NRB Bearings Ltd:Annual Report 2023-24 Analysis

NRB Bearings Ltd.: A Comprehensive Overview #

About the Company #

Year of Establishment and Founding History:

NRB Bearings Ltd. was established in 1965 by Mr. Trilochan Singh Sahney. The company began as a joint venture with Nadella of France, aiming to bring needle roller bearing technology to India.

Headquarters Location and Global Presence:

The company’s headquarters are located in Mumbai, India. While primarily focused on the Indian market, NRB Bearings has expanded its global presence through exports to various countries.

Company Vision and Mission:

• Vision: To be a globally respected engineering organization recognized for innovation, quality, and customer service.
• Mission: To provide innovative and cost-effective bearing solutions that enhance the performance and reliability of our customers’ products.

Key Milestones in Their Growth Journey:

• 1965: Establishment of NRB Bearings Ltd. in collaboration with Nadella, France.
• 1970s: Development of indigenous manufacturing capabilities for needle roller bearings.
• 1980s: Diversification into other types of bearings and automotive components.
• 1990s: Focus on exports and expanding into new markets.
• 2000s onwards: Continued investment in R&D, technological advancements, and global expansion.

Stock Exchange Listing Details and Market Capitalization:

NRB Bearings Ltd. is listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). (Market capitalization data should be verified from current financial sources).

Recent Financial Performance Highlights:

(Insert financial performance data, including revenue, profit, and growth percentages from recent annual reports or investor presentations).

Management Team and Leadership Structure:

(List the key management personnel, including the CEO, CFO, and other key executives).

Any Notable Awards or Recognitions:

(List any awards or recognitions received for quality, innovation, or performance).

Their Products #

Complete Product Portfolio with Categories:

• Needle Roller Bearings
• Cylindrical Roller Bearings
• Special Bearings
• Tapered Roller Bearings
• Ball Bearings
• Automotive Components (e.g., Synchronizer rings, transmission components)

Flagship or Signature Product Lines:

• Needle Roller Bearings

Key Technological Innovations or Patents:

(Include information about patents or technological advancements in bearing design, materials, or manufacturing processes).

Manufacturing Facilities and Production Capacity:

NRB Bearings operates multiple manufacturing facilities across India. (Detailed information about the location of facilities and production capacity).

Quality Certifications and Standards:

• ISO 9001
• IATF 16949

Any Unique Selling Propositions or Technological Advantages:

• Engineering expertise in providing customized bearing solutions.
• Strong focus on R&D and innovation.
• Established reputation for quality and reliability.

Recent Product Launches or R&D Initiatives:

(Include information on any recent product launches, new bearing designs, or R&D initiatives).

Primary Customers #

Target Industries and Sectors:

• Automotive (passenger vehicles, commercial vehicles, two-wheelers)
• Industrial (electric motors, machine tools, textile machinery)
• Off-Highway Vehicles
• Agricultural Equipment

Geographic Markets (Domestic vs. International):

Primarily focused on the Indian market, with exports to several countries globally.

Major Client Segments:

• Automotive OEMs (Original Equipment Manufacturers)
• Tier 1 Automotive Suppliers
• Industrial Equipment Manufacturers

Distribution Network and Sales Channels:

• Direct sales to OEMs
• Distribution network for aftermarket sales

Major Competitors #

Direct Competitors in India and Globally:

• SKF
• Schaeffler Group (FAG, INA)
• Timken
• NBC Bearings (National Engineering Industries Ltd.)
• JTEKT

Comparative Market Share Analysis:

(Include market share data if available from industry reports).

Competitive Advantages and Disadvantages:

• Advantages: Strong domestic presence, established relationships with Indian OEMs, engineering capabilities.
• Disadvantages: Global scale compared to larger international players, potentially higher cost base compared to some competitors.

How They Differentiate From Competitors:

• Focus on customization and engineering solutions.
• Strong relationships with domestic automotive companies.
• Responsiveness.

Industry Challenges and Opportunities:

• Challenges: Intense competition, fluctuating raw material prices, technological advancements.
• Opportunities: Growth in the Indian automotive industry, increasing demand for customized bearing solutions, expanding into new industrial sectors.

Market Positioning Strategy:

• NRB Bearings positions itself as a reliable provider of high-quality bearing solutions, focusing on customization and engineering support.

Future Outlook #

Expansion Plans or Growth Strategy:

(Include information about expansion into new markets, increasing production capacity, or strategic alliances).

Upcoming Products or Innovations:

(Discuss any planned product launches or innovative technologies in development).

Sustainability Initiatives or ESG Commitments:

(Include information about any sustainability initiatives undertaken by the company, such as reducing carbon footprint, conserving resources, or promoting ethical business practices).

Industry Trends Affecting Their Business:

• Electric vehicle (EV) growth and changing bearing requirements.
• Increasing adoption of automation and advanced manufacturing techniques.
• Growing demand for lightweight and energy-efficient bearings.

Long-Term Vision and Strategic Goals:

(Summarize the company’s long-term vision and strategic goals for the future).

Comprehensive Performance Overview of NRB Bearings Limited #

3-Year Trend Analysis of Key Financial Metrics #

• Revenue from Operations: A marginal decrease of 0.04% was observed in FY24 (₹1,02,272 lakhs) compared to FY23 (₹1,02,310 lakhs), following a significant increase from FY22 (₹88,938 lakhs).
  • Domestic Sales decreased by 0.45%.
  • Exports increased by 1.28%.
• Profit After Tax: FY24 showed a substantial increase of 191.92% in net profit (₹25,047 lakhs) compared to FY23 (₹8,580 lakhs), which also saw growth from FY22 (₹7,014 lakhs). This indicates that the company has an Exceptional Items-gain.
• Earnings Per Share (EPS): Consistent with profit trends, both basic and diluted EPS increased significantly in FY24.
• Return on Equity: Significant growth to 33.66% compared to previous years.
• Debt-Equity Ratio: Improved significantly in FY24, indicating debt repayment.
• Current Ratio: Improvement of 58%.

Business Segment Performance #

• Single Segment: NRB Bearings Limited operates within a single reportable segment: ball and roller bearings, primarily serving the mobility industry.
• Customer Base: 65%-70% of demand is from Original Equipment Manufacturers (OEMs) and Tier 1 customers, 10%-12% from the Aftermarket, and 20%-23% from Exports (predominantly OEMs and Tier 1).

Major Strategic Initiatives and Their Progress #

• Focus on Emerging Markets: The Company is exploring emerging markets like aerospace, high-speed rail, and new energy.
• Product Diversification: Efforts are underway to expand the product portfolio, focusing on components that are less susceptible to obsolescence with EV advancements.
• R & D: Prime focus for the company.
• Operational Efficiency: Ongoing initiatives for process reengineering, automation, and digitization to improve operations and match global standards.
• Investment: Investment done in R&D and capex to improve efficiency and reduce environmental impact.

Risk Landscape Changes #

• Increased Market Volatility: Shifting market dynamics due to customer demand and operating models.
• Technological Disruption: Risks associated with EV transition and technological advancements, impacting the demand for traditional components.
• Supply Chain Disruptions: Procurement of raw materials is subject to market volatility and supply chain disruptions.
• Regulatory and Trade Environment: Rapidly evolving emission and safety regulations and trade barriers are creating risks.
• Operational Risks: A fire incident at the Waluj plant occurred during the year, impacting production.

ESG Initiatives and Metrics #

• Environmental: ISO 14001:2015 certification, efforts to conserve natural resources, reduce and recycle waste, and adhere to emission norms. Initiatives include ETP upgrades, water conservation, rainwater harvesting, and energy conservation measures.
• Social: Focus on safety, health, and employee well-being, including safety training, health check-ups, and awareness programs. The company also maintains cordial relations with workmen’s unions.
• Governance: Adherence to Corporate Governance standards, Code of Conduct, Whistle Blower Policy, and compliance with SEBI regulations.
• CSR: The Company spent Rs. 170.00 lakhs on CSR projects.

Management Outlook #

• Optimistic Growth: The management anticipates continued growth in the auto component industry due to strong macroeconomic indicators, government policies, and GDP growth projections.
• Focus on Innovation: Emphasis on friction reduction, precision improvement, NVH reduction, and products for electric vehicles.
• Global Player Strategy: The Company aims to become a global player by providing multiple solutions for customer requirements and expanding its range of products and allied parts.
• Material Subsidiary: No subsidiary company became a material subsidiary, as per the SEBI.

Detailed Analysis #

Financial Position Analysis of NRB Bearings Limited #

Balance Sheet Analysis: 3-Year Comparative (Consolidated, ₹ in lakhs) #

The following data pertains to the entire company.

Significant Changes in Major Line Items (>10% YoY) #

• Non-Current Assets (FY24 vs FY23): Decreased slightly (0.26%), mainly due to reduction of right of use assets, partially offset by increase in capital work in progress.
• Current Assets (FY24 vs FY23): Increased by 3.42%, main increase due to a build up in inventories.
• Assets held for sale: Decreased to 0 Lakhs because the Company has dispossed off its assets held for sale.
• Non-Current Liabilities (FY24 vs FY23): Decreased by 35.46%, primarily due to reduction in borrowings.
• Current Liabilities (FY24 vs FY23): Decreased by 29.69%, primarily due to reduction of borrowings.
• Other Equity (FY24 vs FY23): Increased by 30.89%, largely attributed to profit for the year.

Working Capital Trends #

• Current Assets: Increased in FY24, mainly due to a build up of inventories, and an increase of trade receivables.
• Current Liabilities: Saw a significant decrease in FY24, primarily due to a reduction in borrowings, and trade payables.
• Working Capital: Increasing, reflecting the increase in Current Assets and Decrease in Current Liabilities.

Asset Quality Metrics #

• Property, plant and equipment constitutes the largest portion of non-current assets.
• Inventories make up the biggest part of current assets.

Debt Structure and Maturity Profile #

• Non-Current Borrowings: Decreased substantially, indicating repayment of long-term debt.
• Current Borrowings: Also decreased significantly.
• Debt-to-Equity Ratio: Improved considerably from 0.41 in FY23 to 0.14 in FY24, signifying reduced leverage.

Off-Balance Sheet Items #

• Contingent Liabilities: The primary contingent liability relates to claims against the company not acknowledged as debt (primarily tax-related), amounting to ₹4,878 lakhs as of March 31, 2024.
• Guarantees: Outstanding guarantees furnished to banks and financial institutions total ₹7,142 lakhs.

NRB Bearings Limited Financial Analysis #

Revenue Breakdown #

Segment #

The Company operates primarily in a single reportable segment: ball and roller bearings.

Geography (Standalone) #

• Domestic sales decreased by 0.45% (FY24: ₹77,560 lakhs vs. FY23: ₹77,910 lakhs).
• Export sales increased by 1.28% (FY24: ₹24,712 lakhs vs. FY23: ₹24,400 lakhs).

Geography (Consolidated) #

• Within India FY24: ₹80,474 lakhs vs FY23: ₹80,330 lakhs.
• Outside India FY24: ₹28,929 lakhs, FY23: ₹25,386 lakhs

Overall Revenue Growth (Standalone) #

Net revenue from operations decreased by 0.04% (FY24: ₹1,02,272 lakhs vs. FY23: ₹1,02,310 lakhs).

Overall Revenue Growth (Consolidated) #

Net revenue from operations increased by 3.49% (FY24:₹1,09,403 lakhs, FY23:₹1,05,716 lakhs

Cost Structure Analysis (Standalone) #

• Material Costs: Represented 47.46% of total income in FY24, a decrease from 47.93% in FY23.
• Employee Costs: Constituted 12.21% of total income in FY24, increasing from 11.27% in FY23.
• Manufacturing and Other Expenses: Accounted for 26.89% of total income in FY24, a decrease from 26.94% in FY23.

Margin Analysis (Standalone) #

• Profit Before Depreciation, Interest, and Tax (PBDIT) Margin: Decreased to 15.76% in FY24 from 16.83% in FY23.
• Profit Before Tax (PBT) Margin: Increased significantly to 31.12% in FY24 from 11.12% in FY23, primarily due to exceptional items.
• Net Profit Margin: Increased significantly to 24.49% in FY24 from 8.39% in FY23 due to exceptional gains.

Operating Leverage (Standalone) #

Specific data to calculate the degree of operating leverage is not fully provided, but the decrease in PBDIT margin with relatively stable sales indicates the influence of fixed costs.

Non-Recurring Items (Standalone) #

Exceptional Items: FY24 showed a net exceptional gain of ₹21,116 lakhs, primarily due to the gain on the sale of land and building and sale of investment in subsidiary, offset by fire-related losses. FY23 had a net exceptional loss of ₹1,429 lakhs.

EPS Analysis (Standalone) #

• Basic EPS: Increased to ₹25.84 in FY24 from ₹8.85 in FY23.
• Diluted EPS: Increased to ₹25.84 in FY24 from ₹8.85 in FY23.

Cash Management #

Cash Flow and Liquidity Analysis #

Detailed OCF, ICF, FCF Components (Consolidated) #

• OCF: Increased to ₹11,675 lakhs in FY2024 from ₹6,553 lakhs in FY2023, primarily due to higher profit before tax.
• ICF: Increased, showing investing inflow of ₹13,871 lakhs for FY2024 comparing to outflow of (₹4,438)lakhs, due to sale of assets held for sale.
• FCF: can not be fully calculated.

Working Capital Management Efficiency (Consolidated) #

• Net Capital Turnover Ratio decreased to 2.12 times in FY2024 from 2.99 times in FY2023. The Company has repaid the borrowings and hence an increase in the working capital.

Dividend and Share Buyback Trends (Consolidated) #

• An interim dividend of ₹4.10 per share was declared and paid in FY2024.
• A final dividend of ₹2 per share was paid in FY2023, and ₹0.5 in FY2022.
• Total dividend payout was ₹4,943 lakhs in FY2024, compared to ₹1,938 lakhs in FY2023
• No share buyback information is available.

Debt Service Coverage (Consolidated) #

• Debt Service Coverage Ratio improved to 47.29 times in FY2024 from 32.18 times in FY2023. The Company has repaid its borrowings and hence the current maturities of long term borrowings have reduced leading to the variance.

Liquidity Position and Cash Conversion Cycle (Consolidated) #

• Current Ratio improved to 2.48 times in FY2024 from 1.57 times in FY2023.
• Cash and Cash Equivalents decreased to ₹5,093 lakhs in FY2024 from ₹6,288 lakhs in FY2023.
• The cash conversion cycle cannot be calculated with the data.

NRB Bearings Limited: Financial Analysis #

Profitability Ratios (3-Year Trends) #

Return on Equity (ROE) #

• FY2023-24: 33.66%
• FY2022-23: 14.08%
• FY2021-22: Not provided

Analysis: ROE significantly improved in FY24, due to exceptional gains.

Return on Assets (ROA) #

• FY2023-24: 28.03% (Based on Profit before tax)
• FY2022-23: 10.25% (Based on Profit before tax)

Analysis: ROA reflected major increase, due to increased profit and exceptional gains.

Net Profit Margin #

• FY2023-24: 24.49%
• FY2022-23: 8.39%

Analysis: Net profit margin drastically increased due to the exceptional gain, indicating improved cost or pricing, and one-time gains.

Liquidity Metrics #

Current Ratio #

• FY2023-24: 3.01
• FY2022-23: 1.83

Analysis: The current ratio improved considerably in FY24, indicating the company’s enhanced ability to meet short-term obligations.

Efficiency Ratios #

Inventory Turnover #

• FY2023-24: 1.64
• FY2022-23: 1.57

Analysis: A slight improvement in inventory turnover.

Receivables Turnover #

• FY2023-24: 4.52
• FY2022-23: 3.95

Analysis: Receivable turnover improved, indicating greater efficiency in collecting the receivables.

Net Capital Turnover Ratio #

• FY2023-24: 2.12
• FY2022-23: 2.99

Leverage Metrics #

Debt/Equity Ratio #

• FY2023-24: 0.15
• FY2022-23: 0.47

Analysis: Debt-to-equity ratio improved significantly due to debt repayment and increased profits.

Debt Service Coverage Ratio #

• FY2023-24: 5.66
• FY2022-23: 3.85

Analysis: The ratio increased during the year, indicating improved capacity to meet the financial obligations.

Segment-wise ROIC #

• FY 2023-24: 10.62%
• FY 2022-23: 11.67%

Analysis: ROIC decreased in the current year.

Working Capital Ratios #

Receivable Days #

• FY2023-24: 81 days
• FY2022-23: 92 days

Analysis: Receivable days decreased, suggesting a faster collection period.

Inventory Days #

• FY2023-24: 228 days
• FY2022-23: 218 days

Analysis: Inventory holding period slightly increased in FY24.

Payable Days #

• FY2023-24: 58 days
• FY2022-23: 81 days

Analysis: Payable days have decreased significantly, indicating quicker payments to suppliers.

Business Segments Analysis #

Revenue and Profitability Metrics #

• Overall Revenue: Consolidated revenue increased by 3.49% (from ₹1,05,716 lakhs to ₹1,09,403 lakhs). Standalone revenue decreased by 0.04% (from ₹1,02,310 lakhs to ₹1,02,272 lakhs).
• Overall Profitability: Consolidated net profit increased by 151.17% (from ₹9,615 lakhs to ₹24,151 lakhs). Standalone net profit increased by 191.92% (from ₹8,580 lakhs to ₹25,047 lakhs).
• Segment-Wise (Bearings): The auto component industry, of which ball and roller bearings are critical, reported a 9.8% growth rate.

Key Products/Services Performance #

• The Company offers Needle roller bushes and cages, Ball and roller bearings, and Automobile components.
• All Segments Sales saw growth.
• New product development is mentioned for EV components.
• One-way clutch is mentioned as a new product line.

Geographic Distribution and Market Penetration #

• Domestic vs. Export: Domestic sales decreased by 0.45% on a standalone basis, while exports increased by 1.28%.
• Exports account for 20-23% of the Company’s revenue, with a focus on OEMs and Tier 1 customers.
• The company supplies to 45 countries.

CAPEX and ROIC #

• Capital expenditure on energy conservation equipment during the year was Rs. 0.26 lakhs.
• Return on Investment: 28.03% (FY24), 10.25% (FY23).
• Return on Equity Ratio increased by 139%.

Operational Efficiency Metrics #

• Inventory Turnover Ratio: Not directly provided, but changes in inventories are reported.
• Debtors Turnover Ratio/Trade Receivables Turnover Ratio: Not directly provided, but data is present for calculation if total sales data is assumed to be on credit.
• The company transferred on due dates unpaid/unclaimed dividends.

Growth Initiatives and Challenges #

• Growth Initiatives: Focus on component categories with higher margins, development of components for EVs, and expansion into adjacent industries.
• Challenges: Shifting market dynamics, changing OEM needs, technological disruptions (e.g., EVs), evolving regulatory environment, and the presence of spurious/counterfeit products in the market. A fire incident at the Waluj Plant impacted operations.
• Risk Identified: Business continuity, changes in technology, Procurements of raw materials and supply chain.

Risk Framework #

Strategic Risks #

• Severity: High, due to the fire incident impacting a major auto-product assembly line and the evolving automotive market towards EVs.
• Likelihood: Moderate. Market shifts and unforeseen events like the fire incident present ongoing risk.
• Trend: Increasing, with the growing adoption of EVs and changing customer preferences.
• Mitigation Strategies: Focus on components not likely to be replaced by EV, new EV products, expansion into adjacent industries, operational efficiency improvement, process improvement, and investment in R&D for new products.
• Control Effectiveness: Partially effective. Mitigation strategies are in place, but the fire incident indicates vulnerability.
• Potential Financial Impact: Revenue from the two-wheeler segment was adversely impacted. Overall revenue increased by only 3.49% on a consolidated basis, indicating potential stagnation. Net profit increased significantly, but mainly attributed to a one-time exceptional gains, such as income from the sale of land and building, sale of investment in subsidiary company and insurance claim receipts from the fire incident.

Operational Risks #

• Severity: High, highlighted by the fire incident at the Waluj plant causing damage to the auto-product assembly line, ready components, stores, and spares.
• Likelihood: Moderate. Cordial relations with workmen’s unions are mentioned, but incidents like the Waluj fire are possible.
• Trend: Stable, assuming mitigation strategies are implemented effectively.
• Mitigation Strategies: Adequate insurance coverage, risk management framework to identify and minimize risks, focus on safety and environmental awareness, and implementation of safety measures like ETP upgradation, water conservation and energy conservation activities.
• Control Effectiveness: Moderate, with systems like ISO 14001:2015, ISO 45001:2018, and IATF16949:2016 certifications, but the fire incident demonstrated vulnerability.
• Potential Financial Impact: The fire led to a recorded impairment loss (net) of ₹2,076 lakhs. The insurance claim received was ₹3,051 lakhs.

Financial Risks #

• Severity: Moderate.
• Likelihood: Moderate, influenced by market volatility, raw material price fluctuations, and interest rate changes.
• Trend: Decreasing for some risks (e.g. debt levels) and increasing for other risks (e.g. change in raw material prices).
• Mitigation Strategies: Judicious working capital management, operational efficiencies, focus on receivables and inventory, hedging against foreign currency fluctuations through derivative instruments.
• Control effectivness: the debt-equity ratio improved significantly from 0.46 to 0.14, indicating a reduction in financial leverage.
• Potential Financial Impact: Interest rate sensitivity analysis indicates potential impact on profit before tax with changes in interest rates.

Compliance/Regulatory Risks #

• Severity: Moderate to High. A fine was levied by BSE and NSE for delay in obtaining shareholder approval under Regulation 17(1A) of SEBI, also, FED Master Direction related delay.
• Likelihood: Low to moderate. There’s a strong emphasis on compliance, but instances of delay have occurred.
• Trend: Stable.
• Mitigation Strategies: Vigil Mechanism and Whistle Blower Policy in place, systems to ensure compliance with laws.
• Control Effectiveness: Moderate. Systems are present, but the mentioned non-compliance indicates room for improvement.
• Potentail Financial Impact: A fine of Rs. 128.29 thousands has been levied by BSE and NSE.

Emerging Risks #

• Severity: Moderate to High. The evolving mobility industry with shifts towards EVs poses both an opportunity and a threat.
• Likelihood: High. The shift towards EVs is a clear trend in the automotive sector.
• Trend: Increasing, with the accelerating adoption of EV technology.
• Mitigation Strategies: Focus on R&D for EV-compatible components, diversification of product portfolio.
• Control Effectiveness: Partially effective. The Company is investing in R&D and adapting its product offerings, but the rapid evolution of the market creates ongoing challenges.
• Potential Financial Impact: Potential reduction in revenue in the short term due to the increasing usage of electric vehicles. Long-term impact depends on the success of adaptation strategies.

Strategic and Management Analysis #

Long-Term Strategic Goals #

• Shifting from bearing-related products to a broader “friction solutions provider.”
• International expansion is a key strategic focus, with support for exports to Europe, Thailand, and North America.
• Supplying to the EV and Defence sectors, focusing on component categories with higher margins.

Competitive Advantages and Market Positioning #

• A “pioneer” in bearing technology in India.
• Engineering differentiated advantage with innovative technology and a focus on high-technology products.
• Positioning as a “first choice supplier” for EVs and EV-agnostic friction solutions.
• Strong position in the global heavy vehicle market.
• Leveraging a less hierarchical, flatter organizational structure, and agile, collaborative work style.

Innovation Initiatives and R&D Effectiveness #

• Focus on friction reduction, precision improvement, NVH reduction, and EV-specific products.
• R&D efforts include developing core competencies for EV aggregates and design automation.
• In-house development of advanced CAE techniques.
• Development and application of new materials like high-temperature ceramic materials and engineering plastics.
• Demonstrated 40% friction reduction in big end Bearings.
• Successfully developed one way clutch bearings, expanding its product range.
• Digitization of the design process.
• R&D expenditure for the year was Rs. 2,005.22 lacs.

M&A Strategy and Execution #

• NRB Holdings Limited (NHL) was incorporated for the growth of global business.
• NRB Bearings Europe GmbH, NRB Bearings (Thailand) Limited, and NRB Bearings USA Inc. were acquired by NHL, becoming step-down subsidiaries.
• A strategy of consolidating international operations under NHL.

Management’s Track Record in Execution #

• Adapting to the EV market shift by developing new products and enhancing high-speed capabilities.
• Demonstrates commitment to environmental and safety regulations.
• Successfully created cross-functional teams for speedy recovery from the pandemic, which helped the company getting back on profitability track.

Capital Allocation Strategy #

• Investing in R&D, specifically targeting component categories with higher margins and EV-related products.
• Focus on driving operational efficiencies, managing working capital and prudent capital expenditure.
• Maintains an AA-/Stable long term borrowing rating and an A1+ short term.
• Has a dividend distribution policy.

Organizational Changes #

• Continuation of Mr. Satish Rangani as Non-Executive and non-independent director, subject to shareholders and member’s approval.
• Appointment of Ms. Bapsy Dastur and Mr. Jayavardhan Dhar Diwan as Independent Directors, subject to shareholders approval.
• Appointment of Mr. Raman Malhotra as CFO.

Environmental Metrics and Targets #

• The Company has implemented energy conservation measures across all plants, including merging 11KV power in 33KV, eliminating individual chillers, installing idle running timers, and using VFDs, leading to a total energy savings of approximately 2,431,156 kWh per year and avoiding 1,740.71 tCO2 of emissions.
• Water conservation is practiced through waste water re-use and rainwater harvesting, with a capacity to harvest up to 3.06 crore liters of rainwater annually.
• The company is subject to Extended Producer Responsibility (EPR) regulations for plastic waste and is developing a waste collection plan.
• Waste management practices are in place, including collection, segregation, storage, and disposal, with hazardous waste sent to authorized recyclers.
• No sites or facilities are identified as designated consumers (DCs) under the Performance, Achieve, and Trade (PAT) Scheme.
• Energy intensity per rupee of turnover is disclosed, but specific targets are not provided.

Social Responsibility Programs #

• The Company focuses on CSR activities, including promoting education, gender equality, vocational skills, environmental sustainability, and healthcare.
• Spending on CSR projects was Rs. 170.00 lakhs, representing approximately 1% expenditure on CSR project against the required limit of 2% of average net profits.
• Support is provided to institutions like Ashoka University and IIT-Bombay’s Racing Car Project.
• The Company has 6 (six) Internal Committees for redressing complaints under the Sexual Harassment of Women at the Workplace Act, 2013, with zero complaints reported during the reviewed year.
• The company spent on health and safety measurments such as saftey week, awarness programs.

Governance Structure and Effectiveness #

• The Board of Directors consists of 6 members: 1 Executive Director and 5 Non-Executive Directors (4 of whom are Independent).
• Board composition complies with Section 149 of the Companies Act, 2013, and Regulation 17 of the SEBI Listing Regulations.
• Board committees include Audit, Nomination and Remuneration, Corporate Social Responsibility, Stakeholders’ Relationship, and Risk Management.
• Board and committee meetings were held regularly, with attendance details provided.
• A Code of Conduct for the Board and Senior Management is in place and affirmed annually.
• The Company has a Whistle Blower Policy and Vigil Mechanism, with no complaints received during the year.
• An annual performance evaluation of the Board, its Committees, and individual Directors was conducted.
• Independent Directors met seperately on March 9, 2024

Sustainability Investments and ROI #

• R&D and capital expenditure (capex) investments in specific technologies to improve environmental and social impacts were 2.05% and .26 % of the total R&D and capex, respectively.
• Investments in new equipment and machinery resulted in process optimization and energy savings, which will potentially lower costs for the Company, going ahead.
• The Company has invested on automation of product manufacturing processes that enables the development of new products with greater efficiency.

ESG Ratings and Peer Comparison #

• The Company has been rated AA-/Stable for long-term borrowings and A1+ for short-term borrowings and commercial paper.
• The company is certified for EMS ISO 14001, OHS ISO 45001, and IATF16949:2016, REACH.
• The data does not provide any specific information on ESG ratings by external agencies or comparison with peers on overall ESG scores.

Regulatory Compliance and Future Preparations #

• The Company states compliance with all applicable Secretarial Standards.
• The Company is managing identified risks associated with operations, with an action plan for mitigation.
• The Company affirms compliance with the Sexual Harassment of Women at the Workplace Act, 2013.
• The Company states compliance with applicable environmental laws and regulations.
• There was delay in compliance with regulation 17(1A) of SEBI.

Forward Outlook: Ball and Roller Bearings #

Management Guidance and Assumptions #

• Management assumes a strong domestic demand driven by private consumption, investment, and government capital expenditure.
• Management anticipates continued good performance of the auto component industry, aligned with macroeconomic indicators and government policies.
• Management guides toward exploring emerging markets (aerospace, high-speed rail, new energy) and optimizing production processes.
• Assumed that there is low credit risk associated with financial assets, and inventory provision policy is consistently applied
• Management estimated useful life and residual values of PP&E, Investment Property and ROU Assets based on technical evaluation.

Market Growth Forecasts #

• Indian automobile industry production grew 9.61% in 2023-24 versus 2022-23.
• Indian passenger car market is projected to reach USD 54.84 billion by 2027, with a CAGR of over 9%.
• Global EV sales are projected to reach USD 906.7 billion by 2028, with a CAGR of 9%.
• The Indian EV market is estimated to reach USD 7.09 billion by 2025.
• The Indian auto component industry turnover grew by 9.8% in FY 2023-24.
• Auto Component sales is forcasted to grow and reach to USD 30 billion in FY26

Planned Strategic Initiatives #

• Focus on higher-margin component categories that contribute more to vehicle costs.
• Development of components not likely to be replaced by EV technology, and new EV-specific products.
• Expansion of product portfolio to serve adjacent industries.
• Enhancement of high-speed capabilities of bearing products through advanced CAE techniques.
• Development of product diagnostics and monitoring capabilities.
• Focus on light-weighting, friction reduction, and noise reduction in bearing design.
• Developing the Electric Vehicles by the Digitization of Design.
• Process Innovation for Sustainable Development and generate High Defination Surface Finish on Rolling Element.

Capital Expenditure Plans #

• Capital investment of Rs. 0.26 lakhs was made on energy conservation equipment, FY2023-24
• Capex investments were made for new equipment and machinery for process optimization, resulting in energy savings.

Efficiency Improvement Targets #

• Targeting operational efficiencies through process reengineering, automation, and digitization.
• Specific energy conservation measures were implemented during the year, aiming at reducing electrical consumption and costs.
• Aiming for continuous improvement through process innovation and sustainable development.

Potential Challenges and Opportunities #

• Challenges:
  • Shifting market dynamics, changing OEM needs, and technological disruptions (EVs, autonomous driving).
  • Vulnerability to raw material price fluctuations and supply chain disruptions.
  • Competition from spurious/counterfeit products in the replacement market.
• Opportunities:
  • Aggressive pursuit of export opportunities.
  • Enhancement of import substitution.
  • Offering premium features at lower costs.
  • Entering new segments within the aftermarket.
  • Expanding into adjacent industries.

Scenario Analysis and Sensitivity to Key Assumptions #

• Raw Material Price Volatility: Sensitivity analysis not directly quantifiable from provided data, but acknowledged as a significant risk. Mitigation strategies include multiple product sourcing and localization.
• EV Market Penetration:
  • Scenario 1 (Accelerated EV Adoption): Requires rapid adaptation of product lines; potential for short-term revenue reduction.
  • Scenario 2 (Slower EV Adoption): Allows for a more gradual transition, with continued focus on IC engine components.
• Interest rate fluctuation: Sensitivity analysis table shows that group profit before tax decreases by INR 237 Lakhs for increase by 50 basis point and vice-versa.
• Foreign currency Exchange rate fluctuations: Sensitivity analysis table shows impact of +2% and -2% change.
• Change in fair value of equity instruments: Sensitivity analysis table indicates impact of 5% increase and 5% decrease in the price of underlying shares.
• Change in Acturial assumptions The sensitivity analysis has been done on the defined benefit obligation.

Audit & Compliance #

Audit and Regulatory Analysis #

Auditor’s Opinion and Qualifications: #

• Opinion: Unmodified opinion on standalone and consolidated financial statements, indicating a true and fair view in conformity with Ind AS.
• Emphasis of Matter (Standalone & Consolidated): Non-compliance with the Foreign Exchange Management Act, 1999, regarding delayed receipt of foreign currency trade receivables and delayed payments of payables. Procedure being followed to rectify non-compliances.
• Emphasis of Matter (Standalone & Consolidated): Fire incident at Waluj plant, resulting in damage to assets and subsequent insurance claim, classified as an exceptional item.
• Key Audit Matter (Standalone & Consolidated): Existence and valuation of inventories were identified as a key audit matter due to complexities, management judgement.

Key Accounting Policies and Changes: #

• Consistent Application: Accounting policies were consistently applied across all periods presented in both standalone and consolidated financial statements.
• Revenue Recognition: Revenue is recognized upon the transfer of control of products to customers.
• Inventory Valuation: Inventories are valued at the lower of cost or net realizable value, with raw materials on a moving average basis, and WIP/Finished Goods at cost or net realizable value.
• Fixed Assets: Include ROU assets, depreciation on straight-line method.
• Recent Accounting Pronouncements (Amendments): Ind AS 1, Ind AS 12, and Ind AS 8 were amended. Company states Ind AS 1 and 8 ammendements will have no significant impact. Company is assessing Ind AS 12.
• Change in Policy: The company revised its inventory provisioning policy for work in progress during the current year.

Internal Control Effectiveness: #

• Auditor’s Opinion (Standalone & Consolidated): Unmodified opinion on the adequacy and operating effectiveness of internal financial controls over financial reporting.
• Audit Trail: Audit trail feature was not enabled in Database Level for the accounting software, but it was enabled and was operated in the application level, for all transactions.

Regulatory Compliance Status: #

• General Compliance: The Company generally complied with the requirements of the Companies Act, 2013, SEBI regulations, and other applicable laws.
• Specific Non-Compliance: Delayed receipt of foreign currency trade receivables and delayed payments of payables, violating timelines in the Foreign Exchange Management Act, 1999. Delay in passing special resolution, related to Regulation 17(1A) of SEBI, for re-designation of an executive director, with fine imposed by BSE and NSE and waiver application submitted.
• Secretarial Audit: Composition of Corporate Social Responsibility Committee was effected, and composition of Board of Directors was effected.

Legal Proceedings and Their Potential Impact: #

• Pending Litigations: The Company disclosed pending litigations related to income tax, sales tax, value-added tax, and local body tax.
• Management’s Assessment: Management believes that the outcome of these proceedings will likely be favorable.
• Provident Fund Demand: A demand related to provident fund contributions has been contested, and the High Court has directed authorities not to take coercive steps.
• Contingent Liabilities: Claims not acknowledged as debt, guarantees furnished, and capital commitments were disclosed.

Related Party Transactions: #

• Arm’s Length Basis: All related party transactions were conducted on an arm’s length basis and in the ordinary course of business.
• Disclosure: Details of related party transactions, including sales, purchases, loans, and investments, were disclosed.
• Materiality: There were no materially significant related party transactions with promoters, directors, or key managerial personnel that could have a potential conflict of interest.
• Subsidiary Transactions: Significant inter-company transactions and balances with subsidiaries were disclosed.

Analysis of Accounting Quality and Regulatory Risk Assessment: #

• Accounting Quality: The unmodified audit opinion, consistent application of accounting policies, and detailed disclosures suggest a relatively high accounting quality. Reliance on management’s estimates introduces inherent subjectivity.
• Regulatory Risk: The primary regulatory risk identified is the non-compliance with FEMA timelines. The delay in obtaining shareholder’s approval for director designation also represent risk.