INDUSTRY STRUCTURE AND DEVELOPMENT
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.
COMPANY AND BUSINESS OVERVIEW
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.
OPPORTUNITIES / OUTLOOK
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.
THREATS
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.
SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE
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 |
RISKS AND CONCERNS
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.
INTERNAL CONTROL SYSTEMS AND Their ADEQUACY
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.
FINANCIAL AND OPERATIONAL PERFORMANCE
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% |
| Debt-Equity Ratio |
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% |
| Trade 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 Capital
employed |
24% |
27% |
-3.71% |
| Return on investment |
4% |
2% |
1.61% |
HEALTH, SAFETY, SECURITY ENVIRONMENT
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..
Human RESOURCES / INDUSTRIAL RELATIONS
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.
CAUTIONARY STATEMENT
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 |
|
| Coimbatore |
B. VIJAYAKUMAR |
P.PRABAKARAN |
| 29.04.2023 |
Executive Chairman |
Managing Director |
|
DIN: 00015583 |
DIN:01709564 |
+91-9892691696
