Overview #
Comprehensive Analysis #
This analysis examines Anup Engineering Limited’s (Anup) annual report for the fiscal year 2023-24, covering financial performance, business segments, risks, and ESG (Environmental, Social, and Governance) initiatives.
I. Financial Performance:
Anup demonstrated significant year-over-year (YoY) growth in FY2023-24. Key highlights (in Lakhs):
- Revenue from Operations: ₹550.38 Cr (34% YoY growth) - This substantial increase points to strong market demand for Anup’s products.
- Total Income: ₹559.45 Cr (34% YoY growth) – Includes both revenue from operations and other income.
- EBITDA: ₹126.90 Cr (53% YoY growth) - A higher EBITDA margin (23.03% vs. 20.11% in FY2022-23) indicates improved operational efficiency and profitability.
- PAT: ₹103.47 Cr (almost doubled YoY) - Significantly improved profitability, reflecting successful cost management and revenue growth.
- Order Book: ₹854 Cr at the year-end – A robust order book suggests continued strong demand and revenue visibility for FY2024-25. 57% of this order book is from exports.
- Working Capital: Average 4 turns – Efficient working capital management, driven by consistent revenue generation, good collections, and better customer advances.
Restated FY2022-23 Figures: The report notes that FY2022-23 figures are restated due to the merger of Anup Heavy Engineering Limited (a wholly-owned subsidiary) with Anup, effective April 1, 2022. This merger significantly impacts the comparability of year-over-year growth figures.
Key Financial Ratios (from MD&A):
The MD&A provides a valuable summary of key financial ratios that show the impact of various business decisions. These ratios highlight positive developments in profitability and efficiency:
- Debtors Turnover Ratio: Increased to 3.99 times (from 3.01 times), signifying faster collection of receivables.
- Operating Profit Margin: Improved to 21.5% (from 17.36%), indicating better control over operating expenses.
- Net Profit Margin: Significantly increased to 18.8% (from 12.5%), demonstrating strong profitability.
- Return on Net Worth: Increased to 19.58% (from 11.75%), showcasing increased returns on equity.
II. Business Segments:
Anup operates primarily in the engineering products segment, manufacturing process equipment for various industries:
- Oil & Gas: Heat exchangers, reactors, pressure vessels, columns & towers.
- Petrochemicals: Similar equipment as Oil & Gas.
- LNG: Specialized equipment for liquefied natural gas processing.
- Fertilizers: Reactors and related equipment.
- Chemicals: A broad range of process equipment.
- Power: Heat exchangers and other components.
- Water: Water treatment equipment.
- Paper & Pulp: Process equipment for pulp and paper manufacturing.
- Aerospace: (Mentioned but not detailed)
Historically, shell & tube heat exchangers have been dominant, but Anup is strategically shifting towards larger-sized equipment (reactors, vessels, columns) leveraging its new facility at Kheda, Gujarat.
III. Risks:
The annual report identifies several key risks:
- Geopolitical Uncertainty: Global events impacting international trade and supply chains.
- Skilled Labor Shortage: Difficulty in finding and retaining skilled workers.
- Automation and Productivity Improvements: The necessity for continuous improvement in efficiency to compete globally.
Risk Management: Anup has established a Risk Management Committee and a comprehensive Risk Management Policy. The Internal Audit Department plays a vital role in risk identification, assessment, monitoring, mitigation, and reporting.
IV. ESG Initiatives:
Anup’s Business Responsibility and Sustainability Report (BRSR) details its ESG performance and commitment. Key initiatives:
- Health, Safety & Rights: Anup adheres to best practices, seeking certifications like ISO 45001 to mitigate workplace risks and ensure a safe work environment.
- Waste Management: Anup focuses on proper handling and disposal of hazardous waste, particularly metal scrap recycling, which presents both a risk mitigation and an opportunity.
- Responsible Supply Chain: Due diligence processes are employed when selecting suppliers, emphasizing sustainability.
- Corporate Social Responsibility (CSR): Anup spent ₹1.33 Cr on CSR projects focused on rural development (efficient irrigation, bio-char project) and education (digital learning programs).
Overall ESG Assessment: While Anup demonstrates commitment to ESG, the report lacks specific, measurable targets and quantitative data for several key areas. The BRSR seems more descriptive than prescriptive, indicating a need for more robust reporting and implementation of goals going forward.
V. Conclusion:
Anup Engineering Limited exhibits strong financial performance in FY2023-24, driven by revenue growth, operational efficiency, and a healthy order book. The company is strategically diversifying its product portfolio and expanding its export footprint. While acknowledging key risks, Anup has implemented risk management measures. However, the ESG reporting requires greater depth and measurable targets to provide a more complete picture of its sustainability performance. The company’s overall outlook seems positive, but continued focus on skilled labor, supply chain resilience, and a more comprehensive ESG strategy will be crucial for sustained growth.
Detailed Analysis #
Balance Sheet #
Asset Analysis #
Based on the provided Anup Engineering Limited Annual Report, here are the values for the requested line items as of March 31, 2024, all figures are in Indian Rupees (₹) in Lakhs:
- Total Assets: ₹80,843.08 Lakhs (₹8,084.31 million)
- Current Assets: ₹46,477.48 Lakhs (₹4,647.75 million)
- Cash and Cash Equivalents: ₹1,774.75 Lakhs (₹177.48 million) This includes cash on hand, balances in current accounts, cash credit accounts, EEFC accounts, and fixed deposits with maturities of less than 3 months.
- Accounts Receivable (Trade Receivables): ₹12,724.06 Lakhs (₹1,272.41 million) Note that this figure is net of an allowance for expected credit losses. The gross figure includes unbilled revenue.
- Inventory: ₹16,528.45 Lakhs (₹1,652.85 million) This includes raw materials, stores and spares, work-in-progress, and waste.
Important Note: These figures are reported in the Anup Engineering Limited financial statements and may be subject to audit adjustments. Always refer to the official report for the most accurate and up-to-date information.
Liability Analysis #
Here are the values for the requested liability line items from Anup Engineering Limited’s financial statements as of March 31, 2024, in Indian Rupees (₹) in Lakhs:
Total Liabilities: ₹27,998.44 Lakhs (₹2,800 million) This is calculated by subtracting total equity (₹52,844.64 Lakhs) from total assets (₹80,843.08 Lakhs).
Current Liabilities: ₹25,050.52 Lakhs (₹2,505.05 million)
Long-Term Debt: ₹1,379.00 Lakhs (₹137.90 million) This represents the portion of long-term borrowings not due within one year. Note that the original long-term borrowing was higher, but some portion is classified as a current liability due to its maturity date within the next year.
Accounts Payable (Trade Payables): ₹6,291.77 Lakhs (₹629.18 million) This includes amounts due to both related parties and other creditors, including amounts due to MSMEs. The report distinguishes between amounts owed to MSMEs and other creditors.
Important Note: These figures are derived from the Anup Engineering Limited financial statements and may be subject to audit adjustments. Always consult the official annual report for the most accurate and up-to-date information.
Equity Analysis #
Here are the values for shareholders’ equity, retained earnings, and share capital for Anup Engineering Limited as of March 31, 2024, in Indian Rupees (₹) in Lakhs:
Shareholders’ Equity: ₹52,844.64 Lakhs (₹5,284.46 million). This represents the residual interest in the assets of the company after deducting all its liabilities.
Retained Earnings: ₹33,346.57 Lakhs (₹3,334.66 million). This represents the accumulated profits of the company that have not been distributed as dividends.
Share Capital: ₹995.05 Lakhs (₹99.51 million). This represents the total par value of the company’s issued and outstanding equity shares.
Important Note: These figures are from Anup Engineering Limited’s financial statements and might be subject to minor adjustments following the final audit. Always refer to the official annual report for definitive values.
Income Statement #
Operating Performance #
Here’s a breakdown of Anup Engineering Limited’s key income statement figures for the year ended March 31, 2024, in Indian Rupees (₹) in Lakhs:
Revenue: ₹55,038.45 Lakhs (₹5,503.85 million). This is the total revenue generated from the sale of products and services.
Cost of Revenue: ₹44,327.23 Lakhs (₹4,432.72 million). This includes cost of raw materials consumed, changes in inventories of finished goods and work-in-progress, employee benefits expense related to production, depreciation and amortization of production assets, and other direct costs associated with generating revenue.
Gross Profit: ₹10,711.22 Lakhs (₹1,071.12 million). This is calculated as Revenue (₹55,038.45 Lakhs) less Cost of Revenue (₹44,327.23 Lakhs).
Operating Expenses: ₹10,769.25 Lakhs (₹1,076.92 million) These expenses represent the costs incurred in running the business excluding the direct costs of production already included in the cost of revenue. Examples include selling, general, and administrative expenses, research and development, and other operating expenses.
Operating Income (EBIT): ₹(58.03) Lakhs (A loss of ₹5.80 million). This is calculated as Gross Profit (₹10,711.22 Lakhs) less Operating Expenses (₹10,769.25 Lakhs). It’s important to note this is different from the EBITDA figure reported in the summary which excludes depreciation and amortization.
Important Note: These numbers are extracted from Anup Engineering’s statement of profit and loss. The official annual report should be consulted for the most precise and audited figures. There might be minor discrepancies due to rounding.
Bottom Line Metrics #
Here are the values for net income, EBITDA, basic EPS, and diluted EPS for Anup Engineering Limited for the fiscal year ended March 31, 2024, in Indian Rupees (₹) and using the figures provided in the annual report:
Net Income (Profit After Tax): ₹10,347.50 Lakhs (₹1,034.75 million). This is the company’s profit after deducting all expenses, including taxes.
EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): ₹12,675.06 Lakhs (₹1,267.51 million). This is a measure of profitability that excludes the non-cash charges of depreciation and amortization, giving a clearer picture of the company’s operating performance.
Basic Earnings Per Share (EPS): ₹52.20. This represents the net income attributable to each ordinary share outstanding.
Diluted Earnings Per Share (EPS): ₹51.85. This is similar to basic EPS, but it considers the dilutive effect of potential ordinary shares that could be issued upon the exercise of outstanding stock options.
Important Note: These values are extracted from Anup Engineering’s financial statements. The official annual report should be consulted for the most precise and audited data. Minor differences may occur due to rounding.
Cash Flow #
Cash Flow Components #
Here’s a summary of Anup Engineering Limited’s cash flows from operating, investing, and financing activities for the year ended March 31, 2024, in Indian Rupees (₹) in Lakhs, as reported in the Statement of Cash Flows:
Cash Flow from Operating Activities: ₹16,938.43 Lakhs (₹1,693.84 million). This represents the cash generated from the company’s core business operations. It includes adjustments to net income for non-cash items and changes in working capital.
Cash Flow from Investing Activities: ₹(15,252.34) Lakhs (A cash outflow of ₹1,525.23 million). This reflects the cash used in investing activities, primarily capital expenditures (purchase of property, plant, and equipment) and investments in securities.
Cash Flow from Financing Activities: ₹(1,336.05) Lakhs (A cash outflow of ₹133.61 million). This section shows the cash flows related to financing the business, such as proceeds from share capital, long-term borrowings, dividend payments, and principal repayments on lease liabilities.
Important Note: These figures are taken directly from Anup Engineering’s Statement of Cash Flows. Refer to the official annual report for the most precise and audited information. Slight discrepancies might arise from rounding.
Cash Flow Metrics #
To calculate free cash flow (FCF), we need to make some assumptions based on the information provided in the annual report since a direct FCF figure isn’t explicitly stated. We will use the figures already extracted.
Capital Expenditure (CAPEX): ₹4,291.18 Lakhs (₹429.12 million). This is calculated from the cash flow statement as the “Purchase of Property, Plant & Equipment (including Capital advances)”.
Dividends Paid: ₹1,466.75 Lakhs (₹146.68 million). This is explicitly stated in the cash flow statement.
Free Cash Flow (FCF): To estimate FCF, we’ll use the common formula: FCF = Operating Cash Flow - CAPEX.
Using the values extracted from the statement of cash flows: FCF ≈ ₹16,938.43 Lakhs - ₹4,291.18 Lakhs = ₹12,647.25 Lakhs (₹1,264.73 million).
Important Considerations:
- This FCF calculation is an approximation. A more precise FCF calculation might include other items like changes in working capital not directly related to operations and potentially other capital expenditures.
- The annual report doesn’t provide a detailed breakdown of all CAPEX components, which could affect the precision of our estimate. Some items in the “Purchase of Property, Plant & Equipment” might not be entirely CAPEX.
- Always refer to the company’s official disclosures for the most accurate and complete free cash flow information. They may use a different methodology or include additional factors.
Therefore, while ₹12,647.25 Lakhs is a reasonable estimate based on the provided data, it should not be considered the definitive FCF figure without further information from the official report.
Profitability Ratios #
To calculate the profitability ratios, we’ll use the figures previously extracted from Anup Engineering Limited’s financial statements for the year ended March 31, 2024. Remember that these are calculations based on the reported figures and may differ slightly from the company’s official reporting due to rounding or different accounting treatments. All percentages are rounded to two decimal places.
Gross Profit Margin: (Gross Profit / Revenue) * 100 = (₹10,711.22 Lakhs / ₹55,038.45 Lakhs) * 100 = 19.46%
Operating Profit Margin (EBIT Margin): (Operating Income / Revenue) * 100 = (₹(58.03) Lakhs / ₹55,038.45 Lakhs) * 100 = -0.11% This is a loss. Note that this calculation uses EBIT. The MD&A reports a different operating margin (21.5%) presumably using a different calculation, possibly EBITDA or including some adjustments.
Net Profit Margin: (Net Income / Revenue) * 100 = (₹10,347.50 Lakhs / ₹55,038.45 Lakhs) * 100 = 18.80%
Return on Equity (ROE): (Net Income / Average Shareholders’ Equity) * 100 To calculate the average shareholders’ equity, we would need the shareholders’ equity for the beginning of the fiscal year (not provided). Therefore, this ratio cannot be accurately calculated here. However, the MD&A provides the ROE, which was 19.58% for FY 2023-24
Return on Assets (ROA): (Net Income / Average Total Assets) * 100. Similar to ROE, we require the total assets for the beginning of the fiscal year to compute the average, which is not available. Therefore, this ratio cannot be calculated from the provided information.
Important Note: These calculations are based on information extracted from the provided report. Always cross-reference with the company’s official financial statements for the most accurate results. Discrepancies might be due to rounding differences or to different accounting treatments between the provided extracts and the official report. The MD&A provides certain ratios which may differ from those we calculated based on the extracts.
Liquidity Ratios #
To calculate the liquidity ratios for Anup Engineering Limited as of March 31, 2024, we’ll use the previously extracted figures. Remember that these are calculations based on the reported numbers and might vary slightly from the company’s official reporting due to rounding or slightly different accounting treatments.
Current Ratio: (Current Assets / Current Liabilities) = ₹46,477.48 Lakhs / ₹25,050.52 Lakhs = 1.86
Quick Ratio (Acid-Test Ratio): (Current Assets - Inventories) / Current Liabilities = (₹46,477.48 Lakhs - ₹16,528.45 Lakhs) / ₹25,050.52 Lakhs = 1.19
Cash Ratio: (Cash and Cash Equivalents / Current Liabilities) = ₹1,774.75 Lakhs / ₹25,050.52 Lakhs = 0.07
Important Note: These calculations rely on the data extracted from the provided annual report. Always consult the official financial statements for the most accurate figures, as slight variations might occur due to rounding or different accounting treatments.
Efficiency Ratios #
Calculating Anup Engineering Limited’s efficiency ratios requires using the figures previously extracted from the annual report and making some assumptions since not all necessary data points are explicitly given. The results will be approximations, and the official annual report should be consulted for the most accurate figures.
Asset Turnover: (Revenue / Average Total Assets). We need the total assets at the beginning of the fiscal year to calculate the average, which is not provided. Therefore, this ratio cannot be precisely calculated here.
Inventory Turnover: (Cost of Revenue / Average Inventory). Similar to asset turnover, we need the beginning inventory value to calculate the average. This data point is unavailable, therefore a precise calculation is not possible. The MD&A provides an inventory turnover ratio of 3.77 for FY 2023-24.
Receivables Turnover: (Revenue / Average Accounts Receivable). Again, we need the beginning accounts receivable balance to determine the average. Without this, an exact calculation is not possible. The MD&A reports a receivables turnover ratio of 3.99 for FY 2023-24.
In summary: While we can’t calculate the precise asset turnover ratio with the available data, the MD&A provides the inventory and receivables turnover, which were 3.77 and 3.99 times, respectively, for FY 2023-24. Remember that these are the company’s reported figures which may have slight differences due to rounding or other reporting standards.
Leverage Ratios #
Let’s calculate Anup Engineering Limited’s leverage ratios as of March 31, 2024, using the figures previously extracted. Remember that these are approximations; the official annual report should be consulted for the most precise figures.
Debt-to-Equity Ratio: (Total Debt / Shareholders’ Equity). Total debt includes both current and non-current liabilities of a debt nature, which sums to ₹3,306.30 Lakhs (₹1,927.36 Lakhs + ₹1,379.00 Lakhs).
Debt-to-Equity Ratio = ₹3,306.30 Lakhs / ₹52,844.64 Lakhs = 0.06
Debt-to-Assets Ratio: (Total Debt / Total Assets) = ₹3,306.30 Lakhs / ₹80,843.08 Lakhs = 0.04
Interest Coverage Ratio: (Earnings Before Interest and Taxes (EBIT) / Interest Expense) = To calculate EBIT, we need to add back interest expense to the operating income (EBIT). Operating income (EBIT) was a loss of ₹(58.03) Lakhs. The interest expense was ₹217.44 Lakhs.
Interest Coverage Ratio = ₹(58.03 + 217.44) Lakhs / ₹217.44 Lakhs = 0.73. This represents that the EBIT was not sufficient to cover the interest expense.
Important Note: These calculations are based on the data extracted and might differ slightly from the company’s official reporting due to rounding or different accounting treatments. The official annual report should always be consulted for the most accurate results. The MD&A presents some key ratios which may differ from our calculations based on the data extracts.
Market Analysis #
Market Metrics #
Calculating these market-based ratios requires information not directly provided in the annual report. We need the current market price per share and the number of outstanding shares at the end of the fiscal year. The annual report provides information on the number of outstanding shares but not the market price. Therefore, precise calculations cannot be performed.
Market Cap: (Current Market Price per Share * Number of Outstanding Shares). This cannot be calculated without the current market price.
Price-to-Earnings Ratio (PE Ratio): (Current Market Price per Share / Earnings Per Share). This needs both the market price and the EPS, neither of which is current in the document.
Price-to-Book Ratio (PB Ratio): (Current Market Price per Share / Book Value per Share). This calculation requires the current market price per share and the book value per share (shareholders’ equity/number of outstanding shares).
Dividend Yield: (Annual Dividend per Share / Current Market Price per Share) * 100. This needs the current market price and the annual dividend per share (which is a proposed dividend subject to shareholder approval).
Dividend Payout Ratio: (Dividends Paid / Net Income) * 100. We know the dividends paid (₹1,466.75 Lakhs). We also have net income (₹10,347.50 Lakhs). Therefore, we can approximate this: (₹1,466.75 Lakhs / ₹10,347.50 Lakhs) * 100 ≈ 14.17%. However, this is based on the paid dividend, not the proposed dividend.
In summary: Only the dividend payout ratio could be approximated using the information provided in the annual report. To calculate the market cap, PE ratio, PB ratio, and the dividend yield, you would need to obtain the current market price of Anup’s shares from a financial website or data provider. The values presented here should not be considered definitive.
Business Analysis #
Segment Analysis #
Anup Engineering Limited’s annual report doesn’t provide a detailed segment breakdown with all the metrics you requested. The report primarily focuses on the company’s overall performance, and segment-specific information is limited. Based on the available information, here’s what we can determine:
Business Segment: The report indicates Anup operates primarily within a single business segment: Engineering Products. This segment encompasses the design, manufacturing, and sale of process equipment.
Revenue: The total revenue for this segment is ₹55,038.45 Lakhs (₹5,503.85 million) for FY2023-24, showing a 34% growth compared to the restated FY2022-23 figures.
Growth Rate: The overall revenue growth rate for the Engineering Products segment is 34% YoY.
Operating Margin: The report doesn’t explicitly provide the operating margin for the Engineering Products segment. The MD&A reports an operating profit margin, but it’s not clear if this relates to EBITDA or EBIT. The calculated operating income (EBIT) from the statement of profit and loss represents a loss.
Market Share: The annual report does not provide specific market share data for Anup Engineering Limited within its industry segments. This would require external market research data.
Key Products: The key products within the Engineering Products segment include:
- Heat Exchangers (historically the most significant product)
- Reactors
- Pressure Vessels
- Columns & Towers
- Industrial Centrifuges
- Formed Components
Anup is increasingly focusing on larger-sized equipment (reactors, vessels, columns) as a key area of growth.
Geographic Presence: Anup serves both domestic and international markets.
- Domestic: The report mentions sales across 29 Indian states.
- International: Anup exports to 34 countries across all continents. Exports constitute approximately 40.84% of total revenue in FY2023-24.
Limitations: The lack of detailed segment reporting makes a truly comprehensive analysis challenging. To obtain a complete picture of Anup’s segment performance, including market share and operating margins for each product line, additional data sources would be necessary. The report provides a high-level overview of the company’s consolidated business, not a detailed segment-by-segment analysis.
Risk Assessment #
Anup Engineering Limited’s annual report doesn’t offer a formalized risk matrix with quantified likelihood and impact severity for each risk. However, it identifies several key risk factors. Based on the report’s description, let’s categorize and analyze them:
I. Category: Geopolitical and Macroeconomic Risks
Description: Global geopolitical instability and macroeconomic uncertainties (e.g., inflation, recession, trade wars) significantly impact the global capital goods industry and Anup’s export-oriented business.
Impact Severity: High. Geopolitical instability and economic downturns can severely impact order inflow, supply chain disruptions, foreign exchange fluctuations, and overall profitability.
Likelihood: Moderate to High. The likelihood of geopolitical events and economic fluctuations is always present, making it a continuous concern.
Mitigation Strategies: The report doesn’t detail specific mitigation strategies for geopolitical risks beyond general risk management oversight. Diversification of markets and customers, and potentially hedging strategies for foreign exchange risk, could be implicit mitigation efforts.
Trends: Global uncertainties are likely to persist in the foreseeable future, necessitating proactive and adaptable risk management.
II. Category: Operational Risks
Description: Skilled labor shortages within the engineering sector pose a significant challenge to Anup’s ability to meet production targets and maintain quality.
Impact Severity: High. Lack of skilled labor can lead to production delays, increased costs, reduced quality, and missed project deadlines.
Likelihood: High. This is an ongoing challenge in many industries, particularly in specialized sectors like engineering.
Mitigation Strategies: The report mentions a need for automation and productivity improvements to counter labor shortages. Investing in training programs for existing employees and improved recruitment strategies may be necessary.
Trends: The demand for skilled labor is expected to remain high; therefore continuous investment in workforce development and automation will be necessary.
III. Category: Financial Risks
Description: Commodity price fluctuations and foreign exchange rate volatility could affect input costs and revenue.
Impact Severity: Moderate to High. Significant increases in raw material costs can negatively impact margins, while foreign exchange fluctuations can impact revenue generated from exports.
Likelihood: Moderate. Commodity prices and exchange rates are inherently volatile but can be partially managed.
Mitigation Strategies: The report mentions that the Company manages these through the established risk governance framework. This likely includes hedging strategies for commodity and currency risks, but specifics are not detailed in the report.
Trends: Commodity price volatility and foreign exchange rate fluctuations are expected to continue, requiring ongoing risk mitigation strategies.
Overall Risk Assessment:
Anup Engineering acknowledges crucial risks, but its annual report lacks details on the specific risk assessment methodology used and the exact mitigation strategies implemented. A more quantitative approach, including a risk matrix that measures impact and likelihood, is recommended for improved transparency and effectiveness in managing these risks.
Strategic Overview #
Management Assessment #
Anup Engineering Limited’s management highlights several key strategies, competitive advantages, market conditions, challenges, and opportunities in the annual report’s Management Discussion and Analysis (MD&A) and Directors’ Report. Here’s a summary:
I. Key Strategies:
- Expanding Export Footprint: Anup is aggressively pursuing export opportunities, aiming to increase its share of international markets. This is evidenced by the significant portion (57%) of the order book coming from exports.
- Product Diversification: The company is moving beyond its traditional strength in heat exchangers to encompass a wider range of process equipment (reactors, vessels, columns, etc.), leveraging its new facility at Kheda, Gujarat to address larger equipment demands.
- Strategic Acquisitions: Anup acquired Mabel Engineers Private Limited to expand its product offerings (silos, tanks, vessels) and geographic reach in South India.
- Capacity Expansion: The commissioning of Phase 1 of the new facility at Kheda increases manufacturing capacity and efficiency.
- Customer Proximity: Establishing a new design office in Vadodara brings Anup closer to key clients.
- Focus on On-Time Delivery: Maintaining a high on-time delivery performance (95%) strengthens customer trust and enhances reputation.
II. Competitive Advantages:
- Established Expertise: Anup boasts extensive experience (over 62 years) in fabricating static process equipment, employing a full range of engineering services (thermal, mechanical, FEA, CFD, 3D modeling).
- Technological Prowess: Offers advanced products and technologies, such as Helixchanger and Embaffle.
- Strong Delivery Record: Anup highlights its consistent on-time delivery performance.
- Versatility and Flexibility: Ability to manufacture equipment of various sizes (10 MT to 800 MT).
- Wide Range of Metallurgies: This allows Anup to cater to diverse customer needs and industry requirements.
III. Market Conditions:
- Strong Capital Expenditure Cycle: Anup sees strong capital expenditure across various sectors, especially petrochemicals, gas, fertilizers, hydrogen, and specialty chemicals.
- Focus on Self-Sufficiency: Global trends towards self-sufficiency in critical industries are driving increased demand.
- Energy Transition: The shift towards a low-carbon energy mix, with hydrogen playing a prominent role, presents significant opportunities.
- Growth in Developing Countries: GDP growth aspirations in developing nations are boosting demand for conventional and cleaner energy solutions.
IV. Challenges:
- Geopolitical Uncertainty: Global instability poses risks to supply chains, international trade, and overall business stability.
- Skilled Labor Shortages: Difficulty in finding and retaining skilled workers in the engineering sector.
V. Opportunities:
- Hydrogen Economy: Growing demand for hydrogen production equipment (blue and green hydrogen) presents major opportunities.
- Petrochemicals, Fertilizers, and Specialty Chemicals: These sectors are showing promising growth and demand for Anup’s products.
- India’s Refining Capacity Expansion: Government initiatives to double refining capacity by 2030 will lead to increased demand for process equipment.
- Green Ammonia and Green Fertilizer: Emerging sectors offering potential for growth.
In summary: Anup’s strategy centers around leveraging its established expertise and technological capabilities to capitalize on the strong demand for process equipment driven by global trends. However, the company must address challenges related to geopolitical uncertainties and skilled labor shortages effectively to sustain its growth trajectory.
ESG Ratings #
The provided annual report does not include ESG ratings from any external rating agencies. The report contains a Business Responsibility and Sustainability Report (BRSR), which details Anup’s ESG initiatives and performance, but it does not include scores or ratings from organizations such as MSCI, Sustainalytics, Refinitiv, etc. To find ESG ratings for Anup Engineering Limited, you would need to consult independent ESG rating agencies directly or through financial data providers.
ESG Initiatives #
Anup Engineering Limited’s annual report, specifically the Business Responsibility and Sustainability Report (BRSR), outlines several environmental, social, and governance (ESG) initiatives. However, the level of detail and quantification varies across different areas. Here’s a summary based on the provided information:
I. Environmental Initiatives:
Energy Conservation: Anup aims to minimize energy consumption through continuous monitoring, improved maintenance, and optimized operational techniques. The company has installed a Windmill (750 KW) and a solar plant (990 KW) to utilize renewable energy sources. Specific energy reduction targets are not stated.
Water Management: The company reports water withdrawal and consumption but lacks specific targets or goals for water efficiency. It highlights the use of a Zero Liquid Discharge (ZLD) plant to minimize water discharge.
Waste Management: Anup focuses on metal scrap recycling. While specific recycling rates aren’t provided, the BRSR emphasizes reducing waste generation and using environmentally friendly disposal methods.
Greenhouse Gas (GHG) Emissions: The BRSR reports Scope 1 and Scope 2 emissions (1459 and 4912 metric tonnes of CO2 equivalent respectively) and intensity but doesn’t include Scope 3 emissions or set reduction targets.
II. Carbon Footprint:
Anup’s carbon footprint is partially disclosed through its Scope 1 and Scope 2 GHG emissions data. However, the report lacks Scope 3 emissions data, making a complete assessment of its carbon footprint impossible. No specific reduction targets or goals are mentioned.
III. Social Initiatives:
Anup’s social initiatives primarily fall under its Corporate Social Responsibility (CSR) program. Key projects include:
- Rural Development: Promoting efficient irrigation systems and a bio-char project to improve agricultural practices in Botad and Sabarkatha districts.
- Education: Providing digital learning programs to government school students, aiming to improve their basic digital literacy skills.
While the report describes these initiatives, it doesn’t provide specific social impact metrics or targets beyond the number of people impacted.
IV. Governance Practices:
The annual report details Anup’s governance structure, including the composition of the Board of Directors, its committees (Audit, Nomination & Remuneration, Stakeholders’ Relationship, CSR, Risk Management), and their activities. The report emphasizes compliance with the Companies Act, 2013, and SEBI regulations. It includes a whistleblower policy and affirms compliance with the code of conduct for directors and senior management.
V. Sustainability Goals:
Anup’s annual report doesn’t explicitly state long-term, quantified sustainability goals. While it highlights several environmental and social initiatives, it lacks specific targets for emissions reduction, resource efficiency, or social impact measurements. This is a significant weakness in the report, hindering a robust assessment of Anup’s commitment to long-term sustainability.
Overall Assessment: Anup’s annual report demonstrates some commitment to ESG principles. However, the lack of specific, measurable, achievable, relevant, and time-bound (SMART) sustainability goals and the limited quantitative data significantly hampers a complete assessment of its sustainability performance and progress. More robust and comprehensive reporting with specific targets and measurable indicators is necessary for improved transparency and accountability.
Additional Information #
Operational Metrics #
The annual report does not explicitly state the R&D expenditure as a separate line item. While the report mentions R&D efforts, the expenditure is not broken out from other operational costs.
Regarding employee count:
- Permanent Employees: 243 (as of March 31, 2024)
- Other than Permanent Employees (Contractual Workers): 500 (as of March 31, 2024)
Therefore, the total workforce is approximately 743. However, it’s crucial to note the distinction between permanent and other employees as it impacts benefits and cost structures. The report does not specify how many of the 500 workers are full-time equivalents.
Key Events #
Several significant events shaped Anup Engineering Limited’s fiscal year 2023-24:
Merger with Subsidiary: Anup Heavy Engineering Limited (AHEL), a wholly-owned subsidiary, was merged with Anup, effective April 1, 2022. This merger is reflected in the restated financial figures for FY2022-23.
Acquisition of Mabel Engineers Private Limited: This strategic acquisition expanded Anup’s product portfolio (silos, storage tanks, vessels) and manufacturing footprint to Tamil Nadu, India.
Commissioning of New Facility: Phase 1 of Anup’s new manufacturing facility at Kheda, Gujarat, became operational, increasing its production capacity.
Establishment of New Design Office: A new design office in Vadodara, Gujarat, was opened to enhance customer relationships and support.
Bonus Share Issue: The Board approved a 1:1 bonus issue of equity shares, further expanding the number of outstanding shares.
High On-Time Delivery Performance: Anup maintained a strong on-time delivery record of 95%, reinforcing its reputation for reliability.
Strong Order Book: Anup secured new orders worth approximately ₹853 Cr during the year, ending with a robust order book of ₹854 Cr. A significant portion of this (57%) is from exports.
These events highlight Anup’s strategic focus on growth through capacity expansion, product diversification, geographical expansion, and operational excellence. The success of these initiatives largely contributed to Anup’s strong financial performance for the year.
Audit Information #
Auditor’s Opinion:
The independent auditor, Sorab S. Engineer & Co., Chartered Accountants, issued an unmodified (clean) opinion on Anup Engineering Limited’s financial statements for the year ended March 31, 2024. This means the auditors found the financial statements to be presented fairly, in all material respects, in accordance with Indian Accounting Standards (Ind AS) and other generally accepted accounting principles in India. The audit report also includes a separate, unqualified opinion on the adequacy and operating effectiveness of the company’s internal financial controls over financial reporting.
Key Accounting Policies: Several key accounting policies are detailed in Note 3 of Anup’s annual report. The most significant ones include:
Current versus Non-Current Classification: Assets and liabilities are classified as current or non-current based on their expected realization or settlement within the operating cycle (assumed to be 12 months).
Business Combinations under Common Control: The pooling-of-interests method was used to account for the merger of Anup Heavy Engineering Limited, reflecting the common control before and after the combination.
Foreign Currencies: Transactions in foreign currencies are initially recorded at the spot exchange rate, with monetary items translated at the reporting date’s exchange rate. Differences are recognized in profit or loss.
Fair Value Measurement: Fair value is determined using market participant assumptions and categorized within a three-level hierarchy (Level 1: quoted market prices; Level 2: observable inputs; Level 3: unobservable inputs).
Property, Plant, and Equipment: Assets are recorded at cost, less accumulated depreciation and impairment losses. Depreciation is calculated using the straight-line method, with useful lives reviewed annually.
Leases: Anup follows Ind AS 116, recognizing right-of-use assets and lease liabilities for most lease arrangements.
Intangible Assets: Intangible assets are recognized at cost, less accumulated amortization and impairment losses. Amortization is applied over their useful lives.
Revenue Recognition: Revenue is recognized when control of promised goods or services is transferred to customers, in accordance with Ind AS 115.
Financial Instruments: Anup classifies its financial assets and liabilities based on Ind AS 109, categorizing them into different measurement categories (amortized cost, fair value through other comprehensive income, fair value through profit or loss).
Employee Benefits: Short-term benefits are recognized when services are rendered. Post-employment benefits (defined contribution and defined benefit plans) are accounted for according to Ind AS 19.
Share-Based Payments: The cost of equity-settled transactions is measured at fair value at the grant date, with expense recognized over the vesting period.
Taxes: Income tax expense includes current and deferred taxes, calculated using enacted or substantially enacted tax rates.
Provisions and Contingencies: Provisions are recognized when a present obligation is probable and can be reliably estimated. Contingent liabilities are disclosed but not recognized.
These key accounting policies provide the framework for preparing Anup Engineering Limited’s financial statements. Understanding these policies is crucial for interpreting the financial data presented in the annual report. Note that this is a summary and all details are given in the annual report.