ABOUT METALYST FORGINGS LIMITED
Metalyst Forgings Limited (erstwhile Ahmednagar Forgings Limited) incorporated in 1977,
is engaged in manufacturing of wide range of highly engineered forging components viz. hot
forged parts and high tensile fasteners for automotive and non-automotive segments. Its
state-of-the-art manufacturing facilities are equipped with world-class presses, hammers
and upsetters machines. MFL is one of the
leading front axle beam, crankshaft and other small and medium components manufacturing
organisation in India catering to wide end market customer base, An ISO 9001, IATF:16949,
OHSAS & EMS certified company.
The Company has manufacturing facilities with vertical presses, hammers and upsetters.
The Companys plants are located in Maharashtra Industrial Development Corporation (MIDC)
Area, Ahmednagar; Chakan, Pune; Kuruli, Pune; Nalagarh, Himachal Pradesh, and MIDC Area,
Aurangabad.
Further National Company Law Tribunal, Mumbai Bench has ordered the commencement of a
corporate insolvency resolution process against Metalyst Forgings Limited on 15th December
2017. Its affairs, business and assets are being managed by the Resolution Professional,
Mr. Dinkar T. Venkatasubramanian, appointed as Interim Resolution Professional (IRP) by
the National Company Law Tribunal by order dated 15th December, 2017 and
continued as Resolution Professional (RP) by the Committee of Creditors in its meeting
held on 12th January, 2018 under provisions of the Insolvency and Bankruptcy Code,
2016&Resolution Plan Submitted By Deccan Value Investors L.P. has been Approved By
Committee Of Creditors In Its Meeting Dated On 25th August, 2018.
METAL FORCING MARKET INSIGHTS
The global metal forging market size was valued at $83.4 billion in 2022, and is
projected to reach $168 billion by 2032, growing at a CAGR of 7.2% from 2023 to 2032.
Metal forging is a process of forming and shaping metal by compressive force. It is
commenced at room temperature or at an elevated temperature, known as cold forging or hot
forging respectively. Forged metal has a properly aligned grain structure, making the
resultant metal component stronger, less brittle, and more durable. Such properties of the
forged metal make it suitable for demanding and critical applications in industries such
as automotive, aerospace, railways, marine, industrial machinery, and others.
"The metal forging market was severely hampered owing to the outbreak of COVID-19.
The industrial machinery, automotive, and aerospace sectors had declined. The automotive
sector has recovered to a greater extent; however, the aerospace sector is yet to reach
its pre-COVID-19 level."
Source:
https://www.alliedmarketresearch.com/metaI-forging-market-A 74841
Global Economic Review
The forging of metal has been a standard practice for metal forming and shaping for
centuries. It is a suitable method for producing components that are to be used in
challenging applications having high pressure, force, and temperature. The market for
metal forgings is driven by a rise in the automotive industry, and a rise in energy
sectors such as oil & gas refineries, and thermal power plants. Industries in the
energy sector utilize various industrial components such as flanges, fittings, valves,
studs and nuts, pressure vessels, pipes, and many others which are commonly made using the
forging process. Gulf countries and countries in Latin America are few of the major oil
& gas producers, and demand for forged metal components in these regions is
anticipated to rise with various planned and ongoing oil & gas projects. For instance,
in March 2022, Aramco along with North Huajin Chemical Industries Group Corporation and
Panjin Xincheng Industrial Group planned to develop a petroleum refinery with 300,000 bpd
capacity. Similarly, Kineticor Resources Corp. is developing and constructing a gas-fired
power plant in Edson, Alberta, Canada. The estimated total cost of the project is expected
to be $1.5 billion, which is projected to be completed by 2025. These projects are
expected to demand forged metal flanges, fittings, valves, studs and nuts, pressure
vessels, and others. Furthermore, the automotive industry is witnessing a rise owing to
the rising disposable income of people, and rising urbanization. For instance, in January
2023, the total sales volume of vehicles was 1,065,937 units, which increased to 1,384,676
units in March 2023, an increase of nearly 30%. Moreover, India and China have emerged as
major automotive markets in the last decade. According to International Energy Agency,
India has approximately 25 vehicles per thousand people as of 2020, and the number is
expected to cross 150 vehicles by the year 2040. The automotive industry makes extensive
use of forged metal components, such as engine components, transmission components,
suspension components, and body sheet. Thus, growth in automotive industry is anticipated
to drive metal forging market growth, and is also expected to improve the metal forging
market outlook.
However, limitations of the metal forging process are anticipated to restrain the metal
forging market growth in the coming years. For example, producing a complicated shaped
component, and a component with good surface finish are difficult to achieve with forging
process. In addition, metal forging is slow as compared to other methods.
Contrarily, during the beginning of 2023, the number of COVID-19 cases surged again,
especially in China, which had an unfavorable impact on the metal forging market for a
short duration. Thus, businesses involved in metal forging market must focus on protecting
their workforce, operations, and supply chains to respond to any looming threat of
COVID-19. For instance, as of April 2023, COVID-19 cases are rising in India. In addition
to COVID-19, another global event; worldwide inflation, driven by the Ukraine-Russia war
and quantitative easing done in some parts of the world during COVID-19 has also
negatively affected the construction and mining sector.
Indian Economic Review
The Indian forging industry is concentrated around its end user customer locations.
Therefore, the major forging clusters are found to be in the states of Maharashtra,
Punjab, Gujarat, Tamil Nadu, Haryana, Delhi, Karnataka, Jharkhand, West Bengal and Andhra
Pradesh. States such as Maharashtra, Punjab, Tamil Nadu, Haryana, Jharkhand and Delhi.
The forging industry of India provides direct employment to about 95,000 people. The
small and very small units are mainly dependant on manual labour, however medium and large
units are more mechanized. Quality standards in the industry have improved significantly
and the sector is now well known globally for its high quality.
Current share of auto sector is about 58% of total forging production while the rest is
with the non-auto sector. Changes in Indian automobile industry directly impact Indian
forging industry, because the forging components form the backbone of the Indian
automobile industry. Since the automobile industry is the main customer for forgings the
industrys continuous efforts in upgrading technologies and diversifying product range has
enabled it to expand its base of customers to foreign markets.
The Indian forgings industry has made rapid strides and currently, not only meets
almost all the domestic demand, but has also emerged as a large exporter of forgings.
Source:
https://www.indianforging.org/indian-forging-industry
Outlook o? the Company
Your Company believes that demand conditions in the metal forging sector are exhibiting
early signs of improvement. As Metalyst Forgings Limited continues to build on its core
business of manufacturing of wide range of highly engineered forging components viz. hot
forged parts and high tensile fasteners for automotive and non-automotive segments,
executing its operations and taking advantage of a potential revival in economic growth
and its resultant positive effects on the growth of the company.
The Company has followed all legal and Regulatory Compliances requirement and has
implemented all statutory requirements.
Companies engaged in the auto forging space are also trying to reduce the dependence on
the automobile sector by diversifying product range through technology upgradation to
expand their customer base in nonautomotive sectors which includes aerospace, energy, oil
and gas, heavy engine parts, construction equipment and power sector, amongst others.
Consequently, demand for overall forging industry is expected to be driven not only by
the increased demand from the automobile sector but also from the non-automotive sectors.
With increased dependence of the developed countries on the developing nations for the
supply of forgings, the export market is expected to drive the overall growth of the
Indian Forging Industry.
Overall the forging industry is expected to grow exponentially in the long term, it is
definitely a positive step by the government in the right direction. This will create a
positive impact in the banking sector by offering the lower rate of interest to consumers
which will lead to increased investments automobile sector.
Business Environment
Global Supply Chains in our industry have been affected by shocks of covid and Ukraine
war. From our primary interaction across all global customers, most of them are keen on
shifting some or majority of their manufacturing or sourcing operations from China to
India. This is a tail-wind for Metalyst Forgings Limited to capitalize on the sourcing
interest from Indian companies who have a long history and established brand in the
market. Our Country enjoys a strong position in the global heavy vehicles market as it is
the largest manufacturer of Tractors, the second-largest manufacturer of buses and
third-largest manufacturer of heavy trucks around the world. Our company has a scope to
extend its market share into these sectors to diversify in other sector as well,
particularly in the defence sector as the government intends to reduce the defence export
and procure defence requirements indigenously. The focus of Indian Automotive industry is
shifting towards Electronic Vehicles shortly called as EVs. Our country is a prominent
auto exporter and has strong export growth expectations in the near future and in addition
to that there are several initiatives implemented by the Government of India and major
automobile players in the domestic market are expected to make our country a leader in the
two-wheeler and four-wheeler market across the globe. In spite of these upcoming
opportunities, the forging industry faces a number of challenges which include, disrupted
supply chain, poor allocation of resources, delayed technology up gradation, lack of
benchmark infrastructure available in the Country amongst others.
Strength 8 Opportunities
Your Company continues to capitalize on the market opportunities by leveraging its key
strengths & Opportunities. These include:
• Strong and Reliable: No other metalworking processes can ensure the superior
strength of forged metal parts. The high strength is a result of the tight grain structure
of the forged metal. The ductility, reliability, and strength of forged products go beyond
the casted, fabricated and welded products. This is often a reason for forged products to
find its application in industries in which human safety is crucial. Moreover, forged
products can maintain its performance on a wider temperature range due to the grain
structure.
• Highly Cost-Effective: Forging has a significant cost advantage, particularly in
precision metal manufacturing in high volume production runs. The materials used in
forging are less expensive when compared with other materials used in metalworking
processes. Furthermore, it requires fewer secondary operations in most cases. Given to the
high precision metal manufacturing, the finish material can be obtained with exact
dimension and good surface finish. Hence, it requires very low machining giving a way to
cost-effectiveness.
• Different Alloys: The biggest advantage of machine forging is that most of the
metals can be forged into the desired shape. The forging process can be applied to any
type of metal. Each metal comes with a distinct set of characteristics that can be best
used for specific parts depending on the requirement. Some of the common forged metals are
aluminum, alloy, stainless steel, brass, carbon, titanium, copper, brass, etc. In
industries that require high temperature, alloys that contain cobalt, molybdenum or nickel
can be used. By using strong forged metals, industries can reduce usage of expensive
alloys to achieve high strength components.
• Better Metallurgical Properties: Sometimes selective heating and non-uniform
cooling that take place in the machines may lead to failure of a particular part. The
final product obtained in the forging process does not have any internal voids and have
superior grain flow. The forging process reduces the occurrence of shrinkage and porosity
which is commonly seen in casted products. Therefore, the chances of unexpected failure
under stress or temperature differences are negotiated in machine forging.
Risk Management
Risk Management is becoming an increasing important area for all organizations and
especially for a company like ours that is on the growth path. We understand the need to
eliminate, minimize and contain risks and uncertainty so that the momentum to grow does
not stop. We have identified some important dimensions of Risk Management as follows:
• Business Risk - evaluating business lifecycles for each product and impact of
market movements on the business.
• Operational Risk - identifying all risks that impact the order to cash cycle.
• Compliance Risk - all operating compliances and statutory obligations are
reviewed by our Department in their management review meetings. All financial and
governance related compliances are reviewed by the Secretarial and Finance Departments.
INTERNAL CONTROL SYSTEM
The company has proper and adequate system of internal controls commensurate with its
size and nature of operations to provide assurance that all assets are safeguarded,
transactions are authorized, recorded and reported properly; applicable status, the code
of conduct and corporate policies are duly complied with. The Company has an internal
audit department
_______ N
• High initial cost towards forging machinery, forging setup, and forging dies.
The forging process requires trained personnel, and the workshop building should be able
to absorb the vibration and shock generated by the forging operations
• The process is hazardous since the person has to deal with hot metal and the
sound of the presses and hammers
• Complex shapes cannot be forged
which conducts audit in various functional areas as per audit programme approved by the
Audit Committee of Directors. The internal audit department reports its findings and
observations to the audit committee, which meets at regular intervals to review the audit
issues and to follow up implementation of corrective actions. The committee also seeks the
views of statutory auditors on the adequacy of the internal control system.
FINANCIAL OVERVIEW
> Shareholders Fund and Net Worth
There was no change in share capital of the Company during the FY 2022-23. The paid up
equity share capital of your Company as on 31st March, 2023 was Rs.43,55,00,000, /-
(Rupees Forty Three Crore Fifty Five Lakhs only) divided into 43,55,0000 Equity shares of
the face value of Rs. 10/- (Rupees 10 only) each.
> Discussion on Financial Performance
The Revenue from Operations is 26,203.15 Lakhs for the financial year 2022-23.
• Profit/Loss before Tax: The Profit/Loss before Tax for 2022-23 is (31387.79)
Lakhs as compared to Loss before Tax of Rs. (25,246.69) Lakhs in 2021-22.
• Profits/Loss after Tax: The Profit/Loss before Tax for 2022-23 is (31387.79)
Lakhs as compared to Loss before Tax of Rs. (25,246.69) Lakhs in 2021-22.
MFLs business operations and affairs after being managed by Insolvency Resolution
Process ("IRP") Mr. Dinkar T. Venkatasubramanian (IP Registration no. IBBI/IPA-
001/IP- P00003/2016-17/10011), with effect from 15th December 2017 vide an order of the
Honble National Company Law Tribunal ("NCLT"), Mumbai dated 15.12.2017
.Further, in terms of the provisions of the Code, the Committee of Creditors (CoC) in its
meeting held on 12th January 2018 continued to Mr. Dinkar T. Venkatasubramanian as the
Resolution Professional.
STATUTORY COMPLIANCES
Pursuant to Listing Regulations, the company regularly obtains declaration in respect
of compliance of Code of Conduct adopted by the company. A certificate from CFO is also
adopted on yearly basis certifying the compliances as stipulated in Listing Regulations.
The whole Time Director before Commencement of Corporate Insolvency Resolution Process
(CIRP) makes a declaration to the Board of Directors every quarter regarding Compliance
with provisions of various statues as applicable. The Company Secretary ensures compliance
with guidelines on insider trading for prevention of the same. The company secretary
ensures compliances with the Companies Act 2013, SEBI (Listing Obligations and Disclosure
Requirements) Regulations 2015 and compliance with guidelines on insider trading for
prevention of the same.
In terms of the SEBI (Listing Obligation and Disclosure Requirements) (Third Amendment)
Regulation, 2018, May 31st, 2018 read with the Resolution Plan as approved by the NCLT
Order dated February 24th, 2020, all the roles and responsibilities of the Board of
Directors/ Committees shall be fulfilled by the Resolution Professional in accordance with
Section 17 and Section 23 of IBC and powers of the Board of Directors/ Committee stands
suspended.
HUMAN RESOURCE
During the year, the Company delivered value to its customers and investors. This was
made possible by the relentless efforts of each and every employee. The Company has
developed a robust and diverse talent pipeline which enhances Metalyst Forgings Limited
organizational capabilities for future readiness, further driving greater employee
engagement. Our human resource program is focused on attracting the right talent,
providing excellent on the job training opportunities, and finally giving them the growth
opportunities consistent with their aspirations.
Employees are the key to achieve the Companys objectives and strategies. The Metalyst
Forgings Limited provides to the employees a fair equitable work environment and support
from their peers with a view to develop their capabilities leaving them with the freedom
to act and to take responsibilities for the tasks assigned. The Company strongly believes
that its team of capable and committed manpower, which is its core strength, is the key
factor behind its achievements, success and future growth. We are continuously working to
create and nurture an organization that is highly motivated, result oriented and adaptable
to the changing business environment. The industrial relations remained cordial during the
year.
SIGNIFICANT CHANGES
Metalyst Forgings Limited is under Corporate Insolvency Resolution Process under the
Insolvency and Bankruptcy Code 2016 (Code) vide an order of the Honble National Company
Law Tribunal ("NCLT"), Mumbai dated 15.12.2017 and Mr. Dinkar T.
Venkatasubramanian (IP Registration no. IBBI/IPA- 001/IP-P00003/2016-17/10011), was
appointed as the Insolvency Resolution Process ("IRP") with effect from 15th
December 2017. Further, in terms of the provisions of the Code, the Committee of Creditors
(CoC) in its meeting held on 12th January 2018 continued to Mr. Dinkar T.
Venkatasubramanian as the Resolution Professional under provisions of the Insolvency and
Bankruptcy Code, 2016 and further Resolution plan submitted By Deccan Value Investors L.P.
has been approved by committee of creditors in its meeting dated on 25th
august, 2018 and was thereafter submitted to the Honble National Company Law Tribunal,
Mumbai ("NCLT"), for its approval.
However the NCLT vide its order dated September 27, 2019, rejected the approval of the
resolution plan and allowed the same to be withdrawn by the successful resolution
applicant, pursuant to an application filed by the successful resolution applicant in this
regard.
The aforesaid order of the NCLT was challenged by the RP and the CoC in the Honble
National Company Law Appellate Tribunal, praying, inter alia, that withdrawal of an
approved resolution plan is not permitted in terms of the Code, and that such withdrawal
was permitted by the NCLT on misconceived grounds and without jurisdiction.
However, the NCLAT, vide its order dated February 7, 2020, upheld the order passed by
the NCLT and the consequent withdrawal of the resolution plan by the successful resolution
applicant.
Pursuant thereto, the RP and the CoC have filed separate appeals in the Honble Supreme
Court, challenging the order passed by the NCLAT and have prayed, inter alia, for the same
to be set aside and for the Supreme Court to direct the NCLT to approve the resolution
plan under Section 31 of the Code.
After the Commencement of Corporate Insolvency Resolution Process (CIRP) The role and
responsibilities of the Committees specified in regulations 17, 18,19,20 and 21 of SEBI
(Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2018
dated 31st May 2018 shall be fulfilled by Resolution Professional and powers of the Board
of Directors/committees stand suspended and and all the other regulations are complied
with under the direction of Resolution Professional of the Company.
Cautionary Statement
The statements in this Management Discussion and Analysis Report describing the
Companys objectives, projections, estimates and expectations, may be forward looking
statements within the meaning of applicable laws and regulations and the actual results,
performance might differ materially from those expressed or implied herein. The Company is
not under any obligation to publicly amend, modify or revise any such forward looking
statements on the basis of any subsequent developments, information or events.
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