ANNEXURE-B TO DIRECTORS REPORT
The Managements perspective on performance of the Company for the
financial year 2022-2023 is given in this report. This report should be read along with
the Companys financial statements, the schedules and notes thereto and other
information included in this Annual Report for the financial year 2022-2023. The
Company financial statements have been prepared in accordance with Indian Accounting
Standards ("Ind AS") complying with requirements of the Companies Act, 2013 and
SEBI regulations as amended from time to time.
INDUSTRY STRUCTURE AND DEVELOPMENT
The Company is operating in single segment business namely engineering.
The Company is engaged in the manufacture and sale of extensive range of Heat Exchangers
such as Shell & Tube Type, Finned Tube Type and Air Cooled Heat Exchangers, Pressure
Vessels, Air-conditioning and Refrigeration equipments and Turnkey HVAC Projects in India
& marketing of equipments in India and outside India. All these products are supplied
to leading Industrial Sections like Power Projects, Refineries, Fertilizers, Cements,
Petrochemicals, Pharmaceuticals, Textile and Chemical Industries make them a single window
option for multiple products. With their design to deliver ability, the Company could
always offer and deliver something extra to their clients, including ease of one-stop
solutions.
With the highly innovative environment the Company able to achieve
considerable improvements across the targets and achieved turnover of 28147.85 Lakhs
during the financial year even in highly cut-thought competition and the prevailing market
conditions.
ECONOMIC OUTLOOK
The global economy has experienced numerous challenges over the course
of the past years, in the form of geopolitical tension and war between Russia and Ukraine,
elevated inflation and interest rates, financial sector stress and Spread of COVID-19
pandemic. Despite these, the global GDP growth is estimated to fall from 3.4% in 2022 to
2.8% in 2023.
The present geopolitical developments are leading to heightened
uncertainty and many countries are experiencing a situation of multi-decadal high
inflation. As a result, central banks across the world have resorted to synchronized
monetary policy tightening. The growing polarization amongst countries, monetary
imbalances, sticky inflation and a rising interest rate regime, only add to the
uncertainty overhang. However, the global economy is demonstrating resilience and
adaptability in the face of uncertainties, paving the way for a brighter future.
It is projected that the economy of India will be accelerate over the
next few years and as per IMF projection Indian GDP growth is expected to surpass the
other countries GDP growth, despite significant challenges in the global environment.
Growth of the Indian economy in the financial year 2023 was accelerated and same is
expected to continue its impressive growth trajectory in financial year 2024. With the
private capex expected to take a leadership role in job creation, the Indian economy is
poised for further expansion over the course of the upcoming years.
FINANCIAL AND OPERATIONAL PERFORMANCE
Your Company is engaging in single segment namely engineering business.
The Company has commenced its ever progressing journey with expertise of Design and
Manufacturing of process equipments. This discussion, therefore, covers the financial
results and other developments during April 2022 to March 2023, in respect of the Company.
Once again the financial year 2022-2023 was challenging year due to
geopolitical tension and war between Russia and Ukraine, elevated inflation and interest
rates, financial sector stress. Despite of the challenging situation in country, your
Company with the support of works, employees and management of the Company has been able
to effectively manage the operations till now with appropriate safety precautions and able
to achieve considerable improvements across the targets and achieved turnover during the
financial year. The Company has earned total revenue from operations of 28147.85 Lakhs
during the year ended on 31st March, 2023 as against 30321.97 Lakhs earned
during the previous year ended on 31st March, 2022. The Company has also earned
other income of 132.56 Lakhs during the year under review as against
112.47 Lakhs earned during the previous year.
Product wise bifurcation of total revenue of the Company during the
financial year 2022-2023:
| Sr. No. Description |
% as on 31/03/2023 |
% as on 31/03/2022 |
| 1 Heat Exchanger & Accessories |
55.74 |
26.96 |
| 2 Air Cooled Heat Exchanger & Accessories |
40.11 |
62.78 |
| 3 Others |
4.15 |
10.26 |
Out of the revenue from operations of 28147.85 Lakhs earned by the
Company during the year under review, 27784.36 Lakhs represents sale of products
(Domestic & Export), 163.60 Lakhs represents sale of Services (Processing Charges)
and 199.90 Lakhs represents other operating revenue including export incentives.
The Company has incurred total expenses of 26744.61 Lakhs during the
year ended on 31st March, 2023 as compared to 28751.01 Lakhs incurred during
the previous year ended on 31st March, 2022.
The Company has earned the Profit before Tax of 1535.80 Lakhs during
the year ended on 31st March, 2023 as compared to 1683.43 Lakhs earned during
the previous year ended on 31st March, 2022.
The Company has earned Net Profit of 1118.81 Lakhs for the year ended
on 31st March, 2023 after making Provision for Tax Expenses of 416.99 Lakhs
and other adjustments, as compared to Net Profit of 1240.12 Lakhs earned by the Company
during the previous year ended on 31st March, 2022.
FINANCIAL RATIOS
Pursuant to Regulation 34 of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, the details of the key financial ratios of the
Company and comparison to previous year has been provided in Note No. 56 to standalone
financial statements of the Company.
PERFORMANCE OF PRODUCT
Along with development of product design and product manufacturing
application, the Company in its tenure of 50+ years continuously upgraded quality and
product system by acquiring worlds most recognized system like ISO 9001:2015, ISO
14001:2015, ISO 45001:2018 and ASME (U2, U, S-Stamps). The Company is having Quality
Management System as per ISO 9001-2015 certification from TUV-SUD and recently received
Certificate for Environment Management System as per ISO 14001:2015 and Occupational
Health and Safety (OH&S) Management System as per ISO 45001:2018 from TUV-NORD.
The Companys products have ASME (American Society of Mechanical
Engineers-USA) "U", "U2" and "S" Stamp authorization. The
Company is also having "NB" and "R" Stamp. The Company is also a
member of HTRI (Heat Transfer Research, Inc, U.S.A.) for updating Heat Transfer
Technology.
Due to "U"/ "U2"/ "S" Stamp
authorization, it is expected to improve the Quality of the products/equipment of the
Company and to achieve higher growth and profitability of the Company in future.
The Company has also licensed software of ANSYS, CREO, PVelite, Nozzle
Pro and TEKLA for product development.
FUTURE OUTLOOK
The engineering sector is the largest of the industrial sector in
India. Indias engineering sector is dividend in to two major segments – Heavy
Engineering and Light Engineering. The Heavy Engineering industry is one of the largest
sectors in the world. It produces machinery, capital goods and components and parts for
various industries.
In the interdependent world we live in an age of unpredictability. This
has disrupted the global supply chains and triggered an alarming spike in prices. The
consensus view is that prices of various commodities would remain elevated in the near
term. The opportunities for our company business remain positive for order booking
prospects. The strong growth movement in the short terms as well as long terms due to
continuing enquiries from current and new clients from Domestic and Export Market.
In respect of new Greenfield project set up by the Company in the year
2019-20 at Dudhai, Taluka. Kadi, Dist. Mehsana, Gujarat (Dudhai Unit), the Company has
constructed total four bays/shades with total covered area of 11,016 Sq. Mtrs., with total
capital outlay of around 24.00 crores.
With this, the Company has created additional infrastructure required
for the purpose of taking care of a part of the production process and primarily removed
the space constraints and the company is in a position to carry out the assembly
operations in a cost effective and efficient manner.
Your Company has confirmed orders of about 490 Crores on hand as on 1st
August, 2023. Your Directors are cautious and making untiring efforts so as not to
compromise on growth, quality, and profitability of the Company.
OPPORTUNITIES
With the expansion of infrastructure in Dudhai Unit there are number of
new opportunities are available to the Company to enhance the various products, enter into
new market and industry sectors both in the domestic and international market through
Export. Export in the developed countries like UK, USA, Canada & Singapore and other
countries like Nigeria, Indonesia, Zambia etc. is to be developed and it is expected to
provide large impetus to engineering exports to these countries after obtaining the ASME
"U"/ "U2"/ "S" Stamp Authorization. Your company is
preparing itself to meet the increased demand in the years to come through efficient
production management system which will enable to minimize the risk of raw materials price
fluctuations.
RISK FACTORS
As per the nature of our business, your Company often exposed to
various risks owing to the changing market and volatility external environment. As Risk is
an integral part of every business and your Company always tries to deliver superior
shareholder value by achieving an appropriate trade-off between risk and returns. Our risk
management strategy is based on a clear understanding of various risks i.e. operational
risk, marketing risk involved, systematic risk assessment and taking steps to overcome
risks and continuous monitoring.
The industry is facing stifi competition from big players who are
producing on large scale production and have the advantage of economies in cost, facing
challenges from cheaper imports and the industry is also facing risks from unorganized
sector particularly from the marketing in the state and nearby states which have major
thrust on Air-conditioning and Refrigerator parts. However, Your Company does not foresee
any risk due to its concentration on quality commitment for better products and prompt
after sales and service. The Government of Indias measures to curb cheaper imports
imposing anti dumping duties and other restrictions will give much needed relief to the
domestic industry.
QUALITY CONTROL
The Company features its achievements to adherence to strict quality
standards. This has been achieved through our efforts to strike the balance between
resources and technology to develop products at same level in excellence with
international standards. The quality standard is taken care from the initial stage of
production to ensure high end product quality.
INTERNAL CONTROL SYSTEM
The Company has adequate and effective internal control system in
operation commensurate with the size and nature of its business for enduring efficiency of
operation and protection of Companys assets. Our internal control system ensures
that all business transactions are recorded in a timely manner, resources are utilized
effectively and our assets are safeguarded. Internal Audit is conducted by experienced
Chartered Accountants in close coordination with companys Accounts and other
departments of the Company. The Audit Committee formed by the company review on periodical
basis the compliance with the Companys policies, procedures and prevailing laws.
The system is supported by documents policies, guidelines and
procedures to monitor business and operational performance which are aimed at ensuring
business integrity and promoting operational efficiency.
INDUSTRIAL RELATION & HUMAN RESOURCES
The Company believes that the Company future will grow when its
employees and works are grows. Human Capital is true assets for smooth functioning of
business activities and greatest tool for shaping the future growth of Company. To praise
the sophisticated production process, we have a team of experienced workers who are
skilled and trained to get best out of it. Regular orientation programs are being
conducted by the Company wherein workers are directly exposed to the experts, which keep
them with the latest technology and development.
The Companys philosophy is to provide to its employees friendly
working environment and a performance oriented work culture. To enrich the skills of
employees and enrich their experience, the Company arranges, Practical Training Courses by
Internal and External Faculties. Due to the employees friendly working environment,
performance oriented work and performance appraisal on yearly basses, it attract and
retain the best employees in the Company. As on 31st March, 2023, the Company
has 236 employees including workers on the roll of the Company.
CAUTIONARY STATEMENT
The statement given in this report, describing the Companys
objectives, estimates and expectations and future plans may contribute towards forward
looking statement within the meaning of applicable laws and / or regulations. Actual
performance may differ materially from those either expressed or implied. Some statements
in this discussion describing the projections, estimates, expectations or outlook may be
forward looking. Actual results may, however, differ materially from those stated on
account of various factors such as changes in government regulations, tax regimes,
economic developments, exchange rates and interest rates fluctuations, impact of
competition, demand and supply constraints.
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