Abhishek Integrations Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS REPORT </dhhead>

Aviation

Industry Structure and Development

The civil aviation industry in India has emerged as one of the fastest growing industries in the country during the last three years. India has become the third largest domestic aviation market in the world and is expected to overtake UK to become the third largest air passenger market by 2024.

India is expected to overtake China and the United States as the worlds third-largest air passenger market in the next ten years, by 2030, according to the International Air Transport Association (IATA). Further, the rising demand in the sector has pushed the number of airplanes operating in the sector. The number of airplanes is expected to reach 1,100 planes by 2027.

India’s passenger traffic stood at 236.71 million in FY23 (from April to December 2022). Domestic passenger and international passenger traffic declined at a CAGR of -0.21% and -14.04%, respectively, from FY16 to FY22. In FY22, airports in India pegged the domestic passenger traffic to be reach 166.8 million, a 58.5% YoY increase, and international passenger traffic to be reach 22.1 million, a 118% YoY increase, as compare to FY21.

Between FY16 and FY22, freight traffic increased at a CAGR of 2.52% from 2.70 million tonnes (MT) to 3.14 MT. Freight traffic on airports in India has the potential to reach 17 MT by FY40. In FY22, the number of aircraft movements stood at 1,757,112, and aircraft movements reached 2,029,090 in FY23 (April-December 2022). To cater to the rising air traffic, the Government of India has been working towards increasing the number of airports. As of 2022, India had 131 operational airports. India has envisaged increasing the number of operational airports to 220 by 2025.

International Aviation Demand, Capacity and Utilization

Aircraft movement declined at a CAGR of -7.79% from 1.60 million in FY16 to 1.20 million in FY21. From FY16 to FY22, domestic aircraft movement decreased at a CAGR of -6.44% and international aircraft movement declined at a CAGR of -18.52%. India’s domestic and international aircraft movements reached 1,062 thousand and 135 thousand, respectively, in FY21.

To cater to the rising air traffic, the Government of India has been working towards increasing the number of airports. As of 2020, India had 153 operational airports. India has envisaged increasing the number of operational airports to 190-200 by FY40.

Further, the rising demand in the sector has pushed the number of airplanes operating in the sector. The number of airplanes is expected to reach 1,100 planes by 2027.

Some major initiatives undertaken by the Government are:

? In the Union Budget 2023-24:

 Rs. 3,224.67 crores (US$ 440.36 million) has been allocated to the Ministry of Civil Aviation.

Government to revive 50 aircraft landing sites comprising airports, heliports, water aerodromes, and advanced landing grounds to improve regional air connectivity.

In the budget 2022-23, the RCS (Regional Connectivity Scheme) UDAN scheme which aims to stimulate regional air connectivity has been allocated Rs. 601 crores (US$ 77.52 million).

For better execution of the PM-Gati Shakti vision, Mr. Jyotiraditya M. Scindia, Minister of Civil Aviation asks for synergy between the Central and State Governments to build 16 new airports in Madhya Pradesh, Chhattisgarh, Uttar Pradesh, Rajasthan, and Maharashtra.

? NABH (NextGen Airports for Bharat) - Nirman is a government initiative to expand airport capacity more than five times to handle billions of trips a year, in the next 10-15 years.

? AAI Startup Policy: Delivering a framework & mechanism for the interaction of AAI with internal and external stakeholders that catalyze innovation at airports and leveraging technology for addressing challenges and enhancing the delivery of services to passengers.

? Under four rounds of bidding of RCS-UDAN, as of November 2022, 459 routes have commenced, operationalizing 70 airports including 2 water aerodromes & 9 heliports.

? Union Minister for Civil Aviation Mr. Jyotiraditya Scindia launches Digi Yatra for three airports in the country.

? Civil enclave to be built in Jammu at a cost of Rs. 861 crores.

? In October 2022, Prime Minister Mr. Narendra Modi laid the foundation stone of the C-295 Aircraft Manufacturing Facility in Vadodara, Gujarat.

Coal

? Indias coal reserves are the fourth largest in the world, In FY22 Indias coal production stood at 777.31 MT, a 8.55% YoY.

? Being the third largest energy consuming country in the world, there is always increased demand for power and electricity in the country, and hence the surge in demand for coal.

? Enactment of Mines and Minerals (Development and Regulation) Amendment Act, 2021 enabled captive mines owners (other than atomic minerals) to sell up to 50% of their annual mineral (including coal) production in the open market.

? Coal production in India stood at 380.082 MT in FY 2022-23 (April-October 2022).

Source: https://www.ibef.org/

 Opportunities and Threats.

Opportunities:

? Increasing Government focus on increasing reforms in the infrastructural and industrial sector; ? Expansion of key industry sector Airports, Ports etc.;

? Infrastructural development in the Country.

Threats:

? Economical and Political scenario in the country;

? Gradually becoming highly competitive due to entry of large number of organized player which are creating disturbance by offering services at unrealistic prices.

 Segment wise or product-wise performance

The Company has expanded its segment apart from existing developing, maintaining & operating of Airports to a Lighting & Electrical Products Trading and Coal Trading.

Segment wise Revenue:

Particulars	2022-23
Infrastructural & Utility Services	1,968.32
Electrical Goods Trading	35.29
Coal Trading	251.57

Segment Results (Profit/Loss before tax and interest from each segment)

Particulars	2022-23
Infrastructural & Utility Services	173.88
Electrical Goods Trading	1.60
rift;mso-bidi-font-family:"Times New Roman">Coal Trading	6.81

 Outlook

Your Company has kept pace with the overall market scenario and continues to grow significantly. The Management expects to improve the growth in the years to come, subject to favourable market conditions, and stable economic policies. With each passing year, our commitment to our clients’ success and our will has only grown stronger. Our motivation comes from our clients’ guidance and warm support that have always welcomed our lofty goals and helped us execute and achieve them through a well-crafted plan. The organisation is constantly working on overcoming difficulties by enhancing our capabilities and focusing on increased efficiency, which will aid in profit development and consistency.

 Internal Control Systems and their adequacy

Your Company has deployed all relevant technology solutions to manage and monitor internal process. Further, we have well established and adequate systems for internal control to provide reasonable assurance that all assets are safeguarded. Also, as a measure of checks and balances, all transactions are authorized and reported diligently.

 Risks and Concerns

The Company has put in place Risk Management Policy and Procedures for identification, assessment, management, monitoring and minimization of risks. It has identified potential risks under various categories like Business Dynamics, Operations, Liquidity,

Market/Industry, Human Resources, Systems and Disaster Management. The Company is periodically reviewing the risks and their identification, assessment, monitoring and mitigation procedures. It does not perceive any major technological, operational, financial or environmental risks in the near future.

 Discussion on financial performance with respect to operational performance Revenue:

We have got thought leadership in our focused domains. The Company’s growth considering the past years’ performance has increased. The Company is taking necessary steps for increasing profits from year to year. The Company recorded net sales Rs. 2255.18 lakhs as against Rs. 1324.60 lakhs in the previous year and thereby recording the increase in the net sales by 70.25% over previous year.

 Human Resources

More than 500 employees are working in the Company. We continuously endeavor to improve and enhance the work environment for our employees. Competitive compensation package, innovative and challenging environment to work, etc., are some of the steps taken by the Company for the welfare of its employees.

 Cautionary Statement

Statements in the Management Discussion & Analysis Report describing the Company’s expectations, opinion, and predictions may please be considered as “forward looking statements” only. Actual results could differ from those expressed or implied. Company’s operations should be viewed in light of changes in market conditions, prices of raw materials, economic developments in the country and such other factors.

 Key Financial Ratios

Sr. No. Particulars of Ratio	31st March, 2023	31st March, 2022
1. Debtors Turnover Ratio1	12.56	9.32
2. Inventory Turnover Ratio2	4.15	5.92
3. Interest Coverage Ratio3	4.58	12.07
4. Current Ratio	2.47	2.30
5. Debt Equity Ratio4	0.16	0.08
6. Operating Profit Margin (%)	4.96	4.72
7. Net Profit Margin (%)	2.98	3.80
8. Return on Net Worth (%)	8.27	9.47

Explanations for significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in Key Financial Ratios:

^1. Debtor Turnover Ratio increased by 34.73% due to increase in Turnover.

^2. Inventory Turnover Ratio decreased by 29.89% due to start of new segment of business.

^3. Interest Coverage Ratio decreased by 62.08% due to increase in EBITDA.

^4. Debt Equity Ratio increased by 100.90% due to increase in Long Term Debts.