Inox India Ltd:Annual Report 2023-24 Analysis

Inox India Ltd: A Comprehensive Overview #

About the Company #

• Year of Establishment and Founding History: Inox India Ltd. was established in 1992. It was founded as a part of the Inox Group, a well-known industrial conglomerate in India.

• Headquarters Location and Global Presence: The company’s headquarters are located in Vadodara, Gujarat, India. Inox India has a global presence with operations and sales in various countries, including the United States, Europe, and several Asian countries.

• Company Vision and Mission: While the specific published vision and mission statements can vary, Inox India generally aims to be a leading global provider of cryogenic solutions, driven by innovation, quality, and customer satisfaction. Their mission revolves around delivering reliable and efficient cryogenic equipment and services to diverse industries.

• Key Milestones in Their Growth Journey:

  • Early years focused on establishing a strong domestic presence.
  • Expansion into international markets through exports and strategic partnerships.
  • Development of a wide range of cryogenic products and solutions.
  • Investment in R&D and technological innovation to maintain a competitive edge.
  • Successful initial public offering (IPO) in December 2023.

• Stock Exchange Listing Details and Market Capitalization: Inox India Ltd. is listed on both the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE). Market capitalization fluctuates with market conditions.

• Recent Financial Performance Highlights: Specific details on recent financial performance including revenue, profit, and growth percentages, should be sought from the company’s official investor relations releases and financial reports.

• Management Team and Leadership Structure: Details on the key individuals in the management team, including the CEO, CFO, and other key executives, along with information about the board of directors, should be sought from the company’s official website and annual reports.

Their Products #

• Complete Product Portfolio with Categories: Inox India offers a comprehensive range of cryogenic solutions, categorized as follows:

  • Industrial Gas Solutions: Cryogenic tanks, vaporizers, and related equipment for storing and distributing industrial gases like oxygen, nitrogen, argon, and carbon dioxide.
  • LNG Solutions: Equipment for LNG storage, transportation, and distribution, including small-scale LNG plants and regasification terminals.
  • Cryo-Scientific Solutions: Liquid nitrogen plants, bio-storage systems, and other equipment for research and medical applications.
  • CNG/Hydrogen Solutions: Equipment for compressed natural gas (CNG) and hydrogen storage and transportation.

• Flagship or Signature Product Lines: Cryogenic tanks for industrial gases and LNG storage are considered flagship products.

• Key Technological Innovations or Patents: Details on patents or specific technological advancements should be sought from the company’s filings.

• Manufacturing Facilities and Production Capacity: Manufacturing facilities are located in India.

• Quality Certifications and Standards: Inox India maintains relevant quality certifications.

• Any Unique Selling Propositions or Technological Advantages: Key USPs involve technical expertise, experience, and customization.

Primary Customers #

• Target Industries and Sectors:

  • Industrial Gases
  • Oil and Gas (LNG)
  • Healthcare
  • Research and Development
  • Food and Beverage
  • Aerospace
  • Automotive

• Geographic Markets (Domestic vs. International): Operates in both domestic and international markets.

• Major Client Segments (agricultural, industrial, residential, etc.): Primarily serves industrial and institutional clients.

• Distribution Network and Sales Channels: Utilizes direct sales teams and partnerships for distribution.

Major Competitors #

• Direct Competitors in India and Globally: Competitors exist both in India and globally. Some key competitors include Chart Industries, Cryolor (Air Liquide), Linde Engineering, and local cryogenic equipment manufacturers.

• How they differentiate from competitors: Inox differentiates itself through experience, technical expertise and customization.

Future Outlook #

• Expansion Plans or Growth Strategy: Geographical expansion and product portfolio diversification are areas for growth.

• Sustainability Initiatives or ESG Commitments: Details regarding sustainability initiatives and ESG commitments should be sought from the company’s annual reports and communications.

• Industry Trends Affecting Their Business: Growing demand for industrial gases, increased adoption of LNG, and rising interest in hydrogen energy.

• Long-Term Vision and Strategic Goals: To strengthen market leadership position and expand their global reach.

INOX India Limited: FY 2023-24 Performance Overview #

Key Financial Metrics Analysis (Consolidated) #

INOX India Limited demonstrated robust financial performance in FY 2023-24, achieving several record milestones.

• Total Income: Reached its highest ever at ₹1162 Crore, an 18% increase from ₹986 Crore in FY23. Revenue from operations grew to ₹1131 Crore from ₹966 Crore in FY23.
• EBITDA: Achieved its highest ever at ₹282 Crore, a 25.4% increase from ₹225 Crore in FY23. EBITDA margin improved by 145 bps to 24.2% in FY24 from 22.8% in FY23.
• Profit After Tax (PAT): Stood at ₹196 Crore in FY24, up 26.7% from ₹155 Crore in FY23. PAT Margin improved to 16.9% from 15.7% in FY23.
• Export Revenue: Recorded its highest ever at ₹641 Crore, up 44% YoY, comprising 55% of total income in FY24.
• Order Booking: Achieved its highest ever order booking at ₹1193 Crore in FY24, up 14% YoY. Order backlog stood at ₹1087 Crore as of March 31, 2024.
• Financial Position: The company is net debt-free with cash and cash equivalents of ₹253 Crore as of March 31, 2024. The new Savli plant expansion (₹100+ Crore) was funded entirely through internal accruals.
• Earnings Per Share (EPS): Basic EPS (Consolidated) increased to ₹21.59 in FY24 from ₹17.05 in FY23.
• Return on Net Worth (Consolidated): Improved to 30.20% in FY24 from 28.16% in FY23.

Business Segment Performance (FY 2023-24) #

Industrial Gas Division #

• Business Environment: Sustained demand for Standard Storage Tanks and Micro-bulk units in India, Middle-East, North & South America, and Europe. Engineered Tanks & System packages (including Flat Bottom Tanks, large non-Cryo equipment) saw demand from India, Middle East, and Far East Asia. Steel production increase in India (target 230 MT by 2030-31) is expected to boost demand for Air Separation Plants and related cryogenic equipment. Investments in industrial gas, hydrogen liquefaction, and semiconductor industries are driving EPC demand.
• Achievements: Secured large contract for PETRONAS ZLNG project. Consistent orders for Standard Tanks (Americas, Middle-East, India) and LCO2 tanks (Africa, Middle-East). Micro-bulk units gained business in India and exported to Americas, Australia, Middle-East. Semi-Trailer orders from South-East Asia, Middle-East, South America, Australia, including a FOIK LN2O Trailer. Designed, manufactured, and erected 311 M3 Liquid Hydrogen tank in South Korea for mobility application. Kandla SEZ Plant achieved record revenue of ₹335 Crore.

LNG Division #

• Business Environment: LNG prices stabilized, remaining above historical averages due to limited production capacity. Global LNG demand projected to rise to 625-685 million MT by 2040, driven by coal-to-gas switching in Asia. USA became the largest LNG producer. LNG played a crucial role in European energy security. Domestically, India’s LNG imports rose. NITI Aayog report supports LNG for transport, aligning with India’s goal of 15% natural gas in energy mix by 2030.
• Achievements (Export): Set new benchmark in Brazil with large fleet of 61 M3 LNG Semi-Trailers for On-Road distribution. Supplied a 560 M3 LNG Marine Fuel Gas Tank (one of the largest from Kandla Works) to a European shipyard for a Japanese cruise vessel. Supplied LNG Storage Tanks for Liquefaction Plants in Americas, including an order from a large private US Space Agency. Completed equipment supplies for Antigua mini LNG Terminal (4 X 1000 M3 Storage Tanks), expected commissioning May-June 2024. Increased footprint in Central America and Caribbean by commissioning several LNG Satellite Stations.
• Achievements (Domestic): Secured majority share for LNG Fueling Stations from private and public sector companies; commissioned 6 LNG Dispensing Stations. Won key orders for LCNG Stations and commissioned several for CGD companies. Secured orders for LNG fuel tanks from automobile OEMs as LNG-fueled truck trials completed. Supplied LNG Fuel Tanks for MSRTC’s pilot project to convert diesel buses to LNG. Signed Mutual Support Agreement with Adani Total Gas Limited to strengthen LNG ecosystem.

Cryoscientific Division #

• Business Environment: Growing global focus on renewable energy and nuclear fusion (ITER). Cryogenics (Liquid Helium) vital for superconducting magnets in fusion. Demand for cryo-distribution in atomic acceleration research (Cryolines, Feedboxes, Cryomodules). Defence applications (AIP systems for submarines requiring LOX). Medical applications (MRI machines – India largely imports).
• Achievements: Received challenging project from ITER Organisation for vacuum vessel thermal shield repair work (5 of 9 sectors awarded). Received 2 first orders from Wroclaw University, Poland for FAIR Project, Germany (Feedboxes, Current lead boxes). First order from L&T Defence for LOX tank for AIP system in Kalvari submarines. First order from MTAR Technologies for high-pressure kerosene tank for rocket engine testing. Ongoing ITER Project cryo/warm lines installation (approx. 80% complete, 100% in Cryoplant building). Continuous business from ITER/CERN, including special orders for impregnation chamber (CERN) and Multi Process Cryolines (ITER).

Other Businesses #

• Disposable Refrigerant Cylinders: Low demand initially due to US anti-dumping case; orders resumed in Q4 FY24 post favorable initial USDOC report. Strong domestic demand. Developed cylinders for new refrigerants (R448A, R410A, etc.) and dual-use DC-30 cylinders for US. Developed helium storage and propane application prototype cylinders. Successfully completed US DOT 39 audit for Silvassa & Kalol.
• Stainless Steel Kegs: COVID-19 recovery delayed by geopolitical situation and inflation. Positive outlook due to balance of profitability/sustainability favoring returnable stainless-steel kegs. Global annual demand estimated between 4.5-7.5 Mio units. Growth expected from emerging markets. Successfully commissioned keg plant at new Savli facility; initial samples well-received in Europe. Dispatched kegs to Belgium, Germany, US for approvals. Developed special small industrial containers for chemicals (orders from US). Products received ASME, NSF, EN, ISO approvals.

Detailed Analysis #

INOX India Limited - Financial Analysis (FY 2023-24) #

Report Details #

• Date of Report Generation: Based on Annual Report for FY 2023-24 (Submission date 21st May, 2024)
• Source Document: INOX India Limited Annual Report FY 2023-24

Balance Sheet Analysis #

Comparative Analysis of Assets, Liabilities, and Equity (FY24 vs FY23) #

(Data for FY22 is not available, hence a 2-year comparison is presented.)

Consolidated Financial Position #

(₹ in Lakhs)

Standalone Financial Position #

(₹ in Lakhs)

INOX India Limited Financial Analysis Report (FY 2023-24) #

Date of Report: 21st May, 2024 Company: INOX India Limited (INOXCVA) CIN: L99999GJ1976PLC018945 Stock Exchanges: BSE (INOXINDIA), NSE (INOXINDIA) Financial Year Ended: 31st March, 2024

Overall Financial Performance (Consolidated) #

INOX India Limited reported a strong financial performance for FY 2023-24, achieving record highs in several key metrics.

• Total Income: Increased by 17.9% YoY to ₹1,162 Crore (FY23: ₹986 Crore).
• Revenue from Operations: Grew to ₹1,131 Crore (FY23: ₹966 Crore), a 17.1% YoY increase.
• EBITDA: Reached ₹282 Crore, a 25.4% YoY growth from ₹225 Crore in FY23. EBITDA margin improved by 145 bps to 24.2% (FY23: 22.8%).
• Profit After Tax (PAT): Increased by 26.7% YoY to ₹196 Crore (FY23: ₹155 Crore). PAT margin improved to 16.9% (FY23: 15.7%).
• Export Revenue: Achieved a record ₹641 Crore, up 44% YoY, constituting 55% of total income.
• Order Booking: Highest ever at ₹1,193 Crore.
• Order Backlog: Stood at ₹1,087 Crore as of FY24 end.
• Financial Position: The company is net-debt free with cash and cash equivalents of ₹253 Crore as

INOX India Limited (FY 2023-24) Financial Analysis #

Long-term Strategic Goals and Progress #

INOX India Limited (INOXCVA) aims to be the “world’s best integrated cryogenic solutions enterprise.” Key strategic priorities include accelerating LNG adoption, capitalizing on green hydrogen, expanding geographically, and pursuing sustainable growth.

• FY 2023-24 Progress:
  • Market Listing: Listed on Indian stock exchanges (NSE & BSE) on December 21, 2023.
  • Strategic Partnerships:
    • ‘Preferred partner’ agreement with Adani Total Gas for LNG and LCNG equipment.
    • Collaboration (MOU) with IUAC to develop technologies for SuperConducting Magnet-based Systems.
    • Collaboration with FABRUM (NZ) for small-scale hydrogen liquefaction solutions.
  • Innovation & R&D: Registered three key patents. Supplied cryolines to ITER and equipment to ISRO. Manufactured India’s first indigenously designed 1.5T superconducting MRI magnet cryostat.
  • Capacity Expansion: Completed a manufacturing facility in Savli, Gujarat. Kandla SEZ Plant achieved record revenue.
  • Financial Strength: Achieved highest total income and export revenue. Net-debt free with cash & cash equivalents.

Competitive Advantages and Market Positioning #

Dominant force globally in vacuum-insulated cryogenic equipment.

• Integrated solutions provider with expertise in conceptualization, design, engineering, manufacturing, delivery, and integration.
• Offers standardized and bespoke cryogenic equipment.
• Strong focus on design innovation and efficient procurement.
• Extensive international certifications.
• Engineering expertise and innovative approach have secured its position as a preferred supplier.
• Net-debt free status and strong cash flow generation underpin its competitive strength.

Innovation Initiatives and R&D Effectiveness #

Innovation is considered the “only force propelling us towards shaping a better tomorrow for all.”

• Strategic Collaborations for R&D:
  • IUAC: MOU for designing and manufacturing SuperConducting Magnet-based Systems.
  • FABRUM: Collaboration for hydrogen technologies.
• Key Innovations & Developments:
  • Patents: Registered three key patents in LNG dispensing and cryogenic piping systems.
  • MRI Technology: Manufactured India’s first indigenously designed 1.5T superconducting MRI magnet cryostat.
  • LNG Solutions: Designed and developed a full range of LNG equipment.
  • Hydrogen Technology: Designed and developed liquid hydrogen storage tanks and transport equipment.
  • Helium Transport: Designed and developed a liquid Helium IMO container.
• National Projects Contribution:
  • ITER: Supplied cryolines and received a project for vacuum vessel thermal shield repair work.
  • ISRO: Providing equipment for cryogenic scientific research.
  • FAIR Project (Germany): Received orders for feedboxes and current lead boxes.
  • Naval Defence (DRDO): Developing Liquid Oxygen (LOX) tanks for AIP systems.
  • Space Application (MTAR): Developing high-pressure kerosene tanks for rocket engine testing.
• R&D Expenditure: Incurred ₹13.82 Crore in R&D expenditure over the past four years.

M&A Strategy and Execution #

Actively pursues strategic partnerships and collaborations.

• Strategic Partnerships:
  • Adani Total Gas: “Preferred partner” agreement for LNG/LCNG equipment.
  • IUAC: MOU for joint R&D on superconducting magnet systems.
  • FABRUM (NZ): Strategic collaboration for hydrogen liquefaction solutions.
  • Supermonte S.R.L (Italy): Ongoing cooperation for developing new products for the beverage industry.
• Stated Intent: The MD&A section lists “Strategic acquisitions and alliances” as a future growth driver.
• Execution: The formation of the above partnerships demonstrates execution on its strategy of leveraging collaborations.

Management’s Track Record in Execution #

• Financial Performance:
  • Achieved highest ever Total Income, EBITDA, and PAT.
  • Highest export revenue.
  • Maintained a net-debt free, net cash surplus position.
• Operational Milestones & Project Delivery:
  • Successful IPO and listing on Indian stock exchanges.
  • Completion and operationalization of the new Savli manufacturing facility.
  • Record revenue from Kandla SEZ Plant.
  • Successful dispatch of LH2 tanks to Korea.
  • Completion of supplies of LNG Semi-Trailers to Brazil.
  • Supplied an LNG Marine Fuel Gas Tank to a European shipyard.
  • Completion of equipment and systems for Antigua mini LNG Terminal.
  • Commissioned several LNG Satellite Stations in Central America and the Caribbean.
  • Secured market share for LNG Fueling Stations in India.
  • Won orders for LCNG Stations.
  • ITER Project: Completed manufacturing of Cryolines; ongoing installation work.
• Strategic Initiatives:
  • Forged key partnerships.
  • Secured three new patents.
  • Developed and launched new products.
• The “Our Achievements” timeline showcases a consistent track record of technological development, market expansion, and project execution.

Capital Allocation Strategy #

• Demonstrated preference for funding organic growth through internal accruals.
• The company emphasizes its net-debt free and net cash surplus position.

Future Outlook: INOX India Limited (FY 2023-24) #

Management Guidance and Assumptions #

Management projects continued growth driven by rapid industrialization, the transition to a green economy (LNG and hydrogen adoption), and expanding scientific research applications. The company’s financial performance in FY24, coupled with a net-debt-free status and cash reserves, are presented as a strong foundation for future investments and growth initiatives. Export revenue is a key growth vector.

Assumptions underpinning this outlook include:

• Sustained demand for cryogenic equipment from diverse sectors.
• Global uptake of cryogenic LNG infrastructure.
• Increasing demand for hydrogen solutions.
• Stabilization of LNG and Natural Gas prices.
• Continued government support for cleaner fuels and “Make in India” initiatives.
• Asia-Pacific region as the fastest-growing market for LNG adoption.

Market Growth Forecasts #

• Global Cryogenic Equipment: The Indian cryogenic equipment market is forecasted to grow at a CAGR of 7.1% over CY22-27E. Metallurgy is the largest global demand segment, followed by energy & power.
• LNG: Global LNG demand is projected to increase by over 50% by 2040. The Indian LNG import market has also grown. NITI Aayog supports LNG as a transport fuel, aiming to increase natural gas share in India’s energy mix.
• Hydrogen: Increasing demand for hydrogen is anticipated.
• Industrial Gases: Steel production in India is projected to increase by 2030-31, boosting demand for air separation plants and associated cryogenic equipment.
• Cryo-Bio Freezers: This market is projected to grow at a CAGR of 10.65%, with major markets in North America, Europe, and Asia Pacific.

Planned Strategic Initiatives #

• Partnerships & Collaborations:
  • Strategic agreement with Adani Total Gas for LNG and LCNG equipment and services.
  • MOU with Inter-University Accelerator Centre (IUAC) for developing SuperConducting Magnet-based Systems.
  • Collaboration with FABRUM (NZ) for hydrogen liquefaction solutions.
• Product Development & Innovation:
  • Registration of three key patents: LNG Dispensing System, Sliding Spacer for Cryogenic Piping, and Displacement Decoupling Arrangement.
  • Development of India’s first indigenously designed 1.5T superconducting MRI magnet cryostat.
  • Development of a full range of LNG equipment and onboard LNG fuel tanks for automotive applications.
  • Design and development of liquid hydrogen storage tanks, transport equipment, and fuel tanks for automotive applications.
  • Development of liquid Helium IMO containers (final testing stage).
  • Development of disposable cylinders for new refrigerants and new applications.
• Global Expansion: Expanding geographical footprint to become a global integrated cryogenic solutions provider.
• Manufacturing Expansion: Completion of the new greenfield manufacturing facility in Savli, Gujarat. This includes a new stainless steel keg plant.
• Turnkey Solutions: Focus on growing the large turnkey project business by enhancing operational efficiency.
• Scientific & Research Contributions:
  • Supplying cryolines to ITER.
  • Providing equipment to ISRO for cryogenic scientific research.
  • Received orders from Wroclaw University, Poland for the FAIR Project, Germany.
  • Development of Liquid Oxygen (LOX) tank for NMRL (DRDO).
  • Development of high-pressure kerosene tank for MTAR Technologies for rocket engine testing.

Capital Expenditure Plans #

• Completion of the greenfield manufacturing facility in Savli, Gujarat.
• The new Savli plant includes a stainless steel keg manufacturing facility, now in trial production.
• Future capex is implied for continued growth initiatives and potential strategic acquisitions.

Efficiency Improvement Targets/Initiatives #

• Operational Efficiency: Improve operational efficiency and productivity.
• Technology Absorption: Collaboration with M/s. Supermonte (SRL) for stainless steel beverage keg technology. Development of LH2 storage/transport and Helium IMO containers.
• R&D Initiatives: Significant investment in R&D. Focus on indigenous development.
• Skill Development: Operation of a Skill Development & Welding Excellence Centre. Extensive employee training programs.
• Quality Standards: Emphasis on maintaining quality standards.
• Energy Conservation: Multiple initiatives including LED lighting, utilization of treated water, energy-efficient motors, and a windmill. Plans for rooftop solar panel installation.
• Green Building Concept: Implemented at the new Savli plant focusing on water efficiency, sustainable material selection, and energy efficiency.

Potential Challenges and Opportunities #

• Opportunities:
  • Capitalizing on the shift towards clean energy (LNG and Hydrogen).
  • Rising LNG demand.
  • Offering site-built storage tanks for international markets.
  • Expanding international business through partnerships and investments.
  • Developing non-cryo engineered products for defense, automotive, and nuclear sectors.
  • Growth in demand for standard cryogenic and non-cryogenic equipment in international markets.
  • Growth through strategic acquisitions and alliances.
  • Participation in large-scale scientific projects.
• Challenges (Threats & Weaknesses):
  • Potential changes in CFC regulations.
  • Customer concentration risk.
  • Long usable life of cryogenic equipment.
  • Exposure to anti-dumping duties.
  • Future demand for cryogenic equipment being affected by LNG and Hydrogen prices and government policies.
  • Limited volume for mass production benefits.
  • High transportation costs for large tanks.
  • Intense competition from global players.
  • Limited buyers in the gas industry leading to competitive pricing pressure.
  • Volatility in steel prices impacting costs.
  • Increased adoption of electric vehicles potentially hurting CNG, LNG, and hydrogen demand in certain transport segments.

Scenario Analysis and Sensitivity to Key Assumptions #

The report acknowledges several factors that introduce sensitivity:

• LNG and Hydrogen Prices & Policies: Future demand will be affected by these factors.
• Steel Prices: Volatility impacts costs and profitability.
• Foreign Exchange Risk: Exposure to FX fluctuations.
• Customer Concentration: Reliance on top customers makes the company sensitive to order changes.
• Regulatory Changes: Anti-dumping duties or environmental regulations can impact product lines.
• Interest Rate Risk: Borrowing exposes the company to interest rate fluctuations.

Audit & Compliance #

Audit and Regulatory Analysis #

Auditor’s Opinion and Qualifications #

The Independent Auditors’ Reports on both Standalone and Consolidated Financial Statements for the financial year ended March 31, 2024, provide an unqualified opinion. The auditors state that the financial statements give a true and fair view in conformity with Indian Accounting Standards (Ind AS) and other accounting principles generally accepted in India.

• Standalone Financial Statements: No qualifications are noted. A Key Audit Matter (KAM) identified is “Revenue from Contracts recognized over time” due to significant management judgment involved in estimating percentage completion and contract margins based on actual costs incurred and forecasted future costs.
• Consolidated Financial Statements: No qualifications are noted. The same KAM, “Revenue from Contracts recognized over time,” is identified. An “Other Matter” paragraph highlights that the financial statements of two foreign subsidiaries, reflecting total assets of ₹5,929.32 lakhs and total revenues of ₹6,442.43 lakhs, were not audited but were certified by management. These are stated as not material to the Group. The auditors’ opinion is not modified in respect of this matter.

Key Accounting Policies and Changes #

The company has consistently applied its material accounting policies during the financial year 2023-24. No new standards or amendments notified by the Ministry of Corporate Affairs (MCA) were applicable to the company for this financial year that would necessitate a change in accounting policies.

Key accounting policies include: #

• Revenue Recognition (Ind AS 115): Revenue from contracts is recognized when performance obligations are satisfied. For obligations satisfied over time (a significant portion, particularly for long-term projects), progress is measured using the input method (proportion of actual cost incurred to total estimated cost). This involves significant estimation for total contract costs and revenue.
• Property, Plant & Equipment (PPE) and Intangible Assets: Carried at cost less accumulated depreciation/amortization and impairment. The company elected to use previous GAAP carrying amounts as deemed cost on Ind AS transition. Depreciation is on a straight-line basis over useful lives prescribed by Schedule II of the Companies Act, 2013, or based on technical assessment for certain assets.
• Leases (Ind AS 116): Right-of-use (ROU) assets and lease liabilities are recognized for leases. Short-term leases and low-value asset leases are expensed on a straight-line basis.
• Inventories: Valued at the lower of cost (weighted average for raw materials, stores & spares; includes material, labor, and overheads for finished goods & WIP) and net realizable value.