(i) Global Economy Overview
With no end in sight for the Russia-Ukraine conflict, energy and
commodity markets continued to remain volatile, along with persisting disruptions in
global supply chains, higher inflation, and the sharp rise in central bank rates. The
unanticipated failures of two regional banks in the United States and the collapse of the
Credit Suisse have exerted significant pressure on financial markets.However, global
economic conditions started showing signs of stabilization in early 2023, with a slight
moderation in projected global inflation to 7.0% in 2023 as compared to 8.7% in 2022 (as
per OECD). The goodnews is that towards the latter part of FY 2022-23 and leaning into the
nextfiscal, energy and food prices have softened significantly, which augurs well for
return of global demand and ebbing of the tight liquidity conditions seen in FY 2022-23.
(ii) Indian Economy Overview
As per National Statistical Office ("NSO") the growth in the
real GDP during FY 2022-23 is estimated at 7.0%, compared to 9.1% in FY 2021-22. This is
driven by the accentuated headwinds from prolonged geopolitical tensions, tightening
global financial conditions and slowing external demand.
The Indian automotive industry has seen a healthy revival in FY
2022-23, aided by a recovery in the economic activities and recovery in mobility post
COVID impacted period (FY 2021-22). However, the two-wheeler segment is yet to reach the
pre-pandemic levels as the industry navigates through high inflation, supply chain
hurdles, a sharp increase in input costs, and the rising cost of ownership due to
regulatory changes.
According to the Society of Indian Automobile Manufacturers (SIAM), the
two-wheelers segment grew by a relatively moderate 17% YoY growth, after witnessing
de-growth for the previous three consecutive years. The long-term two-wheeler growth
potential in India is backed by the relatively young population, rising incomes, wide
availability of credit and financing options, and boost to the local manufacturing
ecosystem.
(ii) Future Outlook
The Automobile sector is expected to a very strong growth in FY 2023 on
a weaker base and very strong consumer demand in all segments. Post COVID there is a
strong pent-up demand in all segments and we expect the industry to maintain very strong
volume growth.
The increase in consumer spending across categories during the holiday
season of 2022 is an indication of a resurgence in consumer confidence and bodes well for
future industry growth. With two-wheeler penetration still low, combined with the growing
road network, the future holds great promise. Other factors driving growth are the
availability of unique underwriting tools that enable new age digital lenders to cater to
a large section of credit-worthy customers who were traditionally outside the formal
lending ecosystem. Financial penetration will further shape the demand for two-wheeler
purchases going forward.
COMPANYS FINANCIAL PERFORMANCE
The Companys Board of Directors is responsible for the matters
stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to
the preparation of these Ind AS financial statements that give a true and fair view of
thefinancial position, financial performance including othercomprehensive income, cash
flows and changes in equityof the Company in accordance with the Indian Accounting
Standards (Ind AS) prescribed under Section 133 of the Actread with the Companies (Indian
Accounting Standards) Rules, 2015, as amended, and other accounting principles generally
accepted in India. The financials have been prepared considering the above requirements of
applicable laws.
During FY 2022-23, total income of the Company was 1,595 Crores as
compared to 1,716 Crores in FY 2021-22, showing drop of about 7.05%.
Profit before tax and Profit after tax were 92.30 Crores and 65.73
Crores respectively for the FY 2022-23 as against 30.04 Crores and 20.81 Crores
respectively in the previous year which can be mainly attributed to exceptional item by
way of sale of surplus Land.
(i) Key Financial Ratios
As required under Regulation 34 of the Listing Regulations, details of
changes are:
| Particulars |
FY 2022-23 |
FY 2021-22 |
Change (in %) |
Remarks - 2022-23 |
| Debtors turnover ratio-times |
6.98 |
6.43 |
8.55 |
The ratios in the current year have improved
compared to the previous year, mainly on account of effectively processing credit period. |
| Inventory turnover ratio - times |
31.77 |
31.07 |
2.25 |
The ratios in the current year have improved
compared to the previous year, because of decrease in average inventory level in
comparison to cost of goods sold. |
| Interest coverage ratio |
11.25 |
7.15 |
57.32 |
Interest coverage ratio was improved due to
reduction in borrowing. |
| Current ratio - times |
1.50 |
1.31 |
14.50 |
Overall the trade receivables and trade
payables of the Company has increased owing to the BS VI pricing premium. |
| Debt equity ratio |
0.08 |
0.14 |
42.86 |
Debt equity ratio has improved due to
reduction in borrowing. |
| Operating Profit margin (%) |
5.83 |
1.65 |
253.33 |
The ratios in the current year have improved
compared to the previous year, primarily reflecting better operational performance and
reduction in borrowing and extra ordinary gain on sale of leasehold land. |
| Net Profit margin (%) |
4.16 |
1.22 |
240.98 |
The ratios in the current year have improved
compared to the previous year, primarily reflecting better operational performance and
reduction in borrowing and extra ordinary gain on sale of leasehold land. |
| Return on net worth (%) |
16.74 |
6.18 |
170.87 |
The ratios in the current year have improved
compared to the previous year, primarily reflecting better operational performance and
reduction in borrowing and extra ordinary gain on sale of leasehold land. |
DEVELOPMENTS AT OUR SUBSIDIARY
In the Financial year 2018-19 your Company took majority stake in
Indutch Composites Technology Private Limited. The purpose of this acquisition was
twofold, first, to diversify the risks in the present business. Second, to enter an area
of huge market potential. India is just starting to realize the benefits of the use of
composites as a material and in the coming years, its use across sectors will increase.
Today the company is the leader in the country for windmill blades and tools.
In the past four years the company has grown four folds to touch a
turnover of four hundred Crore rupees. There is huge potential for growth in this
business.
HUMAN RESOURSE DEVELOPMENT
The Company has always considered its employees an important
stakeholder for its success, and its vision statement reflects that. We are committed to
creating a fair, inclusive, and collaborative work environment where all the employees can
learn, develop, and achieve their full potential. As an innovation and people driven
Company, our success is driven by the success and satisfaction of our employees. A diverse
workforce brings together a wide range of perspectives, ideas and experiences leading to
enhanced innovation, and creativity in problem solving and decision-making processes. At
MAIL, we onboard talent and nurture their growth through regular training and other
knowledge enhancing and skill upgradation mechanisms. Raising employees involvement
in the decision making process and grooming them for leadership positions has been an
ongoing process.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
We have a robust internal control system corresponding to our size and
operating structure. The Internal Control System is integrated with our financial and
operating systems which directs in a more effective manner. Your Company has deployed an
Enterprise Resource Planning ("ERP") system based on SAP platform enabling a
high degree of system-based checks and controls ensuring protection of its assets and
interests. The governance risk and compliance framework further ensure that internal
controls are effective and complied with. The audit findings and managements
resolution plans are reported on a quarterly basis to the Audit Committee by the internal
auditor. The internal auditor of your Company also reports to the Audit Committee in
respect of adequacy of internal control systems and weaknesses, if any. Furthermore, the
statutory auditor reports on the adequacy and effectiveness of the internal financial
controls in respect of financial reporting.
Your Company has appointed reputed firm of Chartered Accountants for
internal audit functions consisting of experienced and professionally qualified team. The
Internal Auditor reports directly to the Board through Audit Committee. The internal
auditor has covered the area of internal financial Controls, reconciliation of GST inputs,
Checking of TDS compliances and GST compliances. The Audit Committee reviews the adequacy
and effectiveness of the Companys internal control environment and monitors the
implementation of audit recommendations.
OPPORTUNITIES & THREATS OPPORTUNITIES
India, as an emerging economy, is at the cusp of exponential growth in
various sectors. While some sectors, like the automotive sector, are seeing paradigm
shifts in their products. Sectors like electronics and other areas linked to the digital
wave, are witnessing huge strides in growth.
The Company has a strong mechanism to anticipate and manage risks. The
Companys robust systems, processes, standards, code of conduct, organisational
structure, and appropriate review mechanisms enable it to conduct its business and
actively monitor, manage, and mitigate potential risks.
Your Company is looking at opportunities in both, the fast-changing
automotive sector and other upcoming sectors. With the maturing of the business
environment and the financial sector, there are many organic and inorganic opportunities
that the company is looking at.
THREATS
High energy cost, labour cost and increased of price of raw material
which may lead to increase the carrying cost and working capital interest cost, are the
major constraint for the Company.
The automotive industry is subject to environmental and other
regulations. Therefore, any adverse impact on the industry in general and the
Companys customers due to any change in such rules can affect its business. Further,
there has been a gradual shift in the industry from pure ICE-dependent vehicles. An
acceleration in this trend will adversely affect the ICE- dependent business of the
Company. The auto segment is seeing a paradigm shift with the introduction of electric
mobility. This does pose a threat to the Company, like many in the industry. Munjal Auto
is closely monitoring the developments.
We are working on getting business from our existing customers, which
will not be affected by electrification, as well as new businesses. We are also looking at
newer sectors to enter into, like our subsidiary Indutch Composites Technology Private
Limited.
RISK AND CONCERNS
Risk, which is the manifestation of business uncertainty affecting
corporate performance and prospects, is an integral part of business. The Company follows
a well-defined and exhaustive risk management process, which is integrated with its
operations. This enables the Company to identify, categorise and prioritise operational,
financial and strategic business risks. To address the identified risks, the Company
continues to spend significant time, effort and human resources to manage and mitigate
such risks.
The Company has a well-established risk management policy and
procedures based on which risks are identified and assessed across its business units and
operations. To manage and mitigate the risks, mitigation plans are embedded in the various
initiatives that the management has already executed. These plans are reviewed by the Risk
Management Committee of the Company. For better mitigation of Risk, the Company has made a
Risk Management Committee. The Committee reviews the concerned risks. The Company reviews
the effectiveness of the mitigation strategies and their implementation process.
CAUTIONARY STATEMENT
Certain statements in the Management Discussion and Analysis Report
describing the Companys objectives, projections, estimates, expectations or
predictions may be "forward looking statements" within the meaning of applicable
securities laws and regulations. Actual results could differ from those expressed or
implied. Important factors that could make a difference to the Companys operations
include raw material availability and prices, cyclical demand and pricing in the markets,
exchange rate variations, global economic, social & demographic factors, changes in
Government regulations, tax regimes, economic developments within India and the countries
in which the Company conducts business and other incidental factors.
For and on behalf of the Board of Directors Munjal Auto Industries
Limited
Sudhir Kumar Munjal Date : May 23, 2023 Chairman & Managing
Director Place : Vadodara DIN : 00084080
Conservation of energy, research and development, technology
absorption, foreign exchange earnings and outgo [Particulars pursuant to the Companies
(Accounts) Rules, 2014]
A. Conservation of Energy
Your Company is committed to sustainable business practices by
contributing to environment protection and considers energy conservation as one of the
strong pillars of preserving natural resources. Your Company has taken various initiatives
as listed below, for energy conservation and preserving natural resources:
- Programs for improving energy, efficiency and energy productivity
across all operations;
- Rainwater harvesting, reduce usage, reuse and recycle water;
- Domestic sewage treatment and recycling facilities are a part of
design in all its units towards becoming zero water discharge;
- Creating awareness and promote sustainability amongst stakeholders.
The Management is pursuing energy conservation with considerable focus
and commitment. Effective use of energy, particularly in the hard core manufacturing
processes of the Company. Optimal utilization of various energy resources like power, fuel
and oil is ensured by ongoing measures/steps that improve power factor and other
consumption.
B. Technical Absorption
Since, the Company has not imported technology; the Company has no
information to offer in respect of Technology Absorption.
C. Foreign Exchange Earnings and outgo
Foreign Exchange earnings and outgo during the year under review are as
follows:
(Amount in Lakhs)
|
2022-23 |
2021-22 |
| (a) Foreign Exchange Earnings |
69.32 |
77.79 |
| (b) Foreign Exchange Outgo |
34.69 |
35.48 |
To,
The Members,
INDUTCH COMPOSITES TECHNOLOGY PRIVATE LIMITED
Plot No. (187/P &187/P/1/)/B/1, GIDC Industrial Estate, Waghodia
Vadodara, Gujarat-391760
We have conducted the secretarial audit of the compliance of applicable
statutory provisions and the adherence to good corporate practices by the Company.
Secretarial Audit was conducted in a manner that provided us a reasonable basis for
evaluating the corporate conducts/statutory compliances and expressing our opinion
thereon. Based on our verification of the INDUTCH COMPOSITES TECHNOLOGY PRIVATE LIMITEDs
books, papers, minute books, forms and returns filed and other records maintained by the
Company and also the information provided by the Company, its officers, agents and
authorized representatives during the conduct of secretarial audit, we hereby report that
in our opinion, the Company has, during the audit period covering the financial year ended
on March 31, 2023 complied with the statutory provisions listed hereunder and also that
the Company has proper Board-processes and compliance-mechanism in place to the extent, in
the manner and subject to the reporting made hereinafter: We have examined the books,
papers, minutes books, forms and returns filed and other records maintained by the Company
for the financial year ended on March 31, 2023 according to the provisions of: (i) The
Companies Act, 2013 (‘the Act) and the rules made thereunder; (ii) The
Securities Contracts (Regulation) Act, 1956 (‘SCRA) and the rules made
thereunder; (iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed
thereunder; (iv) Foreign Exchange Management Act, 1999 and the rules and regulations made
thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and
External Commercial Borrowings; (v) The following Regulations and Guidelines prescribed
under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act): -a) The
Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011; b) The Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 1992; [Presently: The Securities and Exchange Board of India
(Prohibition of Insider Trading) Regulations, 2015.] c) The Securities and Exchange Board
of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; [Presently: The
Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements)
Regulations, 2018] d) The Securities and Exchange Board of India (Employee Stock Option
Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 [Presently: The Securities and
Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations,
2021] e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)
Regulations, 2008; (Repealed)[Presently: Securities and Exchange Board of India(Issue and
Listing of Non-Convertible Securities) Regulations, 2021] f) The Securities and Exchange
Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993
regarding the Companies Act and dealing with client; g) The Securities and Exchange Board
of India (Delisting of Equity Shares) Regulations, 2009; [Presently: The Securities and
Exchange Board of India (Delisting of Equity Shares) Regulations, 2021] h) The Securities
and Exchange Board of India (Buyback of Securities) Regulations, 1998 [Presently: The
Securities and Exchange Board of India (Buyback of Securities) Regulations, 2018] (vi)
Having regard to the products, processes and locations of the Company as also having
regard to the compliance system prevailing in the Company and on examination of the
relevant documents and records in pursuance thereof on test check basis, we further
report that the Company has compliance management system for the sector specific laws
specifically applicable to the Company as informed to us by the Company as follows:
(a) The Environment (Protection) Act, 1986
(b) The Air (Prevention and Control of Pollution) Act, 1981 (c) The
Water (Prevention and Control of Pollution) Act, 1974
(d) The Hazardous Wastes (Management and Handling and Transboundary
Movement) Rules, 1989 We have also examined compliance with the applicable clauses of the
following: i. Secretarial Standards issued by The Institute of Company Secretaries of
India. ii. The Listing Agreement entered into by the Company with the Stock Exchanges, if
applicable. [Including Securities and Exchange Board of India (Listing Obligations and
Disclosure Requirements) Regulations, 2015]
We further report that
The Board of Directors of the Company is duly constituted with proper
balance of Executive Directors, Non-Executive Directors and Independent Directors.
Adequate notice is given to all directors to schedule the Board
Meetings, agenda and detailed notes on agenda were sent at least seven days in advance,
and a system exists for seeking and obtaining further information and clarifications on
the agenda items before the meeting and for meaningful participation at the meeting.
Majority decision is carried through while the dissenting members
views are captured and recorded as part of the minutes.
We further report that there are adequate systems and processes in
the Company commensurate with the size and operations of the Company to monitor and ensure
compliance with applicable laws, rules, regulations and guidelines.
We further report (by way of information) thatduring the audit
period, the Company has: (a) The Company being unlisted-
1) The Securities and Exchange Board of India (Substantial Acquisition
of Shares and Takeovers) Regulations, 2011;
2) The Securities and Exchange Board of India (Prohibition of Insider
Trading) Regulations, 2015
3) The Securities and Exchange Board of India (Issue of Capital and
Disclosure Requirements) Regulations, 2018
4) Securities and Exchange Board of India (Issue and Listing of
Non-Convertible Securities) Regulations, 2021
5) The Securities and Exchange Board of India (Share Based Employee
Benefits and Sweat Equity) Regulations, 2021
6) The Securities and Exchange Board of India (Registrars to an Issue
and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with
client;
7) The Securities and Exchange Board of India (Delisting of Equity
Shares) Regulations, 2021
8) The Securities and Exchange Board of India (Buyback of Securities)
Regulations, 2018 were not applicable during the audit period.
(b) The members of the Company at their 13th Annual General
Meeting held on 15th September, 2022 passed Special Resolutions in respect of
approval to
- Revision in remuneration of as well as re-appointment of Shri Binayak
Rath (DIN: 02784819) as an Executive Director.
- Revision in remuneration of as well as re-appointment of Shri
Sathianarayanan Palaniappan (DIN: 02852765) as an Executive Director.
- Shifting of the Registered office of the Company from Vadodara to
Waghodia
- The Company is a subsidiary of Munjal Auto Industries Ltd. the Listed
Company.
- The members of the Company at their 13th Annual General
Meeting held on 14th September, 2022 appointed Mr. Naresh Kumar Chawla as
Independent Director and Ms. Avi Sabavala as Independent Women Director.
|
For Devesh Pathak & Associates |
|
Practising Company Secretaries |
|
CS Devesh A. Pathak |
|
Sole Proprietor |
| Date : 22.05.2023 |
FCS No.4559 CP No.: 2306 |
| Place : Vadodara |
UDIN: F004559E000347528 |
To,
The Members,
INDUTCH COMPOSITES TECHNOLOGY PRIVATE LIMITED Plot No. (187/P
&187/P/1/)/B/1, GIDC Industrial Estate, Waghodia Vadodara, Gujarat-391760
Ref: Secretarial Audit Report dated May 22, 2023 pursuant to Section
204(1) of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014
1. Maintenance of secretarial records is the responsibility of
management of the Company. Our responsibility is to express an opinion on these
secretarial records based on our audit.
2. We have followed the audit practices and the processes as were
appropriate to obtain reasonable assurance about the correctness of the contents of the
secretarial records. The verification was done on the test basis to ensure that correct
facts are reflected in secretarial records. We believe that the process and the practices
we followed provided reasonable basis for our opinion.
3. We have not received an Independent Auditors Report and
Audited Financial Statement for the financial year ended on 31st March, 2023
and accordingly, we have relied upon the Unaudited Financial Statement and Management
Representation provided by the Company on the matter.
4. We have not verified the correctness and appropriateness of
financial records and books of Accounts of the Company and have relied upon the reports of
designated professionals including Statutory Auditors for the purpose. Wherever required,
we have obtained the Management representation about the compliance of laws, rules,
regulations and happenings of events etc.
5. The compliance of the provisions of corporate and other applicable
laws, rules, regulations, standards, is the responsibility of management. Our examination
was limited to the verification of procedures on test basis.
6. Secretarial Audit Report is neither an assurance as to the future
viability of theCompany nor of the efficacy or effectiveness with which the management has
conducted the affairs of the Company.
| For Devesh Pathak & Associates |
| Practising Company Secretaries |
| CS Devesh A. Pathak |
| Proprietor |
| FCS No.4559 |
| CP No.:2306 |
+91-9892691696
