Patels Airtemp (India) Ltd Management Discussions

The Managements perspective on performance of the Company for the financial year 2023-2024 in 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 2023-2024. 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.

ECONOMIC OUTLOOK

In fiscal 2023-2024, due to uncertain environment, the global economy showed strong resilience led by robust in advanced economies. The journey has been eventful, starting with supply chain disruptions in the aftermath of the pandemic and a considerable surge in in_ation, followed by globally synchronized monetary policy tightening. The global financial system has broadly withstood the unprecedented monetary tightening across the world with the resilience of emerging market economies, which were at the receiving end of pervious years of volatility, standing out.

The forecast for the world economy to continue growing at 3.2% during 2024 and 2025, at same pace in 2023. Advanced economies where growth is expected to slight acceleration from 1.6% in 2023 to 1.7% in 2024 and 1.8% in 2025 will be offset by economies from 4.3% in 2023 to 4.2% in the year 2024 and 2025. The financial year 2023-2024 remained a mixed bag of opportunities and challenges. Despite of facing headwind from the sluggish global market for last three years, the Indian economy continue to stand out as the fastest growing economies and there is every sign that this trend will continue in the near future. Policy and regulatory support and prudence have helped, as has the gradual reinvigoration of the private sector organizations in India. Favorable government policies, like the Production Linked Incentive (PLI) Scheme, alongside Indias increasing demands in construction, infrastructure, and global markets, continue to uplift the industry. In the engineering sector, demand is fueled by investments and capacity expansion in crucial areas such as power, infrastructure, mining, oil, as well as in sectors like general manufacturing, automotive, process industries, and consumer goods.

The interim Budget for 2024-2025 has projected an accelerated reduction of fiscal deficit of GDP in 2024-2025, while continuing its focus on capital expenditure. The finance ministry has projected India to become third-largest economy in the global market by 2027 fifth largest currently. Indias appeal as a destination for investments has grown stronger and more sustainable because of the current period of global unpredictability and volatility, and the record amounts of money raised by India-focused funds which are evidence of investor faith in the "Invest in India" narrative.

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 delivery ability, The Company could always offer and deliver something extra to their clients, including ease of one-stop solutions.

The manufacturing facilities in India are located in Gujarat at Rakanpur, Dist: Gandhinagar and Dudhai, Dist: Kadi. During the year under review the state in both units worked diligently towards meet its highest ever turnover. Despite of mixed bag of opportunities and challenges, strong domestic demand and global geopolitical uncertainty the Company able to achieve considerable improvements across the targets and achieved its highest ever turnover of 37,076.17 Lakhs during the financial year even in highly cut-thought competition and the prevailing market conditions.

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 2023 to March 2024, in respect of the Company.

Against the backdrop of domestic economic resurgence amidst at world level volatility, the Company has recorded a healthy performance across its business, spread across geographies.

The Company has earned total revenue from operations of 37076.17 Lakhs during the year ended on 31^st March, 2024 as against 28147.85 Lakhs earned during the previous year ended on 31^st March, 2023, an increase of 31.72 %. The Company has also earned other income of 198.94 Lakhs during the year under review as against 132.56 Lakhs earned during the previous year.

Product wise bifurcation of total revenue of the Company during the financial year 2023-2024:

Sr. No. Description	% as on 31/03/2024	% as on 31/03/2023
1 Heat Exchanger & Accessories	39.81	55.74
2 Air Cooled Heat Exchanger & Accessories	50.07	40.11
3 Other	10.12	4.15

Out of revenue from operations of 37076.17 Lakhs earned by the Company during the year under review,

36597.61 Lakhs represents sale of products (Domestic & Export), 72.01 Lakhs represents sale of Services (Processing Charges) and 406.55 Lakhs represents other operating revenue including export incentives. The Company has incurred total expenses of 35261.00 Lakhs during the year ended on 31^st March, 2024 as compared to 26744.61 Lakhs incurred during the previous year ended on 31^st March, 2023.

The Company has earned the Profit before Tax of 2014.11 Lakhs during the year ended on 31^st March, 2024 as compared to 1535.80 Lakhs earned during the previous year ended on 31^st March, 2023, an increase of 31.14 %.

The Company has earned Net Profit of 1469.45 Lakhs for the year ended on 31^st March, 2024 after making Provision for Tax Expenses of 544.66 Lakhs and other adjustments, as compared to Net Profit of 1118.81 Lakhs earned by the Company during the previous year ended on 31^st March, 2023, an increase of 31.34 %.

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. 57 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 51+ 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 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. In this regard, during the financial year 2023-24, the Company has further incurred additional capital expenditure to the extent of 86.26 Lacs for the said project mainly in Plant & Machinery and Factory Road. 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 about 312 Crores order on hand as on 1^st August, 2024. 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 staff 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 manpower is internal customer of the Company. If they are not happy, survival would be dificult. No employee union has ever been formed in the Company since inception which is a testament of how we keep each employee and their family member happy in the Company.

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. The Company organizes regular medical camps, awareness sessions, and life skills workshops for employees and works. These initiatives are aimed at fostering a healthy work life balance and nurturing an open and caring culture within the organization. The Company extending best possible medical facilities like health check-ups for employees and workers, regular Health Camps, Awareness Talks, Immunization camps at units.

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 31^st March, 2024, the Company has 187 employees including workers on the roll of the Company.

HEALTH, SAFETY & ENVIRONMENT

We at Patels Airtemp (India) Limited (the Company) are fully committed to provide Quality services with safe working place and clean environment to our employees, subcontractors, suppliers, and any other stakeholder involved as an integral part of our business philosophy and value system. We recognize that providing and integrating a sound environmental, health and safety program into our business is the key to our success.

The well – experienced members of our HSE segment are constantly and tirelessly working towards making our organization Accident – free. Some of the HSE protocols and procedures that are included in the system; O Comply with all pertinent environmental and safety laws, rules and regulations, not just because it is legally required, but also because we believe it is the responsible way to conduct our business. O Set HSE targets and goals annually to measure our performance and identify areas for improvement. O Conducting regular audits to identify potential workplace risks and hazards and its preventive measures.

O Employees and workers working at shop poor are provided with Personal Protective Equipments (PPEs) to protect themselves from potential hazards.

O Provide education and training to our employees and contractors to enhance their knowledge, skills and understanding to perform their responsibilities and duties safely. O Prevent environmental pollution and impact by conserving natural resources, improving e_ciency and reducing wastages in our processes.

O Conducting regular meetings with workers across the organization to ensure their consultation and participation is Effectively done.

O Ensure continual improvement of business processes through motivation and empowerment of employees.

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.