rexnord electronics & controls ltd share price Management discussions



Financial year 2022-23 witnessed a mixed operating environment as it had a healthy business outlook while at the same time faced challenges around commodity price fluctuations, rupee depreciation and accelerated inflation rates.

In the backdrop of global challenges, India continued its strong growth with a rebound in private consumption and increase in government capital expenditure.

During the year, India became the worlds fifth largest economy and its GDP is estimated to grow at 6.8% in FY23 (IMF World Economic Outlook). India is expected to maintain leading growth in coming years. The consumer electrical and durables industry continues to perform well with demand expanding on the back of increasing penetration, urbanisation, electrification and higher share of spending for consumers.

The megatrends shaping the business landscape include consumers becoming more informed, demanding and aspirational. Internet of Things (IoT) and smart connected homes are on the rise with the younger population contributing to buying decisions in the home. There is a clear preference for brands of trust and reliability as well as those ensuring deep engagement with consumers using an omni-channel approach


The Electronic and Refrigeration industry grew substantially, however a large portion predicated on rise of raw material prices. Increase in commodity costs was effectively passed on to the consumers, resulting in cost effectiveness and increase in margins Shift from unorganised to organise and channel expansion helped the domestic business to register volume growth despite the inflationary deterrents. Today, more than financial challenges, leading businesses face environmental and social risks. The society at large is facing extreme conditions such as pandemic, unpredictable climate and unprecedented inflation. A fragmented recovery from the crisis created by the COVID-19 pandemic risks widening the global divides at a time when countries urgently need to collaborate to combat Climate Change. Under these circumstances, sustainability initiatives by the business world could become key to resiliency and long-term value.


A. Industry growth and under penetration: Electricals and consumer durables categories are still under penetrated and poised for strong growth on the back of increasing urbanisation and personal disposable income.

B. Increasing electrification: Government efforts towards enhanced power availability is continually increasing electrification in semi-urban and rural areas, along with stable electricity supply in urban areas. This has translated into better demand for electrical and consumer durable products in new and existing markets.

C. Infrastructure expansion: The governments strong focus on infrastructure expansion including highway construction, railway modernisation and airport additions is expected to create demand for electrical goods.

D. Favourable demographics: While the world is rapidly aging, Indias population is among the youngest globally. With a median age of less than 29 years and 67% of the population in the working age group of 15-64 years this is a key demographic dividend for India.

E. Exports: A sizeable global market is looking to diversify its supply chain in order to tide over any probable regional challenges or geopolitical issues. With a strong business environment and enhanced ease of doing business, India is emerging as a strong country and as a manufacturing alternative to other Asian countries.

F. Product Portfolio: With a strong full stack product portfolio across electricals, industrial consumer the Company is well-positioned to capitalise on a great opportunity to increase shelf space at the retail counter and share of wallet of the consumer. Alongside providing a natural hedge in case of an economic downturn, a complete product portfolio enhances the opportunity to cross sell with channel partners and final consumers.

G. Accelerated shift from unorganised to organised: A large portion of the consumer electrical market continues to be unorganised. However, increasing brand awareness, formalisation and aspirations, can accelerate the shift in consumer preference from unorganised to organised, which shall be beneficial for the key players.

Risk and Concerns

A. Economic slowdown: Slowdown in the Indian economy due to global developments could adversely impact growth in the short-term.

B. Commodity pressures: Sharp increase in commodity prices could lead to increase in cost of finished goods thereby impacting affordability and consumer sentiment.

C. Competitive intensity: Irrational market behaviour with increased competitive intensity could cause value erosion for the industry as a whole especially with the entry of new disruptive players with access to low cost capital and extended ability to sustain losses to capture market share. D. Power disruptions: Any impact on power distribution and electricity delivery can impact the demand for electrical products. Availability of stable and quality power supply continues to be an important factor for the industrys growth prospects.

E. Pandemic: Deterioration in supply chain and demand due to the COVID-19 pandemic or similar disruptions have emerged as a significant business risk.

F. Geopolitical crisis: Volatility in the commodity and foreign currency markets may impact raw material availability due to geopolitical challenges in different geographies around the world.


Performance was broad-based with each of our Product lines contributing to the growth. The quality and consistency of our results reflect our competitive edge and consumer affinity. Your Company continued to meet consumers needs and improve the consumer experience, making meaningful progress on the whole.

After three years of COVID-led disruptions, FY 2022-23 was in contrast a wholesome year. The year saw a very encouraging with both B2B and B2C demand momentum continuing from the previous year; however, commodity prices continue to add pressure and impact the B2C end markets. Despite shrinkages in consumer spending, your Company continued the growth trajectory with a strong product portfolio and brand. Rexnord continues to be a leader in this market segment. Continued commodity price increases asserted pressures on the margins as your Company took calibrated price increases, albeit not commensurate to the raw material cost increases. Margins in the fan prices were very volatile given sharp commodity price fluctuations.

A healthy balance sheet and strong cash flow generation provided us ample headroom to continue investing strategically in our growth.


Your Company maintain a constant focus on sharpening our competitive edge on all fronts operational efficiency, optimal use of assets, high level of automation and backward integration. Strong relationships with dealers, vendors and an effective governance framework have been the key to our enduring enterprise. An effective organisational culture, environment-friendly and socially responsible practices further help deliver holistic change to achieve long-term social and environmental sustainability.

The following strategies have been adopted in order to suppress competition:

1. Your Company continued its strategy of investing in the long-term growth drivers, including brand, omni-channel, innovation, digitisation, and talent. Our brands continue to command top-of-the-mind awareness and is trusted by our customers. Our omni-channel approach ensures that brand reaches out to a wide set of customers giving a seamless experience whether it is traditional channel or modern formats. True to our DNA of continuously innovating, we expanded our team of engineers who are working to boost capabilities and serving consumers even better.

2. We continue to ensure a great fusion of professional rigour and entrepreneurial mindset in our talent pool. I am glad to share that our success over the years has been deeply rooted in the human capital we have developed and nurtured at Rexnord.

3. Our focussed investments have supported us to deliver across cycles, navigating multiple macroeconomic disruptions. We envisage continuity in our approach to build a strong and durable foundation for the next phase of growth.

4. Strengthening Product and Brand positioning- Over the years, we have relentlessly invested in building our brand equity. This has significantly helped us in positioning the brand as an industrial leader. FY 2022-23 witnessed greater heights by the company achieving a remarkable gross sale vale (including GST) of 10000 lakhs signifying the we are here only to excel.

5. We are recognised for our high-quality products and manufacturing strength powered by deep innovation capabilities and sustainable practices. Regular and astute investments in manufacturing and R&D have enabled us to build a varied product line. Our constant endeavour is to sharpen our manufacturing edge on all fronts – quality, operational efficiency, optimal use of assets, high level of automation, and backward integration.

6. Marketing advantage: Showcasing our robust manufacturing infrastructure to channel partners and key customers serves as a marketing tool to enhance our brand recall. It boosts the confidence of the sales team and trade partners, assuring them of good quality, consistency, and technological superiority.


Rexnords International Business contributes approximately 17.20% of the Companys overall business. Our vision is to increase this contribution with accelerated growth in products including AC fans, DC and EC fans and Shaded Pole motors. We are presently supplying to more than 15 countries across the globe. During the past years, we have invested heavily on HR resources, products, and channels to achieve the accelerated growth in International Business and currently developing a road map to enter the developed markets including Europe, US and Australia. At Rexnord we conduct a detailed Analysis on every stage of our production which leads to lower manufacturing costs, better efficiencies, and productivity improvement. Our in-house manufacturing operations flexibilityto customise give the products as per diverse customer requirements. This is particularly useful for the B2B business where product offerings can be adapted to the requirements of the customers thus strengthening our position to serve the global markets.

During FY 2022-23, our international business, remained in the same range across all product categories i.e 1517.48 lakhs compare to 1516.78 lakhs last year. We are continuing the investment on Certifications, Product Development for Different markets, Brand building & Channel expansions across markets and geographies.


The Company has robust internal financial controls systems, which is in line with requirement of the Companies Act, 2013, which is intended to increase transparency & accountability in an organisations process of designing and implementing a system of internal control. The Company has a clearly defined Governance, Standard Operating Procedures, Financial & Operational systems.

Our SAP ERP system facilitate mapping with role-based authority to business & functional team to ensure smooth conduct of their operations across the organisation. The Company has well established Internal audit function. Regular audit is performed for all locations (Plants and Head office).


Encouraging performance across product segments led to a revenue growth of 24%, however Margins were under pressure due to spiralling cost inflation. We exited the year with a positive momentum recording highest ever revenue. It has been a year of revival despite transitional impact of Covid and commodity inflation. Overheads remained almost in the same range. While the inflationary environment continues to pose a challenge, however, we maintain a positive outlook on demand growth and gradual recovery of margins.

We have developed a strong financial capital framework with adequate foresight and agility to drive effective growth. Our strong balance sheet enables us to direct our growth capital swiftly efficiently towards emerging opportunities and for long-term value creation. Armed with this prudent approach, we navigated through exceptional circumstances brought on by the pandemic, transforming into a future-ready organisation with confidence and purpose.

We continued investing in capacity expansion to fuel our next phase of growth. Our total capital expenditure during the year was Rs 433.59 lakhs, which was primarily directed towards enhancing our infrastructure and capabilities.


We differentiate ourselves through culture of transparency, inclusion, collaboration and excellence, making Rexnord a ‘Great Place to Work. Our policies and practices are aimed at providing a conducive work environment to meet the aspirations of our people, while ensuring their safety and well-being. We carry out continuous employee training to upgrade skills and equip our people with the latest technologies in the market. We regularly engage with our employees, with a special focus on ensuring their well-being and retention. These training sessions included trainings on functional/behavioural and technical topics, in close coordination with our in-house experts. Rexnord believes in an equal opportunity approach. The employees within the organisation are evaluated solely on the basis of their qualification and performance. We provide equal opportunities in all aspects of employment, including retirement, training, work conditions, and career progression, among others. This reinforces our commitment that equal employment opportunities are key element of our growth and competitiveness. Further, Rexnord is also committed to maintaining a workplace where each employees privacy and personal dignity is respected and protected.

We have always strived to maintain the health and safety of our employees and contractual workers, making it an utmost priority for the organisation. We have undertaken several initiatives to prevent and reduce injuries at our plants, and ensuring safety for all. Periodical Health check-ups are done to ensure the health the wellbeing of our employees.

We at Rexnord believe in providing a homely environment for all its employees with minimal stress in these difficult times. Under this initiative the company provides Mid-day Meals to all its Employees at its cost to maintain a hygienic as well as a work friendly environment. The total number of employees at the end of the year (including executive directors) are 87.



2022-23 2021-22
Debtors Turnover ratio (times) 20.25 26.62
Inventory turnover (times) 2.57 2.34
Interest coverage ratio (times) 7.90 16.98
Current ratio (times) 3.14 3.00
Debt equity ratio (times) 0.22 0.27
Operating Profit 11.60% 18.60%
Net Profit Margin Ratio (%) 7.26% 12.97%


The return on net worth of the Company remained 11.74% for the year as against 19.66% in the previous year. The reduction in the return on net worth are mainly on account of increase in material costs and effect of exceptional items.


Statement in the Management Discussion and Analysis describing the

Companys objectives, expectations, estimates or predictions may be forward looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement due to external factors. Important factors that could influence the Companys operations include global and domestic supply and demand conditions affecting selling prices of finished goods, input availability and prices, changes in Government regulations, tax laws, economic developments within the country, Covid-19 situation in the Country and other incidental factors. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis, of any subsequent developments, events or information.