sar auto products ltd share price Management discussions


The Company engage in manufacturing and selling of Auto components, especially Gears for Transmission, Differential & Engine. Our Company manufactures Auto components comprising of automobile gears like Spur Gear, Helical Gear, Straight Bevel Gear, Sprockets along with Transmission Spline Shafts, Couplings and Power Take-off clutches which are used for Transmission, Engine and Differential gear boxes. Our Company is one of the leading manufacturers of quality assured gears, gear boxes and other transmission components in Rajkot, Gujarat-India, since last 20+ years. Company have battery of CNC & VMC machines and we can manufacture machined parts upto 480mm dia.

All parts are manufactured and tested as per the German Specification (DIN standard DIN 7 to DIN 9) and majority of the parts are self-certified by our OEM customers and are directly used at their assembly line.

We are certified to IATF 16949:2016 in quality system for the products ranges: Automobile Components Like Synchronizer Ring, Synchronizer Cone, Sliding Sleeve, Hub and Transmission Components. The said certificate is valid upto 27 September, 2024.

We are also having certificate in compliance with the requirements of the Standard ISO 9001: 2015 audited by ICV for following scope:

Manufacturer & Supplier of Automotive Components like Synchronizer Ring, Synchronizer Cone, Sliding Sleeve, Hub and Transmission gears. The said certificate is valid upto 15/12/2023.

We are constantly undergoing expansion and introducing newer technologies and equipment. Computerization in every facet of operations is the key to our manufacturing success. The manufacturing processes are : Turning on CNC turning centers, Gear cutting on CNC Hobbing, Shaping & Straight Bevel generating machines, Gear shaving (with inprocess gauging system), Gear Honning, Broaching (horizontal & Vertical), Tooth rounding / Chamfering, Gear cleaning (Shot Blasting), Milling and Grinding: Internal (CNC), External, Surface & Root with Inprocess gauging system and CNC Hard Turning. SAR is also equipped for Heat treatment processes like : Gas Carburizing, Induction Hardening, Salt bath HT, Nitriding, Annealing & Normalizing. We also have a TOOL ROOM for manufacture of jigs, fixtures, etc.

During the year 2022-23, the company has achieved the net turnover of Rs. 1160.68 Lacs in comparison to previous year of Rs. 1068.85 Lacs. The overall Review highlighted below:


Year: 2022-2023 (In Rs. In Lacs except EPS) Year: 2021-2022 (In Rs. In Lacs except EPS)

Export Sales

2.31 162.55

Domestic Sales

1096.39 893.26

Other Operating revenue

61.98 13.04

Total Sales

1068.68 1068.85

Other Income

33.35 50.44

Earnings Per Share

1.30 2.37

In the year 2023-23, Exports sales has been reduced. Though the Turnover of the Company has increased, profitability of the Company is reduced due to increase in the price of materials consumed and increase in other expenses. However, Management is hopeful to achieve better performance in next period. Further, due to external political situation, Export sale of the Company also got reduced. Management efforts and hard work and continuous analyzing and searching and grabbing of opportunities, Company was able to maintain the profitability of the Company. Of course, Government policies has also played a vital role in making the industry structure of the Company stronger and thereby Economic of whole Country.



The baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. In a plausible alternative scenario with further financial sector stress, global growth declines to about 2.5 percent in 2023 with advanced economy growth falling below 1 percent. Global headline inflation in the baseline is set to fall from 8.7 percent in 2022 to 7.0 percent in 2023 on the back of lower commodity prices but underlying (core) inflation is likely to decline more slowly. Inflations return to target is unlikely before 2025 in most cases.

Emerging market and developing economies are already powering ahead in many cases, with growth rates jumping from 2.8 percent in 2022 to 4.5 percent this year.

The outlook is uncertain again amid financial sector turmoil, high inflation, ongoing effects of Russias invasion of Ukraine, and three years of COVID.

(Source: IMF, World Economic Outlook April, 2023)


Strong economic growth in the first quarter of FY 2022-23 helped India overcome the UK to become the fifth-largest economy after it recovered from repeated waves of COVID-19 pandemic shock. Real GDP in the first quarter of 2022-23 is currently about 4% higher than its corresponding 2019-20, indicating a strong start for Indias recovery from the pandemic. Given the release of pent-up demand and the widespread vaccination coverage, the contactintensive services sector will probably be the main driver of development in 2022-2023. Rising employment and substantially increasing private consumption, supported by rising consumer sentiment, will support GDP growth in the coming months.

Future capital spending of the government in the economy is expected to be supported by factors such as tax buoyancy, the streamlined tax system with low rates, a thorough assessment and rationalization of the tariff structure, and the digitization of tax filing.

India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

As per IMF, World Economic outlook, April, 2023, lates world economic outlook Growth Projections is as follows which shows strong position of India:


India has become the fastest-growing economy in the world in recent years. This fast growth, coupled with rising incomes, a boost in infrastructure spending and increased manufacturing incentives, has accelerated the automobile industry. The two-wheeler segment dominated the automobile industry because of the Indian middle class, with automobile sales standing at 19.45 million units in FY23.

Significant demand for automobiles also led to the emergence of more original equipment and auto components manufacturers. As a result, India developed expertise in automobiles and auto components, which helped boost international demand for Indian automobiles and auto components. Hence, the Indian automobile industry has a considerable impact on the auto component industry.

Indias auto component industry is an important sector driving macroeconomic growth and employment. The industry comprises players of all sizes, from large corporations to micro entities, spread across clusters throughout the country. The auto components industry accounted for 2.3% of Indias GDP and provided direct employment to 1.5 million people. By 2026, the automobile component sector will contribute 5-7% of Indias GDP. The Automotive Mission Plan (2016-26) projects to provide direct incremental employment to 3.2 million by 2026.

Due to the high development prospects in all vehicle industry segments, the auto component sector is expected to see double-digit growth in FY22. The industry is expected to stand at US$ 200 billion by FY26.


Indias auto components industrys market share has significantly expanded, led by increasing demand for automobiles by the growing middle class and exports globally. Due to the remarkable growth in demand for Indian auto components, several Indian and international players have entered the industry. Indias auto component industry is broadly classified into organized and unorganized sectors. While the unorganized sector consists of low-valued items and mostly serves the aftermarket category, the organized sector serves OEMs and includes high-value precision instruments.

The turnover of the automotive component industry grew 34.8% to Rs. 2.65 lakh crore (US$ 33.8 billion) during April-September 2022 compared to the first half of the previous year. Moreover, the auto component exports increased by 8.6% in H123 to US$ 10.1 billion (Rs. 79,033 crore) from US$ 9.3 billion (Rs. 68,746 crore) in H1 2021-22.

As per the Automobile Component Manufacturers Association (ACMA) forecast, auto component exports from India is expected to reach US$ 30 billion by 2026. The auto component industry is projected to record US$ 200 billion in revenue by 2026. Strong international demand and resurgence in the local original equipment and aftermarket segments are predicted to help the auto component industry grow 20-23% in FY22.


The Government has reaffirmed its commitment towards EVs and its mission for 30% electric mobility by 2030. Budget announced customs duty exemption on the import of capital goods and machinery required for the manufacture of lithium-ion batteries that typically power EVs. The Government of Indias Automotive Mission Plan (AMP) 2006-26 has been instrumental in ensuring growth for the sector. The Indian automobile industry is expected to achieve a turnover of US$ 300 billion by 2026 by expanding at a CAGR of 15% from its current revenue of US$ 74 billion.

The governments AMP 2016-26 will help the automotive industry grow and will benefit the economy in the following ways:

• The auto industrys GDP contribution will rise to over 12%.

• Additional ~65 million direct and indirect jobs will be created.

• End-of-life policy will be implemented for old vehicles.


The rapidly globalising world is creating newer opportunities for the transportation industry, especially while shifting towards electric, electronic and hybrid cars, which are deemed more efficient, safe and reliable modes of transportation. Over the next decade, this will lead to newer verticals and opportunities for auto component manufacturers. To help them adjust to the shifting dynamics of the sector, the Indian government has already offered various production incentives. India is also investing heavily in electric car infrastructure.

The Indian government is exempting imports of capital goods and machinery essential to produce lithium-ion cells used in EV batteries from customs duty. This, coupled with the shift

in global supply chains, will help the Indian global automotive component trade to expand 45% to US$ 80 billion by 2026. Moreover, the Indian auto component industry is predicted to become the third largest in the world.

References: International Organization of Motor Vehicle Manufacturers, Media Reports, Press Releases, Department for Promotion of Industry and Internal Trade, Automotive Component Manufacturers Association of India, Society of Indian Automobile Manufacturers.



The Indian automobile industry has historically been a good indicator of how well the economy is doing, as the automobile sector plays a key role in both macroeconomic expansion and technological advancement. The two-wheelers segment dominates the market in terms of volume, owing to a growing middle class and a huge percentage of Indias population being young. Moreover, the growing interest of companies in exploring the rural markets further aided the growth of the sector. The rising logistics and passenger transportation industries are driving up demand for commercial vehicles. Future market growth is anticipated to be fueled by new trends including the electrification of vehicles, particularly three-wheelers and small passenger automobiles.

India enjoys a strong position in the global heavy vehicles market as it is the largest tractor producer, second-largest bus manufacturer, and third-largest heavy truck manufacturer in the world. Indias annual production of automobiles in FY22 was 22.93 million vehicles. India has a strong market in terms of domestic demand and exports. In FY23, total passenger vehicle sales reached 3.89 million. In FY23, total automobile exports from India stood at 47,61,487. This sectors share of the national GDP increased from 2.77% in 1992-1993 to around 7.1% presently. It employs about 19 million people directly and indirectly.

India is also a prominent auto exporter and has strong export growth expectations for the near future. In addition, several initiatives by the Government of India such as the Automotive Mission Plan 2026, scrappage policy, and production-linked incentive scheme in the Indian market are expected to make India one of the global leaders in the two-wheeler and fourwheeler market.


The Indian passenger car market was valued at US$ 32.70 billion in 2021 and it is expected to reach a value of US$ 54.84 billion by 2027 while registering a CAGR of over 9% between 202227. The global EV market was estimated at approximately US$ 250 billion in 2021 and by 2028, it is projected to grow by 5 times to US$ 1,318 billion.

The electric vehicle (EV) market is estimated to reach Rs. 50,000 crore (US$ 7.09 billion) in India by 2025. A study by CEEW Centre for Energy Finance recognised a US$ 206 billion opportunity for electric vehicles in India by 2030. This will necessitate a US$ 180 billion investment in vehicle manufacturing and charging infrastructure.


The automobile industry is dependent on various factors such as the availability of skilled labour at low cost, robust R&D centres, and low-cost steel production. The industry also provides great investment opportunities and direct and indirect employment to skilled and unskilled labour. The electric vehicles industry is likely to create five crore jobs by 2030.

The Government of India expects the automobile sector to attract US$ 8-10 billion in local and foreign investments by 2023. India could be a leader in shared mobility by 2030, providing opportunities for electric and autonomous vehicles.

References: International Organization of Motor Vehicle Manufacturers, Media Reports, Press Releases, Department for Promotion of Industry and Internal Trade (DPIIT), Automotive Component Manufacturers Association of India (ACMA), Society of Indian Automobile Manufacturers (SIAM), Union Budget 2023-24


Disclaimer: This information has been collected through sources mentioned above and Company is not responsible for any error in data as mentioned above

Company is focusing on the Industry structure prevalent in Indian Economy and Global Economy and Company is planning its road map of business activity accordingly.

Future Plan of Company : We are on the threshold of manufacturing the following products: -- Assembly of Gear boxes for automobiles and machine tools.

-With the best of technical expertise, financial acumen, marketing experience and managerial skills at hand, we actively seek new clients in India and abroad.

- We welcome foreign collaborations in technical knowhow, with buyback arrangements, for manufacture of Gear boxes, Geared motors, Ground Gears and other similar components.

Auto Parts Today, Airplanes Tomorrow!


The Company is working in single segment namely the manufacturing Segment includes manufacturing of gears, gear boxes and other transmission components. Further In this segment company has earned revenue of Rs. 1098.70 (Rs. in Lacs) in comparison to previous year of Rs. 1055.81 (Rs. in Lacs) and other operating revenue of Rs. 61.98 Lacs in comparison to previous year of Rs.13.04 Lacs.



The Company is carrying on the business of manufacturing of auto components such as automobile gears like Spur, Helical, Straight Bevel, Sprockets along with Transmission Spline Shaft, Couplings and Power Takeoff Clutches which are used for Transmission, Engine and Differential gear boxes.

In todays parlance Auto component industry has growth potential as the population is increasing, demand of vehicle in all segment is increasing, in furtherance after the spread of Covid-19 pandemic and its post effect, people feel safe for using personal vehicles instead of public transport and this factor also boost up the demand and the future of the Company seems bright. In aforesaid points given various advantages of auto parts components Industry and Automobile Industry which are opportunities for our Company. Further Government of India is also taking various initiative steps for the development of Auto Industry. The Theme of "ATMANIRBHAR" & "MAKE IN INDIA" of Indian Government will also be one of the path of Opportunity for the Company.

Further as stated above in the Road ahead, Government and life style, needs of society gives boost to the business opportunities.

Further, Our Company also believe that Company have a greater advantage of being located in Rajkot (Gujarat) as it is a hub for engineering industries, enabling to offer the customers more range of products and services in a faster and at the most competent way. With, many OEM approved raw material suppliers and heat treatment service providers stationed here, we have a competitive advantage in providing the services, in the most efficient and effective way to delight our valued customers. As Rajkot being popular for its skilled labour availability & labour friendly environment, we hold the reputation of being the most reliable, at any point of time. Our gears are used in automobiles, machine tool industries and printing machineries. We are ready and equipped to manufacture any type of gear for anyone, anywhere in the world!


Your Company regularly monitors the various risks associated with its business. The Company is identifying, minimizing and mitigating the risks and the same are reviewed periodically. There are various Risk factors such as Changes in Government Policies and

Regulations, Tense situations amongst the Country, Fluctuation in Foreign Exchange Rates, Prices of Raw materials, Competition, Volatile in Automobile Industry, Manpower. The Company is trying to overcome/minimize it by taking certain steps, which are in hand of Company.

The Companys risk management is done in close co-ordination with the board of directors and focuses on actively securing the Companys short, medium and long-term cash flows by minimizing the exposure to volatile financial markets. Long-term financial investments are managed to generate lasting returns. The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options.

Besides this, Companies Internal Risk, Credit Risk, Liquidity Risk, Maturities of Financial Liabilities, Interest rate risk and the details of the same has been given in Notes Forming Part of Financial Statements.

Company is watching and analyzing the trend of market situation and accordingly will take various steps to mitigate the risks of the business.


Your Company is committed to maintaining high standards of internal controls designed to provide accuracy of information, efficiency of operations, and security of assets. The Company has adequate internal controls commensurate with the size and nature of its operations to ensure orderly and efficient conduct of business.

These controls ensure the safeguarding of assets, prevention and detection of fraud and error, Irregularities. These controls ensure the accuracy and completeness of the accounting records, timely preparation of reliable financial information and adherence to Companies policies, procedures and legal obligations. The audit committee of the Board of Directors meets periodically to review the performance as reported by the auditors.


The Company has achieved the Net turnover of Rs. 1160.68 (Rs. in Lacs)/- in the Financial year 2022-23 in comparison to previous year of Rs. 1068.85 (Rs. in Lacs). In this year, company has earned Profit of Rs. 62.49 lacs as compared to last years profit of Rs. 116.18 lacs. Inspite of various challenges in the year 2022-23 internal as well as external, company has tried to maintain and maintain the profitability situation. Details of the performance are disclosed in the financial statement.


There has been no material development on the Human Resource/ Industrial Relations Front during the year. The Company always has adopted positive approach towards human relation development. Industrial relations remained cordial throughout the year and there was no incidence of strike, lock-out, etc. There were no Complaints from any of the employees of the Company. The Company is taking all precautions measures that are required to be followed for prevention and safeguard of the Human Assets. Company has a panel of 5 Senior Engineers provide top class technical backup and Under their able supervision 25 skilled technicians work at SAR around the clock.


Details of Changes in Key Financial Ratios along with reasons for variance is given as below :

Sr. No. Key Financial ratio





Variance Reason for variance

1 Debt Turnover ratio

2.82 2.88 -2% --

2 Debt Service Coverage Ratio

5.83 14.30 -59% On Account of lower Profit after T ax

3 Current Ratio

1.51 2.42 -37% On Account of lower Trade receivable and Cash and cash equivalents

4 Debt Equity Ratio

0.44 0.35 26% Loan from Director received during the year

5 Operating Profit Margin(%)

8.84% 11.54% -23.40 --

6 Net Profit Margin (%)

8.17% 10.88% -25.00% On Account of lower Profit after Tax

Further more details on financial ratio is given in the Annexure D i.e. Annexures forming part of Notes to Financial Statements and the same is forming part of this Annual Report.


The Networth of the Company as on 31st March, 2023 is Rs. 15,64,95,594.2 in comparison to previous year of Rs. 15,11,90,553.63. There has been no material change in Net worth of the Company and change in net worth is due to retained earnings.


The Companys financial statements comply in all material aspects with Indian Accounting Standard (IND AS) notified under section 133 of the Companies Act, 2013, Companies (Indian Accounting Standard) Rules, 2015 as amended by Companies (Indian Accounting Standards) (Amendment) Rules, 2016 and other relevant provisions of the Act as applicable. Company has not followed different treatment than prescribed in the accounting standard and as such no explanation is required to be given.


Management Discussion and Analysis Report are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized by the Company. Actual results could differ materially from those expressed or implied.

The Company assumes no responsibility to publicly to amend, modify or revise any of these statements on the basis of any subsequent developments, information or events.

Place: Rajkot

For and on Behalf of

Date: 9th August, 2023

Sar Auto Products Limited
Rameshkumar D. Virani Chairman and Managing Director DIN: 00313236