherein employees can raise their concerns and opinions results in high engagement levels and lower employee turnover ratio.

We aspire to provide excellent opportunities for professional and personal growth of our employees and encourage collaboration, creativity continuous learning work environment. We believe the quality and commitment level of our professionals is at par / highest amongst the peers. As of March 31, 2024, Jaykay Enterprises Limited has a workforce of 28 employees.

I) KEY FINANCIAL RATIOS

Details of significant changes in Key Financial Ratios and any changes in Return on Net Worth of the Company (on standalone basis) including explanations therefor are given below:

SAFE HARBOUR DISCLAIMER

Some of the statements in this Annual Report that are forward looking statements. These forward-looking statements include our financial and growth projections as well as statements concerning our plans, strategies, intentions and beliefs concerning our business and the markets in which we operate.

The above statements are perceived by the Directors based on the current scenario and the input available. Any extraneous developments and force majeure conditions may have an impact on the above perceptions.