NRB Industrial Bearings Ltd Management Discussions

I. Outlook/ Business Overview

Indias economy is experiencing a robust upswing, with GDP growth reaching an impressive 8.2% in FY24. This surge, driven by a strong manufacturing sector, solidi es Indias position as the worlds fastest-growing major economy. While economists and the government anticipate continued high growth, some concerns remain, particularly regarding subdued private consumption, which could dampen overall economic activity.

The Indian bearing market presents a complex landscape. Domestic production ful ls roughly 60% of consumption, with imports accounting for the remaining 40%. Demand is primarily driven by Original Equipment Manufacturers (OEMs) at 60%, with the aftermarket and exports constituting the remaining share. However, Chinese bearings pose a signi cant challenge to domestic players and established European and Japanese multinational corporations (MNCs) due to their growing acceptance among end-users.

In FY 2023-24, NRB Industrial Bearings Limited (NIBL) navigated a dynamic market environment. The company implemented strategic cost-containment measures, optimised resource utilisation, and undertook restructuring initiatives to adapt to changing demand patterns.

The domestic business witnessed mixed results. Key segments like textiles, harvester combines, and mining underperformed, leading to production schedule adjustments and a contraction in market potential. Conversely, the company achieved positive growth in gearbox, material handling, and construction machinery segments. By focusing on acquiring new customers and increasing market share among existing major OEMs, NIBL was able to offset the negative impact of underperforming sectors.

As NRB Industrial Bearings Limited enters the new nancial year, the company prioritises three key focus areas:

New Product Development: Continuous innovation in product design and development will be crucial for maintaining a competitive edge.

Market Expansion: Exploring and entering new markets presents exciting growth opportunities.

People Skill Development: Investing in employee training and skill development will ensure NIBL has a highly quali ed workforce prepared for the future.

While FY 2023-24 presented challenges, NRB

Industrial Bearings Limiteds strategic decision-making has positioned the company for a promising FY 24-25. By capitalising on Indias economic growth, focusing on new product development, and expanding into new markets, NIBL is well-positioned to achieve sustainable success.

II. Financial Condition

1. Changes in Share Capital:

During the year under review, there was change in the share capital of the Company. The authorized share capital of the Company increased from Rs. 85,00,00,000/- (Rupees Eighty-Five Crores only) divided into 2,50,00,000 equity shares of Rs. 2/- each and 8,00,00,000 preference shares of Rs. 10/- each to Rs. 99,00,00,000/- (Rupees Ninety Nine Crore only) divided into Rs. 5,00,00,000/- (Rupees Five Crore only) of 2,50,00,000 equity share of Rs. 2/- each and Rs. 94,00,00,000/- (Rupees Ninety Four Crore only) of 9,40,00,000 preference shares of Rs. 10/- each.

During the year, the Company allotted 75,00,000 Cumulative Redeemable Non-Convertible Preference shares of a face value of Rs. 10/- each for an amount aggregating to Rs. 7,50,00,000/- (Rupees Seven Crores Fifty Lakh only) to Mr. Devesh Singh Sahney (DIN: 00003956) Chairman and Managing Director on 25th May, 2023

Details of Increase in the Authorized Share Capital and Issue and Allotment of Preference shares are stated in the notes to accounts of Financial Statements, forming part of this Annual Report.

During the nancial year other than aforesaid, the Company has neither issued any shares nor has granted stock options or sweat equity

2. Reserves and Surplus

The balance of Capital Reserve as at March 31, 2024 amounted to Rs. 5,700.16 lakhs, Retained Earnings of the Company for the nancial year ended March 31, 2024 stood at Rs.-16,216.86 lakhs and deemed capital contribution is Rs. 6,406.03 lakhs.

3. Fixed Assets

During the year, we capitalized Rs. 89.61 lakhs to our gross block comprising of Rs. 89.61 lakhs in Plant & Machinery.

4. Deferred tax assets / liabilities

Deferred tax asset and liabilities primarily comprise deferred taxes on xed assets, un-availed leave, trade receivables, accrued compensation to employees and other provisions which are not tax-deductible in the current year.

5. Trade receivables

Trade receivables amounted to Rs. 1424.11 lakhs as at March 31, 2024 compared to Rs. 2045.96 lakhs as March 31, 2023. Debtors are at 19.48 % of revenues for the year ended March 31, 2024, compared to 25.34% as on March 31,2023.

6. Cash and cash equivalents

The bank balances in India include both rupee accounts and foreign currency accounts.

7. Loans and advances and other non-current assets

The following tables give the details of our long-term and short-term loans, advances and other non-current Loans and advances

(Rs. in Lakhs)

Particulars	31st March, 2024	31st March, 2023
Capital advance	65.45	48.58
Security deposits	130.06	82.44
Total	195.51	131.02

Capital advances represent amount paid in advance on capital expenditure.

Non-current Investments

The Company had acquired 42,00,000 equity shares of Rs. 10/- each comprising 35% of paid-up capital in its associate viz. NRB-IBC Bearings Private Limited for the year ended December 31, 2013.

The Company had acquired 10,50,000 equity shares of Rs. 10/- each comprising 35% of paid-up capital in its associate viz. NIBL - Korta Engineering Private Limited for the year ended March 31, 2019.

Further theres no change for the year ended March 31, 2024.

8. Liabilities

Long term Liabilities

(Rs. in Lakhs)

Particulars	31st March, 2024	31st March, 2023
Secured Term Loan	461.29	537.57
Other Loan	6365.29	5333.06
Total	6826.58	5870.63

Term Loan from Bank

Secured:

(a) Rs. 44.54 lakhs (March 31, 2023 Rs. 102.05 lakhs) secured by second charge on all present and future stock and book debts of the Company and second pari pasu charge over immovable Property, plant and equipment (buildings), leasehold land of the Company and its movable plant & machinery, furniture & xtures and other movables at its factory at Shendra (near Aurangabad). The working capital term loan is repayable in balance 9 equal monthly installments of Rs. 5.50 lakhs each till 7 December 2024 and carried interest rate of 7.5 % p.a.

(b) Rs. 83.51 lakhs (March 31, 2023 Rs. 98.77) secured by second charge on all present and future stock and book debts of the Company and second pari pasu charge over immovable Property, plant and equipment (buildings), leasehold land of the Company and its movable plant & machinery, furniture & xtures and other movables at its factory at Shendra (near Aurangabad). The working capital term loan is repayable in 33 equal monthly instalments of Rs. 2.72 lakhs each till 7 December 2026 after end of moratorium period of 5 months and carries interest rate of 7.5 % p.a.

(c) Rs. 316.71 lakhs (March 31, 2023 Rs. 361.68) secured by rst pari- pasu charge over Land and Building situated at Shendra, MIDC Aurangabad. The working capital term loan is repayable in remaining 51 monthly instalments Rs. 8.90 lakhs each till June 27, 2028 and carries interest rate of 14 % p.a.

(d) Rs. 84.82 lakhs (March 31, 2023 Rs. 115.09) secured by hypothecation of vehicles. Out of these, the term loan of Rs. 74.45 lakhs (March 31, 2023 Rs. 101.46 lakhs) carrying interest rate of 7.65 % is repayable in remaining 29 equal monthly instalments by August, 2026 and the term loan of Rs. 10.37 lakhs (March 31, 2022 Rs. 13.63) carrying interest rate of 7.65 % is repayable in remaining 33 equal monthly instalments by December 5, 2026.

(e) Rs. 112.27 lakhs (March 31, 2023 Rs. NIL lakhs) secured by hypothecation of machineries purchased out of banks nance at its factory at Shendra (near Aurangabad) and personal guarantee of Promoter Director of the Company. The machinery term loan is repayable in 78 equal monthly instalments of Rs. 3.84 lakhs each till March 30, 2030 after end of balance moratorium period of 6 months and carries interest rate of 12.30 % p.a.

Term loan from others

(a) Rs. 7.21 lakhs (March 31, 2023 Rs. 13.41 lakhs) secured by hypothecation of vehicles. The entire term loan carrying interest rate of 8.21 % p.a. is repayable in remaining 20 equal monthly instalments by November 20, 2025.

Loans from related parties:

(g) 100 lakhs each 6 % Redeemable Cumulative Non - Convertible Preference shares of Rs. 10 each fully paid up were issued to a Promoter shareholder in March 2016 and in April 2016 with redemption at the end of 5 years from the date of issue. During the year ended March 31, 2018, the sterms of existing Redeemable Cumulative Non -Convertible Preference shares were changed w.e.f. February 15, 2018, the preference dividend rate is modi ed to 2 % and redemption term is changed to 10 years for above said preference shares.

200 lakhs 2 % Redeemable Cumulative Non - Convertible Preference shares of Rs. 10 each fully paid up were issued to a Promoter shareholder in February 2018 with redemption at the end of 10 years.

100 lakhs and 35 lakhs 2 % Redeemable Cumulative Non -Convertible Preference shares of Rs. 10 each fully paid up were issued to a Promoter shareholder in January 2019 and in March 2019 respectively with redemption at the end of 10 years.

50 lakhs, 15 lakhs, 150 lakhs and 50 lakhs 2 % Redeemable Cumulative Non -Convertible Preference shares of Rs. 10 each fully paid up were issued to a Promoter shareholder in June 2019, August 2019, December 2019 and in March 2020 respectively with redemption at the end of 10 years.

65 Lakhs 2% Redeemable Cumulative Non- Convertible Preference shares of Rs. 10 each fully paid up were issued to a Promoter shareholder in March 2023 with redemption at the end of 10 years.

75 lakhs 2 % Redeemable Cumulative Non-Convertible Preference shares of Rs. 10 each fully paid up were issued to a Promoter shareholder in March 2023 with redemption at the end of 10 years

(b) Pursuant to the members resolution passed dated November 29, 2019 for conversion of unsecured loan of a Promoter shareholder amounting to Rs. 1,400 lakhs into 2% Redeemable Cumulative Non- convertible Preference Shares of Rs. 10 each ("Preference Shares"), the Company, during the year ended March 31, 2023, sought to increase its authorized share capital from Rs. 85 Crore (Equity share capital Rs. 5 Crore and Preference share capital Rs. 80 Crore) to Rs. 99 Crore (Equity share capital Rs. 5 Crore and Preference share capital Rs. 94 Crore) by obtaining an approval from members via a resolution approved through a postal ballot dated March 20, 2023.

During the voting period for such postal ballot, the Scrutinizer invalidated the vote of a Promoter shareholder, who had initially voted against the resolution and later (during the voting period) communicated the decision to vote in favour of the said resolution. Accordingly, the Scrutinizer, in accordance with Clause 16.5.3 (d) of SS-2 ‘Secretarial Standard on General Meetings while counting the votes and declared that the resolution to increase the authorized share capital was passed by absolute majority (‘the decision). Basis such decision, unsecured loan of a Promoter shareholder has been converted into 2% Redeemable Cumulative Non-convertible Preference Shares by the Company.

Subsequently, the Scrutinizer received communication from another Promoter shareholder challenging the decision / result published by the Scrutinizer. In the event the said Promoter pursues and is successful in setting aside the Scrutinizers report then the same could result in certain modi cations to the above nancial results such as decrease in authorised share capital by Rs. 1,400 lakhs and its resultant impact on reclassi cation of borrowings from Non-Current Liabilities and Deemed capital contribution under Equity to Borrowings under Current Liabilities by equivalent amount and increase in the pro t for the period by approximately Rs. 25 lakhs. The Company is of the view, supported by legal opinions, that the Scrutinizers decision is appropriate and accordingly the resolution for increase in authorised capital and consequent conversion of unsecured Promoter loan to preference shares is valid. Accordingly, no adjustments have been made by management in the above nancial results.-

Short term Liabilities

(Rs. In Lakhs)

Other Payables includes payables on purchase of xed assets, statutory remittances (Contribution to PF, PT, Withholding Tax, GST, Excise Duty etc.), Advance received from customers, advance against assignment of certain Rights, Premium on call Spread.

9. Provisions

Short term provisions for the previous nancial year ended March 31, 2023 was Rs.20.79 Lakhs compared to Rs. 197.81 Lakhs for the nancial year ended March 31, 2024.

Long term provisions for the previous nancial year ended March 31, 2023 was Rs.37.82 Lakhs compared

Particulars	31st March, 2024	31st March, 2023
Current Maturities of
Long Term Debt	187.77	153.42
Current Liabilities	81.21	64.45
Total	268.98	217.87

to Rs. 84.21 Lakhs for the nancial year ended March 31, 2024.

10. Revenue from Operations

The classi cation of the Statement of Pro t and Loss is as follows: (Rs. In Lakhs)

Particulars	For the Financial Year ended March 31,	For the Financial Year ended March 31,
	2024	2023
Revenue from Operations	7311.15	8072.74
EBITDA	664.34	551.37
Loss Before Tax	(2616.79)	(1312.19)
Tax Expenses	-	-
Loss after Tax	(2616.79)	(1312.19)
Other Comprehensive Income	143.16	30.99
Total Comprehensive Income	(2759.95)	(1343.18)
Earnings Per Share	(10.80)	(5.42)

DETAILS FOR DIRECTORS REPORT

In the Human Resources Report you can explore how we motivate, engage and care for our talent. Meet our workforce and see how we develop the future of work at NIBL Group.

III. Environment, Health and Safety

At NIBL, we prioritize the physical and mental well-being of our employees as a cornerstone of operational ef ciency. Our robust safety measures and training programs ensure that our workplace is not only safe but also supportive of our employees health.

A safe workplace is an ef cient workplace. It promotes wellbeing of employees. When the proper safety protections are in place, employees feel safe doing their job, are more productive, are more likely to take personal accountability and be engaged in work. It prevents workplace accidents, injuries, and occupational illness, thereby ensuring the overall health and safety of employees.

We also organize health checkup for our employees as we believe work can be stressful. The stress can give rise to various diseases which eventually affect the persons performance at workplace and lays a negative effect on the organizations strength. Therefore, the health of the staff is always a priority at NIBL.

There are mock re drills conducted so that employees are equipped to handle any kind of accidental situations. A safe working place enhances productivity and ef ciency. When employees feel secure, they can focus on their tasks without unnecessary distractions or fear of injury. It also reduces the number of accidents, disruptions, and downtime caused by injuries, which can signi cantly impact productivity.

IV. Human Resources

Valuing Human Capital:

Since its inception, your Company has always viewed its employees as its greatest asset. We concentrate on making the most of the human resources that are at the disposal of the organization and enhance the performance of employees to achieve the organizations objectives. We try to keep the balance between employee needs and satisfaction and an organizations pro tability and capability to reach its objectives.

Your Company has always worked towards to be an ‘Employer of Choice by driving teams to focus on achieving the goals and work on continuous improvement. A positive work culture and strong teamwork is contributing to a harmonious and productive work environment. The company culture cultivates collaboration, productivity and satisfaction among its employees.

Your Company culture has achieved improved teamwork, increased productivity and ef ciency, enhanced job satisfaction and productive collaboration. And, most importantly, a positive workplace environment reduces stress in employees.

Core Values:

Core values are fundamental beliefs and principles that guide individuals, organizations, and societies in their actions and decision-making processes. These values represent the foundational principles upon which individuals and groups build their identity, culture, and relationships. We believe workplace values are the guiding principles to you about the way you work every employee of your company will be bringing into practice use these deeply held principles to choose between right and wrong ways of working, and also to take important decisions at work.

1. Flexibility and Adaptability We keep no boundaries, to meet our consumer needs.

2. MD at Work / Task Every employee is the owner of their task.

3. No compromise on Quality We deliver with zero defects.

4. Loyalty & Transparency between all stakeholders We commit loyalty.

5. Customer First in all actions We work on unmet needs of our customer.

6. Fun at Work We believe happy employees are the best employees.

7. Grow with pro ts We aim on achieving consistent pro table growth.

8. Keep it Simple Simplicity is what we believe in.

Offering a harassment-free workplace to all:

Policies and Training: Your Company aims to have a discrimination-free workplace. Guidance on a harassment-free workplace is adopted in Company‘s Code of Conduct and the Companys Human Resource, Sexual Harassment and Af rmative Action Policies. Creating a harassment-free workplace takes into account the commitment from both leadership and employees at all levels.

Creating a harassment-free workplace is crucial for fostering a safe and inclusive environment where all individuals can thrive and contribute to their fullest potential. To establish a harassment-free workplace, here are clear policies are de ned. Regular training sessions (classroom as well as e-learning) are conducted for all employees to raise awareness about harassment, its impact, and the responsibilities of each individual to prevent and address it. These compliance trainings are mandatory for all employees.

A zero-tolerance policy for harassment is established in the company which is also included in the Induction Training process.

Safety Governance Structure

Safety is of utmost importance. Your Company had organized Safety Week at our Shendra plant, wherein we provided re safety training to our employees and conducted safety mock drill. The employees participated enthusiastically in the competitions organized as a part of the Safety Week celebrations. The children of the employees also participated in the Slogan and poster competition.

This years theme of the National Safety Week was "Focus on Safety Leadership for ESG Excellence". The theme emphasizes the signi cance of protecting society as a whole and creating more opportunities to improve our safety culture. The goal of the safety week is to spread safety awareness amongst all the employees to make the workplace safer. The competitions are a motivation to people to make the workplace safer for all.

Equal opportunity to all

NIBL recognizes and values the differences in employee ‘backgrounds and skills and promotes equal access to employment and supply opportunities without discrimination. We agree not to discriminate against any employee or job applicant because of race, color, religion, national origin, sex, physical or mental disability, or age.

All the cases are evaluated objectively and fairly. Any alleged violation of the equal opportunity policies, will be investigated and, if found valid, acted upon.

Positive working environment:

Company emphasis and make all possible efforts to create a positive working environment for its employees. We believe in creating workplaces where there is trust, cooperation, safety, risk-taking support, accountability, and equity. Such environment encompasses a level of respect, empathy and overall understanding between colleagues.

Company arranges various employee engagement activities to bring them closer and making a great place to work. Engaged employees care about their work and about the performance of the company, and feel that their efforts make a difference. Employee engagement activities like competitions, celebration of national festivals are carried out. The weekly "Chai Pe Samwaad" awards the achievements of the team members, celebrates birthdays, and acts as a forum to bring together all functions to know the achievements and support required to meet the objectives.

No Child Labor Policy

The Company is committed to nd practical, meaningful and culturally appropriate responses to support the elimination of practices of employing child labor. The company endorses the need for appropriate initiatives at the workplace to completely eliminate such abuses. The company will not employ any child, below the age of 18 years, in any capacity in any industrial operation under its control either directly or through contract labor. The company has added a suitable clause in the agreement/ contract with contractors/vendors providing for non-employment of children.

V. Segment wise Performance

Your Company has a single reportable segment of Industrial Bearings as the primary business segment for the purposes of Accounting Standards-17. The assets and liabilities of the Company are all expended towards this business segment.

VI. Risks and concern:

The economic and business environment is fast evolving, and with the rapid transformation of technology and the impact of cultural changes, society and consumers are also transforming on multiple dimensions. Your Company is operating in an industry that faces price volatility in raw materials and is dependent on agricultural commodities that need to meet stringent quality standards and on natural resources where alternatives are not viable.

VII. Internal control systems and their adequacy:

The Company has in process vigilant process to monitor the internal control. The management has devised its Internal Control Systems to safeguard its assets, controlling costs, ef ciency in operations, compliance of statutes, and effective management of working Capital. These systems are designed keeping in mind the Business plans and overall growth of the company and its stakeholders.

VIII. Details of signi cant changes (i.e. change of 25% or more as compared to the immediately previous nancial year) in key nancial ratios, along with detailed explanations therefore, including:

Particulars	Numerator	Denominator	2023-24	2022-23	Difference	Remarks for variance more than 25%
a. Current Ratio	Current Assets	Current Liabilities	0.55	0.61	-9.84%	Not applicable
b. Debt Equity Ratio	Borrowings	Total Equity	(3.16)	(8.28)	-61.84%	Ratio has decreased on account of reduction in debt compared to previous year and also due to decreased equity on account of losses during the year.
c. Debt Service Coverage Ratio	Earning Available for Debt Service = Pro t after taxes + Non-cash operating expenses like depreciation and other amortizations + Finance Costs	Debt Service = Interest on borrowings+ Principal repayments	(1.17)	0.41	-385.37%	Ratio has decreased on account of loss incurred during the year and additional interest on preference shares issued during previous year and current year.
d. Return on Equity	Net Pro t After Tax	Average Shareholders Equity	1.05	1.47	-28.57%	Due to increase in losses for the year.
e. Inventory Turnover	Cost of Goods Sold	Average Inventory	1.28	1.48	-13.51%	Not applicable
f. Trade Receivable Turnover Ratio	Revenue from operations	Average Trade Receivable	4.21	3.97	6.05%	Not applicable
g. Trade Payables Turnover Ratio	Cost of Goods Sold and other expense	Average Trade Payable	2.32	1.81	28.18%	Ratio has increase on account of increase in expense during the year.
h. Net Capital Turnover Ratio	Revenue from Operations	Average Working Capital	(2.24)	(2.56)	-12.50%	Not applicable
I. Return on Capital Employed	Earnings before interest and Tax	Capital Employed = Tangible Net Worth + Total Borrowings + Deferred Tax Liability	(0.19)	(0.04)	375.00%	Due to increase in losses for the year.
j. Net Pro t Margin	Net Pro t After Tax	Revenue from Operations	(0.36)	(0.17)	110.41%	Due to increase in losses for the year.
k. Return on Investment	NA	NA	NA	NA	NA