undefined share price Management discussions

1.Indian Economy

The effects of the Russia-Ukraine war, heightened energy prices and elevated inflation trickled down to India as well. However, the economy remained on a steady growth path, demonstrating strong resilience against these headwinds. According to the National Statistical Office (NSO), the Indian economy grew by 7.2% in FY2023. Factors such as strong private consumption, steady manufacturing and normalisation of contact-intensive services sectors contributed to this growth.

Inflation remained at 4-6% for most of FY2023, but began to ease during Q3 and Q4 of FY2023 owing to the central banks hiking policy rates by 250 bps. In April 2023, the Reserve Bank of India (RBI) paused its rate hike cycle and is expected to maintain it if inflation remains under control.

Growth during the year was largely led by private consumption and capital formation. The central government increased capital expenditure to reach H 7.28 lakh crore in FY2023 to boost employment and infrastructure growth. It also seeks to ensure equity and equality of such investments across the country. This is in line with the Governments focus and commitment to the Four Is – Infrastructure, Investment, Innovation and Inclusion – in the next 25 years.

The Indian government has stressed on making India ‘Atmanirbhar and has laid down various incentives and policies. The Union Budget 2023-24 proposed a 33% increase in infrastructure spending to H 10 trillion, with the highest ever capital outlay of H2.4 trillion for railways. It has also identified 100 critical transport infrastructure projects for last-mile logistics and allocated H 75,000 crore towards it.

Source: Ministry of Finance, Business Standard

1.1. Outlook

The Indian economy is expected to remain resilient and grow at 6.1% in FY2024. Broad-based credit growth, improving capacity utilisation, the governments thrust on capital spending and infrastructure are expected to bolster investment activity. Moreover, a positive outlook prevails for the residential real estate and automotive sectors, and renewable energy industry. The anticipation is that both consumer and business confidence will endure in the upcoming period, as India maintains its trajectory of high growth, reaffirming its position of influence in the global economic landscape.

The favourable aspects include moderating inflation and the decision by the RBI to halt interest rate increases. Nonetheless, there persists a risk stemming from the global economic deceleration. The monsoon season assumes importance as a critical factor to observe, particularly in terms of its impact on rural demand, given the projected El Nino conditions for the current year.

Source: World Economic Outlook, International Monetary Fund (IMF)

2.Indian Railways

As a Comapny that manufactures and supplies hot coil springs and air springs, Indian Railways is our primary customer. During FY2023, Indian Railways registered a record revenue of 2.4 lakh crore, reflecting a 25% growth over FY2022. This growth was driven by milestones achieved across categories including freight loading, electrification, new line/ doubling / gauge conversion, loco production and technology integration for ensuring safety:

Freight loading and revenue

The Railways loaded 1,512 MT of freight in FY2023, marking an increase of 6.63% over the previous year. Favourable government policies and the Railways ease of doing business and improved service delivery at competitive prices attracted new traffic.


In its bid to accomplish Mission100% Electrification and become the largest green railway network in the world, the Indian Railways achieved electrification of 6,542 RKMs during the year, registering an increase of 2.76%.

New line

The Railways laid new lines measuring 5,243 km during the year – its highest-ever commissioning.

Automatic signalling

Automatic signalling is a cost-effective measure to increase line capacity to run more trains on existing high-density routes of Indian Railways. During FY2023, the Railways upgraded 530 km with automatic signalling, registering an increase of 143.12% over FY2022.

Gati Shakti Freight Terminals

To increase its model share in the freight segment, Indian Railways is prioritising the development of Gati Shakti Freight Terminals. During FY2023, 30 freight terminals were created compared to 21 in FY2022.

Vande Bharat Trains

Indian Railways has issued a production plan of 102 Vande Bharat Rakes (35 in FY2023 and 67 in FY2024). A total of x75 Vande Bharat Rakes are planned as Chair Car version and the remaining as Sleeper version. The Railways has also planned to manufacture 400 Vande Bharat trains (Sleeper version) of three different technologies for which tenders have been floated to select technology partners for manufacturing within Indian Railways Production Units with the Railways manpower.

Source: Ministry of Railways

2.1. Government initiatives

The Indian Government has rolled out several initiatives to boost Indian Railways:

National Rail Plan (NRP)

The NRP aims to create a future-ready railway system by 2030. Its goal is to formulate strategies based on both operational capacities and commercial policy initiatives to increase the modal share of the Railways in freight to 45% and create capacity ahead of demand. Under the Plan, 58 super-critical projects of a total length of 3,750 km costing 39,663 crore and 68 critical projects of a total length of 6,913 km costing 75,736 crore have been identified for completion by 2024.

Foreign direct investment

The government has cleared the proposal for allowing 100% FDI in the railway sector, other than operations through the automatic route. The government wants to invest US$120 billion in the coming five years for the development of railway services. As India has an edge in terms of skilled workforce and a huge manufacturing and consumer base, it would be a profitable sector for foreign investors

Indian Railway Innovation Policy

The Indian Railway Innovation Policy "Start-ups for Railways" was introduced in June 2022. The intention is to work with entrepreneurs, technology developers, and innovators through start-ups to obtain affordable, user-friendly, reliable products and solutions for use on the Indian Railways network.

Union Budget 2023-24

The Indian Railways has been allocated a capital outlay of H2.4 lakh crore in the Union Budget 2023-24. This allocation will be used to lay new lines with an aim to decongest the Indian Railways and make it future-ready.

Mission Raftaar

In August 2022, the government launched Mission Raftaar for speed enhancement and to achieve a target of doubling the average speed of freight trains and increasing the average speed of superfast /mail/express trains by 25 kmph.

2.2. Outlook

Over the upcoming five years, the Indian railway market is anticipated to ascend to the position of the third-largest market globally, contributing a substantial 10% share to the overall global market. The government has announced two key initiatives that are expected to ramp up the development of Indian Railways:

‘Adarsh Station Scheme

Under the scheme, 1,253 stations have been identified for development, out of which 1215 stations have been developed so far. The remaining 38 stations are planned to be developed by FY2023.

National Rail Plan (NRP)

Under this Plan, Indian Railway plans to accelerate implementation of critical projects, such as multitrack congested routes, achieve 100% electrification, upgrade the speed to 160 kmph on Delhi-Howrah and Delhi-Mumbai routes, upgrade the speed to 130 kmph on all other golden quadrilateral-golden diagonal (GQ/GD) routes and eliminate all level crossings on the GQ/GD route by 2024.

Indian Railways is also looking at leveraging technology and embedding artificial intelligence, quantum computing and data analytics in its operations to transform railways into a more efficient, safer and passenger-friendly mode of transportation. This is expected to further expedite the development of railways in India and contribute significantly to the Indian economy.

3.Company Overview

Frontier Springs Limited (Frontier Springs) was established in 1981. Commencing with the manufacturing of Leaf Springs and Laminated Bearing Springs for both the automotive and railway sectors, the Companys journey evolved consistently. As the railway industry underwent modernisation, the Company embraced this transformation and, in a matter of years, expanded its facility to cater to the surging need for Coil Springs and Air Springs. These springs found application in wagons, coaches and locomotives for the Indian Railways, alongside numerous other valued clients.

The Companys forefront standing in the market results from its unwavering dedication to key aspects such as product excellence, innovative product launches, the acquisition of cutting-edge machinery for enhanced and expedited product finishing via in-house advancement, competitive pricing and an exceedingly efficient cost structure. Its commitment to perpetual product enhancement and its adaptable approach to varying situations have further bolstered its market leadership. Looking ahead, the Company remains resolute in its objective of efficiently and promptly catering to the needs of its end users.

3.1. Performance

Our performance aligned with our stated projection of a 25% growth in our conventional product categories, which include Coil Springs and Forgings. Our revenue from operations stood at H 10,735.56 lakh, having grown by 28.33% over FY2022. We recorded an EBITDA of H 1,330.87 lakh, up by 0.75% compared to H1,320.95 lakh in FY2023. EBITDA margin was 12.40% compared to 15.79% in the previous year. Our PAT stood at H724.05 lakh compared to H 751.44 lakh in FY2022.

3.3. Outlook

The governments railway modernisation drive is expected to create a range of opportunities. Our FY2024 order book ensures 25% growth in traditional products and the new Air Springs line will boost revenue and margins. We will focus on Forging for higher growth and have installed a 6-tonne hammer to achieve this goal. In the coming 2-3 years, the Company will continue to pursue strong growth, margin expansion and facility upgrades.

4. Risks and Their Mitigation

Every business is susceptible to risks. The Company has identified the risks to its business and is undertaking the necessary measures to continue sustainable operations.

Raw material costs

Most of our raw materials are iron and steel, both commodity materials prone to notable price shifts. The railway industrys safety reliance on springs enforces strict sourcing control by Indian Railways. This confines us to authorized procurement sources.

Competitive landscape

Indian Railways employs diverse suppliers to mitigate procurement risks. Given the tender-based nature of the business, the inherent risk lies in rivals presenting lower prices, posing a threat to our market share.

Inconsistent order flow

A significant segment of our operations hinges on the Indian Railways. Disruptions in their orders could significantly affect our financial performance. To mitigate this reliance, we have diversified into forgings, expanding beyond the railway sector.

Delay in order execution

Delays in order fulfillment jeopardise our credibility, potentially undermining our prospects in upcoming tender opportunities.

High dependency on a single client

Relying heavily on the Indian Railways as a key client exposes our revenue stream and operational sustainability to vulnerability

5.Human Resources

The Company places immense value on its employees as a critical asset within the current business landscape. To ensure that this asset significantly contributes to the Companys performance, the following strategies are being pursued:

Offering ongoing training and comprehensive exposure to all employees.

Actively encouraging regular input and feedback from employees, fostering a meaningful exchange of ideas.

Empowering employees effectively to nurture a sense of ownership among them.

In essence, the Company provides every employee with the chance to unleash their full potential and flourish within the organisation.

As of March 31, 2023, the Company has 186 skilled employees.

6. Internal control system and adequacy

The Company is committed to maintaining internal control systems and procedures designed to provide reasonable assurance for the orderly and efficient conduct of business and the security of its assets. Actual performance is constantly monitored by the management. The Company has a well–defined organisation structure and authority level. The internal control system is supplemented by an extensive review by the management and documented policies, guidelines and procedures.

7.Cautionary Statement

Frontier Springs Limited may, from time to time, make additional written and oral forward-looking statements, including statements contained in the Companys filings and the reports to shareholders. The Company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the Company. All information contained in this report has been prepared solely by Frontier Springs Limited. The Company does not accept any liability whatsoever for any loss, howsoever, arising from any use or reliance on this Annual Report or its contents or otherwise arising in connection therewith.