l g balakrishnan & bros ltd share price Management discussions


The automotive industry is coming out of one of its most challenging periods in history. Considering that the post-pandemic, a major restructuring is underway in global supply chains following widespread disruption in recent times due to Covid, Russia-Ukraine conflict and the global inflation in advanced economies was accompanied by tightening monetary policy stance, which in turn created a ripple effect in global markets. Although we have no operations in Russia or Ukraine, we are closely monitoring the conflict and constantly assessing its potential impacts on LGB and our customers.

Moreover, domestic sales across the segments of the industry are bouncing back to the pre-pandemic levels. These trends assure us that the Indian auto component industry is set on the trajectory of strong and sustainable growth. The collective effort of the government and the industry players have started to come to fruition, putting India on the world map as the global manufacturing destination. Nevertheless, by focusing on our strategy and financial prudency, LGB remained steadfast and delivered strong FY 2022-2023 results.


With over 66 years of service, LGB has established itself as a leading supplier of Transmission Chains, Sprockets and Metal formed Parts for automotive applications and for Original Equipment Manufacturers (OEM) and also caters to export, after market and spares segments. Our strong "ROLON" brand recognition with global presence is built on the pillars of Trust, Integrity, and Respect. From research and development to manufacturing, marketing, and customer engagement, LGB provides a comprehensive range of Products. We continue to focus on creating new products as well as expanding the use of existing offerings that are tailored to the different needs of our customers. Building and strengthening strategic partnerships with customers is core to LGBs strategy.


The growth outlook is better than pre-pandemic years for Indian Automobile segment and is prepared to grow at its potential in the medium term. The demand for automotive components is increasing due to various factors, such as the increasing service life of vehicles. "ICRA" projects replacement demand growth at 6-8 per cent in FY2024, supported by underlying demand drivers, including the increase in mobility, improving economic activity. Besides that, Indian automobile market is predominantly led by two-wheeler segment, sales may boost amidst improving rural incomes, expanding middle class population and due to vehicle scrappage policy introduced by Indian Government. These measures are expected to brighten the long-term prospects for the industry. LGB continues to transform its offering in order to provide its customers with differentiated, reliable and high-quality products and services based on their needs.

Going forward, LGB will continue to closely watch global developments, seeking opportunities to advance our strategy, building on our strengths, and adapting to business environment changes. By doing so, LGB is confident that it can continue supporting customers and creating lasting value for all LGBs Shareholders.


In terms of the outlook for the FY2024, the components body, however, is adopting a wait-and-watch approach as uncertainties continue to loom large due to the prolonged Russia-Ukraine conflict, changed the market landscape considerably, contributing to a downturn in demand. Accordingly, we face global macroeconomic challenges and highly competitive environment. While the overall environment remains uncertain, particularly in light of the effects of the COVID-19 pandemic, increase in raw material prices, increase in lending rates, global geopolitical tensions, volatility in exchange rates and evolving dynamics in the global trade environment. The hardening of crude oil prices presents a major risk to the outlook on inflation. The Company keenly monitor the price movements and undertakes the necessary strategy or adopts remedial measures to offset this risk and we continue to aggressive in priority areas with the objective of driving profitable growth over the long term. Despite such turbulence, LGB continued making significant progress.


The Company manufactures chains, sprockets and metal formed parts for automotive applications. Its business segments are transmission and metal forming. Its transmission products include chains, sprockets, tensioners, belts and brake shoe. It also offers metal forming products consisting of fine blanking for precision sheet metal parts, machined components and wire drawing products for internal use as well as for other chain manufacturing plants, spring steel suppliers and umbrella manufacturers.

The sales performance during the year is as follows:

Particulars Consolidated (Rs. in Lakhs)
Transmission 1,73,165.98
Metal Forming 47,131.81
Total 2,02,297.79


The Board of Directors has adopted and approved a Risk Management Policy for the Company to ensure the ongoing identification, evaluation, and mitigation of business risks, safeguarding the interests of its stakeholders. The Risk Management framework is designed to adapt to the evolving business environment and promptly address any emerging risks. The Risk Management Committee is updated on emerging risks and corrective actions every six months.


At LGB, Internal Control serves as a fundamental pillar of Corporate Governance. The Company has established policies, procedures, control frameworks, and Management systems. These initiatives ensure compliance with regulatory requirements, internal controls, and accurate financial and operational reporting. At the entity and process levels, internal control mechanisms are designed to promote adherence to established procedures and ethical codes of conduct. Senior Management certifies the effectiveness of internal controls, ensures compliance with financial and commercial transactions, and declares any conflicts of interest. Independent internal auditors further bolster the internal control process. The Audit Committee of LGB reviews and approves the audit plan. In addition, regular meetings are held to review auditor reports and compliance. Significant audit observations and followup actions are reported to the Audit Committee for further review.


On consolidated basis, revenue from operations and other income for the financial year under review were 2,22,554.84 Lakhs as against 2,11,412.90 Lakhs for the previous financial year registering an increase of 5.27%. The profit before tax and exceptional item was 32,001.19 Lakhs and the profit after tax, was 25,232.80 Lakhs for the financial year under review as against 24,574.17 Lakhs respectively for the previous financial year.

On standalone basis, revenue from operations and other income for the financial year under review were 2,10,822.36 Lakhs as against 2,01,771.53 Lakhs for the previous financial year registering an increase of 4.48%. The profit before tax and exceptional item was 31,517.13 Lakhs and the profit after tax was 24,769.58 Lakhs for the financial year under review as against 23,911.04 Lakhs respectively for the previous financial year.

Details of significant changes (i.e., change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations thereof, including, are listed below:

Year ended March 31, 2023 Year ended March 31, 2022 % of Change
Current Ratio 2.39 2.08 15.31%


0.06 0.08 -18.10%
Debt Service Coverage Ratio 18.31 22.63 -19.09%
Return on Equity Ratio 0.18 0.22 -15.21%
Inventory turnover ratio 5.28 5.72 -7.80%

Receivables turnover ratio

7.87 7.94 -0.89%
Trade payables turnover ratio 4.21 4.23 -0.41%
Net capital turnover ratio 1.70 2.02 -16.20%
Net profit ratio 12% 12% -0.03%
Return on



24% 27% -3.71%
Return on investment 4% 2% 1.61%


We are committed to creating a safe and secure work environment for our employees. We strive to ensure that safety is our top priority in all our operations, and we are dedicated to fostering a culture of safety first. We regularly review our safety practices to ensure that they meet the highest industry standards, and we endeavor to ensure that our workplace is the best it can be. As a result, there were no fatal accidents in FY 2022-23. The Company is committed to maintain its operations andworkplace free from incidents and significant risk to the health & safety of its stakeholders through improved engineering practices, constant communication, safety awareness, robust checking systems and sound training practices and through audits..


LGB ability to attract, retain and develop talented employees at all levels is critical to delivering on the companys Purpose and Global Integrator vision. The People strategy was designed, in alignment with the companys Core Values, to create the right environment to engage and inspire employees to thrive.

During the year 2022-23, the Company made significant progress in rolling out initiatives to support the priorities defined in the People Strategy. These included new talent attraction and onboarding programmes, a strong focus on leadership development, and a new talent Management approach closely linked to new career building tools.

The Industrial relations were peaceful and harmonious throughout the year. As on the date, the number of permanent employees on roll is 2,478.


The statement forming a part of this Report may contain certain forward-looking remarks with the meaning of applicable Securities Law and Regulations. Many factors could cause the actual results, performances, or achievements of the Company to be materially different from any future results, performances, or achievements. Significant factors that could make a difference to the Companys operations include domestic and international economic conditions, changes in government regulations, tax regime and other statutes

For and on behalf of the Board of directors
29.04.2023 Executive Chairman Managing Director
DIN: 00015583 DIN:01709564