Precision Metaliks Ltd Management Discussions

Outlook

India has been one of the fastest-growing major economies in the world. The GDP Growth Rate has averaged around 6-7% per annum over the past few decades. Indias young and growing population is often seen as a potential demographic dividend, with a large workforce providing opportunities for economic growth and productivity gains, provided adequate employment opportunities and skill development measures are in place. The Indian Government has implemented various structural reforms to boost economic growth, including measures to improve ease of doing business, initiatives to attract Foreign Investment and Investments in Infrastructure. Indias rapidly expanding Digital Economy, driven by the proliferation of smartphones, increasing internet penetration, and government-led initiatives like Digital India, has contributed significantly to economic growth, innovation, and job creation. The outlook of the automobile industry in India has also witnessed significant growth and transformation driven by various factors such as rising income levels, urbanization, infrastructure development, and favorable Government Policies. Our Country is one of the largest Automobile Markets Globally, with a diverse consumer base comprising of both urban and rural populations. The growing middle class and increasing disposable incomes have fueled the demand for the Passenger Vehicles, Motorcycles, and Commercial Vehicles. The Governments initiative by introducing battery-swapping policy, expansion of Indian National Highways and adding advanced technologies including alternate fuel systems such as Compressed Natural Gas (CNG), Bharat Stage-VI Compliant Flex-Fuel Engines, Electronic Control Units (ECU) for safety, advanced driver assist systems, under the Production-Linked Incentives (PLI) scheme for Automobiles has attracted new investment and has further provided boost to the Industry. The introduction of Artificial Intelligence in the Automotive Industry helps to optimize the manufacturing processes, reduce costs and improve Supply Chain Management. The data from vehicles and sales can help model and regulate the Production Process with Real-time data.

Industry Structure and Development

The Automobile Industry has experienced significant growth and transformation over the past few decades, becoming one of the largest Automotive Markets Globally. The Indian Automobile Industry is segmented into various categories including Passenger Vehicles, Commercial Vehicles, Two-Wheelers, and Three-Wheelers. Passenger Vehicles consist of Cars, Utility Vehicles, and Vans, while Commercial Vehicles include Trucks, Buses, and other Utility Vehicles. Rapid urbanization, rising disposable incomes, and a growing middle class have fueled the demand for the Automobiles in India. Increasing urbanization due to infrastructure development has led to greater demand for personal mobility and contributed to the growth of the Passenger Vehicle Segment. The Governments "Make in India" initiative aims to boost domestic manufacturing across the sectors, including Automobiles, by promoting indigenous production and attracting Foreign Investment. The Government is also promoting Electric Mobility as part of its efforts to reduce pollution and dependence on fossil fuels. Incentives such as Subsidies, Tax Benefits, and incentives for manufacturing of the Electric Vehicles, have been introduced to encourage the adoption of the Electric Vehicles. Several Automakers are investing in Electric Vehicle Technology and launching EV Models in the Indian Market.

Opportunities and Threats

There are ample opportunities for growth, particularly in the Electric Vehicle Segment, where the Government is offering Incentives and Subsidies to promote adoption. Over the next decade, this will lead to newer verticals and opportunities for Auto Component Manufacturers. Despite advancements in Electric Vehicles, the majority of the Industry still relies on gasoline, which is subject to price volatility. The development of Smart Mobility Solutions, including Ride-sharing Services, Car Rentals and Mobility-as-a-Service (MaaS) Platforms, presents new avenues for innovation and investment. Despite challenges, a convergence of factors such as focus on improved vehicle performance and heightened safety standards is driving the adoption of new materials in Automotive Components. The Industry is committed to a greener, safer and more innovative future, embracing ECG measures for sustainable ecosystem. The Indian Automotive Sector is poised to rank number three globally, led by initiatives such as the PLI for Automobile and Auto Components.

India is emerging as the Global Auto Component Sourcing Hub due to its proximity to key Automotive Markets such as ASEAN, Europe, Japan and Korea. Incentives are applicable for determined sales of products manufactured in India for a period of five consecutive years. The Ministry of Heavy Industries has announced the extension of the tenure of the Production Linked Incentive (PLI) Scheme for Automobile and Auto Components by one year with partial amendments. Under the amended scheme, the Incentive will be applicable for a total of five consecutive Financial Years. Rising EV Startup Ecosystem, focus on localization and conducive Government Policies are acting as a booster to the EV Ecosystem.

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.

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, and disruption in Supply Chain 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.

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.

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 The Companys demand outlook is strong, our approach is to remain vigilant to ensure that we are agile and evolve dynamically.

Internal Control Systems

The Company has an adequate system of Internal Controls to ensure that transactions are properly authorized, recorded, and reported, apart from safeguarding its Assets. The Internal Control System is supplemented by well-documented Policies, Guidelines and Procedures and Reviews carried out by the Companys Internal Audit Function, which submits reports periodically to the Management and the Audit Committee of the Board. The Company strictly ensures adherence to all the Internal Control Policies and Procedures as well as compliance with all Regulatory Guidelines. The Company has a favorable work environment that motivates performance, customer focus and innovation while adhering to the highest degree of quality and integrity.

Industrial Relations

The Company believes that employees are key for our success, have immense knowledge and power of innovation. The Company aims to create an environment where every employee can contribute to the Companys performance, excel and grow in their respective jobs. Our focus is to recruit employees with right skills and talent, raise competency through training and development, recognize and reward leadership and performance. Several measures are implemented to retain the talent within the organisation. The workforce goes through a mandatory training plan including the Vision, Mission and the Companys Values, which forms a base for treating everybody with dignity and respect. To further strengthen and motivate our employees, several initiatives are taken on a continuous basis to foster teamwork, trust and communication across the organisation. Employees are encouraged to have a passion for excellence and focus on the customer with a performance goal of doing things right first time and every time. The Company provides challenging and fulfilling opportunities to maximize employee potential so that every employee excels and grows along with Companys growth. Health, Safety and Environment remains our top priority. Periodic audits are carried out both internally as well as through external agencies to identify gaps and to define action items for continuous improvement, ensuring a safe workplace for employees.

The Company is sensitive towards the 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 upgradation programs are widely deployed within the Company.

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 classroom 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.

Company Outlook

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.

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.

Financial Performance

The Financial Statements of the Company are in accordance with requirements of applicable Accounting Standards of India. The Management of the Company accepts the integrity and objectivity of these Financial Statements as well as the various estimates and judgments used therein.

The details of the Financial Performance of the Company are appearing in the Balance Sheet, Statement of Profit and Loss and Notes to the Financial Statements forming part of this Annual Report.

The Company has complied with all the provisions of the Accounting Standards in accordance with the Section 133 of the Companies Act, 2013.

Key Financial Ratios

During the Financial Year 2024-25, the Company focused on Business, Receivables and Working Capital Management.

Segment Reporting

The Company is primarily engaged in the business of manufacturing of Alloy Wheels. 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

Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Companys Objectives, Projections, Estimates and Expectations may constitute forward Looking Statements within the meaning of applicable Laws and Regulations. Actual results might differ materially from those either expressed or implied in the statement depending on the circumstances.