Taneja Aerospace & Aviation Ltd Management Discussions

Industry Structure and Development

The Indian aviation sector has been through huge transformation to generate the growth momentum to cater the growing demand of the aspirational class as well as the requirements of the defence sector. Large players have entered the aviation & aerospace manufacturing sectors. These companies have entered this sector and are competing on the basis of pricing that supports aggressive penetration strategies. The financial strength and corporate credibility of these companies provide them with the ability to look at evolving and future markets. The Company earns its revenue by providing technical support and leasing services.

The Company has leased hangar space and buildings to a Commercial Maintenance, Repair and Overhaul (MRO) organization. The Company also generates income from the use of infrastructure facilities including runway and hangars.

Performance

Particulars	2023-24	2022-23
Total Income	3086.05	3324.85
Profit after Tax	1113.14	1098.70

Opportunities

With the Government opening up and providing opportunities to the private sector, global and domestic players are collaborating and establishing joint ventures for manufacturing of aerospace components and MRO facilities for civil and military aviation sectors. In addition, the ongoing Government initiative in the outer space missions has opened up new opportunities.

The Govt of India has recently opened certain part of Defence Sector for private sector participation. This is aimed to reduce dependency on imports as well as boost to develop technology in this key sector. As a part of this, the Defence Innovation Organization (DIO) of the Department of Defence Production in the Ministry of Defence launched a Scheme under the name Innovation for Defence Excellence (IDEX) and under this "SPARK GRANT" is provided to technology developers. This grant is to the extent of 50% of development expenditure incurred by the developers. Participants are invited to participate in specific product development programs and the technical parameters and the expenditures for the same will be approved by the DIO. The developer is required to incur the expenditure and Government provides grant aid in instalments based on the achievement of milestone.

The Company has invested and taken equity in a Defence company, Altair. Altair is one of the companies that has been very successfully participating in the IDEX programs. It has already developed "Upgraded Assault Track Way (UATW)" for facilitating the movement of vehicles in sandy and wet terrains and based on the success of the prototype that it had developed it has received an order for commercial supply of 100 kms of the product for Rs. 68.79 crore excluding GST. This is the first order that it has received and it is expected that, in consideration of the large requirement of this product by the Indian Army, large quantity follow-up orders would be received. In addition to this, the Company is working on 5 other programs and has successfully completed multiple milestones of performance.

The civil aviation sector is going through a phase of accelerated growth and it is expected that the aircraft fleet size operating in the country would increase substantially in the next five years. This will substantially improve the prospects for MRO activities.

Threats

The delay in decision making and finalisation of contracts by the Defence Sector for their modification / refurbishment projects is a challenge for the industry.

Outlook

A stronger collaboration between the government and the private sector under the Atmanirbhar Program is expected to provide a fillip to the the growth of the aviation sector. With increased demand and the ability of the Indian industry to leverage this for sustained technology upgradation, India has the potential to transform itself into an aerospace manufacturing hub in the near future.

There is a renewed thrust of indigenous manufacturing especially in Defense. The Company, being one of the first organized players in defense space, will explore new opportunities in the area under Atmanirbhar Bharat Scheme.

Risks And Concerns

The delayed lease rentals from the major customer and the resultant outstanding amount may affect the upkeep of the infrastructure.

Internal Control Systems

Through regular internal review systems, the Companys internal control system is being continuously strengthened to meet the needs of Manufacturing and Services Divisions.

Key Financial Ratios

In accordance with the Listing Regulations, as amended, the Company is required to provide details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector specific financial ratios. The Company has identified the following ratios as key financial ratios:

Particulars	2023-24	2022-23	Change
Debtors Turnover	4.26	4.93	14%
Inventory Turnover	NA	NA	-
Debt- Service coverage ratio	NA	NA	-
Current Ratio	2.89	3.11	-7%
Debt Equity Ratio	Nil	Nil	-
Operating Profit Margin (%)	64.90%	62.98%	3%
Net Profit Margin (%)	35.65%	34.24%	4%
Return on Net Worth	11.28%	14.71%	-23%

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys expectations or predictions are ‘forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include demand-supply conditions, raw material prices, changes in Government regulations, tax regime, economic developments within the country and other factors such as litigation and labour negotiations.