MTAR Technologies Ltd Management Discussions

Global Economic Overview

Global uncertainties including inflationary pressures and supply chain contraints are expected to impact profit margins of the organisations across various sectors. International Monetary Fund projections forecast sluggish growth for most of the major economies in 2023 with a gradual recovery in 2024

As per IMF, the baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are expected to see a pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023.

Inflations return to target is unlikely before 2025 in most cases.

Public debt as a ratio to GDP soared across the world during COVID-19 and is expected to remain elevated. However, emerging and developing economies are expected to farewell compared to advanced economies

Source: IMF, Economic Times

Regional Growth %	2023	2022
World Output	2.8	3.4
Advanced economies	1.3	2.7
Emerging and Developing economies	4.0	3.9

Source: IMF, World Bank

Indian Economic Review J

International Monetary Fund (IMF) had projected that India would be the fastest-growing economy in the world with a growth rate of 5.9% in FY 2023-24, despite confronting considerable challenges such as financial sector turmoil, inflationary pressures, effects of the Russia-Ukraine war, and the persistent impact of the Covid-19 pandemic over the past three years. The IMFs biannual report stated that Indias headline retail inflation is expected to ease up, from 6.7 per cent in the previous year to 4.9 per cent in 2023-24, which is a clear indication of Indias economic prowess and its unwavering determination to overcome even the toughest of obstacles.

IMF acknowledged Indias efforts in leveraging digitalization to overcome the challenges posed by the Covid-19 pandemic, which has not only helped the country weather the storm but also created new opportunities for growth and employment. The recent Unionbudget balances between addressing development needs and maintaining fiscal responsibility with enhanced capital expenditure that provides a strong foundation for long-term growth and ensures sustainable development for India.

The budget has increased capital expenditure on important infrastructure projects that will create a strong foundation for long-term growth and help India achieve sustainable development. India has also been rising investment in the green economy, including clean and renewable energy, looking forward to the conversion of this fiscal responsibility into a medium-term framework anchoring Indias public finance.

Indian manufacturing sector is set to witness a significant growth as Government is placing for a wide- ranging push on manufacturing.

Broad government reforms have started

showing momentum, from the Goods and Services Tax (GST) to the ease of doing business and the Production Linked Incentive (PLI) schemes. Opportunities are emerging in renewables, aerospace, and Defence as the world transitions to a green and connected future. Building a futuristic competency in these sectors will require focusing on R&D, investments in technology transfers, global tie-ups, and incentivizing private investments along with collaboration across academia, industry, and the government. With the right reforms and disciplined execution, Indias manufacturing sector can reach $4.5 trillion, taking its GDP share to 22 percent by 2047 (against a base projection of $2.5 trillion with a 17 percent share in GDP), which is both a necessity and an opportunity for India to unfold golden age of manufacturing Source: Economic Times, IMF

Y-o-Y growth of the Indian economy

	FY18	FY 19	FY 20	FY 21	FY 2021-22	FY 2022-23
Real GDP growth (%)	7.2	6.1	4.2	6.6	8.7	7.2

Source: Economic Times, IMF

Growth of the Indian economy, FY 2022-23

	Q1 FY 2022-23	Q2 FY 2022-23	Q3 FY 2022-23	Q4 FY 2022-23
Real GDP growth (%)	13.1	6.2	4.3	6.1

Source: Economic Times, IMF

Clean Energy

Globally the shift to renewable energy is gaining momentum. Economies depend on reliable and affordable delivery of electricity for sustainable development. At the same time, the need to address climate change is driving a

transformation of power systems globally. Renewables, including solar, wind, hydro, waste to energy, Hydel and others, are at the centre of the transition to a less carbon-intensive and more sustainable energy system.

If world has to achieve its carbon neutrality targets, electricity has to be generated from various sources of Clean Energy.MTAR is focusing on enhancing its product portfolio in various verticals of Clean Energy to contribution to the global transition to low carbon economy

Clean Energy - Civil Nuclear Power :

Indian government is committed to growing nuclear capacity and has set ambitious targets to increase the number of civil nuclear reactors. Civil nuclear power currently comprises three per cent of Indias total electricity generation

One of the major growth drivers for Indias nuclear programme is the consistently increasing demand for electricity. The current capacity of the fossil fuel driven power plants is prone to supply chain interruption largely as India is a net importer of coal. Dependence on imported energy resources and the inconsistent reform of the energy sector are challenges to satisfying rising demand. Additionally, the conventional power generation technologies are highly polluting in nature. With rising carbon neutrality goals and targets, India is focusing on clean power generation through renewables and nuclear technology. Indias nuclear power sector is saving 41 million tonnes of carbon dioxide emissions annually, compared to emissions that would have been generated by equivalent electricity generation from conventional coal-based thermal power plant.

Currently, 22 reactors with a combined capacity of 6.7 GWe are operational in the country, 8 reactors with combined capacity of 6.0 GWe are under construction. To strengthen the domestic nuclear supply chain in line with the governments Atmanirbhar Bharat initiative, the government has devised a policy to increase the capacity by three-fold and announced tc construct 14 reactors in fleet mode with a single timeframe. The government plans to increase nuclear capacity from 6.7 GWe to 22.4 GWe by 2031 on the progressive completion of projects under construction and accorded sanction.

In the next three years, capacity addition of 5,300 MW is planned on completion of two 700 MW units each at Kakrapar Atomic

Power Station and Rajasthan Atomic Power Project respectively, two 1,000 MW power plants at the Kudankulam Nuclear Power Project and one 500 MW Prototype Fast Breeder Reactor at Kalpakkam. In addition, government wants to outsource construction of Kaiga 5 & 6 reactors 700 MWe eachto major private player on a mega package mode with a target to finish the construction of reactor in 4 years

The Centre has accorded in-principle approval for the site at Jaitapur in Maharashtra for setting up six nuclear power plants with a total capacity of 9.9 GWe in technical cooperation with France. The nuclear equipment industry in India is set to grow rapidly with the government sharpening its focus on the sector as it plans Indias transition into low carbon economy. NPCIL is expected to roll out tenders for fleet reactors (planned expansion market) in the near to medium term in a phased manner. The total investment for building these reactors would be Rs 1,760-1,800 billion. Of this, Rs 350-435 billion would be equipment market. This growing market opportunity in civil nuclear power is expected to increase opportunities for domestic suppliers present in this sector. With rising contract volume, while new entrants would plan to make in-roads into the industry, high entry barriers especially in technology, reliability, and manufacturing capability will give an edge to the established players.

The combined after-market revenue, including maintenance and refurbishment during FY 2015-19, which was valued at Rs. 5.5 Bn-6 Bn is estimated to reach Rs. 9 Bn-10 Bn from FY 2020-25E. Over the next five years, the maintenance and refurbishment market is anticipated to expand around 1.7x on account of more reactors completing 18-year life spans. As of 2019, nuclear power plants with 2.6 GWe capacity were in the refurbishment stage, which is expected to rise to 3.5-4.0 GWe by 2025.

Opportunity for MTAR

MTAR caters to 20-25% equipment portion of the overall order for a 700 MWe PHWR nuclear plant. The Company supplies 14 different equipment to the nuclear island, which translates into an addressable market opportunity size of Rs. 7-8 Bn per reactor. The total equipment addressable opportunity for MTAR stands at Rs. 70-80 Bn over the next decade from fleet reactor orders.

MTAR has facilities to address orders from 4 assemblies, among others, not just for the new pressurized heavy water nuclear reactors, but also for refurbishment of the existing reactors enables it to address the massive opportunity available in civil nuclear power sector.

Source: NPCIL, World Nuclear Association,

CRISIL Research

New-build market (Rs billion)	Overall capital cost (Rs. bn)	Equipment cost (Rs. bn)
Operational reactors*	110-120	22-28
Under-construction reactors**	680-720	130-170
Planned expansion (medium to long term)	1,760-1,800	350-435

Source: NPCIL, World Nuclear Association, CRISIL Research

Reactors under construction

Under-construction reactors	Construction start	State	Type	Gross capacity (Gwe)
PFBR	2004	Tamil Nadu	FBR	0.5
Kakrapar 4	2010	Gujarat	PHWR	0.7
Rajasthan 7 & 8	2011	Rajasthan	PHWR	0.7*2
Kudankulam 3 & 4	2017	Tamil Nadu	PHWR	1*2
Gorakhpur 1, & 2	2018	Haryana	PHWR	0.7*2
Total				6.0

Source: NPCIL, World Nuclear Association, CRISIL Research

New planned reactors

New reactors planned	State	Type	Gross capacity (Gwe)
Gorakhpur 3 & 4	Tamil Nadu	FBR	0.7 * 2
Chutka 1 & 2	Gujarat	PHWR	0.7 * 2
Mahi Banswara- 1, 2, 3 & 4	Rajasthan	PHWR	0.7 * 4
Kaiga 5&6	Tamil Nadu	PHWR	0.7 * 2
Kudankulam- 5 & 6	Haryana	PHWR	1.0 * 2
Total			9.1

Source: NPCIL, World Nuclear Association, CRISIL Research

Projects Executed L FY 2022 -

• Fuelling Machine Head

• Coolant Channel Assemblies and other products

• Ball Screws

• Water Lubricated Bearings

Key MTAR projects in progress

• Fuelling Machine Head

• Sealing and Shielding Plug assemblies for Kaiga and GHPVR projects

• Fuel Transfer System

• Fuel Locator Assembly

• Fuelling Bridge & Column

Clean Energy - Fuel Cells

Fuel Cells Industry Potential

Energy generated from fuel cells is emerging is one of the reliable sources of renewble energy as world is witnessing transition into Clean Energy. At present, bulk of the electricity in the power grid is generated at centralised power plants, with natural gas, coal, and nuclear power as the most common fuels. However a much smaller, though growing amount of electricity is being produced through distributed generation - technology that generates electricity at or near where it will be used. Energy storage is supporting this new grid system, with high efficiencies and more distributed power source.

Fuel cells are deployed across stationary applications, such as primary power source and power back-up, transportation, including automobiles, buses, utility vehicles, and scooters and bicycles; and portable power options for applications, including laptops, cellular phones, power tools, military equipment, battery chargers, unattended sensors, and unmanned aerial and underwater vehicles.

Stationary fuel cell systems are utilised for backup power, powering remote locations, stand-alone power plants for off-grid towns and cities, distributed generation for residential and commercial buildings, and co-generation (in which excess thermal energy from fuel cell process is used for heat). These applications find more relevance for

commercial Stationary fuel cell systems are utilised for backup power, powering remote locations, stand-alone power plants for off-grid towns and cities, distributed generation for residential and commercial buildings, and co-generation (in which excess thermal energy from fuel cell process is used for heat). These fuel cell applications find more reliance for commercial applications such as data centers and servers, hospitals, cellular towers.

As per Frost & Sullivan, global fuel cell market will grow at a Compounded annual growth rate (CAGR) of 15.4% between 2022 and 2030, with revenues increasing from USD 1.06 bn to USD 3.33 bn. The United States, South Korea and Japan will remain as leading markets for stationary fuel cells. The stationary fuel cell market has approximately 50% active competitors, but the top four account for 85.2% of total installed capacity. With a 44% global market share, Bloom leads the top four companies, followed by Doosan-HyAxiom, FuelCell Energy and Panasonic.

There are mulitple kinds of stationary fuel cells, from phospheric acid and molten carbonate to alkaline, however, as per Frost & Sullivan solid oxide is on track to dominate sales due to the numbei and scale of the projects. Solid Oxide fuel cells as those made by Bloom operate at a higher temperatures than any other kinds of fuel cells, which eliminates the the

need for precious metal catalysts and gives Solid Oxide an electrical efficiency that exceeds that of conventional power source- 60% as compared to 40%- 50%

Data centres are key to the future cell market growth, and Bloom Energy is well positioned in this market. While data centres are energy intensive, their operators are both looking to reduce their carbon footprint and get power according to a timetable that local electric utilities cant meet

From the cost perspective as well, the cost of fuel cell systems has declined by 20% over the past five years. As fuel cells find more commercial applications and higher reception in the market, the demand for fuel cells will help to bring economies of scale and aid in the reduction of prices. For example, scaling fuel cell production from 10,000 to

50.000 units can reduce unit costs by as much as 7-10%, without technological breakthroughs. This cost reduction goes up to 40-45% with production volume of

200.000 units i.e., 20x times growth in fuel cell production.Manufacturing costs largely drive the cost for fuel cells, which, in turn, is largely determined by production volume. Today, fuel cell manufacturing is manual and smaller in scale, with material cost forming a lower share of 10-30% for an annual production of 100-1,000 units. By taking advantage of production volume increases, companies can achieve significant cost reductions for several reasons.

Economies of scale will enable the operational efficiencies by reducing the fixed costs

Electrolysers

Hydrogen electrolysers are devices that use electricity to split water into hydrogen and oxygen.. When electricity input to the electrolyser is obtained from renewable sources like Wind and solar, then the hydrogen produced is called green hydrogen.

Electrolyzers can range in size from small, appliance-size equipment that is well- suited for small-scale distributed hydrogen production to large-scale, central production facilities that could be tied directly to renewable or other non-greenhouse-gas-emitting forms of electricity production. Similar to fuel cells, electrolyzers comprises of an anode and a cathode separated by an electrolyte. Electrolyzers powered by different technologies function in different ways, mainly due to the different type of electrolyte material involved and the ionic species it conducts EU has set a target of producing 10 Mt of green hydrogen domestically and importing 10 Mt by 2030. Europes new REPowerEU targets and IRA incentives in the US will further increase the demand for green hydrogen from the current projection of 14 Mt per annum to 28 Mt per annum by 2030, equivalent to more than 280 GW of electrolyzer demand.

Globally several players have ventured into the development of electrolysers. Currently, there are only a few electrolyzer OEMs in India with extensive production facilities. and advanced technologies, presenting a significant opportunity for India to become a global electrolyzer manufacturing hub that caters to domestic as well as international demands.

Currently, the cost to produce and operate electrolyzers is high as the technology is a nascent phase, however, the need for precious metal catalysts and gives Solid Oxide an electrical efficiency that exceeds that of conventional power source- 60% as compared to 40%- 50%. Data centres are key to the future cell market growth, and Bloom Energy is well positioned in this market. While data centres are energy intensive, their operators are both looking to reduce their carbon footprint and get power according to a timetable that local electric utilities cant meet

Bloom Energy Fuel Cells - Market Potential

In the clean energy segment, MTAR caters to Bloom Energy USA, a market leader in the stationary fuel cell segment. Bloom Energys sales are larger than those of the next six players combined in the fuel cell space; the industry which posted a 40% CAGR in the past four years (annual installations of 1GW in 2019) is expected to witness a 35% CAGR over the next 10 years and Bloom Energy is targeting a revenue of USD 10 bn by end of CY 2030

Bloom Energy has signed a deal with South Korean conglomerate SK Group to provide $4.5 billion of equipment and services,

Comparison of technology types of fuel cells

Fuel cell type	Operating temperature	Typical stack size	Electrical efficiency (%)	Major technology deployment players
Solid oxide fuel cell	500-1,000 C	1 kW - 2 MW	60%	Bloom Energy
Polymer electrolyte membrane	<120 C	1-100 kW	60% direct hydrogen fuel, 40% reformed fuel	Ballard

Source: industry, CRISIL Research

accordingly, Bloom Energy shall be deploying 500 MW of powerthrough 2024.

The ongoing partnership between Bloom Energy and SK ecoplant was initiated three years ago and since then both the parties have transacted close to 200 MW of projects together, exceeding USD 1.8 billion of equipment and expected service revenue. The additional 500 MW to which the SK Group unit has now committed, shall be delivered in the period 2022-2025. South Korean government released a Hydrogen Economy Roadmap in 2019 calling for 15,000 megawatts of stationary fuel cells by 2040, which shows an immense potential available for fuel cells. Increasing public-private partnerships are also expected to result /in a faster adoption of hydrogen-based applications.

The total opportunity size from hydrogen fuel cells is estimated at USD 300 Bn; including other areas such as the US C&I market and international expansion, the total opportunity is estimated at more than USD 2 Trn. Bloom Energy is targeting 30- 35% CAGR over CY20-30E

Key advantages of Solid Oxide fuel cells supplied by Bloom Energy

cells: The key advantages of Bloom Energys fuel cells over traditional grid power comprise the following: Competitively priced: Bloom Energys penetration is increasing, with an annual reduction of 18% CAGR in product costs. The Company expects to be competitive against traditional grid power in all 50 US states by 2025 (penetration in 12 states currently).

Uninterrupted power with high efficiency: Blooms fuel cells are designed to provide 24x7 power and enjoy a track record of no outages, compared with grid power, while generating the highest electrical efficiency of 65% among peers.

Lower emissions: Fuel cells generate 50% lower CO2 when compared with the US base load power generation with no particulates (SOx and NOx). A recent study indicates that fuel cells are able to reduce carbon reduction as effectively as renewables, given their high capacity

factor (of 95%) against 10-30% for solar/ wind.

Lower production footprint and no transmission lines: A 1 MW Bloom box takes only 170m2 of space as against 22,257m2 by a solar PV (12,500% higher), while onsite generation eliminates T&D infra requirements

Bloom Energy Electrolysers - Market Potential

While BE is still in the process of commercializing its Solid Oxide (SO) electrolyzer, these are 20% more efficient than the PEM electrolyzer (45kWh/kg vs. 55 kWh/kg). Higher efficiency might enable Bloom Energy to gain market acceptance and price its Solid Oxide electrolyzer at a premium to a PEM electrolyzer.

Electrolyzer business is project to generate $500M in revenue for BE by 2026E. Higher rates of acceptance (+35% CAGR) and large orders for BEs SO based electrolyzers shall ramp up the production volumes

Source: Industry, CRISIL Research, Economic Times

Fuel cell type	Operating temperature	Typical stack size	Electrical efficiency (%)	Major technology deployment players
Alkaline fuel cell	90-120 C	1-100 kW	60%	AFC Energy
Direct methanol fuel cell	30-130 C	25-5 kW	40%	SFC Energy
Phosphoric acid fuel cell	150-200 C	5-400 kW, 100 kW module (liquid PAFC) <10 kW (polymer membrane)	40%	Doosan Corporation
Molten carbonate fuel cell	600-700 C	300 kW -3 MW, 300 kW module	50%	Fuel Cell Energy
Solid acid fuel cell	220-280 C	10W- 10kW	-	SAFCell Inc

Source: industry, CRISIL Research

Parameter	2019	2030P	Growth (x)
Fuel industry size	Rs. 2.8 Bn	Rs. 26.1 Bn	1.9
Fuel industry installations by	1.1 GW	5.0+ GW	4.5
MW

(Source: Industry data and publication, CRISIL Research)

Opportunity for MTAR

MTAR is one of the key manufacturing partners to Bloom Energy and sole supplier from India market for SOFC & hydrogen units and electrolysers. The Company has more that a decade of relationship with Bloom Energy. MTAR caters to 50%- 60% of of its typical hotbox requirement and has a 100% compliance record with it.

Increased content per fuel cell: MTAR

has been strategising to increase its wallet share with Bloom Energy and developed lot of new products. In FY 2022-23, MTAR has commenced the supply of sheet metal assemblies and enclosures

Key Products being supplied by MTAR

• SOFC Units- Yuma & Keeylocko

• electrolyser Units

• ASP assemblies

• Sheet metal assemblies & enclosures

1 Clean Energy - Battery Storage Systems

Market Potential

Energy storage is causing a significant disruption in the power industry, and the year 2023 is poised to witness unprecedented growth in storage solutions.

As the electricity grid increasingly relies on variable load power generation, the ability to store this electricity becomes crucial to avoid supply disruptions and prevent the wastage of surplus energy through curtailment. The widespread adoption of renewable energy sources worldwide has

amplified the demand for longer duration energy storage technologies. Additionally, the utilization of both battery and non-battery storage in various applications offers promising growth opportunities for players in this sector. The global momentum towards efficient energy storage solutions is continuing to build, marking a transformative shift in the power industry.

Opportunity for MTAR

MTAR intends to foray into storage solutions considering the exponential growth the storage solutions sector is set to witness

The company is in final stages of discussions with Fluence Energy that is into battery storage systems for supplying enclosures to their batteries. It has potential to generate Rs. 150- 200 Crs over the next couple of years, once the discussions are materialized.

We have also initiated discussions with Enervenue that is into Hydrogen Storage Systems. MTAR startegises to grow the storage systems vertical in a significant way over the next five years.

Source: industry, Frost & Sullivan

Clean Energy - Hydel, Wind Energy & Others

Market Potential - Hydro Power

Hydropower currently generates more electricity than all other renewable technologies combined and is expected to remain the worlds largest source of renewable electricity generation into the 2030s. Henceforth, it will continue to play a critical role in decarbonising the power system.

India sees hydro power one of the renewable sources of energy as key in its transition away from coal to help manage the fluctuations caused by intermittent solar and wind supplies. Recently, government has approved the estimated investment of USD 3.9 bnfor the 2,880-megawatt Dibang project in Arunachal Pradesh

Market Potential - Wind Energy

Wind is estimated to be one of the predominant sources of power generation in the Net Zero Emissions by 2050 scenario, provided there are significant capacity additions till 2030 in order to

be on track with the Net Zero pathway

Opportunity for MTAR

MTAR is catering to customers such as Andritz, Voith, GE Power, among other by supplying complex fabricated products including draft tubes, spiral casings etc. The company is also in discussion with companies such as Enercon, Regen Power in Wind Energy for various products including rotar and stator assemblies

Source: industry, Economic Times

Divisional Review

Indian Space Industry Market Potential

Indias space program has earned worldwide recognition for launching lunar probes, building satellites, ferrying foreign satellites up and has even succeeded in reaching Mars and stands out as one of the most cost-effective in the world.

Indian space sector, valued at $9.6 billion in 2020, contributes only about 2% of the global space economy of about $470 billion. It targets to reach $13 billion by 2025 and, further, aims by 2030 to capture about 10% of the global space economy i.e., a four to five-fold growth in the next 5 to 6 years. However, the growth could be much higher than the target set and experts opine that the global space economy could well be $1 trillion in the next few years

In June 2022, PSLV-C53 launched three satellites DS-EO satellite, NeuSAR satellite, and SCOOB-I satellite, which was the second dedicated commercial mission of NewSpace India Limited (NSIL). In October 2022, LVM3 in its first commercial launch placed 36 satellites of OneWeb in their intended orbits, one of the biggest commercial orders executed by ISRO that has enhanced its reputation in global market. In March 2023, ISRO has taken up the second launch for One Web through LVM 3 to place another constellation of 36 satellites in the orbit. With two successful commercial launches of LVM3 for One Web, through the New Space India Ltd, ISRO is confident of handling many more such launches on demand for both LEO and GEO mission in the future.

Prestigious Missions in Pipeline

ISRO has geared up to launch Chandrayaan-3 in July 2023, a follow-on mission to Chandrayaan-2 to demonstrate end-to-end capability in safe landing and roving on the lunar surface. It consists of the Lander and Rover configuration. While the orbiter is devoid of all those payloads that are there in Chandrayaan-2, it will have only a little bit of payload. The primary objective of Chandrayaan 3 is to take the lander to the orbit of the moon and make it land

ISRO wants to Launch Aditya L1, Indias first solar mission, by the August 2023. Aditya L1 is very unique solar observation capability that ISRO is building for which instruments have already been delivered, and ISRO is in the process of integrating them in the satellite. The mission will be launched using PSLV rocket. Similar to Chandrayaan missions, the spacecraft shall be placed in a low earth orbit and, subsequently, the orbit shall be made more elliptical and launched towards L1 using on-board propulsion. The spacecraft exit earths gravitational sphere of influence as it travels towards L1. From here, the cruise phase will start and the spacecraft will be injected into a large halo orbit around L1. The total travel time from launch to L1 would take about four months.

Success of complex missions like Chandrayaan 3, Aditya L1 will further enhance the reputation of ISRO in the international Space community, and enables it to attract wider set of international customers for commercial launches.

Small Satellite Launch Vehicle Market

To capture the lucrative small satellite launching market, ISRO has developed a Small Satellite Launch Vehicle (SSLV) with a view to transfer the technology to the industry and has successfully tested the technology in second developmental flight. And the technology will be transferred to the industry after successful qualification.

The rising demand for smaller satellites is expected to increase satellite manufacturing in the nation and attract international start-ups to the sector to help incubate space tech enterprises here. Indian space launch eco system is expected to get a boost due to the governments positive step towards the inclusion of private players in the Indian space ecosystem

The launch services segment that was pegged at USD 600 million in 2020 is projected to grow at a CAGR of 13 per cent to reach USD 1 billion by 2025. The availability of low-cost satellite launch vehicles coupled with mass production will lead to demand from customers around the world. Indian private companies are working towards capturing the space industry by using innovative technologies

Indian space equipment market (Rs billion) by type, for FY17-FY25P

Segment	CAGR (FY17-FY21)	CAGR (FY21-FY25P)
Satellite	-7.5%	6.0 - 7.0%
Launch systems	-26.5%	10.0 - 11.0%

Launches by PSLV & GSLV

Year	No of PSLV Launches	No of GSLV Launches
2015	4	1
2016	6	1
2017	3	2
2018	4	3
2019	5	1
2021	1	1
2022	5	Nil

Privatisation of Space

Government of India intends to enable and promote Non-Governmental Entities and enable them to contribute to development of Indian Space eco system. Government policies are aimed at allowing Indian private players to become independent actors in the space sector instead of being solely vendors or suppliers to the government programs.

To facilitate private sector participation, the government has created the Indian National Space Promotion and Authorization Centre (IN-SPACe), as a single window, independent, nodal agency under Department of Space. The main mandate of IN-SPACe is to promote and enhance the role of Non-Government Entities (NGEs) in the space sector through hand holding, support, and by providing them with a level playing field.

It will also authorize the use of ISRO facilities by private companies, development of Indian satellite systems, and launch of rockets/ vehicles developed by the private sector.

Currently, the following Support is being rendered from IN-SPACe to all the private entities

1. Building Launch Vehicles and Satellites

2. Sharing of ISRO facilities

3. Establishment of facilities in Department of Space premises

4. Mentorship, Evaluation & consultancy

5. Launch campaign & launch

6. Customization & Delivering of sub-systems packages to NGEs

7. Space based services

This has encouraged private players to involve in manufacturing of launch vehicles, satellites and provide launch services. These developments might take medium to long term in order to fully materialise.

Going forward, ISRO shall solely focus on development of new technologies, its ambitious exploration and human spaceflight missions.

Competitive landscape of space industry

Indian Space industry is marked with high entry barriers as working with Space technologies entails advanced technological capabilities, skilled talent pool,manufacturing prowess, quality assurance, reliability and state of the art production facilities. As a result, the supplier ecosystem of ISRO has very few major players, with each operating in a niche monopolistic segment of precision equipment manufacturing. However, recently many start ups have emerged in Launch Vehicle space because of the opportunities due to commercialization of Space

Opportunity for MTAR

MTAR has been associated with ISRO from 1983. The company has been a trusted partner to ISRO for the past four decades. It has proven capabilities in manufacturing high-tech products for PSLV, and GSLV like liquid propulsion rocket engines (Vikas Engine for PSLV), cryogenic engine sub systems, electro pneumatic modules etc.; these products shall be used in the LVM 3 and PSLV for the upcoming Chandrayaan 3 and Aditya L1 missions. The Company is also manufacturing critical structure like grid fin for Gagaganyaan mission.

Increase in launches from ISRO due to success of commercial launches over the coming years is expected to provide increased inflow of orders to MTAR. Furthermore, the company intends to increase its wallet share. o address opportunities including motor casings, light alloy structures and thrust chambers through our new sheet metal facility.

MTAR is working on the design and development of Two Stage to Low Earth Orbit Small Satellite Launch vehicle- Garuda 1. The Company shall be developing 100 ton and 10 ton all liquid engines in-house. It has forged an MOU with IN-SPACe to take the support of ISROin various areas including Avionics, Navigation Guidance & Control Systems, marketing etc.

Source: ISRO, Economic Times

Key Products being supplied by MTAR

• Vikas Engines

• Cyrogenic Upper Engine assemblies including Turbo Pump, Booster Pump and Gas Generator

• Satellite Valve

• Structures for Gaganyaan

Products under development

• Semi Cryo Engine

• Small Satellite Launch Vehicle

• Initiated discussions

Divisional Review

Defence

The Indian Defence sector, the second largest armed force is at the cusp of revolution amidst the efforts by the Government to enable India achieve self-reliance. Defence and Aerospace sector was identified as a focus area for the Aatmanirbhar Bharat or Self-Reliant India initiative, with a formidable push on the establishment of indigenous manufacturing infrastructure supported by a required research and development ecosystem India is positioned as the 3rd largest military spender in the world, with its defence budgel accounting for 2.15% of the countrys total GDP. Over the next 5-7 years, the Government of India plans to spend $ 130 Bn for fleet modernisation across all armed services. Indian Defence industry gets INR 5.94 lakh crore in Budget 2023-24, a jump of 13% over previous year. Government of India aims to triple the value of Indias annual defence exports to $5 billion over the next two years.To this end, the government has been making diplomatic efforts to export the Tejas.

Recently, General Electric Cos GE Aerospace signed an MoU with Hindustan Aeronautics Limited (HAL), the maker of LCA Tejas MK1, to jointly produce in India the fighter jet engine, GE414. The GE414 engines will be used for the LCA Tejas Mk2, but also for the future Twin Engine Based Fighter (TEDBF) and the Advanced Medium Combat Aircraft (AMCA) Mk1 projects. The deal between GE Aerospace and HAL, will aid in Governments effort to triple the exports and give Indias defence ecosystem a much needed boost

MTARs Contribution to Defence

MTAR is present in the niche areas of Defence. We have supplied 5 ton and 10 ton actuators to LCA Tejas program.

The Company has successfully delivered the first articles of roller screws that are currently being imported from Rollviz Sweden. The company shall be executing Rs. 80 Mn worth of electro-mechanical actuators. However, the Companys presence is limited to niche areas and over the past five years the revenues from Defence are less than 5% of the total revenue from operations

Source: Economic Times, CRISIL Research

Opportunities and threats

Clean Energy Civil nuclear: Nearly Rs. 5000 Mn orders expected from Kaiga 5&6 reactors that shall be outsorced to a private player. In addition, there will be order inflows from fleet reactors over the coming years. The orders from new reactors along with coupled reactor refurbishment opportunities could result in unprecedented growth of the domestic industry. Civil Nuclear power is marked with high entry barriers stringent qualification criteria that could provide incumbents an edge over others. The company has approximately 20- 25% equipment share in each nuclear reactor; the Company is expected to capitalise on increased orders (could be delayed by some quarters on account external uncertainties). MTAR has received Rs. 1350 Mn Cr of orders from fleet reactors

Clean Energy Fuel cells: Global governments are driving the transition to a low carbon economy. Fuel cells are efficient energy sources; global fuel cell market is expected to post a CAGR of 30%- 35% over the next 10 years that translates into healthy growth for MTAR, strengthening the Companys revenues. In addition, the market for electrolysers is expected witness a significant ramp up that shall further contribute to the top line. MTAR has been adding new products in Clean Energy - Fuel Cells division to increase its wallet share with its clients; supplied new products such as sheet metal assemblies, enclosures, ASP assemblies in FY 2022-23. Increase in volumes for existing products and addition of new products shall enhance the topline in this vertical.

The Company is supplying critical fabricated structures for Hydel and Waste to Energy sectors. In addition, MTAR has also initiated discussions with players in Battery Storage systems, Energy Storage systems and Wind Energy

Space: Increased launches from ISRO amidst the success of recent commercial launches done for the companies lIke One Web could enhance order volumes for the Company. Our sheet metal facility enables us to address new opportunities such as motor casings, thrust chambers and light alloy structures, including others. The Company is also keep to tap the massive opportunity available due to privatisation of Space, forged an MoU with IN-SPACe for design and system realisation of Small Satellite Launch Vehicle

Defence: MTAR is catering to niche opportunities in Defence. Domestic Defence eco system is witnessing an accelerated growth due push by Government of India on Atmanirbhar Bharat initiative.

Any slow down in the industry growth in sectors of our presence might impact our revenues due to reduced order inflows from our customers, which could be a major threat to us

I Company overview

Incorporated as a Company in 1999, MTAR Technologies has emerged as a respected player in Indias precision engineering industry. The Company is engaged in the manufacture of mission critical precision engineered systms for Clean Energy- Civil Nuclear Power. The Company emerged as a market leader due to its contribution to the Indian civilian nuclear power programme, Indian space programme, Indian defence, global defence as well as global clean energy sectors. The Company is respected for having invested in state-of- the-art facilities comprising machining, assembly, specialised fabrication, painting and special process facilities. The Companys clients comprise ISRO, NPCIL, DRDO, Bloom Energy, Andritz, Voith, Hitachi Zosen, Rafael and Elbit, among others. Owing to a wide product portfolio,

MTAR is one of the top three suppliers that provide precision engineering requirements to the Indian Civil Nuclear Power, Space and Defence sectors.

Segment wise or product wise performance

MTAR does not operate in the manner of different business segments. However, we do measure revenues based on various customer segments. Revenue from export stands at 79% of

total revenue from operations in FY 202223 as against 61% of total revenue from operations in FY 2021-22. Revenue from domestic stands at 21% of total revenue from operations in

FY 2022-23 as against 39.0% of total revenue from operations in FY 2021-22. Clean energy has witnessed a significant growth in the year under review

Sector	Revenue generated from customers in FY 2022 - 23 (Rs. Mn)	Revenue generated from customers in FY 2021 - 22(Rs. Mn)
Clean Energy- Civil Nuclear Power	438.01	457.00
Clean Energy- Fuel Cells & Others	4,417.20	2,016.00
Space	494.05	482.66
Defence	151.13	81.34
Products and Others	233..08	183.06
Total	5,733.47	3,220.06

Financial overview

Analysis of the profit and loss statement

Revenues: Revenues from operations reported a 78.05 % growth from Rs. 3,220.06 Mn in FY 2021-22 to reach Rs. 5,733.47 Mn in FY 2022-23. Other income of the Company accounted for a 3.44% share of the revenues reflecting the Companys dependence on its core business operations.

Expenses: Total expenses increased by 81.93% from Rs. 2,485.32 Mn in FY 2021-22 to Rs. 4,521.58 Mn due to the increased scale of operations. Cost of materials consumed, accounting for 54.89% share of the Companys revenues, increased by 6.01% from Rs. 1,574.05 Mn in 2021-22 to Rs. 3,147.23 Mn in FY 2022-23 owing to an increase in the operational scale of export revenues. Employees expenses, accounting for a 16.11 % share of the Companys revenues, decreased by 5.87% from Rs. 707.77 Mn in 2021-22 to Rs. 923.63 Mn in FY 2022-23. Finance costs of the Company increased by 118.11% from Rs. 66.49 Mn in 2021-22 to Rs. 145.02 Mn in FY 2022-23. Increase in finance costs was due to increase in term loans and working capital loans.

Analysis of the Balance Sheet Sources of funds

The Equity capital employed by the Company increased by 19.44% from Rs. 5,197.64 Mn as on March 31, 2022 to Rs. 6,208.12 Mn as on March 31, 2023. Long term borrowing increased by 115.66% from Rs.487.25 Mn as on March 31, 2022 to Rs. 1,050.82 Mn as on March 31, 2023.

(Including Current maturity of long-term borrowings) due to Investment in New Capex. Return on capital employed, a measurement of returns derived from every rupee invested in the business, increased by 44% from 13.88% in ; 2021-22 to 19.96% in FY 2022-23 due to increase in profit on account of increase in overall operations.

Applications of funds

Fixed assets (gross) of the Company primarily increased by 37.47% from Rs. 2,669.88 Mn as on March 31, 2022 to Rs. 3,670.37 Mn as on March 31, 2023 owing to an increase in Capex for our sheet metal and specialised fabrication facilities at Adibatla. Depreciation on tangible assets increased by 27.91% from Rs. 137.96 Mn in 2021-22 to Rs. 176.47 Mn in FY 2022-23 owing to an increase in fixed assets during the year under review.

Working capital management

Current liabilities of the Company increased by 84.98% from Rs. 1,653.51 Mn as on March 31, 2022 to Rs. 3,407.75 Mn as on March 31, 2023, due to increase in trade payables and advance received from customers. The Current Ratio of the Company stood at 2.04 at the close of FY 2022-23 compared to 2.80 at the close of 2021-22. Inventories including raw materials, work-in-progress and finished goods, among others, increased by 126.62% from Rs. 1,703.16 Mn as on March 31, 2022 to Rs. 3,859.67 Mn as on March 31, 2023 owing to an increasing scale of operations resulted in increased stock of raw materials and work in progress. The inventory cycle increased from 193 days of turnover equivalent in 2021-22 to 246 days of turnover equivalent in FY 2022-23. Growing business volumes resulted in an increase of 53.04 % in trade receivables from Rs. 1,359.84 Mn as on March 31, 2022 to Rs. 2,081.16 Mn as on March 31, 2023. All receivables were secured and considered good and 90% of receivables are not overdue. The Company contained its debtors turnover cycle within 132 days of turnover equivalent in FY 2022-23 compared to 154 days in 2021-22. Cash and bank balances of the Company decreased from Rs. 669.24.00 Mn as on March 31, 2022 to Rs. 309.81 Mn as on March 31, 2023.

Invested Rs. 274.74 Mn in mutual funds for immediate strategic initiatives. Other Current Assets increased by 82.33% from Rs. 209.70 Mn as on March 31, 2022 to Rs. 382.35 Mn on account of increased balances recoverable from government authorities and advances payable to suppliers.

Margins

The EBITDA margin of the Company reduced from 29.33% in 2021-22 to 26.85% iwhile net profit margin of the Company reduced by 75 basis points.

Particulars	2022-23	2021-22	Remarks
Debtors turnover ratio	3.27	3.02	Our debtors turnover ratio has witnessed improvement due company continuous effort in collecting receivable before due date..
Inventory turnover ratio	1.13	0.85	Increase in ratio is due to purchase of inventory for ongoing projects.
Interest coverage ratio	10.72	13.37	Company is having healthy margins to cover the interest expenses which is approximately by 10 times the interest cost. Interest coverage of company is decreased compared with last year due to Increase in term loan interest expenses.
Current ratio	2.04	2.80	The current ratio of company reduced due to Increase in trade payables and Increase in Advance from Cutomers.
Debt-equity ratio	0.23	0.18	Increase in ratio is due to new term loans obtained for procurement of property, plant and equipment.
Operating profit margin (%)	27.10%	27.60%	Our operating margin has seen reduced slightly in FY 2022-23 compared with last year due to Increase in Employee benefit expenses and Operational cost
Net profit margin (%)	18.49%	18.91%	Our net profit margin decreased slightly compared with last year due to Increase in finance cost.
Return on Net worth	18.25%	12.22%	Our RoNW increased 49% compared with last year.

Risks and concerns

At MTAR we believe that the risk, the manifestation of business uncertainty affecting corporate performance and prospects, is an integral part of business. Accordingly, the company identifies various risk through its enterprise risk management system,

Majority of the companys revenue is derived from few customers, that could hinder our revenues in case we lose business from these customers

Also, our increasing working capital requirement could pose a threat to our liquidity, affecting our cash flows. In addition, any delays in supply chain while importing specialised raw material could disturb our production lines, thereby impacting our revenues

However, the Company follows a comprehensive enterprise risk management systems, which is integrated with its operations.

We have constituted a board risk management committee, apex risk management committee and functional risk management committee to manage risks at various levels.

This enables it to identify, categorize and prioritize operational, financial and strategic business risks. The company is working on adding lot of new customers, reducing working capital days and diversifying its vendor base to address the above identified risks; MTAR continues to spend significant time, effort and human resources to manage and mitigate such risks

Internal control systems and their adequacy

MTARs internal audit system has beencontinuouslymonitored and updated to ensure that assets are safeguarded, established regulations are complied with and pending issues

are addressed promptly. The audit committee reviews reports presented by the internal auditors on a quarterly basis. The committee makes note of the audit observations and takes corrective

actions, if necessary. It maintains constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively

Information Technology

The Company undertook upgradation of technology in relation to customer order management and dispatches, production planning and reporting, manufacturing processes, financial accounting and scheduling raw material purchase. We have carried out necessary upgrades in our ERP system encompassing the requirements from all business functions including production, finance, sales, manufacturing processes, storage and warehousing, inventory and human resource management to have a greater control over the business.

Our facilities at Adibatla, Unit 2 and EOU have been certified for ISO 27001:2013 Information Security Management System.

MTAR has further increased its investments in shop floor automation to reduce the cycle time and enhance productivity by addressing product life cycle bottlenecks.

The company shall continue to focus on investments in IT systems and processes, including backup systems, to improve operational efficiency, customer service, decision-making and reduce manual intervention and risks of system failures and negative impacts these failures may have on the business, improving reliability of operations.

Human Resources

The Company has enhanced its manpower to cater to future growth. We have taken up salary correction in Q4 FY 2022-23 apart from regular increments tc ensure our employees who are backbone of our growth are fairly compensated as per the industry standards. As on March 31, 2023, the Company 603 staff and 952 workmen (including on and off rolls) and 1010 third party contractors.

The company with a modest attrition rate of 8.5%

The Companys personnel policies were aimed at recruiting talent, facilitating their integration into the Company, encouraging the development of skillsets and creating a mutually beneficial relationship to support performance and growth

The Companys industrial relations were amicable. The Company had two recognised labour unions, with registration numbers. There is no labour unrest in the past eight years.

Particulars	FY 2022 - 23	FY 2021- 22
Staff, including on and off the rolls	603	476
Workmen including on and off the rolls	952	742
Third party contractors	1010	522
Total	2565	1740

Disclosure of Accounting Treatment

During the preparation of the financial statement of FY 2022-23 the treatment, as prescribed in an Accounting Standard, has been followed by the Company.

There is no discrepancy in Accounting Treatment as followed by the Company in the last financial year as compared to the previous financial year.

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be forward-looking statements within the meaning of applicable securities laws and regulations Making ESG an integral part of our business

MTAR envisions to be 100% ESG complaint for a sustainable future; Nearly 85% of the Companys revenue is derived from manufacturing climate positive products in FY 2022-23

Our ESG Outlook

At MTAR, we believe companies have a key role to play in driving the global transition to a low-carbon economy, improving workplaces and gender representation, and improving governance. Viewing our long-term business model through a comprehensive ESG lens is essential

Progressive and proactive ESG policies enable a sustainable business growth, thereby enhancing value to all the stakeholders including investors, customers, employees, suppliers and wider communities.

A comprehensive ESG framework links to the cashflows in five important ways:

1. Facilitating top-line growth

2. Reducing costs

3. Minimising regulatory and legal interventions

4. Increasing employee productivity

5. Optimising investment and capital expenditure

Sl No Factor	How a strong ESG proposition could help
1 Top-line growth	• Helps to tap new markets and expand into existing ones
	• Enhance the customer base with sustainable products
	• Provides better access to resources through stronger community and government relations
2 Cost Reductions	• Low energy consumption helps in reducing the operational costs
3 Minimising Regulatory & Legal interventions	• Achieve greater strategic freedom through deregulation
	• Provides access to subsidies and government support
4 Increasing employee productivity	• Increases employee motivation
	• Enables to attract talent through greater social credibility
5 Optimising investment and capital expenditure	• Enhance investment returns through a better capital allocation towards sustainable plant and equipment helps in avoiding investments that may not pay off be cause of longer-term environmental issues

To achieve sustainable business growth the Company is committed to conducting its business by integrating environmental, social and governance ("ESG") factors into its investment decisions and operational processes

Our Environment Commitment

In any business a decision that has positive impact on environment leads to better investment outcomes and increased wellbeing of our stakeholders and society at large. MTAR intends to continuously improve the environmental impact of our business by manufacturing climate positive products and by making our operational processes more sustainable

Over the years we have strategized to grow our clean energy segment significantly to enhance our green

product portfolio that contributes in a small way to global transition into low carbon economy. Nearly 85% of our revenues in FY 2022-23 are derived from clean energy segment including civil nuclear power and fuel cells. In addition, we are in discussions with several other customers in Clean Energy. The Company has a substantial potential to benefit through the growth of low-carbon products and services

To reduce our energy consumption and improve the sustainability of our operational processes we have installed solar rooftops at Unit 2 and EOU, which is expected to reduce our energy consumption significantly. The Company is the process of installing solar rooftops at Unit 3 and Adibatla

Our facilities at Unit 2, EOU and Adibatla are certified for ISO 14001:2015, Enviromental Management System.

Revenue as % of total revenue from operation	FY 19	FY 20	FY 21	FY 2021-22	FY 2022-23
Clean Energy - Fuel Cells & Hydel, and others	61.41%	64.34%	49.79%	62.61%	77.04%
Clean Energy - Civil nuclear Power	13.04%	12.17%	22.43%	14.19%	7.64%
Total	74.46%	76.51%	72.22%	76.80%	84.68%

MTAR believes that ability to maintain healthy, positive, fair, and ethical relationships with all the stakeholders including employees, customers, suppliers, and communities promotes business growth and competitiveness

Diversity, Equity and inclusion

The Company policies are framed in such a way to promote diversity, equity and inclusion among the employees. We believe in an inclusive growth and provide equal opportunities to everyone. However, due to inherent nature of manufacturing sector, the gender gap is wider inspite of conducive policies. The Company is placing additional efforts to increase the number of women in the organisation.

Customers

MTAR is known for exceptional quality of products it, which enabled it to develop a long standing relationships with all its primary customers. The Company acts as a strategic partner to its primary customers. We regularly obtain feedback from our customers to improve the quality of our products further

Employee Welfare and Training

At MTAR, we have been recognised for a culture of excellence, marked by high people retention, knowledge-enhancing workplace, extension of ones workplace to the large exercise of nation-building, and talent investments including recruitment, retention and training) Our policy on Environment, Health and Safety emphasizes a safe and healthy work environment for employees.

Vendor Development

The Company is known for prompt payments among its vendors. It believes in the empowerment of local vendors; nearly 30% of our raw material is procured from local vendors. We also organise training sessions to our vendors to raise awareness on various technical and sustainability issues

Our facilities at Adibatla, Unit 2 and EOU have been certified for ISO 45001:2018 Occupational Health and Safety. The Company also measures the employee satisfaction index with the most recent annual measurement being 86.0% with a net promoter score of 24. The result of our best-in-class talent management practices have been high people retention with an average attrition rate of 8.5% over the last few years

Community Impact

MTAR has allocated Rs. 11.70 Mn funds in FY 2022-23 towards various CSR initiatives including education & skill development, health, eradication of poverty and promotion of cultural heritage. The company has adopted two schools near Adibatla and Nadargul to enhance the infrastructural facilities

MTAR believes that equitable and inclusive growth is essential for the growth of any economy. Hence, the company strives to create a positive impact on the society through its various CSR initiatives. Specifically the company looks forward to contribute to eductaion & skill development to groom the young talent for building tomorrows India.

Our Governance Commitment

Our governance component ensures ethical and anti-corruption practices, compliance, transparency, and commitment to shareholder and voter rightsw

Board of directors

Board of Directors at MTAR, our strategic direction is influenced by our Board of Directors, who comprise of professionals and technologists of standing. Of our ten Directors, five are independent including two technologists from Civil Nuclear, Space and Defence sectors.

We have passed a resolution to reappoint our Independent directors for a five year term. and rest of the directors are appointed on rotation basis. Appointment and removal of directors is under boards purview as per the Companies Act, 2013

Investors

The Company organises quarterly earnings call and provides a broad annual revenue guidance. We regularly interact with analyst community and maintain transparency with them about our ongoing business

Code of conduct

The Code of Conduct of the Company enshrines policies relating to ethics, bribery and corrupwtion. The policy covers our employees and all stakeholders including board of directors, our wholly owned subsidiary, suppliers, contractors and business partners. The company regularly organises code of conduct training to all the stakeholders

Cyber Security

The Code of Conduct of the Company enshrines policies relating to ethics, bribery and corruption. The policy covers our employees and all stakeholders including board of directors, our wholly owned subsidiary, suppliers, contractors and business partners. The company regularly trainin

Executive Compensation

Remuneration to directors, key management personnel and senior management including fixed and incentive pay is determined by NRC committee, which ensures the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate senior executives of the quality required to run the Company successfully

Dividend policy

As per our current approved dividend policy not exceeding 35% of the annual standalone net profits of the Company (Profit After Tax) can be given at any point of time

MTAR has been rated as 2- "good" on a 5 rating scale by Dun & Bradstreet (D&B) for the companys practices on environmental, social and governance aspects

At MTAR, we use Enterprise Risk Management framework to identify, evaluate, report and mitigate risks

Businesses operate in a volatile environment surrounded by constant uncertainties, one needs to prepare for an uncertain and volatile future that includes technological disruption, geopolitical risk, threats to the global supply chain, climate change, data security etc.

Carrying out business operations in a seamless way specifically in an increasingly volatile and complex business environment calls for proactive, integrated enterprise risk management solutions encompassing people, data and infrastructure. Anticipating, prioritising and mitigating risk enables to build a sustainable business in long-term.

Enterprise Risk Management System

At MTAR, we have a Enterprise Risk Management system to assess, and identify significant threats to business and prioritize risk response strategies

The company has constituted a risk management committee at the board level to identify systematically about the multiple categories of risks the Company could be exposed to so that we can institute appropriate risk mitigation processes for each that could neutralise the managerial bias of envisioning a scenario as we would like it to be rather than as it actually is or could possibly become.

The corporate policy (and in effect our ability to manage organisational risk) is framed by our Board of Directors, comprising esteemed professionals with decades of industry experience to ensure a sustainable business growth. The Companys governance principles, including overall risk tolerance, are directed by the Board of Directors. Apart from risk management committee, our Board is assisted by various committees with specific functions

Risk Management Hierarchy

MTAR has a three tier risk management committee structure to activate a response that is agile, improvisational, and iterative to manage strategic, financial, operational and compliance risks

Committee	Roles & Responsibilities
Board Risk Management Committee	• Assessment of strategic risks
	• Summary review of operational, financial and compliance risks
Apex Risk Management Committee	• Assessment of Strategic risks
	• Assessment of financial risks
	• Summary review of operational and compliance risks
Functional Risk Management Committee	• Review of operational and compliance risks of respective functions

Customer Concentration Risk

More than 75% of our revenue is derived from Bloom Energy and in case of any event of loss of business, our revenues could be impacted adversely, which may lead to a significant impact on our financial condition and cash flows.

MTAR acts as a strategic partner to its customers. There has been no instance of prominent customer attrition though proportions in revenues from a customer could vary as per the market conditions. In addition, Clean Energy- Solid Oxide fuel Cells is witnessing growth rate at 30%- 35%, CAGR that shields us from uncertainities.The Company also closely tracks the business growth and industry trends of its prominent customer and redirects its strategy to mitigate the risk. Also, all our assets are mostly fungible across various sectors and we can cater to other customers as well.

The company has added several new customers that have potential to turn into key strategic accounts 3-4 years down the line.

Supply Chain risk

We source majority of raw materials from the third party suppliers except for few materials that are issued by the customer. Raw material supply and pricing can be volatile due to a number of factors beyond our control, including global demand and supply, general economic and political conditions, transportation and labour costs, labour unrest, natural disasters, restrictions on the import of raw material, competition, import duties, tariffs and currency exchange rates and there are inherent uncertainties in estimating such variables, regardless of the methodologies and assumptions that we may use. For instance, failure of our suppliers to adhere to the delivery schedule or the required quality could hamper our production schedule and therefore affect our business and results of operations. However, the Company procures the raw material well ahead of time and maintains a diversified supplier base spread across geographies to navigate through supply chain disruptions. We have increased our inventory levels during COVID 19 pandemic and Russia Ukraine crisis to insulate our business operations from supply chain disruptions

As the company is witnessing an accelerated growth, our working capital requirements are increasing. Our future working capital requirements may differ from estimates as a result of, among other factors, unforeseen delays or cost overruns, unanticipated expenses, regulatory changes, economic conditions, engineering design changes, weather related delays, technological changes and additional market developments.

Our working capital requirements may increase if there is an increase in receivable days and inventory days. Our net working capital days as on 31st March 2023 stands at 230 days as against 275 days as on 31st March 2023. There was a reduction in our receivable days in FY 2022-23 as the supply chains started to streamline. However, our inventory days have increased due to procurement of material ahead of time for new product development activities. However, the company target to reduce NWC in FY 24 to lower than 200 days

Nearly 79% of our revenue is derived from cutomers outside India because of which the Company transacts in foreign currencies primarily USD. Appreciation or depreciation of the Indian rupee against the U.S. Dollar and other foreign currencies may affect our results of operations. Our exports are greater than imports, moderating the forex fluctuation risk.

Our treasury team has set up a hedging policy in place to hedge an amount to certain extent in FY 2023-24

Our manufacturing activities are labour intensive, require our management to undertake significant labour interface, and expose us to the risk of industrial action. We are also subject to a number of stringent labour laws that protect the interests of workers, including legislation that sets forth detailed procedures for dispute resolution and employee removal and legislation that imposes financial obligations on employers upon retrenchment.

The Company has flexible human resource policies to adapt to the changing requirements and has maintained amicable relations with the workmen so far. MTAR believes that its employees are primary reason for the companys growth and has taken up salary corrections in Q4 FY 2022-23

Disruption or failure of our IT systems could have significant effect on our operations. A large-scale IT malfunction could disrupt our business or lead to disclosure of sensitive Company information, particularly since our Company caters to sectors such as nuclear and space and defence, which are of national importance and involve dealing in highly sensitive information). In addition, it is possible that a malfunction of our data system security measures could enable unauthorized persons to access sensitive business data, including information relating to our intellectual property or business strategy or those of our customers. The Company has systems in place for continuous monitoring of preventive, detective, and corrective security controls to protect information assets from compromise or to limit the damage to the organization should a compromise occur.

MTAR has is working on the development of new products like Small Satellite Launch Vehicle, cable harnessing assemblies, electromechanical actuation systems etc.

Introduction of new products across different sectors, enhancing our current capabilities, pushing the existing products into new markets might have unanticipated results, affecting investments. The Company had moderated this risk through the technical know-how gained by it over the past five decades. Since inception, we have developed a culture to train our team on a regular basis in new technologies, and recruit seasoned professionals with vast experience while extending our business in a new direction that enabled us to develop new products consistently. As a result, each expansion has been marked by a low learning curve and quicker revenues accretion, strengthening the overall competitiveness.

Talent Management Risk

MTAR operates in a niche engineering space across diversified sectors that demands highly specialised knowledge, which makes the Company dependent on its Promoters, Directors, senior management and other key managerial personnel, including skilled project management personnel. The loss of any of its Promoters, Directors, senior management and other key managerial personnel or an inability to manage the attrition levels in different employee categories may significantly impact our business, growth prospects, results of operations and cash flows. We face competition to recruit and retain skilled and professionally qualified staff. Due to the limited availability of skilled personnel, competition for senior management and skilled engineers in our industry is intense. We may experience difficulties in attracting, recruiting and retaining an appropriate number of managers and engineers for our business needs, which might call for an increase in our pay structures to attract and retain such personnel. The Company has policies in place for an effective talent management, provides fair compensation packages, and ample opportunities for the professionals to grow up the ladder. Historically, the Company has witnessed a very low attrition rate.

Environmental laws and regulations in India have been increasing in stringency and it is possible that they will become significantly more stringent in the future. Stricter laws and regulations, or stricter interpretation of the existing laws and regulations, may impose new liabilities on us or result in the need for additional investment and managements time which could impact our business, financial condition or prospects. Furthermore, poor awareness and adherence to safety standards can impact people safety and production. The Company takes all the necessary measure to adhere to regulatory norms of environments, monitor the safety standards across all the units and imparts safety & environment related trainings to its employees on a regular basis

More than 60% of our revenue is derived the mass production of the products. Breakdown of critical equipment could impact the business significantly especially in mass production where failure to deliver the products on time could divert the order to the competitors. In addition, many of these equipment demand international service support, with long lead times, which could affect our delivery schedule. The Company has enough spare capacity to address the breakdown issues and undertakes preventive maintenance on a regular basis