The Objective of this Report is to convey the Managements perspective on the external
environment and Automotive Industry, as well as Strategy, Operating and Financial
Performance, Material Developments in Human Resources and Industrial Relations, Risks and
Opportunities and Internal Control Systems and their adequacy in the Company, during the
Financial Year 2022-2023. This should be read in conjunction with the Companys Financial
Statements, the Schedules, and Notes thereto and other information included elsewhere in
this Report and Annual Accounts 2022-2023. The Companys Financial Statements have been
prepared in accordance with the Accounting Principles generally accepted in India,
including the Indian Accounting Standards specified under Section 133 of the Companies
Act, 2013, read amended, and Regulations issued by the Securities and Exchange Board of
India, from time to time.
Global Economy Outlook
Global GDP growth rate in 2022 was 3.4% under the challenging geo-political environment
caused in the wake of the Russia-Ukraine war. The Central Banks hiking rates to control
inflation continues to have an adverse impact on the economic activities. Growth Rate in
2022 was dampened due to rapid spread of COVID-19 variants in China and the ongoing
Russia-Ukraine war. The concerted sanctions on Russia, which supplies around 10% of the
worlds energy, led to dampening growth and further straining of Supply Chain.
The war worsened the persistent inflation across developed economies and the growth
rate is projected to fall from 3.4% in 2022 to 2.8% in 2023.
Growth rate in 2023 in USA is expected to be 1.61%, while the Eurozone is expected to
remain strained at 0.8%. The energy shock, a result of the war in Ukraine, continues to
impact the economic activity in Europe. Chinas economy is set to rebound to 5.20% as
mobility and industrial activities pick up after lifting of pandemic restrictions;
long-term headwinds to growth include a shrinking population and slowing productivity
growth.
The factors that drove inflation in 2022 are already reversing. These include increase
in Commodity Prices, expansive Fiscal and Monetary Policy, and Supply Chain Disruptions.
Global inflation is expected to fall from 8.7% in 2022 to 7% in 2023 on the back of lower
commodity prices. Inflation has already peaked in the US and Europe in early 2023. It is
also declining in other major economies including Japan, China, and India. In the US,
Economic Growth is expected to be slower in 2023 given the tightening Monetary and Fiscal
Policy. Contrary to late 2022 estimates, the US will avoid a recession due to declining
supply chain stress. The threat of recession continues to loom over Europe as the wages
and consumer spending have fallen significantly. Elevated Natural Gas Prices are fueling
inflation and driving down purchasing power. The tightening of Monetary Policy by ECB and
Bank of England along with energy shock resulting from the Russia-Ukraine war will play a
key impact on the growth potential.
Indian Economy Outlook
Indias Gross Domestic Product grew by 7.2% in Financial Year 2022-2023 against 9.1%
expansion in previous Financial Year. Despite the growth rate slowdown, India remains
fastest growing large economy in the world. Key segments of GDP performed better than the
rest of the world. Agriculture rose by 4%, Mining was up by 4.6% and Manufacturing
increased by 1.3% in the Financial Year 2022-2023. At the same time, Electricity
generation was up by 9%, Construction segment was up by 10%, Trade, Hotels and
Transportation were up by 14%. Similarly, Financial Services and Public Administration
increased by 7.1%. Persistent Global High
Inflation and Global Growth headwinds have played a key role in slowing down the growth
rate for the country. In the Financial Year 2023-2024 we expect the GDP growth to further
slowdown to around 6% and we will still maintain worlds fastest growing large economy.
The manufacturing resurgence is key to take the growth to widespread depth in Indian
population. China and Europe can be key features for India to look out for in the coming
years to maintain sustained growth.
Automotive Industry Outlook
The Automotive Industry makes a significant contribution to the global economy. As per
SIAM Figures, the Industry produced a total of 259.32 Lakhs Vehicles in the Financial Year
2022-2023 as against 230.41 Lakhs Vehicles in the previous year, registering growth of
12.55%. The Production of Passenger Vehicles increased by 25.42%.
Passenger Vehicles Sales in the Financial Year 2022-2023 has recorded a growth of
nearly 27%. A total of 38.9 Lakhs Passenger Vehicles were sold during the Financial Year
2022-2023 as against 30.7 Lakhs in the previous Financial Year 2021-2022. The Commercial
Vehicle market is very near to its all-time highs achieved in the Financial Year 2018-2019
and we expect the Commercial Vehicles Industry to surpass the old benchmark in the
Financial Year 2023-2024.
Foreign companies such as Kia Motors and Volkswagen have adapted themselves to cater to
the large Indian middle-class population by dropping their traditional structure and
designs. This has allowed them to compete directly with domestic firms, making the sector
highly competitive.
Passenger Vehicle Exports from India rose 15% in Financial 2023 with Maruti Suzuki
India leading the segment with dispatches of over 2.53 Lakh Units. The Total Passenger
Vehicle Exports stood at 6.63 Lakhs Units in the Financial Year 2022-2023 as compared to
5.78 Lakhs Units in 2021-2022. The bright spot of Exports is the Passenger Vehicles
segment of the Automotive Industry. The Industry is facing headwinds of global slowdown
for other sectors, and we expect the Industry to see stability coming to 2/3 Wheel Exports
in the Financial Year 2023-2024. The key indicators from our global customers indicate the
lowering of Inventory and Demand stabilization coming to the market. Exports of Alloy
Wheel presents a long-term trend for the Company.
India overtakes Japan in Automotive Vehicle Production in the Financial Year 2022-2023.
In terms of production, Passenger Vehicles added 18% to the Production Number. Commercial
Vehicles constituted 3% of the Total Production Numbers. Coming to the value, the story is
very different.Passenger Vehicles added over half of the value at 58% while Commercial
Vehicles added up to 19%. This brings the Total Production Value to Rs.8.71 Lakh Crores.
Several factors have fueled the remarkable growth. Firstly, the Countrys burgeoning
middle class, rising disposable incomes and increasing aspiration for personal mobility
have propelled demand for vehicles. Additionally, favorable Government Policies, such as
the "Make in India" initiative, have played a pivotal role in attracting
investments and bolstering Domestic Manufacturing.
Company Overview
Recovery post Covid is a continuing strong and diversified to grow amid segment-wise
challenges of the Automotive Industry. The Financial Year 2022-2023 being tough for export
markets due to ongoing recessionary fears, the Domestic Market helped the Company to
overcome the pressure. The Improving Domestic Market Matrix ensured a double-digit Revenue
growth. The Company is expecting to maintain double-digit revenue growth with expectation
in the Exports Market Revenue. Domestic Markets are now balanced with a stable growth
outlook. The Alloy wheel Segment will remain capex heavy to meet the domestic as well as
export opportunities. This vertical remains a high growth opportunity area and will have
huge revenue accretion potential for your Company.
Opportunities
The Company is looking forward to increasing its global presence with a major focus on
Alloy Wheels. We are expanding our capacity to cater to this global opportunity and take
up a global market share in the coming years. The Global Automobile Market Growth will
remain a focus area and presents a huge opportunity for the Company to grow. The Alloy
Wheel Segment of the Company has the potential to grow at more than 15% volume growth each
year with export opportunity.
Threats
The global economic growth remains a big risk for the Industry. The rising Interest
Rates globally will surely slow down the economic activity around the world. The
sentimental impact of higher rates remains a big risk for consumption growth of the world.
An economic downturn or slowdown in the key markets may lead to a decrease in volumes and
capacity utilisation. Volatile Exchange Rates, Price Competition, disruption in supply
chain and fears of aggravation in Russia-Ukraine war are some of the threats. It may
increase the operating cost of running the business. An increase in the cost of key inputs
can impact the profitability of the Company.
Outlook
Aluminum is the Primary Raw Material for the Products of the Company and is a very
significant part of the Final Product Cost of Aluminum Wheel. Rising Prices continue to be
a reality and pose a challenge to the Inventory and Financial Management for the Company
in this competitive Auto-Component Sector.
Concerns of global economic slowdown, the impact of war in Ukraine and the Risks of
stagflation envisaging numerous market scenarios are pressing the need for Automotive
Industry players to be more vigilant and forward-looking.
COVID-19 has changed the dynamics of Supply Chain which is further influenced by the
burgeoning drive for a cleaner and sustainable environment. Factor of Global Growth has
become a key linkage between economies and the consumer sentiment. Global Growth is still
limping on weak wicket and manufacturing output is still shrinking for a large part of the
globe. The world economies are making a base after the crisis and will keep the growth
parameters for the Company in check, as the cross-border trade is suffering due to low
consumption. We are constantly de-risking ourselves by broadening our product reach and
extending our reach across the globe to avoid geographical slowdown risk. Top customer
concentration is a risk as more than 90% of Revenues come from Domestic Market Customers
and the Company is increasing its foot print in Export Markets by catering to wide ranges
of Segment and Customers.
The Foreign Currency movement also poses a risk to the Companys Performance as Global
Currencies swings are extreme due to various macro-issues persisting in the current
environment. This may act as a headwind for some time to come till the situation becomes
normal and volatility among Global Currency recedes to normalized levels.
Risks and Concerns
The Business of the Company is exposed to several internal and external risks. It also
has to deal with certain micro and macro-risks that affect the Companys Strategy
implementation. The Company have in place Robust Framework, Internal Processes, Systems
and Controls to monitor, manage, govern, mitigate risks and turning them into
opportunities for strengthening the position of the Company.
To mitigate the risk, the Company continues to strive to improve its Operational
Performance and develop new components, which are technologically superior and have an
edge over the competitors. While your Companys demand outlook is strong, our approach is
to remain vigilant to ensure that we are agile and evolve dynamically.
Financial Performance with respect to Operational Performance
The Company achieved the highest-ever Revenue in the Financial Year 2022-2023. Revenues
from Operations stood at Rs.18,862.88 Lakhs in the Financial Year 2022-2023 as compared to
Rs.12,559.67 Lakhs in the previous Financial Year 2021-2022. The growth was led by an
increase in Domestic Market volume across the segment of the Companys Portfolio. During
the Financial Year 2022-2023, the Company remained focused in reducing its leverage with
good cash accruals. The Company recorded EBIDTA and Profit After Tax (PAT) at Rs.794.58
Lakhs and Rs.735.91 Lakhs respectively. The Company is working towards higher returns on
Return on Equity and Return of Capital.
Internal Control Systems and their Adequacy
The Company has a robust Internal Control and Audit System to provide adequate
assurance regarding the effectiveness and efficiency of its systems and operations. The
Controls are commensurate to the needs of the Organisation given its size and complexity
of operations. The Standard Operating Procedures ensure compliance to local regulation and
statutes as applicable to the Company. The Company strictly ensures adherence to all the
Internal Control Policies and Procedures as well as compliance with all Regulatory
Guidelines. Further, the Audit Committee monitors the adequacy and effectiveness of
your Companys Internal Control Framework.
Material Development in Industrial Relations Front
Managing Human Resources effectivelyand efficiently plays a critical role in ensuring
that a work force delivers quality services. It also plays an important role in increasing
staff performance and productivity, enhancing the Companys competitive advantage, and
contributing directly to the Companys Goals. Your Company believes that growth without
Human Capital Development will be incomplete growth. It is attempting to match the Human
Capital Growth Improvement amid intense competition. Talent Retention has become an
increasingly vital tool for matching customer expectations and will drive the future
growth of the Company.
The Company is sensitive towards the EHS factor of Human Capital and is working
extensively towards the workers safety and happy mind. Several health and safety
initiatives have been introduced as part of a structured program to enhance the safety and
health of its workmen and other associates. Performance measurement and skill up gradation
programs are widely deployed within the Company. The Company is aggressively working
towards improving the well-being of employees and improving their health score.
The Company firmly believes the culture of meritocracy and working extensively towards
Employees training for enhancement and development of job skills. On-Job training along
with class room training is being taken up by each unit to ensure improvement in the
learning curve of the Employees. Various internal job rotations are also deployed for
enhancing the work culture and promoting the meritocracy.
The Company continues to maintain its track record of peaceful Industrial Relations.
Detail of number of employees and other material information is provided in Boards
Report.
Significant Changes in Key Financial Ratios
During the Financial Year 2022-2023, the Company focused on ProfitableBusiness,
Receivable and
Working Capital Management. With the support of employees across divisions and aided by
the rebound witnessed during the Financial Year, the Company could successfully increase
its Turnover, Profitability, and consequently reduce Working Capital utilization and
Interest outflow. The Company registered a profit Rs.710.43 Lakhs against Rs.345.98 Lakhs
in the previous year with a reasonable growth in Sales.
During the Financial Year 2022-2023, there was significantchange (i.e. change of 25% or
more as compared to the previous year) in the following Key Financial Ratios:
Particulars |
Financial Year 2022-2023 |
Financial Year 2021-2022 |
| Inventory Turnover |
0.01 |
0.06 |
| Trade Receivables Turnover |
0.49 |
0.17 |
| Current Ratio |
1.71 |
8.52 |
| Operating Profit Margin |
4.16 |
3.42 |
| Net Profit Margin |
3.77 |
2.75 |
Segment Reporting
The Company is engaged in the processing of semi-finished alloy wheels by rendering
value added services and other engineering services. The inherent nature of activities is
governed by the same set of risk and returns; hence it has been grouped under a Single
Segment. The said treatment is in accordance with the principle enunciated in the
Accounting Standard on Segment Reporting (AS-17).
Disclaimer
This Report contains certain statements that the Company believes and may be considered
as Forward-
Looking Statements. These Forward-Looking Statements may be identifiedby their use of
words like ‘plan,‘hope, ‘will, ‘expect, ‘aim or such similar
words or phrases. All such statements are subject to risks and uncertainties, which could
cause actual results to vary materially from those contemplated by the relevant
Forward-Looking Statements.
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