MANAGEMENT DISCUSSION ANALYSIS
Forward looking statement -
The Management Discussion and Analysis of Financial Condition and Results of Operations
of the Company may contain statements that are forward-looking within the scope of
applicable securities laws and regulations. These forward-looking statements are based on
certain assumptions and expectations regarding future events.
The Company cannot guarantee the accuracy or realization of these assumptions and
expectations. The Company assumes no obligation to publicly amend, modify, or revise these
forward-looking statements based on subsequent developments, information, or events.
Actual results may materially differ from the expressed statements. Key factors that could
influence the Companys operations encompass changes in government regulations,
alterations in tax laws, domestic economic developments, and global considerations.
Financial Statement Preparation and Accounting Standards
The financial statements are prepared under the historical cost convention, utilizing
the accrual basis of accounting, and adhere to the provisions of the Companies Act, 2013
(the Act), while complying with the IND-AS Accounting Standards. The management of Nitiraj
Engineers Limited has exercised prudent judgment and utilized reasonable estimates while
preparing the financial statements. This approach ensures that the financial statements
truly and fairly represent the Companys financial condition and profit for the year.
This discussion concerning our financial condition and operational results should be
considered in conjunction with our audited consolidated financial statements and the
accompanying notes provided in the annual report. Unless context dictates otherwise, all
references herein to "we," "us," "our," "the
Company," and "Nitiraj" pertain to Nitiraj Engineers Ltd.
ECONOMIC OVERVIEW
Global Industry
The total size of the electronic weighing scale industry can vary depending on the
geographic region and market conditions. It encompasses a wide range of manufacturers,
suppliers, distributors, and service providers involved in the production and distribution
of electronic weighing scales for industrial applications.
The global market for electronic weighing scales has been experiencing steady growth
over the years due to factors such as increasing industrialization, automation in various
sectors, and the need for accurate and efficient weighing solutions. The market size is
influenced by factors such as demand from industries like manufacturing, logistics,
healthcare, and retail, as well as technological advancements and regulatory requirements.
A report by Market Research Future published in 2021 estimated the global electronic
weighing scale market to reach a value of approximately USD 4.9 billion by 2027, growing
at a compound annual growth rate (CAGR) of around 4.8% during the forecast period from
2021 to 2027.
Market Outlook for Electronic Weighing Scales
The valuation of the electronic weighing scale market share is projected to grow from
USD 3.35 Billion in 2017 to USD 4.57 Billion by 2023, with a compounded annual growth rate
of 5.54% over the assessment period. This growth is driven by the performance of various
segments within the electronic weighing scale market. Notably, the tabletop scales segment
is expected to be the fastest-growing, contributing significantly to the overall market
expansion. This segments growth is attributed to its lightweight nature,
cost-effectiveness, and user-friendly operation.
Electronic Weighing Scales: Definition and Applications
An electronic weighing scale is a device utilized to measure the weight of diverse
objects, spanning from delicate feathers to substantial loaded trucks. The device measures
weight and subsequently presents it in electronic format. These measurements are then
displayed on an LCD screen after undergoing proper processing. The applications of
electronic weighing machines extend across various sectors, encompassing retail, jewelry,
laboratory, healthcare, and diverse industrial domains.
The advantages associated with electronic weighing scales include their compactness,
ability to measure multiple loads, precision, and real-time processing and delivery of
data. These weighing scales offer notable benefits compared to traditional iron weights or
spring balances, providing enhanced convenience and accuracy in measurement.
In the context of our annual report, its essential to acknowledge the dynamic nature
of the market in which the Company operates. The projected growth and evolving preferences
within the electronic weighing scale market underscore the need for us to stay adaptable
and innovative in order to capitalize on emerging opportunities. Our strategic positioning
and commitment to quality and innovation uniquely position us to benefit from the growth
trends in this market. Top of Form
Electronic Weighing Scale Market Dynamics
Drivers:
The growth of the electronic weighing scale market is driven by several key factors.
Firstly, the escalating trend towards industrial automation serves as a significant
catalyst for market expansion. Secondly, the expanding utilization of electronic weighing
scales in retail and jewelry establishments contributes to market growth. Additionally,
the increasing economic activities and the critical need for precise weighing processes
further boost the demand for electronic weighing scales. The market benefits from
attributes like precision, reliability, portability, and durability, all of which enhance
sales and subsequently fuel industry growth. Technological advancements in the sector
empower consumers to make informed purchasing decisions based on feature and price
comparisons, further driving the expansion of the electronic weighing scale market.
Restraints:
While electronic weighing machines offer numerous advantages over traditional
alternatives such as TOLAS or spring balances, their higher cost presents a notable
restraint to market growth. REMOVE - Moreover, these machines require a constant power
source for operation and lack backup power options like batteries or cells. This
operational dependency on power availability could limit market growth. Maintenance and
servicing of electronic weighing scales at regular intervals incur high costs, acting as
another deterrent to the growth of the market.
Technology Analysis:
The sector is witnessing a surge in innovation. Leading market players are introducing
machines that enable users to get weighing data seamlessly over WiFi or by other means, so
that it can be processed further. Manufacturers are also striving to develop machines with
built-in batteries, similar to mobile phones, allowing industrial weighing scales to
function properly during office hours without continuous electricity supply. Advancements
are being made to create lighter and more portable versions of larger weight scales.
Regional Market Movement:
The electronic weighing scale industry is prominently active across six major global
regions: North America, South America, Asia Pacific, Europe, and the Middle East &
Africa. Among these, North America is poised to dominate the market due to increasing
demand for automated electronic measuring devices across industries and the presence of
skilled technical experts. Europe is also set to experience substantial growth, given the
concentration of major market players within the region. The Asia Pacific region is
expected to witness significant expansion, buoyed by cost-effective raw material
availability, especially in countries like India, China, and Japan. In the context of our
annual report, these market dynamics underscore the exciting opportunities and challenges
within the electronic weighing scale industry. Our strategic positioning and adaptability
remain crucial as we navigate these evolving trends to further enhance our companys
performance and growth.
Global Electronic Weighing Scale Industry Overview:
The electronic weighing scale industry has been witnessing steady growth globally due
to the increasing demand for accurate and efficient measurement solutions across various
sectors. The industry caters to diverse applications, including retail, industrial,
healthcare, logistics, and more. With technological advancements and the push for
automation, electronic weighing scales have become indispensable tools for ensuring
precision in weight measurement.
Key Factors Driving the Global Market:
Industrial Automation: The trend towards automation in industries has propelled the
demand for electronic weighing scales, especially in manufacturing, logistics, and
transportation, where accurate weight measurements are crucial for efficiency and
compliance.
Retail and Commercial Sectors: In the retail and commercial sectors, electronic
weighing scales play a pivotal role in ensuring accurate pricing and weight measurement of
products, contributing to customer satisfaction and regulatory compliance.
Healthcare and Laboratory Applications: Electronic weighing scales are extensively used
in healthcare settings for patient monitoring, medication dosing, and laboratory
measurements due to their accuracy and ease of use.
Advancements in Technology: Technological innovations have led to the development of
sophisticated electronic weighing scales with features like connectivity, data recording,
and integration with other systems, enhancing their utility across various industries.
Indian Electronic Weighing Scale Industry Overview:
In India, the electronic weighing scale industry has shown substantial growth driven by
economic development, urbanization, and increasing consumer awareness about accurate
measurements. The industry is characterized by a mix of local manufacturers and global
players offering a range of products to meet diverse market needs.
Key Factors Impacting the Indian Market:
Retail Expansion: Indias burgeoning retail sector, coupled with the implementation of
Goods and Services Tax (GST), has boosted the demand for electronic weighing scales to
ensure proper billing and compliance with regulations.
Manufacturing and Logistics: With the Make in India initiative and a focus on
enhancing manufacturing capabilities, electronic weighing scales are crucial for quality
control, inventory management, and logistics.
Healthcare and Agriculture: In India, electronic weighing scales find applications in
healthcare facilities, agriculture markets, and food production to ensure accurate
measurements and fair trade practices.
Government Regulations: Government regulations related to measurement standards and
consumer protection drive the adoption of certified electronic weighing scales in various
sectors.
In both the global and Indian contexts, the electronic weighing scale industry is
poised for continued growth due to technological advancements, industrialization, and the
need for accuracy in measurements across diverse applications. The industrys future will
likely see further integration with digital systems, connectivity, and data analytics to
enhance its utility and value proposition.
Indian Manufacturing Sector
The manufacturing sector has emerged as a high-growth area in India, propelled by
initiatives such as the Make in India program led by Prime Minister Shri. Narendra Modi.
This initiative seeks to establish India as a global manufacturing hub, creating worldwide
recognition for the Indian economy.
India possesses the potential tobecome a significant contributor to the global economy,
potentially adding over US$ 500 billion annually by the year 2030.
Child Development Initiatives
Addressing pediatric malnutrition has been a persistent national concern. The
Government of India (GOI) has launched various vertical health programs over the years,
but they have not consistently reached the intended beneficiaries. In 1974, India
formulated a comprehensive national policy for children. This policy led to the
establishment of the Integrated Child Development Services (ICDS) scheme a prestigious
national human resource development program.
Launched on October 2, 1975, in 33 blocks (4 rural, 18 urban, 11 tribal), the ICDS
scheme has progressively expanded over 25 years. Currently, it encompasses 5614 projects
(5103 central, 511 state) covering more than 5300 community development blocks and 300
urban slums. The program benefits over 60 million children under 6 years old, more than 10
million women aged 16 to 44, and 2 million lactating mothers. ICDS coverage includes
approximately 70 million individuals, around 7% of Indias total population. The schemes
primary focus remains rural areas, encompassing over 75% of the nations population, while
also prioritizing urban slums. Source:
https://www.ibef.org/industry/manufacturing-sector-india.aspx
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4925843/#:~:text=Over%20the%20last%2025%20years,ag
e%20and%202%20million%20lactating
About Nitiraj Engineers Ltd
Established in 1989, Nitiraj Engineers Ltd. stands as a prominent manufacturer within
the electronic weighing scale industry. The companys diverse product portfolio
encompasses Electronic Weighing Scales and Systems, Currency Counting Machines, Security
& Automation Products, and Electronic Fare Meters. These offerings cater to both
industrial and domestic sectors and are thoughtfully categorized based on their
applications and utilities, spanning Industrial, Commercial, Jewellery, Healthcare,
Household, and Automobile segments.
Specializations and Initiatives:
Nitiraj Engineers Ltd. supplies its machines to various state governments as part of
the Child Growth Monitoring Systems (CGMS) program. These advanced machines incorporate
cutting-edge technology support, facilitating data collection, plotting, management
information systems (MIS), and information dissemination.
State-of-the-Art Manufacturing Facility:
The companys new manufacturing facility, located in Dhule, Maharashtra, is a
sophisticated and state-of-the-art establishment. This facility is dedicated to continuous
research, stringent quality control, and consistent production. It boasts the capacity to
manufacture around six lakh scales annually.
Distribution and Brand Identity:
Under the brand name PHOENIX, Nitiraj Engineers Ltd. distributes its products through
a well-connected network of 20 branches spanning the states of Chhattisgarh, Maharashtra,
Odisha, Gujarat and Telangana. Additionally, the company collaborates with approximately
400 dealers across India and abroad. This widespread reach ensures effective accessibility
and service to customers.
Quality and Certifications:
The company places a strong emphasis on quality, holding an ISO 9001:2015
certification. With over one million customers, Nitiraj Engineers Ltd. consistently caters
to the evolving needs of its clientele. The companys adept team of qualified and
experienced engineers, equipped with modern facilities, is dedicated to designing and
developing cutting-edge electronic hardware and software.
Research and Development:
Nitiraj Engineers Ltd. boasts a well-equipped Research & Development Department,
situated at its corporate office in Dhule, Maharashtra. This department plays a pivotal
role in driving innovation, enabling the company to stay at the forefront of technological
advancements and industry trends.
Incorporating these key facets, Nitiraj Engineers Ltd. maintains its commitment to
excellence and innovation within the electronic weighing scale industry, aligning with its
mission to provide high-quality solutions to its diverse customer base.
FINANCIAL OVERVIEW
The Companys consolidated performance for the financial year ended March 31st, 2023,
is outlined below:
Total Revenue and Sales:
Total revenue from operations amounted to Rs. 46.08 crore for the year ending March 31,
2023, compared to Rs. 39.63 crore for the corresponding previous period, signifying an
increase of 16.28%. This growth can be attributed to a consistent influx of new orders
from the Government, as well as an upsurge in sales from both branch operations and
dealerships. These factors collectively contributed to the recovery in sales.
EBIDTA and Profitability:
The EBIDTA (earnings before interest, depreciation, and tax, excluding other income)
reached Rs. 3.54 crore for the fiscal year ending March 31, 2023, in contrast to Rs. 1.79
crore in the corresponding previous period. This represents an impressive growth of
98.19%. The significant boost in sales volume played a pivotal role in achieving economies
of scale, leading to this remarkable increase in EBIDTA. Notably, the EBITDA margins for
FY23 stood at 7.68%.
Net Profit and Margin:
The Net Profit for the year FY23 was negative Rs. 0.12 crore, compared to the negative
Rs. 3.59 crore in FY22, indicating a year-on-year decrease in losses by a substantial
96.68%. Its worth mentioning that the exceptional loss incurred during FY22, stemming
from the complete shutdown of the Parwanoo unit, had a significant impact on the
profitability. Consequently, the Net Profit margin for FY23 was negative 0.8%.
Earnings Per Share (EPS):
The Earnings Per Share (EPS) for the period stood at negative Rs. 0.36.
These financial results collectively underscore the Companys steadfast commitment to
growth and resilience, even in the face of challenging circumstances. The strategic influx
of orders, enhanced sales channels, and improved economies of scale have all contributed
to a notable improvement in key financial metrics. The Company remains dedicated to
optimizing its operations and enhancing its financial health in the coming years.
RESOURCES AND LIQUIDITY
As of March 31, 2023, the consolidated net worth of the Company stood at Rs. 67.58
crore. Furthermore, the cash and cash equivalents at the close of March 31, 2023, amounted
to Rs. 0.29 crore.
Segment-wise Business Performance
The Company operates across five expansive segments, namely:
Electronic Weighing Scales and Systems Electronic Currency Counting Machines and
Digital Fare Meters Home & Hotel Automation Mechanical Scales
This diversified product portfolio is tailored to serve an array of sectors,
encompassing:
Industrial Range Commercial Range Jewellery Range Healthcare Range Household Range
Automobile Range Home and Hotel
Through this strategic segmentation, the Company effectively addresses the distinct
needs of each sector, demonstrating its adaptability and commitment to providing
comprehensive solutions across multiple domains.
As on March 31, 2023, the consolidated net worth stood at Rs. 67.58 crore The cash and
cash equivalents at the end of March 31, 2023 were Rs. 0.29 crore
Revenue share of five broad segments are stated below:
| Name and Description of main products / services |
turnover of the Company |
| Electronic Weighing Scales & Systems |
84.89 % |
| Electronic Currency Counting Machines |
3.63 % |
| Home & Hotel Automation |
0.21 % |
| Mechanical Scales |
10.51 % |
| EMFR Balances |
0.76 % |
RISKS AND CONCERNS
Just like any business venture, the Company encounters both internal and external risks
in its day-to-day operations and its pursuit of long-term objectives. The Company has
developed a comprehensive policy and conducts dedicated risk workshops for each business
vertical and key support functions. These workshops facilitate the identification,
assessment, analysis, and appropriate mitigation of risks to a level acceptable within the
organizations risk appetite. Regular reviews of the risk registers are also conducted.
The Company is confronted by the following Risks and Concerns:
Credit Risk
To effectively manage credit exposure, Nitiraj has formulated a credit policy complete
with credit limit request and approval procedures. The Company conducts thorough research
on the financial health and potential of clients prior to engaging in project bids. A
meticulous and timely approach is maintained to ensure payments are collected in
accordance with schedules. The Company has streamlined its processes to establish a
focused and assertive receivables management system, ensuring prompt collections.
Interest Rate Risk
The Company has prudently managed its debt-equity ratio by employing a combination of
loans and internal cash accruals. Skillful management of working capital has also been
employed to minimize overall interest costs.
Competition Risk
Inherent in various industries, this risk arises due to increased market players vying
for a share. While competition is a norm, Nitiraj has effectively differentiated itself
through exceptional project execution, superior quality, and on-time delivery.
Technological investments and continuous workforce development keep the Company ahead of
the curve. The presence of a strong, steadfast client base consisting of both large and
mid-sized corporations further enhances the Companys resilience to this risk. The Company
counteracts this challenge through superior infrastructure, customer-centricity,
customized solutions, competitive pricing, rigorous project execution, prudent resource
management, and stringent cost controls. As a result, substantial impact from this risk is
not anticipated.
Input Cost Risk
Fluctuations in raw material prices, power availability, and other input costs could
potentially impact our profitability and cost efficiency. Risks of significant nature,
such as raw material price volatility and power supply reliability, demand meticulous
monitoring.
Liability Risk
This pertains to potential liabilities stemming from equipment damage, harm to life,
and third-party concerns that could adversely affect the Companys operations. The Company
addresses this risk by means of contractual obligations and comprehensive insurance
coverage.
OPPORTUNITIES
Considerable potential lies in marketing specialized weighing scales for Infant and
Childcare programs managed by Aanganwadis and other Government institutions.
The burgeoning retail and logistics sectors present heightened demand for weighing
scale systems. Increasing automation preferences within the financial sector offer growth
prospects for currency counting and detection machines.
THREATS
Competition from both local and multinational players. Risk related to successful
project execution. Evolving regulatory landscape. Fluctuations in input costs. Challenges
in attracting and retaining skilled human capital. Rapid technological advancements.
The Company remains committed to proactively managing these risks and capitalizing on
opportunities to ensure sustainable growth and value creation.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Company has meticulously established and implemented comprehensive internal control
systems to ensure the safeguarding of assets against unauthorized use or disposition.
These systems also ensure the proper authorization, recording, and accurate reporting of
all transactions. The Company has further introduced effective mechanisms to achieve the
highest level of operational efficiency, thereby optimizing resource utilization. This
encompasses diligent monitoring and compliance with all legal provisions, including the
Companies Act, 2013, Listing Agreement, directives from the Securities and Exchange Board
of India, labor laws, tax laws, and more. These systems also strive for enhanced financial
management and improved investment policies. A crucial outcome of these efforts is the
promotion of appropriate information flow to facilitate effective monitoring. The internal
audit system, complemented by a competent and independent Audit Committee of the Board of
Directors, ensures the formulation and implementation of corporate policies across
financial reporting, accounting, information security, project appraisal, and corporate
governance. This collective approach underscores the commitment to achieving superior
overall performance and operational excellence.
HUMAN RESOURCES
The Companys HR philosophy is rooted in the establishment of a high-performing
organization, wherein every individual is driven to reach their maximum potential. This
drive is geared towards both individual excellence and the attainment of departmental
objectives, all while consistently enhancing performance to fully harness the potential of
our personnel. As of March 31, 2023, the Company provides direct employment to 259
dedicated employees, in addition to 128 contractual employees. The Company maintains a
harmonious and satisfactory industrial relations environment, ensuring positive
interactions and collaborations between stakeholders.
OUTLOOK
The electronic weighing scale industry is currently experiencing robust growth,
primarily driven by the pervasive automation trend across various sectors. As companies
increasingly adopt automation practices, electronic weighing scales have gained preference
due to their accuracy and efficiency in measurement processes.
We are delighted to highlight that the Company has been the recipient of several
government subsidies. These subsidies are poised to contribute significantly to our
profitability, fortifying our financial position. Additionally, a noteworthy achievement
this year has been the establishment of a new manufacturing unit at Dadra and Nagar
Haveli. This unit, spanning approximately 5,000 square feet, marks a positive stride
forward in our operational capabilities.
Our strategic focus remains keenly directed towards our new analytical weighing
balances. We are committed to enhancing awareness and driving sales through our expansive
dealer and branch network. This concerted effort aligns with our objectives and positions
us to attain our predetermined targets.
In conclusion, we look forward to leveraging the momentum gained from industry growth,
government support, enhanced manufacturing capabilities, and strategic product focus to
further elevate our Companys performance. We are confident in our ability to navigate
challenges and seize opportunities, thereby contributing to our continued success and
growth in the upcoming periods.
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