nrb industrial bearings ltd Management discussions

The Indian economy showed signs of recovery in FY 2022-23, with increased demand and the manufacturing sector operating at nearly full capacity. Domestic demand for all products, including engineering and industrial products, experienced growth during this period.

Economic reports indicate that the Indian economy has grown positively and substantially in 2022-23, following a contraction during the COVID-19 pandemic in 202021. Overall, industrial activities in the domestic market are thriving, although export business, particularly in Europe, has been fluctuating due to the ongoing war situation. The agriculture and allied sectors have remained stable and have shown sustainable growth in 2022-23.

For the fiscal year 2023-24, the Indian economy is estimated to grow at around 6%. However, maintaining a high growth trajectory presents a challenge due to uncertainties arising from the ongoing geopolitical crisis, which has led to a surge in global financial market volatility. It is important to note that the impact of these uncertainties is primarily limited to specific countries. The driving force behind industrial growth is Indias domestic demand, and the initiation of new infrastructure projects further boosts this demand. The Indian economy is well positioned to tackle the challenges of 2023-24 and continue its growth.

In FY 2022-23, NRB Industrial Bearings Limited focused on cost containment, optimising resource utilisation, and restructuring actions to address the changing demand environment. These efforts allowed us to provide the best value to our customers and achieve a growth rate of 16% during this period.

In the Indian bearing market, approximately 60% of the consumption is fulfilled through domestic production, while the remaining 40% is fulfilled through imports. Demand dynamics show that Original Equipment Manufacturers (OEMs) account for 60% of the demand, while the rest is driven by the aftermarket and exports.

The industrial segment relies heavily on domestically manufactured bearings, which are used in applications such as general machines and motors, electrical equipment (fans and appliances), and heavy industries. Indian-bearing manufacturers derive a significant share of their revenue from exports and the aftermarket business.

The growth in the OEM sector in the Indian market is a positive indication of the acceptability of Indian-made products in terms of their quality and performance, both domestically and globally. Effective supply chain management and a cost-effective approach are crucial for maintaining growth in the industrial segment. The global bearing market is mature, with dynamic market demand closely related to the engineering industry and capital goods.

Continuous upgrading of existing products to optimise performance, along with new product development, serves as the growth engine for engineering products. Offering comprehensive combined solutions and ensuring total ownership are critical for profitable growth. Research and Development (R&D) will play a vital role in developing new solutions and offering innovative bearing solutions to meet evolving market needs.

In conclusion, NRB Industrial Bearings Limited has capitalised on the recovering Indian economy and focused on cost containment and resource optimisation to achieve a growth rate of 16% in FY 2022-23. The company recognises the importance of supply chain management, cost-effectiveness, continuous product development, and innovation in maintaining growth in the industrial segment. By staying at the forefront of technological advancements and investing in R&D, we aim to provide high-quality bearing solutions that meet the demands of our customers.

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. 4.00. 00.000/- (Rupees Ninety Four Crore only) of 9.40.00. 000 preference shares of Rs. 10/- each.

During the year, the Company allotted 65,00,000 Cumulative Redeemable Non-Convertible Preference shares of a face value of Rs. 10/- each for an amount aggregating to Rs. 6,50,00,000/- (Rupees Six Crores Fifty Lakh only) to Mr. Devesh Singh Sahney (DIN: 00003956) Chairman and Managing Director on 31st March, 2023

Further, the Company approved the allotment of 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 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 financial 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, 2023 amounted to Rs. 5700.16, Retained Earnings of the Company for the financial year ended March 31, 2023 stood at Rs. (13456.91) and deemed capital contribution is Rs. 5919.68 lakhs.

3. Fixed Assets

During the year, we capitalized Rs. 84.60 lakhs to our gross block comprising Rs. 5.78 lakhs for Furniture &Fixture, Rs. 5 lakhs for Computer, Rs. 71.25 lakhs for Plant & Machinery and Rs. 2.57 lakhs for office equipments.

4. Deferred tax assets / liabilities

Deferred tax asset and liabilities primarily comprise deferred taxes on fixed 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. 2045.96 lakhs as at March 31, 2023 compared to Rs. 1842.45 lakhs as March 31,2022.

Debtors are at 24.78 % of revenues for the year ended March 31, 2023, compared to 26.05% as on March 31, 2022.

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, 2023	31st March, 2022
Capital advance	48.58	2.71
Security deposits	102.43	46.62
Total	151.01	49.33

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, 2023.

8. Liabilities

Long term Liabilities

(Rs. in Lakhs)

Particulars	31st March, 2023	31st March, 2022
Secured Term Loan	537.56	901.68
Other Loan	5333.07	4501.91
Total	5870.63	5403.59

Term Loan from Bank Secured:

(a) Rs. 102.05 lakhs (March 31, 2022 Rs. 166.54 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 & fixtures and other movables at its factory at Shendra (near Aurangabad). The working capital term loan is repayable in balance 21 equal monthly installments of Rs. 5.50 lakhs each till 7 December 2024 and carried interest rate of 7.5 % p.a. Rs. 98.77 lakhs (March 31, 2022 Rs. 98.62) 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 & fixtures and other movables at its factory at Shendra (near Aurangabad). The working capital term loan is repayable in 36 equal monthly instalments of Rs. 2.73 lakhs each till 7 December 2026 after end of moratorium period of 24 months and carries interest rate of 7.5 % p.a.

(b) Rs. 361.68 lakhs (March 31, 2022 Rs. 403.37) secured by first pari- pasu charge over Land and Building situated at Shendra, MIDC Aurangabad. The working capital term loan is repayable in remaining 63 monthly instalments Rs. 8.91 lakhs each till August 2028 and carries interest rate of 14 %.

c) Rs. 115.09 lakhs (March 31, 2022 Rs. 143.14) secured by hypothecation of vehicles. Out of these, the term loan of Rs. 126.49 lakhs (March 31, 2021 Rs. 126.49) carrying interest rate of 7.65 % is repayable in remaining 53 equal monthly instalments by August, 2026 and the term loan of Rs. 13.62 lakhs (March 31,2022 Rs. 16.65) carrying interest rate of 7.65 % is repayable in remaining 57 equal monthly instalments by December, 2026.

Term loan from others

(d) Rs. 13.41 lakhs (March 31, 2021 Rs. 23.53 lakhs) secured by hypothecation of vehicles. Out of these, the term loan of Rs. 3.24 lakhs (March 31, 2021 Rs. 10.54 lakhs) carrying interest rate of 8.63 % is repayable in remaining 5 equal monthly instalments by August, 2023, the term loan of Rs. 10.17 lakhs (March 31,2022 Rs. 12.81 lakhs) carrying interest rate of 8.21 % is repayable in remaining 32 equal monthly instalments by November, 2025. The term loan of Rs. Nil (March 31st , 2022 Rs. 0.18 Lakhs) carrying intrest rate of 8.82% is fully repaid in April, 2022.

(e) Rs. Nil (March 31, 2022 Rs. 268.02 lakhs) secured by first pari- pasu charge over Land and Building situated at Shendra, MIDC Aurangabad and first pari-pasu over Plant and Machinery situated at Shendra, MIDC Aurangabad and pledge of Nil shares (March 31, 2022 600,000 shares) of NRB Bearings Limited held by a director of the Company. The working capital term loan is fully paid in March 2023 and carries interest rate of 13 % .

(f) Rs. Nil lakhs (March 31, 2022 Rs. 62.91 lakhs) secured by second pari- pasu charge over Land and Building situated at Shendra, MIDC Aurangabad and second pari-pasu over Plant and Machinery situated at Shendra, MIDC Aurangabad and pledge of Nil shares (March 31, 2022 600,000 shares) of NRB Bearings Limited held by a director of the Company. The working capital term loan is fully paid in March 2023 and carries interest rate of 13 % .

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 terms of existing Redeemable Cumulative Non -Convertible Preference shares were changed w.e.f. February 15, 2018, the preference dividend rate is modified 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 NonConvertible 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.

Short term Liabilities

(Rs. In Lakhs)

Particulars	31st March, 2023	31st March, 2022
Current Maturities of Long Term Debt	153.43	264.45
Current Liabilities	105.60	92.61
Total	259.03	357.06

Other Payables includes - payables on purchase of fixed 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 financial year ended March 31, 2022 was Rs.55.34 Lakhs compared to Rs. 20.79 Lakhs for the financial year ended March 31, 2023.

Long term provisions for the previous financial year ended March 31, 2022 was Rs.28.65 Lakhs compared to Rs. 37.82 Lakhs for the financial year ended March 31, 2023.

10. Revenue from Operations

The classification of the Statement of Profit and Loss is as follows:

Particulars	For the Financial Year ended March 31, 2023	For the Financial Year ended March 31, 2022
Revenue from Operations	8072.74	6944.31
EBITA	551.37	695.07
Loss Before Tax	(1312.19)	(982.31)
Tax Expenses	-	-
Loss after Tax	(1312.19)	(982.31)
Other Comprehensive Income	30.99	17.07
Total Comprehensive Income	(1343.18)	(999.38)
Earnings Per Share	(5.42)	(4.05)

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

A safe workplace is an efficient workplace. It promotes physical and mental 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 at NIBL provides trainings to employees on the safety measures and has zero tolerance towards negligence provoking hazards accidents. There are regular programs conducted in order to literate employees at shop floor level and staff.

There are mock fire drills conducted so that employees are equipped to handle any kind of accidental situations. A safe working place enhances productivity and efficiency. 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 significantly impact productivity.

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.

IV. Human Resources

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 profitability 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 efficiency, 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 profits - We aim on achieving consistent profitable growth.

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

Offering a harassment-free workplace to all:

Your Company aims to have a discrimination-free workplace. Guidance on a harassment-free workplace is adopted in Companys Code of Conduct and the Companys Human Resource, Sexual Harassment and Affirmative 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 defined. 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 fire 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.

This years theme of the National Safety Week was "Our Aim - Zero Harm". The theme emphasizes the significance 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.

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, efficiency 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 significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore, including:

Sr. No.	Ratios	FY 2022-23	FY 2021-22	Explanation for significant change
a.	Debtors Turnover	3.97	3.80	Not applicable
b.	Inventory Turnover	1.48	1.30	Not applicable
c.	Interest Coverage Ratio	1.65	1.09	Overall Revenue has decreased by 25 % and several cost reduction measures taken has resulted in positive EBITDA
d.	Current Ratio	0.61	0.58	Not applicable
e.	Debt Equity Ratio	(8.28)	(26.60)	The debt has decreased in current year as compared to previous year. However, the shareholder equity has reduced due to losses for the year.
f.	Operating Profit Margin (%)	14%	9%	Overall Revenue has Increased by 17% and several cost reduction measures taken has resulted in positive EBITDA
g.	Net Profit Margin (%)	-17.01%	-14.15%	Not applicable