Master Components Ltd Management Discussions

Annexure-III:

A. INDUSTRY STRUCTURE AND DEVELOPMENTS:

The plastic engineering components and sub-assemblies industry is a crucial sector within manufacturing, encompassing a wide range of products and applications across various industries such as electrical, automotive, electronics, industrial, and more.

Industry Structure for the segments look like:

1. Regulations and Sustainability:

Environmental concerns and regulatory requirements are attracting more light of the industry players. Manufacturers are focusing on sustainability initiatives, including recycling programs, use of biodegradable materials, and reducing carbon footprint throughout the product lifecycle.

2. End-User Industries:

Plastic components and sub-assemblies are used in various sectors. In electrical they are used extensively in all product ranges. In automotive industry, they are integral to vehicle interiors, exteriors, and under-the-hood applications. In Industrial variety of electronics applications they are used in casings, connectors, and many more.

3. Raw Materials Providers:

Key raw materials for plastic engineering components include various types of plastics e.g., thermoplastic polymers and thermoset polymers. Raw material providers play a crucial role in the supply chain. Providers of such materials range from large corporates to small companies specializing in the specific sector.

4. Technology and Innovation:

Advances in materials science, molding techniques (e.g., injection molding, thermoset moulding and automation have significantly enhanced the industry horizon. These innovations improve product design flexibility, precision, and efficiency in manufacturing.

Accordingly recent developments in the industry are seen in following Sectors:

1. Technological Advancements:

The adoption of advanced materials and technology in manufacturing processes have enabled better productivity, and more environmentally friendly plastic components.

2. Quality Standards and Certification:

Compliance with industry standards (e.g., ISO and IATF certifications) and EHS practices are crucial for market acceptance and customer trust, particularly in sectors like electrical and automotive.

• Products of Master Components Limited can be categorized as follows:

1. Electrical Components (Thermoplastics)

2. Electrical Components (Thermoset)

3. Automotive Components

4. Medical Components

5. Industrial Components

6. Thermoset Moulding

B. OPPORTUNITIES AND THREATS:

In our organization vast experience of promoters, skilled team and well-versed board stands the top of strength driving pyramid. Whereas existing customer relations and consistent developments with the trends has served the company in holding strong position in the industry.

The company looks forward to make best of the following opportunities:

1. Growing Demand Across Industries:

There is increasing demand for plastic components and sub-assemblies in diverse sectors such as electrical, automotive, electronics, industrial, healthcare, and consumer goods. This demand is driven by factors such as lightweight material, cost-effectiveness, and design flexibility offered by plastics.

2. Global Market Expansion:

With globalization and the increasing adoption of plastic components worldwide, there are opportunities for companies to enter new markets, especially in emerging economies where industrialization and infrastructure development are driving demand.

3. Customization and Personalization:

Consumer preferences for customized products are increasing. Plastic engineering allows for design flexibility and customization, offering opportunities to cater to niche markets and specific customer needs.

4. Technological Advancements & Sustainability Initiatives:

Updation in technology allows to enhance product performance, customization capabilities, and operational efficiency. Opportunities exist for companies that innovate with latest technology, improve recyclability of products, and adopt circular economy practices.

Regulatory and Environmental Pressures:

Stricter environmental regulations (e.g., bans on certain plastics, recycling mandates) and consumer awareness of plastic pollution pose challenges. Companies need to navigate compliance costs and invest in sustainable practices.

Competitive Pressure:

The industry is highly competitive with numerous players ranging from large multinational corporations to small specialized firms. Price competition, technological advancements, and market consolidation can challenge profitability.

C. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

Company operates in single segment of manufacturing of plastic engineering components and sub-assemblies.

D. OUTLOOK

Future prospects for plastic engineering components and sub-assemblies remains promising yet dynamic, shaped by various trends and factors influencing both demand and supply dynamics.

Though the company is solely involved in the single segment in spite of challenges such as regulatory compliance, raw material costs, and competitive pressures is well-positioned for growth through strategic adaptation to technological advancements, sustainability imperatives, and shifting market dynamics.

E. RISK AND CONCERNS

No matter which industry the company works in, each sector possess some kind of risks and concerns that needs to be acknowledged by the organization. Every business needs to assess such factors and keep a plan of action ready to act upon.

In case of Master Components Limited, the risks and concerns are related mostly to availability of raw material, governmental restrictions on use of plastic, maintaining quality standards and competitive market. All these factors are acknowledged and assessed by the board and executive directors on time and again to upkeep with the next steps to be taken by the management. This way company is working on to minimalize the impact of external changes on the business.

Further the concerning factors can be described in detail as below

1. Raw Material Volatility:

As the manufacturing is completely dependent on the receipt of raw material there are chances of delays in the supply chain can significantly impact project timelines, costs, and quality standards, thereby affecting revenue and profitability.

However our company has proactively addressed this risk by establishing strong commercial relationships with reputable suppliers, ensuring a continuous and reliable flow of raw materials.

2. Maintaining Quality standards:

While expanding the client network globally, it becomes crucial to maintain the quality of product. Sustained quality standards during the entire manufacturing cycle is crucial.

3. Regulatory restrictions:

Where the material involved in production is such crucial and face the threats to environmental sustainability, it becomes mandatory for the business to follow in spirit all the regulatory guidelines laid down by the respective authorities. Such violations can lead the company into legal liabilities, fines, and loss of business opportunities.

However the company has the practice of periodical meeting with all the departmental heads to keep everyone updated with changed regulations and steps needed to be taken in accordance with the same. We ensure that no part of business gets entangled with any of such regulations.

4. Competitive Market:

With time many companies have entered the industry and are competing with the existing market players to gain more share. Such intense competition from both domestic as well as international market has been impacting the pricing models of the company.

To counter the same, our management has been tirelessly working on the innovations in the products and follow Lean manufacturing. In case of customizations, orders are further manufactured only after the sample is approved by the customer. Our principal of customercentric working along with track record of quality maintenance and timely supply has made us stand out in the population.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal control systems covering all its operations of the business. Through our compliance function, we monitor compliance with regulatory requirements laid down by the Securities and Exchange Board of India (SEBI). The adequacy and effectiveness of laid down systems and policies are comprehensively and frequently monitored by your companys management at all the levels of the organization.

The Audit Committee of the Board of Directors reviews the existing audit procedures and internal systems of control on an ongoing basis keeping in mind the organizations requirements, growth prospects and ever evolving business environment. They also review the internal audit findings and recommendations and ensure that corrective measures are implemented. The Audit Committee is responsible for overseeing the risk management framework, reviewing the key risks and mitigation strategies, and ensuring the effectiveness of risk management policies and procedures. The Management is also responsible for ensuring that the risk management framework is effectively implemented within all areas of their respective functions.

Some of the significant features of internal control system are:

• Financial and Commercial functions have been structured to provide adequate support and control of the business.

• Risk Management policy has been adopted by the Company.

• The Company has an Internal Audit System conducted by the Internal Auditor of the Company.

• Standard operating procedures and guidelines are reviewed periodically to ensure adequate control.

Our team stays abreast of the new regulatory requirements and communicates the same to the relevant functions along with further action plan that may be taken into account and implemented by the management.

G. OVERVIEW AND ANALYSIS OF FINANCIAL CONDITIONS

The Management believes that it has been apt in making estimates and judgments relating to the Financial Statements and confirms that these Financial Statements are a true and fair representation of the Companys Operations for the period under review.

Following are the comparative table of financial performance of the company:

YEARLY COMPARISON
Audited Amounts in Lakhs
Particulars	F.Y. 2022-23	F.Y. 2023-24
Revenue from Operations	2529.04/-	2070.26/-
Total Expenses	2202.63/-	1848.43/-
Profit After Tax	267.56/-	171.03/-
PERIODICAL COMPARISON
Unaudited Amounts in Lakhs
Particulars	Oct. 2023 - Mar. 2024	Apr. 2023 - Sept. 2023
Revenue from Operations	1380.43/-	1148.61/-
Total Expenses	1188.44/-	1014.19/-
Profit After Tax	167.49/-	100.07/-

H. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

We at Master Components Limited consider Human Resource as a very crucial part of progress. We understand that without their efforts and contribution the fruit of our success would not be such sweet. This strong force is the reason that the business has sailed successfully through all the high and low waves of the industrial changes throughout the period.

In recent time company has incorporated more skilled minds in the power packed team to neutralize the work load and achieve more. We have been training the beginners according to their positions in the pyramid and have been offering them many opportunities to take initiatives. Attracting new talent with the drive, training and upgrading existing skill sets and getting all to move in a unified direction will definitely be a task in the company. By creating a conducive environment for career growth, Company is trying to achieve the maximum utilization of employees skills in the most possible way. The company also believes in recognizing and rewarding employees to boost their morale and enable to achieve their maximum potential.

Further on the front of Industrial Relations, Master Components Limited is one of the renowned organization for maintaining the customer relationships for a long stretch of time. We are focused on keeping the good terms with values suppliers of the company along with the contractors.

Company has also been on constant lookout for suppliers who can deliver the material in our timelines and matching with our quality standards. Higher management is also constantly exploring new opportunities for furtherance of the business.

I. KEY FINANCIAL RATIOS

Sr. No	Particulars of Ratio	31.03.2024 (In %)	31.03.2023 (In %)	Explanation for change in Ratios
I	Inventory Turnover	10.21	7.01	Combined effect of increase in turnover and decrease in inventory.
II	Interest Coverage Ratio	64.91	25.48	Increasing profits is improving the financial health of the Company has led to improved interest coverage ratio.
III	Current Ratio	5.31	2.03	Combined effect of increase in current asset and decrease in current liabilities.
IV	Debt Equity Ratio	0.01	0.12	Combined effect of reduction in debt in and increase in equity.
V	Operating Profit Margin (%)	0.14	0.11	Combined effect of Increase in sales and Decrease in operating expenses
VI	Net Profit Margin (%)	10.58	8.26	Due to increase in Profit during the year

J. DETAILS PERTAINING TO NETWORTH OF THE COMPANY

Particulars	As on 31/03/2024 Amt. in Lakhs	As on 31/03/2023 Amt. in Lakhs	Explanation for change in Net- worth
Amount of Net worth	2299.79	1165.31	The company has issued equity shares through Initial Public Offer (IPO) during the financial year at premium.

SAFE HARBOUR

This report describing our activities, projections and expectations for the future, may contain certain forward looking statements within the meaning of applicable laws and regulations. The actual results of business may differ materially from those expressed or implied due to various risk factors and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company assumes no responsibility to publicly amend, modify or revise forward-looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include determination of tariff and such other charges and levies by the regulatory authority, changes in government regulations, tax laws, economic developments within the country and such other factors globally.

The financial statement are prepared under historical cost convention, on accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the "Act") and comply with the Accounting Standards notified under Section 133 of the Act. The management of Escorp Asset Management Limited has used estimates and judgements relating to the financial statement on a prudent and reasonable basis, in order that the financial statement reflects in a true and fair manner, the profit for the year.

For and on behalf of Board of Directors of,

MASTER COMPONENTS LIMITED

Formerly known as Master Components Private Limited

Sd/-	Sd/-
Mr. Mudduraj Chandrashekhar Kulkarni	Mr. Shrikant Hanamant Joshi
(Managing Director, DIN: 01190978)	(Whole Time Director & CFO, DIN: 01190986)
Address: Flat No.03, Suraj Enclave,	Address: 04, Indraprastha, B Wing,
Near Abb Circle, Mahatma Nagar	Behind Housefull, Mahatma Nagar
Nashik 422007 Maharashtra India.	Nashik 422007, Maharashtra, India.
Date: 25/07/2024.
Place: Nashik