td power systems ltd share price Management discussions

In tdps we make generators for the world - catering to both conventional and renewable fuel based power plants for a diverse range of prime movers with output capacities ranging from 1 MW to 200 MW for steam gasturbine, up to 35 MW for hydro, up to 20 MW for diesel, gas engines and customized rating for wind turbines. Continuous process automation initiatives & design, manufacturing and quality capabilities honed over the last two decades enable us to exceed customer expectations across a spectrum of applications - Hydro, Steam, Gas, wind, Geo thermal and special applications. -Our Generators cater to different applications, specifications, geographical and climatic challenges which proves our design, manufacturing and quality capabilities over the years. We have a network of 57 service centers covering every continent- to ensure that a service representative who is conversant with the local language is available within 24 to 48 hours from reporting of an issue.

As end of fiscal 2023, 5886 generators have been supplied & are installed in 103 countries reflecting a leap of faith shown by customers worldwide in our design, reliability and manufacturing capabilities. This global foot print reflects that an Indian generator manufacturer can deliver a reliable product & compete effectively meeting testing standards and requirements. Majority of the Installations are in Asia (including Eurasia) & Middle East (4473) followed by Europe (746), Africa (253) North America (224), South America (44) & Oceania (146). The representative country wise installations for each of the continents as follows reflect our global footprint:

Asia & Middle East- India (3366), Thailand (127), Russia (152), Vietnam (139), Nepal (113), Indonesia (109), Japan (92), Pakistan (62), Philippines (51), China (46) Korea (32), Iraq (23), Bangladesh (29) & Singapore (8) .

Africa- Nigeria (47), Kenya (41), South Africa (28), Uganda (27)

Europe- Turkey (164), Germany (157), Norway (81), Italy (50), Austria (32) , Netherlands(45) , Belgium (44), United Kingdom (44), France (12)

Americas- United States (151), Central America-(41)-Costa Rica, Honduras, Nicaragua, Canada (18), Colombia (18),

Oceania- Australia (136), other countries (10) like Fiji, Solomon Islands and Nauru.

Some of the important breakthrough orders & qualification from OEMs/Customers during fiscal 2023 are as follows:

- An Austrian OEM - For the supply of 2 Units of 3.4MW hydro turbine generators for installation in Indonesia

- Orders from two well-known Austrian OEMS with presence in India - for the supply of 3 units of 7.1MW hydro turbine generators for installation in Nepal & 2 units of 4.95MW hydro turbine generators for installation in India.

- Orders from leading project companies from India - For supply of 1 unit of 3.25MW diesel engine generator & the supply of 2 units of 0.38MW Induction motors for installation in India

- Order for supply of 4 units of 16MW synchronous motors for installation in India from a leading Indian EPC company

- Listed as approved supplier for the generators and motors for NPCIL projects .Order for the supply of 1 unit of 1.25MW induction motor for installation in India from the NPCIL.

- Listed as approved supplier for the supply of generators for ONGCs onshore projects.

- Supplied 2 Units of 32.3 MW, 11kV, 1500rpm Gas Turbine Generators for OEM based in Japan for installation in Uzbekistan.

- Qualification of 14.8MVA, low inertia gas engine generator is successfully completed for OEM based in Europe.

- Supply and commissioning 2 units of 3MW, 11kV, 744RPM induction motors for a sugar plant based in India.

These breakthrough orders reflect promising opportunities and are expected to contribute significantly to the order book in the years to follow.

Our pending order book as on April 01, 2022 was 1,39,220 Lakhs ( 1,36,638 lakhs for India and 2,582 lakhs for Turkey), including traction business of 98.922 lakhs. The share of exports and deemed exports is 59% of order book excluding traction business. During fiscal 2023,the total orders inflows was 84,473 lakhs including 821 lakhs at Turkey. Domestic revenue including deemed exports accounted for 53%, while Export revenue stood at 47% of the manufacturing revenues.

The manufacturing revenue was 81,556 lakhs in fiscal 2023 as compared to 70,427 lakhs in fiscal 2022, an increase of 16%. Exports and deemed exports contributed 47% of

manufacturing revenues and domestic revenues contributed 53% in fiscal 2023.

Top 10 customers contributed 78.23% of our consolidated revenues in fiscal 2023 (80% in fiscal 2022). New customers have been added in Hydro (Austria & India), Diesel & synchronous motors (India).We continue to undergo audits by OEMs for supply to Defense, nuclear, wind and Diesel applications.

A brief review of the financial results on Standalone & Consolidate basis is covered in the following sections.

STANDALONE BASIS

The manufacturing revenue was 81,556 lakhs in fiscal 2023 as compared to 70,427 lakhs in fiscal 2022, an increase of 16%. Exports contributed 47% of manufacturing revenues and domestic & deemed export revenues contributed 53% of manufacturing revenues in fiscal 2023. Considering Generator business only, export & deemed export & domestic segments contributed 61% &39% of manufacturing revenues respectively. The project business revenues was 3,352 lakhs in fiscal 2023 as compared to 1,726 lakhs in fiscal 2022.

The total income for fiscal 2023 was 84,348.64 lakhs as compared to 73,637.03 lakhs for fiscal 2022, an increase of 14.55%. The profit after tax and other comprehensive income was 8,841.80 lakhs in fiscal 2023 as compared to 5317.62 lakhs in fiscal 2022, an increase of66.27%.

CONSOLIDATED BASIS

The manufacturing revenues are higher by 7% at 83,878.00 lakhs in fiscal 2023 as compared to 78,106.95 Lakhs in fiscal

2022. The Project business revenues increased by 94% to 3,351.70 Lakhs in Fiscal 2023 from 1,725.51 Lakhs in Fiscal 2022.

The total income is 89,205.17 lakhs in fiscal 2023 as compared to 81,413.88 lakhs in fiscal 2022 an increase of 9.57%. The profit after tax including comprehensive & exceptional income is 9,453.81 lakhs in fiscal 2023 as compared to 61,43.32 lakhs in fiscal 2022. During fiscal

2023, a write back of 62.78 lakhs was accounted in the Indian subsidiary (DFPS) in respect of dues to certain project related creditors The said profits are after accounting for a forex translation loss of 180.42 lakhs which is notional in nature in the Turkish subsidiary due to sharp depreciation of Turkish lira to Indian Rupees- from 5.15 (TL to INR) at the beginning of the year to 4.29 ( TL to INR) at the end of the year, a drop of 20%. However, it is important to note that the said subsidiary posted an actual Profit after tax of 131.89 lakhs.

The performance review of the overseas subsidiaries is covered in the Directors Report to the Members.

Key Financial Ratios

Key financial ratios as follows are for TD Power Systems Limited on standalone basis

Particulars	2023	2022	Change in %
Debtors Turnover Ratio	3.29	3.42	-3.77
Inventory Turnover Ratio	4.29	4.26	0.70
Current Ratio	2.42	1.88	28.79
Operating Profit Margin (%)	14.44	11.06	30.56
Net Profit Margin (%)*	10.48	7.22	45.15
Return on Net Worth (%)*	14.89	10.17	46.41

* Ratios change between fiscal 23 and fiscal 22 are more than 25% as defined under the SEBI Listing Regulations.

*Standalone basis:

- Net Profit Margin- due to improved sales realization, cost reduction and interest cost savings.

- Return on Net worth- due to higher sales revenue &operating profits

As the Company does not have any debt on its standalone balance sheet, Debt Equity and Interest Coverage ratios are not applicable and have not been calculated.

The Company continues to remain debt free and maintains a healthy cash position.

Outlook

The order Book for Steam Turbine Generators grew by 55% year on year in Fiscal 22 with contributions from both from domestic as well as export segments. The domestic market continues to see revival in capex in Fiscal 23 broadly across all sectors. In the export space macro factors like transition to renewables, waste to heat, garbage burning plants etc. continue to drive this space in Fiscal 23. Increased demand for electricity from EV sector and later domestic heating will provide long term sustained demand of new power plants.

In the Gas Engines vertical growing orders from both our engine customers will ensure sustained demand in this segment in Fiscal. Recently the Company has received a big order for supply 20 generators to Ireland. The Gas Turbines segment reflects a promising potential for growth and the Company is actively bidding for more projects with the OEMs where we approved.

The Hydro segment saw a big growth compared to Fiscal 22 & may see a growth around 60-70% in this segment mainly from Nepal, Vietnam and countries in Europe.

In the Motors segment, the first order has been received from Nuclear Power Corporation. First orders have also been received for submersible motors - another new product for TDPS. Submersible motors are used extensively in municipalities in sewage. The Company has also received a large order from local EPC contractor for 5x40MW synchronous motors to be delivered in Q2 /Q3 this year. With this supply TDPS will establish itself firmly in this segment which is expected to open up the market further the Company.

Railways Business-The six months trial of our motors has been completed with the Indian Railways(IR). A few more tests followed by documentation is expected to be completed by Q3 (September - December 23) after which a good ramp up is expected next year in this business. We reiterate that the goal is to make this business around 100 Cr in the next two years. New projects from Indian Railways are awaiting Tender closing and results. We are hopeful that the Companys partner customer will win a few of the upcoming tenders from Indian Railways translating into new orders for TDPS.

Turkey Business- the Turkish government has revised the incentives for locally made generators and made it attractive for end users to buy made in Turkey generators. This new incentive policy is expected to revive the market for Turkey made Generators in about an year since Turkey is a power shortage country.

Considering the order pipeline & new emerging opportunities we are projecting in Fiscal 2023 to reach 1,000 Crores on Consolidated basis in the manufacturing business which will contribute strongly to improvement in EBITDA based on operational leverage.

Barring unforeseen events, we expect to a have a higher level of profit driven by higher top line & improved contribution in fiscal 23.

Risk Management and Mitigation

The Companys business relates to manufacture and sale of generators, repairs of motors and Generators falling under capital goods sector and is dependent on national & global economic growth, investment climate and business confidence as well as the sectors in which the Companys products are used.

Some of the major risks being faced by the Company are described below:

Economic slowdown and market concentration

A conducive investment climate and interest rate regime, global economic and market conditions drive growth and performance of the industrial sector which forms the Companys customer base. An economic slowdown directly impacts the demand for capital goods, including the products of the Company.

Further, over dependence on any market/s may adversely affect the performance of the Company consequent to varying economic or market factor. While dominant presence has been achieved in the domestic markets, impressive strides have been taken in the overseas markets. Our focus on overseas markets and growing relationships with leading global leaders are the drivers imparting sustainability & growth to the companys operations. Strategic focus over the years on marketing products in the global markets continues resulting in growing customer references worldwide & we are now a dominant player in certain verticals in the overseas market. We have continued to grow our export base, by adding new OEMs & increased market share in existing verticals through better pricing, customization etc. and diversifying into introducing new product verticals. The Company continues to direct significant resources in growing its global footprint and is entering new territories world wide.

Product concentration

Steam turbine generators continue to be a major contributor of our standalone net sales year on year. Advanced technology relating to steam turbine generators or the development of steam turbine generators that prove superior in quality or effectiveness to our generator could affect our dominant market position in this segment. However, our R & D & design capabilities support technological & design upgrades to meet customer specifications & requirements.

Even though Steam generators accounted for a significant portion of the revenues, the contribution of hydro, gas and other applications is consistently growing de risking the products mix. The continuing efforts to diversify offerings in product verticals catering to horizontal hydro generators, vertical hydro generators, diesel engine generators, wind turbine generators, gas engine generators, gas turbine generators, high voltage motors and generators for Geo thermal and Solar thermal applications enables market presence across the spectrum of generator market in India and overseas, moderates dependence on any particular industry or market segment.

While we grow our generator business across a spectrum of applications and globally, our foray into new products in the electric rotating machines as a diversification continues with a view to enlarge our product offerings.

Technology Risk

Response to and adoption of advanced technology and emerging power generation industry standards and practices on a cost-effective and timely basis is critical to sustaining and growing market reach of the Company. The Company operates in the engineered-to-order capital goods industry where product efficiency, critical product features and overall life cycle costs play an important role.

Generators are designed based on industry standards incorporating customer requirements/specifications. It is an ongoing design activity to develop generators for special applications. Technology absorption continues and orders are being received for generators with special applications and varied specifications. The Companys R&D effort focuses on adoption of new technology and development of superior designs enhancing performance, quality and reducing cost. Our generators are approved by reputed and leading engineering consultants, Indian Railways &defence establishments.

Competition Risk

Given the increasing exposure to overseas OEMS, the Company continues to face competition from large overseas corporations both in the domestic & overseas market. These large corporations have access and derive significant benefit of advanced technologies, global presence technology or brand preference and larger financial resources.

With a view to mitigate this risk, the Company continues to provide value proposition to customers with products which meet the benchmark efficiencies at a competitive price and shorter delivery time. Our proven ability to meet customer specifications, quality & performance expectations across a spectrum of applications - Hydro, Steam, Gas, wind, Geo

thermal and special applications has enabled us to compete across markets & we are emerging as a dominant player in certain verticals in the overseas market. A responsive customer support policy with a network of service providers situated in vantage locations across continents has enhanced market acceptance.

The Company continues to upgrade design capabilities by incorporating latest technologies in its products and improvements in the design of generators enabling it to offer more efficient machines meeting customer requirements from time to time. Reduction in production, distribution costs and improvement in operating efficiencies are continuously pursued supported by increased automation of the manufacturing facilities enabling it to offer competitive prices. The Company prioritizes sourcing good quality raw materials and other inputs at competitive prices with high reliability in meeting delivery timelines from its supply chain.

Risk arising from transnational sale of products

In view of exports of product to several countries in various continents, there is a risk of claims from customers & third parties related to performance of product or any events arising out of the use of the product as well as noncompliance of laws in those countries.

The Company follows a strict quality control policy which ensures that products supplied must meet the contractual specifications including applicable laws. It is ensured that the contracts with customers clearly specify the obligations of the Company. In addition, the Company takes appropriate insurance coverage in respect of such risks.

Manufacturing facilities & Manpower

We have 2 manufacturing units, both located at Bangalore equipped with advanced automation/ machines which help in delivering quality products at competitive prices. One of the facilities is a dedicated large generator manufacturing unit with state-of-the-art machines and equipment. Both the manufacturing units are ISO 9001:2015 compliant. We invest in upgradations, modernization and automation of processes and design on an ongoing basis to ensure that our facilities are state of the art contributing to efficiency, quality and cost effective. Well trained and experienced manpower focus on design, planning, manufacturing & quality enabling production of top class generators for customers around the world.

Internal Control Systems and their adequacy

The Company has established adequate internal control system, commensurate with the nature of its business and size of its operations in order to ensure quality and reliability of underlying processes focused towards achieving operational efficiency, supported by Management reviews. All audit observations and follow up actions thereon are initiated for resolution by the finance function and Reported to the Audit Committee. Attention is also drawn to the statement on internal financial control in the Directors Report.

Environment, Health and Safety

The Companys environmental, occupational health, operational and safety management systems fulfill ISO 90012015, 14001-2015, ISO 45001-2018 for OH&S Management system, EN ISO 3834-2 and Compliance issued by CSA International. Our operations incorporate due care and responsibility towards environment, health and safety of employees, customers, suppliers and the community in large and is a zero-discharge facility. In fulfilling this commitment, we maintain and continually improve all our process and complying with legal and other requirements, in order to

a. Ensure safety and Health of our employees, associated stakeholders and focus on how to make the world a better place to live.

b. Comply with all applicable legal Safety and Health performance of individuals at different levels while considering their career advancement in the organization.

c. Enhance Safety, Health and Environment (SHE) awareness amongst employees and associated stakeholders through effective communication and training.

d. Ensure SHE responsibility amongst all the employees in their practices, promote and value their involvement in achieving the goals of this policy.

e. Fix responsibility of SHE policy and procedures on the contractors, Sub-Contractors, Transporters and all other agencies operating with the Company.

f. Integrate Health & Safety in all decision-making processes of the company including those dealings with purchase of plant equipment, machinery & materials as well as selection and placement of personnel.

Adopt all the relevant techniques & methods such as risk assessment and safety audits at appropriate intervals of time to assess the status on Quality, Environment and Health &

Safety and take relevant remedial measures to overcome problems encountered.

Human Resources

Continuous skill development and enhancement is important for the Company with its focus on quality & export markets. The Company is committed to training, skilling and up skilling it/s work force on an ongoing basis which ensures that its work force is able to adopt evolving technologies, processes and techniques.

Over 500 training / awareness & management development programs were conducted covering various aspects in manufacturing process Safety, quality and statistical analysis, testing & design correlation, basic electrical concepts in generator design, statistical process control & applications, lead management, maintenance of material movement equipment, finance, prevention of sexual harassment (POSH), communication skills, Safety, waste handling and disposal covering the entire spectrum of employees.

The Company believes in equal opportunity in recruitment and in the course of the employment among employees regardless of color, race, gender, social origin, caste or religion. Efforts are continuously made to create an inclusive working environment for women and to integrate them in organizational functions. Women employees are continuously encouraged and supported to take new roles of responsibility ensuring career growth and retention. Recruitment & technical training of women in manufacturing operations is pursued on an ongoing basis. Crucial functions in the Company like Chief of Finance, Sourcing is helmed by women leaders.

The Company firmly believes that every woman employee of the Company has a right to work in an environment free from sexual harassment, intimidation or offensive behavior and in which issues of harassment will be resolved without fear of reprisal. In this direction a Policy on prevention/prohibition of sexual harassment of woman at Companys workplace ("Policy") is in place to take effective measures to avoid and eliminate and if necessary to impose punishment for any sexual harassment in the Companys work place integrated with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Companys leadership engages affirmatively in employee development and engagement activities such as involvement in the Corporate Responsibility initiatives,

active participation of work force in safety initiatives, quality improvement programs, language skills, leadership development programs, training programs and training under license agreements, on an ongoing basis. Employee relations continue to remain peaceful and cordial. At end of fiscal 2023, the total strength of permanent employees, excluding contract basis and trainees stood at 708.

The Company continues to reinforce the Code of Business Conduct across functions/workforce. In order to enhance communications and to create a congenial environment, the organizational leadership and the shop floor employees of the company have invested significant amount of time and effort.

FORWARD-LOOKING STATEMENT

Statements in the Management Discussion and Analysis describing the Companys plans, estimates and projections may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results may materially differ from those expressed or implied in the report. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events.

Financial Review Consolidated basis

The results of operations for the year ended March 31, 2023 and 2022 on a consolidated basis is as follows:

Particulars	Fiscal 2023		Fiscal 2022
	( in Lakhs)	% of Total Income	( in Lakhs)	% of Total Income
Income:
Sales	87,229.70	97.79%	79,742.46	97.95%
Other Income	1,975.47	2.21%	1,671.42	2.05%
Total Income	89,205.17	100.00%	81,413.88	100.00%
Expenditure:
Consumption of Raw Material, Stores, Spare parts and Components	59,473.95	66.67%	56,047.33	68.84%
Purchases for Project Business	(437.22)	-0.49%	940.96	1.16%
Operating and Other Expenses	15,171.36	17.01%	13,566.14	16.66%
Interest and Finance Charges	106.37	0.12%	205.70	0.25%
Depreciation Amortization of Technical Knowhow	2,070.48	2.32%	2,203.96	2.71%
Total Expenditure	76,384.94	85.63%	72,964.09	89.62%
Profit Before Tax & Exceptional item	12,820.23		8,449.79
Exceptional item	134.41		757.72
Profit Before Tax	12,954.64		9,207.51
Provision for Taxation	3,755.76		1,992.88
Deferred Tax	(482.35)		165.01
Profit/(Loss) After Tax	9,681.23		7,049.62
Other Comprehensive Income
Exchange difference on translation of foreign operations	(234.56)		(858.48)
Income tax on the above	2.81		15.29
Re-measurement of defined benefit plans	5.78		(84.34)
Income tax on above	(1.45)		(21.23)
Total	(227.42)		(906.30)
Total Comprehensive Income	9,453.81		6,143.32

Fiscal 2023 compared to Fiscal 2022

INCOME

Total income increased by 7,791.29 Lakhs, or 9.57%, to 89,205.17 Lakhs in Fiscal 2023 from 81,413.88 Lakhs in Fiscal 2022, predominantly due to increase in sales volume of Manufacturing Business.

SALES

Sales increased by 7,487.24 Lakhs, or 9.39%, to 87,229.70 Lakhs in Fiscal 2023 from 79,742.46 Lakhs in Fiscal 2022, predominantly due to increased sales volume of Manufacturing Business.

Sales from our manufacturing business increased by 5,861.05 Lakhs, or 7.51%, to 83,878.00 Lakhs in Fiscal 2023 from 78,016.95 Lakhs in Fiscal 2022. Net sales of our manufacturing business contributed 94.03% and 95.83% of our Total Income in Fiscal 2023 and 2022, respectively.

Sales from our Project Business increased by 1,626.19 Lakhs, or 94.24%, to 3,351.70 Lakhs in Fiscal 2023 from 1,725.51 Lakhs in Fiscal 2022. Net sales of our Project Business contributed 3.76% and 2.12% of our Total Income in Fiscal 2023 and 2022, respectively.

Expressed as a percentage of total income, net sales remain flat at 97.79% in Fiscal 2023 from 97.95% in Fiscal 2022.

OTHER INCOME

Other income contributed 2.21% and 2.05% of our total income in Fiscal 2023 and 2022, respectively. Other income increased by 304.05 Lakhs, or 18.19%, to 1,975.47 Lakhs in Fiscal 2023 from 1,671.42Lakhs in Fiscal 2022, mainly due to increase in gains from hedging of foreign currency by 222.02 lakhs to 977.71 lakhs in fiscal 2023 as compared to 755.69 lakhs in fiscal 2022.

EXPENDITURE

Total expenditure increased by 3,420.85 Lakhs, or 4.69%, to 76,384.94 lakhs in Fiscal 2023 from 72,964.09 lakhs in Fiscal 2022, primarily due to increased sales volumes of manufacturing business.

CONSUMPTION OF RAW MATERIAL, STORES, SPARES PART AND COMPONENTS

Consumption of raw material, stores, spare parts and components expenses increased by 3,426.62 lakhs, or 6.11% to 59,473.95 lakhs in Fiscal 2023 from 56,047.33 Lakhs in Fiscal 2022, primarily due to increased sales volume of manufacturing products. Expressed as a percentage of total income, raw material consumed contributes 66.67% in Fiscal 2023 compared to 68.84% in Fiscal 2022.

OPERATING AND OTHER EXPENSES

Operating and other expenses increased by 1,605.22 lakhs, or 11.83%, to 15,171.36 lakhs in Fiscal 2023 from 13,566.14 Lakhs in Fiscal 2022.

Power and fuel expenses increased by 19.71 lakhs, or 2.38%, to 848.69 lakhs in Fiscal 2023 from 828.98 lakhs in Fiscal 2022 on account increased production.

Personnel expenses through salaries, wages and bonuses increased by 825.44 lakhs, or 13.35%, to 7,008.21 lakhs in Fiscal 2023 from 6,182.77 lakhs in Fiscal 2022 on account of salary revision coupled with additions to manpower.

Welfare expenses increased by 110.96 lakhs, or 8.98%, to 1,346.83 lakhs in Fiscal 2023 from 1,235.87 lakhs in Fiscal 2022.

Rent charges decreased by 30.10 lakhs, or 32.77%, to 61.76 lakhs in Fiscal 2023 from 91.86 lakhs in Fiscal 2022 due to vacating of rental premise .

Repair expenses increased by 272.56 lakhs, or 71.63%, to 653.07 lakhs in Fiscal 2023 from 380.51 lakhs in Fiscal 2022 due to refurbishment of factory building and repairs of old machines.

Selling expenses decreased by 364.82 lakhs, or 26.44%, to 1,015.06 lakhs in Fiscal 2023 from 1,379.88 lakhs in Fiscal 2022.

Vehicle Maintenance expenses increased by 8.95 lakhs, or 16.54%, to 63.05 lakhs in Fiscal 2023 from 54.10 lakhs in Fiscal 2022.

Insurance expenses increased by 15.46 lakhs, or 12.81%, to 136.11 lakhs in Fiscal 2023 from 120.65 lakhs in Fiscal 2022.

Printing and Stationary expenses increased by 5.14 lakhs, or 12.46%, to 46.39 lakhs in Fiscal 2023 from 41.25 lakhs in Fiscal 2022.

Travelling expenses increased by 335.24 lakhs, or 43.13%, to 1,112.86 lakhs in Fiscal 2023 from 777.52 lakhs in Fiscal 2022 due to increased travel for marketing and other business related travel.

Postage & Telephone charges increased by 3.70 lakhs, or 6.92%, to 57.18 lakhs in Fiscal 2023 from 53.48 lakhs in Fiscal 2022.

Audit Fee decreased by 0.41 lakhs, or 1.65%, to 24.40 lakhs in Fiscal 2023 from 24.81 lakhs in Fiscal 2022.

Consultancy and Professional charges increased by 194.99 lakhs, or 44.60%, to 632.19 lakhs in Fiscal 2023 from 437.20 lakhs in Fiscal 2022 due to increased product related certifications.

Bank charges decreased by 159.18 lakhs, or 31.70% to 502.17 lakhs in Fiscal 2023 from 502.17 lakhs in Fiscal 2022 due to reduction in rates for non-fund facilities.

Royalty charges decreased by 11.86 lakhs, or 65.56%, to 6.23 lakhs in Fiscal 2023 from 18.09 lakhs in Fiscal 2022 due to lower sale of product under license agreement.

Direction charges including other expenses increased by 203.35 lakhs, or 35.38%, to 778.15 lakhs in Fiscal 2023 from 574.80 lakhs in Fiscal 2022.

Manufacturing expenses increased by 45.98 lakhs, or 20.62%, to 268.97 lakhs in Fiscal 2023 from 222.99 lakhs in Fiscal 2022.

Rates and taxes increased by 67.97 lakhs, or 126.03% to 121.90 lakhs in Fiscal 2023 from 53.93 lakhs in Fiscal 2022.

Software expenses increased by ? 51.71 lakhs, or 21.55% to 291.70 lakhs in Fiscal 2023 from 239.99 lakhs in Fiscal 2022.

Expressed as a percentage of total income, operating and other expenses is 17.01% in Fiscal 2023 when compared to 16.66% in Fiscal 2022.

INTEREST AND FINANCE CHARGES

Our interest and finance charges decreased by 99.33 lakhs, or 48.29%, to 106.37 lakhs in Fiscal 2023 from 205.70 lakhs in Fiscal 2022, due to utilization of working capital in FCNR and surrendering of working capital loans during H2.

DEPRECIATION AND AMORTIZATION OF TECHNICAL KNOW-HOW

Our depreciation and amortization of technical know-how expense decreased by 133.48 lakhs, or 6.06%, to 2,070.48 lakhs in Fiscal 2023 from 2,203.96 lakhs in Fiscal 2022.

PROFIT BEFORE TAX AND EXCEPTIONAL ITEM

Profit before tax and exceptional item increased by 4,370.44 lakhs, or 51.72%, to 12,820.23 lakhs in Fiscal 2023 from 8,449.79 lakhs in Fiscal 2022.

EXCEPTIONAL ITEM

Exception item includes write back of payable in Indian subsidiary which amounts to 62.78 lakhs in Fiscal 2023 as compared to 757.72 lakhs in Fiscal 2022 and Profit on sale of land by holding company amounts to 71.63 lakhs in fiscal 2023.

PROFIT BEFORE TAX

Profit before tax increased by 3,747.13 lakhs, or 40.70%, to 12,954.64 lakhs in Fiscal 2023 from 9.207.51 lakhs in Fiscal 2022.

TAXATION

Our tax expense increased by 1,115.52 lakhs, or 51.69%, to 3,273.41 lakhs in Fiscal 2023 from 2,157.89 lakhs in Fiscal 2022 due to higher profits.

PROFIT AFTER TAX

Consequently, our profit after tax increased by 2,631.61 lakhs, to 9,681.23 lakhs in Fiscal 2023 from 7,049.62 lakhs in Fiscal 2022.

The consolidated net worth stands at 60,451.97 lakhs with an increase of 7,735.54 lakhs over Fiscal 2022.

Stand-alone basis

The results of operations for the year ended March 31, 2023 and 2022 on a standalone basis is as follows:

Particulars	Fiscal 2023		Fiscal 2022
	( in Lakhs)	% of Total Income	( in Lakhs)	% of Total Income
Income:
Sales	82,148.42	97.39%	71,880.55	97.61%
Other Income	2,200.22	2.61%	1,756.48	2.39%
Total Income	84,348.64	100.00%	73,637.03	100.00%
Expenditure:
Consumption of Raw Material, Stores, Spare parts and Components	57,071.17	67.66%	50,749.97	68.92%
Purchases for Project Business	(437.22)	-0.52%	940.96	1.28%
Operating and Other Expenses	13,651.50	16.18%	12,237.37	16.62%
Interest and Finance Charges	106.37	0.13%	205.70	0.28%
Depreciation and Amortization of Technical Knowhow	1,964.46	2.33%	2,123.70	2.88%
Total Expenditure	72,356.28	85.78%	66,257.70	89.98%
Profit Before Tax and exceptional item	11,992.36		7,379.33
Exceptional items	(50.81)
Profit Before Tax	11,941.55		7,379.33
Current Tax	3,578.07		1,788.12
Deferred Tax	(482.35)		165.01
Profit After Tax	8,845.83		5,426.20
Other Comprehensive Income
Exchange difference on translation of foreign operations	(11.17)		(60.76)
Income Tax on exchange difference on of foreign operations	2.81		15.29
Re-measurement of defined benefit plan	5.78		(84.34)
Income Tax on re-measurement of defined benefit plan	(1.45)		21.23
Total	(4.03)		(123.87)
Total Comprehensive Income	8,841.80		5,317.62

Fiscal 2023 compared to Fiscal 2022

INCOME

Total income increased by 10,711.61 lakhs, or 14.55%, to 84,348.64 lakhs in Fiscal 2023 from 73,637.03 lakhs in Fiscal 2022, predominantly due to increase in sales volume of Manufacturing Business.

TOTAL SALES

Total sales increased by 10,267.87 lakhs, or 14.28%, to 82,148.42 lakhs in Fiscal 2023 from 71,880.55 lakhs in Fiscal 2022, predominantly due to increase in sales volume of Manufacturing Business.

Net sales from our manufacturing business increased by 8,641.68 lakhs, or 12.32%, to 78,796.72 lakhs in Fiscal 2023 from 70,155.04 lakhs in Fiscal 2022. Net sales of our manufacturing business contributed 93.42% and 95.27% of our Total Income in Fiscal 2023 and 2022, respectively.

Net sales from our Project Business increased by 1,626.19 lakhs, or 94.24%, to 3,351.70 lakhs in Fiscal 2023 from 1,725.51 lakhs in Fiscal 2022. Net sales of our Project Business contributed 3.97% and 2.34% of our total Income in Fiscal 2023 and 2022, respectively.

Expressed as a percentage of total income, net sales contributed 97.39% in Fiscal 2023 versus 97.61% in Fiscal 2022.

OTHER INCOME

Other income contributed 2.61% and 2.39% of our total income in Fiscal 2023 and 2022, respectively. Other income increased by 443.74 lakhs, or 25.26%, to 2,200.22 lakhs in Fiscal 2023 from 1,756.48 lakhs in Fiscal 2022 mainly due to increase in foreign exchange fluctuation gains by 365.44 lakhs to 1,251.44 lakhs in fiscal 2023 as compared to 886 lakhs in fiscal 2022.

EXPENDITURE

Total expenditure increased by 6,098.58 lakhs, or 9.20%, to 72,356.28 lakhs in Fiscal 2023 from 66,257.70 lakhs in Fiscal 2022.

CONSUMPTION OF RAW MATERIAL, STORES, SPARES PART AND COMPONENTS

Consumption of raw material, stores, spare parts and components expenses increased by 6,321.20 lakhs, or 12.46% to 57,071.17 lakhs in Fiscal 2023 from 50,749.97 lakhs in Fiscal 2022, primarily due to increase in sales volume of manufacturing product. Expressed as a percentage of total income, raw material consumed expense is 67.66% in Fiscal 2023 from 68.92% in Fiscal 2022.

OPERATING AND OTHER EXPENSES

Our operating and other expenses increased by 1,414.13 lakhs, or 11.56%, to 13,651.50 lakhs in Fiscal 2023 from 12,237.37 lakhs in Fiscal 2022. Expressed as a percentage of total income, operating and other expenses is 16.18% in Fiscal 2023 when compared to 16.62% in Fiscal 2022.

Power and fuel expenses has increased by 19.71 lakhs, or 2.38%, to 848.69 lakhs in Fiscal 2023 from 828.98 lakhs in Fiscal 2022 on account of increased production.

Personnel expenses through salaries, wages and bonuses increased by 729.47 lakhs, or 12.79%, to 6,431.53 lakhs in Fiscal 2023 from 5,702.06 lakhs in Fiscal 2022 on account of salary revision coupled with additional manpower.

Welfare expenses increased by 112.46 lakhs, or 9.64%, to 1,278.67 lakhs in Fiscal 2023 from 1,166.21 lakhs in Fiscal 2022.

Repair expenses increased by 272.08 lakhs, or 72.32%, to 648.31 lakhs in Fiscal 2023 from 376.23 lakhs in Fiscal 2022 due to refurbishment of factory building and repairs of old machines.

Selling expenses decreased by 362.91 lakhs, or 26.34%, to 1,015.06 lakhs in Fiscal 2023 from 1,377.97 lakhs in Fiscal 2022.

Vehicle Maintenance expenses increased by 8.84 lakhs, or 23.28%, to 46.81 lakhs in Fiscal 2023 from 37.97 lakhs in Fiscal 2022.

Insurance expenses increased by 19.54 lakhs, or 21.39%, to 110.90 lakhs in Fiscal 2023 from 91.36 lakhs in Fiscal 2022.

Travelling expenses increased by 330.44 lakhs, or 44.28%, to 1,076.70 lakhs in Fiscal 2023 from 746.26 lakhs in Fiscal 2022 due to increased travel for marketing and other business related travel.

Consultancy & Professional charges increased by 146.81 lakhs, or 49.49%, to 443.46 lakhs in Fiscal 2023 from 296.65 lakhs in Fiscal 2022 due to increased product related certifications.

Bank charges decreased by 133.42 lakhs, or 29.45% to 319.67 lakhs in Fiscal 2023 from 453.09 lakhs in Fiscal 2022 due to reduction in rates for non-fund facilities.

Royalty charges decreased by 11.86 lakhs, or 65.56%, to 6.23 lakhs in Fiscal 2023 from 18.09 lakhs in Fiscal 2022 due to lower sale of product under license agreement.

Direction charges including other expenses increased by 77.21 lakhs, or 22.77%, to 416.32 lakhs in Fiscal 2023 from 339.11 lakhs in Fiscal 2022.

Manufacturing expenses increased by 45.98 lakhs, or 20.62%, to 268.97 lakhs in Fiscal 2023 from 222.99 lakhs in Fiscal 2022.

Software expenses increased by 51.71 lakhs, or 21.55%, to 291.70 lakhs in Fiscal 2023 from 239.99 lakhs in Fiscal 2022.

Rates and taxes increased by 102.38 lakhs, or 797.35%, to 115.22 lakhs in Fiscal 2023 from 12.84 lakhs in Fiscal 2022.

INTEREST AND FINANCE CHARGES

Interest and finance charges decreased by 99.33 lakhs, or 48.29%, to 106.37 lakhs in Fiscal 2023 from 205.70 lakhs in Fiscal 2022, due to lower utilization of working capital limits and improved receivable & operating cash flow management.

DEPRECIATION AND AMORTIZATION OF TECHNICAL KNOW-HOW

Our depreciation and amortization of technical know-how expense decreased by 159.24 lakhs, or 7.50%, to 1,964.46 lakhs in Fiscal 2023 from 2,123.70 lakhs in Fiscal 2022.

PROFIT BEFORE TAX AND EXCEPTIONAL ITEM

Profit before tax and exception items increased by 4,613.03 lakhs, or 62.51%, to 11,992.36 lakhs in Fiscal 2023 from 7,379.33 lakhs in Fiscal 2022.

EXCEPTIONAL ITEM

Exceptional items include profit on sale of unused land of 71.63 lakhs and provision for diminution in the value of investments 122.44 lakhs in Fiscal 2023.

PROFIT BEFORE TAX

Profit before tax increased by 4,562.22 lakhs, or 61.82%, to 11,941.55 lakhs in Fiscal 2023 from 7,379.33 lakhs in Fiscal 2022.

TAXATION

Tax expense including deferred tax increased by 1,142.59 lakhs, to 3,095.72 lakhs in Fiscal 2023 from 1,953.13 lakhs in Fiscal 2022 due to higher profits.

PROFIT AFTER TAX

Profit after tax increased by 3,419.63 lakhs to 8,845.83 lakhs in Fiscal 2023 from 5,426.20 lakhs in Fiscal 2022 due higher profit.

Net worth stands at 59,389.25 lakhs i.e. an increase of 7,123.53 Lakhs over fiscal 2022.

	For and on behalf of Board of Directors
	Mohib N Khericha	Nikhil Kumar
	Chairman	Managing Director
July 12, 2023	Ahmedabad	Frankfurt