m r organisation ltd share price Management discussions

M.R. Organisation Limited is Indias largest independent compressor spare parts and service company in International and domestic Compressed air market for any type of compressed air solution.

Our headquarter, manufacturing unit and air end rebuilding workshop are located in Ahmedabad, India and have overseas offices in USA, Europe, UK and UAE with team of more than 200 employees.

We produce & supply all type of aftermarket, replacement, equivalent kits & parts for over 35 different Air/Gas compressor global brands of Rotary screw compressors, High & Low-pressure Reciprocating/Piston compressors, Centrifugal compressors, Vacuum pumps, Thermostat valve and Elements, Consumables, Electronic parts and Instruments, Lubricants (semi & fully synthetic compressor oils) and Rebuild Air-end or provide replacement Air-end with various service options.

In addition to our collection of over 40,000 aftermarket, replacement, equivalent parts & kits, we continuously endeavor to identify additional product development, opportunities from new and existing clients to enhance customer service and satisfaction. Our unique re-engineering services are expanded to provide cost advantage to our clients in any machine parts production.

We supply aftermarket, replacement, equivalent kits & parts to 6 continents - Asia, North America, South America, Europe, Africa & Australia including 72 well-flourished countries with numerous of distributors in major 3 continents and our field force are spread across pan India at 44 locations in 24 states of India to provide on-time support to customers.

OVERVIEW OF COMPRESSED AIR SECTOR:

Air & Gas Compressors

A compressor is a machine which is capable of compressing air or gas thereby elevating its pressure from an initial low pressure to a higher final pressure. All compressors act as sources of energy. Compressed air is a source of energy and finds application in virtually all sectors of industry. Some of the major industries which use compressed air are construction, cement, glass, plastic processing, chemicals and Pharmaceuticals, foundries and forge shops, textiles and automotive manufacture. The air is typically used for control applications, etc. where it triggers, starts, stops, modulates or acts otherwise for controlling the motion or process.

A compressor can be classified in many ways. Depending on the mobility factor, compressors are classified as Portable or Stationary. Depending on the technology used, they could be reciprocating, rotary vane, screw or centrifugal. And depending on the inputs used, they could be either air or gas compressors.

Reciprocating, Rotary vane and Screw compressors are based on the positive displacement principle while Centrifugal compressors are based on the dynamic principle. Depending on the requirements of the application, compressors can be further sub-classified as single or multistage, air-cooled or water-cooled, horizontal or balanced opposed, electric driven or diesel engine driven and lubricated or non-lubricated compressors.

The major raw materials used for the manufacture of compressors are castings, aluminium and steel. The major finished and semi-finished components used are bearings, crankshafts, switches, gauges, rotors and housings. The major bought-out items are motors, starters, control panels, inter and after coolers and filters.

The major capital equipment used in the manufacture of compressors are horizontal boring machines, vertical boring machines, CNC machines, radial drilling machines, 3-D measuring units, ultrasonic cleaning equipment and dynamic balancing equipment.

Global Scenario

The global market for compressed air equipment and aftermarket is characterized by a diversified customer base. Air compressors are used in wide spectrum of applications in which compressed air is used as a source of power or as an integrated part of industrial process. Gas compressors find use in any industry where gases are handled as part of the manufacturing process, such as vanaspati, fertilizers, refineries, etc. apart from usage in gas purification and bottling plants including LPG bottling.

Availability of technically skilled manpower, coupled with cheap unskilled labour has been drawing many multinational companies to either establish manufacturing facilities into the country directly or through joint ventures with indigenous suppliers. Also, given the economic downturn in the Western countries, several global companies are looking at India as a viable destination for business.

Since the beginning of the establishment of the compressor industry in India, Air and Gas compressors have been manufactured with foreign technical collaboration. Most of the established manufacturers continue to enter into foreign collaborations for producing new types of compressors or for updating and expanding the present range. The industry has huge entry barrier with respect to technology and initial capital outlay.

Growth Drivers

Growth factors are proteins that regulate many aspect of cellular function of the Company. The Company believes in below all 10 major Drivers and prioritising their actions according to growth ambition as follows:

¦ Strategy

¦ Customer Relationship

¦ Qualitative Products & Servicing

¦ Finance

¦ Distribution Network

¦ Marketing

¦ Pricing Strategies

¦ Personnel Equipment with Appropriate Working Culture

¦ Digital Technology

¦ Transactions and alliances

Challenges

We consider Covid is the biggest challenge this year, the ongoing COVID-19 has caused a significant global economic downturn. The pandemic COVID-19 has disrupted the whole market, supply chain, working patterns etc.

Covid-19 has affected our international and domestic both market, internationally it has been affected more due to sudden lockdowns and hike in COVID cases, this has created huge uncertainty in the market and intern our global business has been affected.

Buyer preference for compressors has witnessed a shift over the last few years. Only a few indigenous suppliers along with multinational companies can offer desired cost-effective solutions to the customers. This is one of the major challenges for most of the small and medium-scale manufacturers who lack the required capital and technical expertise.

FINANCIAL PERFORMANCE

Sales

The total sales of the current year are Rs. 333,202,880 as compared to Rs. 274,156,889 in previous year.

Profit

During the year, the Company reported a profit of Rs. 51,816,877 as compared to Rs. 66,233,653 in the previous year.

FUTURE PROSPECTS

Economic recovery of post Covid 19 situation is bringing many new opportunities and growth plan for Company, expansion of domestic business is now planned more systematic way on minute level and we are now planning to expand it at micro level and covering small to midsize of companies as our customers, overseas addition of UK has opened up many future prospect with more strong holding in UK as well as Europe market. This year Company definitely has 360 degree growth plan in near future in domestic as well as international market.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has proper and adequate system of internal controls commensurate with its size and nature of operations to provide reasonable assurance that all assets are safeguarded, transactions are authorized, recorded and reported properly, applicable statutes, the Code of Conduct and Corporate policies are duly complied with. The Company has an Audit Committee with majority of Independent Directors as members to maintain the objectivity. The Internal Audit Program is designed in consultation with the Statutory Auditors to ensure accuracy and reliability of accounting data and is monitored by the Audit Committee. Audit observations and recommendations are reported to the Audit Committee, which monitors the implementation of the said recommendations. The Companys internal audit team also carries out extensive audits throughout the year, across all functional areas.

PERSONNEL

Human wealth is the ultimate wealth in for any industry. The Company recognizes this fact and understands that employees are one of the most important sources for sustained growth of any business. Quality personnel delivering their optimum potential for the organization is the key differentiator. The Company maintained good relations with its employees and there was no unrest in the Company.