Syrma SGS Technology Ltd Management Discussions

Global economic overview

In FY23, the global economy dealt with several headwinds, including novel COVID variants, the food and energy crises in Europe and the war of attrition between Russia and Ukraine. These challenges adversely impacted global growth forecasts and might also trigger further economic upheavals. Despite these challenges, as per recent estimates by the IMF that the global economy clocked a growth rate of 3.4% in 2022.

The global economy began to show signs of a soft landing in early 2023, but recent turbulence in the banking sector and persistently high prices have somewhat affected the outlook for long-term growth. As long as debt levels remain high and geopolitical tensions intensify, risks are partially skewed to the downside.

The economic downturn, on the other hand, is concentrated in advanced economies, especially in the Eurozone and the UK. China is also recovering from the pandemic-induced shocks, following the reopening of its economy and the easing of supply-chain bottlenecks.

Outlook

Going forward, monetary policies of central banks are anticipated to rein in inflation. Many emerging markets and developing economies, including India, are gaining ground, with growth rates expected to rise significantly in the current fiscal year. The efficacy of monetary policy is also expected to boost economic growth. Favourable fiscal policies will also be crucial, particularly to support businesses and individuals impacted by the pandemic.

Indian economic overview

Remaining relatively shielded from the challenging global economic environment, India emerged as one of the fastest- growing major economies in the world. The domestic economy demonstrated sheer resilience to register a growth rate of 7.2% in FY231.

Based on sectoral analysis, this growth can be attributed to an upswing in construction activity facilitated by robust infrastructure investment both by the Central Government and state governments, which is also paving the way for large- scale employment opportunities.

A sustained hike in GST collections, electronic toll collections and the volume of E-Way bills generated during FY 2023 indicate encouraging momentum. Additionally, the indicators of the services sector (UPI transactions, high credit demand) suggest long-term expansion.

Outlook

While the post-pandemic private investment recovery is still in its early stages, there are preliminary indications that suggest India is on track for a stronger investment upcycle in both the manufacturing and services sectors.

Rising consumer demand is also expected to augur well for economic growth. Looking ahead, the Indian economy continues to be buoyed by underlying macroeconomic stability.

Industry overview

Global Electronics Manufacturing Services (EMS) industry

The Electronics Manufacturing Services (EMS) industry is responsible for the development and production of different types of electronic products. The widespread adoption of electronic devices like tablets and smartphones, along with the integration of electronic components across various sectors, driven by automation, and advancements in EV technology, introduction of 5G, Industry 4.0, and IoT, has significantly propelled the growth of the electronic industry in recent years. The global electronics manufacturing services market predominantly comprises companies that manufacture electronic products, assemble components on Printed Circuit Boards (PCBs) and caters to Original Equipment Manufacturers (OEM). The OEMs are generating more value from EMS companies as they have expanded offerings beyond manufacturing services to include product design and development, testing and aftersales services such as repair, remanufacturing, marketing and product lifecycle management.

"The Long-term forecast for the EMS sector remains positive, driven by increased electronics consumption and Indias emergence as a reliable manufacturing aLternative to China"

The Semiconductor Industry Association (SIA) reported that in February 2023, the total sales for the semi-conductor industry reached USD 39.7 billion, down 4.0% from USD 41.3 billion in January 2023..2 Although short-term market cyclicality and macroeconomic headwinds have impacted sales, growing demand from end users continue to create better prospects for the medium as well as long term.

The global electrical and electronics market grew from USD 3454.94 billion in CY 2022 to USD 3739.37 billion in CY 2023, at a compound annual growth rate (CAGR) of 8.2%.3 The advent of digital technologies such as the internet of things (IoT) and advanced connectivity solutions like 5G is expected to drive the demand for innovative electronic devices. Consequently, the market for electronic equipment manufacturing is projected to witness substantial growth during 2023-2027.

Key drivers of the global EMS industry

* The key growth drivers fuelling the global EMS market is the increasing demand for engineering and design of premium circuit boards, as well It is also extensively used for testing conducted by contract manufacturers.

* The incorporation of latest manufacturing technologies and cloud networks, Internet of Things (IoT), continues to increase the demand for manufacturing superior quality products from the EMS industry.

* The auxiliary tasks are mainly outsourced, which helps the OEMs to focus on their core expertise to create a distinguished product.

Outlook

The electronic contract manufacturing services sector is expected to experience substantial growth due to the use of these services in non-technical industries such as healthcare, automotive, industrial, aerospace, and defence. These segments currently have a relatively low adoption of electronic contract manufacturing and design services, which presents significant opportunities for contract manufacturers to establish a prominent position in these markets.

Despite facing challenges and global economic uncertainties, the electrical and electronic industry is projected to achieve a market value of USD 4,986.91 billion by CY 2027, growing at a compound annual growth rate (CAGR) of 7.5%. 4

Indias Electronic Manufacturing Services (EMS) industry

India is witnessing accelerated growth to become a global leader in electronics manufacturing, as the industry is expected to play a vital role in Indias goal to become a USD 10 trillion economy.5 According to the Ministry of Electronics and Information Technology, electronic manufacturing in the country is projected to cross INR 1.28 trillion and mobile phone production is expected to reach INR 1 trillion, both achieving the milestones by FY24. The government aims to provide support of up to 100% to component players with the objective of boosting the local ecosystem. 6

India is expected to become an electronics manufacturing hub and the sector is expected to show robust growth, which will enable the Government to promote domestic electronics manufacturing with increased investment as well as the creation of new jobs.

The governments focus on promoting indigenous manufacturing, along with the China +1 strategy pursued by original equipment manufacturers (OEMs) looking to establish manufacturing operations in India, has further contributed to this growth. This shift to strengthen Indias position as an electronics manufacturing hub, shall extend beyond the mobile and consumer-focused sectors. Additionally, the rise in domestic consumption and OEMs inclination towards India for manufacturing operations have been significant driving factors.

In India, the electric vehicle market is expected to witness significant growth in the years to come. By 2025, the market share of electric passenger vehicles is projected to exceed 6%, with the three-wheeler segment leading at 4%, followed by two- wheelers at 3.5%, and passenger vehicles at 1.3%. To support this growth, the government has implemented schemes like FAME1 and FAME2, with a focus on developing charging infrastructure. Currently, there are 2,700 public charging stations and 5,500 charging connectors, which are expected to grow to 10,000 charging stations by 2025. With the increasing adoption of electric vehicles, the country will require approximately 20.5 lakh charging stations by 2030 to meet the growing demand.7

Electrification aim by 2030

Moreover, with increasing emphasis on energy efficiency, BLDC motors are being adopted extensively across diverse sectors, including automotive, aerospace, robotics, consumer electronics, and industrial automation, facilitating the creation of state-of-the- art electronic devices. These motors ensure superior efficiency, reduce maintenance requirements, and enhance performance. Indias Electronics Manufacturing Services (EMS) industry is strategically positioned to leverage this trend, catering to both domestic and international markets with its capacity to deliver high-quality and cost-effective energy solutions.

Furthermore, increased adoption of 5G technology is expected to drive the industrys growth. It will drive the demand for fibre- to-home devices as fast and reliable connectivity becomes indispensable for both households and businesses. Moreover, the proliferation of smart metering is expected to be one of the major driving forces behind the expansion of the EMS industry. Through the integration of advanced communication and data analytics capabilities into energy meters, smart metering enables real-time monitoring and optimisation of energy consumption. It empowers consumers, businesses, and utilities, facilitating informed decision-making and leads to enhanced energy efficiency and cost savings. The widespread adoption of smart metering also opens up new avenues for innovation within the EMS sector, propelling the industry forward towards the realisation of a more sustainable energy landscape.

With more emphasis on clean energy, theres also a surge in demand for solar-powered products. Companies are adopting solar technology to ensure cost efficiency and reduce their carbon footprint, thereby attracting new consumers and creating new business opportunities.

Additionally, the rising adoption of remote work and digital Learning has resulted in a surge in demand for IT hardware, particularly laptops and tablets, thereby fortifying the EMS sector.

Outlook

During the period between April and November 2022, there was a significant increase in the export of electronics from India, with a growth rate of 13.8%. It was the highest in the past six years. As a result of this, India has set a target of achieving USD 120 billion in electronics exports by FY26.

The domestic electronics industry in India was valued at USD 118 billion in FY20. In addition to the export target, the electronics manufacturing industry in India is expected to be worth USD 300 billion in electronics manufacturing and USD 120 billion in exports by FY26. It aligns with the governments vision of making India a USD 1 trillion digital economy by FY25.8

Exports

Indias total exports are expected to reach new heights, with a projected growth rate of 13.84% during FY 2022-23 compared to FY 2021-22. This growth is anticipated to result in exports worth USD 770.18 billion.

Export of electronic goods (values in USD billion)

The export of electronics from India has attained the 6th position. Furthermore, the central government has set a target to enhance the electronics manufacturing capacity to INR 24 lakh crore by FY 2025-26.

Import of electronic goods from China also witnessed a decline of approximately USD 2 billion during the period between April 2022 and February 2023, compared to the same period last year. Additionally, the import share of electronic goods from China decreased from 48.1% in April 2021 to February 2022 to 41.9% in April 2022 to February 2023.9

Emerging trends for electronic manufacturing in India

The key trends that drive the growth of the EMS industry in India are mentioned below:

Emerging technologies - Rapid technological advancements and the emergence of new products or software upgrades for existing products have reduced the life cycle of existing products. Higher data speed, low latency networks such as 5G, Artificial Intelligence and the Internet of Things (IoT) further contribute to the need for the upgradation of electronic products.

Localisation of the supply chain - The establishment of a localised supply chain is crucial for the industry as it helps promote cost reduction, flexible operations and lesser reliance on imports and services. Also, a localised supply chain can assist in providing large product volumes within a shorter period of time.10

Improved sourcing capabilities - India has a competitive advantage over other countries in electronic manufacturing due to the easy availability of resources, skilled workforce, raw materials, and state-of-the-art manufacturing facilities. These manufacturing plants aid in reducing production costs and make India an attractive investment option for foreign investors. Easy sourcing also helps address global supply chain constraints. 11

Government initiatives

The government aspires to build a semiconductor ecosystem, which directly involves expansion of the electronic manufacturing industry. Several Production-Linked Incentives (PLI) schemes act as catalysts for this growth. These PLI schemes are designed to promote exports and the growth of the domestic electronic manufacturing industry. The countrys large-scale electronic manufacturing (LSEM) sector was allocated H 40,951 crore (approximately USD 5 billion) under this scheme. This has led to a surge in investments in the sector, with several global electronics companies, including Samsung and Apple, setting up manufacturing facilities in India. 12

The Union Minister of State for Skill Development and Entrepreneurship and Electronics and IT stated that the establishment of the H 180 crore Electronics Manufacturing Cluster (EMC), which is anticipated to generate over 18,000 jobs, at Dharwad has been approved.13

"FDI of up to 100% in electronics manufacturing is allowed under the automatic route."

Company overview

Syrma SGS (Syrma), a leading Electronics System Design and Manufacturing (ESDM) Company, is dedicated to technology- based solutions and the Original Design Manufacturer (ODM) business. Unlike traditional business models followed by Original Equipment Manufacturers (OEMs) or ODMs, which concentrate on specific production stages, Syrma takes a comprehensive approach starting from product concept design and encompasses every stage of the production process. This enables the Company to provide value-added services throughout the industry value chain, prioritising high-margin and flexible operations.

The Company firmly believes that its business strategy gives it a competitive edge and positions it at the helm of the industry value chain, transforming it into a value creator and empowering it to become a catalyst for the creation of novel goods and ground-breaking technology.

Strengths

The Companys strengths define the key aspects of its business, which helps to differentiate it from its competitors.

* Syrma is recognised as one of the major players in the Electronic System Design and Manufacturing (ESDM) sector, with a substantial market share.

* With strategically located manufacturing facilities across the country, the Company caters to the needs of both domestic and international customers.

# The Company follows a diversified business model and operates in various industry verticals. It offers a range of products including PCBA, RFID, and magnetic solutions.

# The Company pioneered the manufacture of RFID products in India and it holds a leadership position in this segment.

* Strong engineering capability, enables it to deliver high- quality solutions and services.

* With its extensive domain knowledge and expertise, it is renowned as an industry leader in the memory modules segment.

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Growth strategies

In the years ahead, the Company looks forward to implementing several strategies for its sustained growth. Some of these strategies are as follows:

* Bolster and consolidate the fundamental competitiveness of technology Enhance opportunities for technological innovation

* Establish a specialised facility to enhance design capabilities for emerging areas and new age technologies.

* Invest in new infrastructure and maintain lower operating expenses while sustaining quality

* Make strategic acquisitions in order to pursue inorganic growth

# Increase scale, market share and range of products

* Permit entry for new clients and seize emerging opportunities.

* Improve wallet share, geographic reach, and client base * Increase the number of customers by adding more products

# Market current goods and services to new clients and undertake acquisitions

# Continue R&D projects

* Profit from cross-selling and upselling chances * Adapt to emerging markets and industries

# Concentrate on businesses with flexible profit margins to develop products and services that use smart gadgets, electric vehicles, medical equipment, and existing manufacturing capabilities.

Product portfolio

Printed Circuit Board Assembly (PCBA):

A circuit board is referred to as a printed circuit board (PCB) before the assembly of electronic components and as a printed circuit board assembly (PCBA) after the soldering of those components to the board.

* Solder Paste Stencilling: Solder paste stencilling is the foundational step of PCB assembly. Irrespective of the type of PCB assembly, this step remains unaltered.

* Pick and Place Components Mounting: Component mounting is a pick-and-place activity that can be performed manually or mechanically by an automated system in the through-hole PCB assembly.

* Soldering: Soldering is performed to join components on the PCB. During this process, the circuit boards pass over a pan of molten solder and a pump produces an upwelling of solder that looks like a standing wave. The process is known as Wave soldering.

* Inspection: Inspection and quality testing are performed at every stage of the manufacturing process and comprise a mix of automated optical inspection and manual inspections.

a. Visual/Manual Inspection: In most cases, a template is used for manual inspection to inspect the soldered connections. This method is only suitable for small batches of PCBs.

b. Automatic Optical Inspection (AOI) 2d and 3d: The

AOI machine features high-resolution cameras that can be aligned in different angles to test PCBs. This type of inspection is suitable for single or double sized PCBs. This is placed in line with the other SMT machines.

c. X-ray Inspection: X-ray inspection is performed on intricate PCB designs with multi-layer component mounting. Such complex PCBs are hard to inspect manually.

Radio Frequency Identification (RFID):

RFID is a type of wireless communication that integrates the use of electromagnetic or electrostatic coupling in the radio frequency section of the electromagnetic spectrum to uniquely identify an object, animal or person. RFID tags comprise one of two types of transponders. The first has a ferrite core and the second has an air coil. RFID tags consist of an antenna and a semiconductor chip. The antenna can be etched or a copper wire antenna in the form of an air coil can be wound over ferrite.

Electromagnetic and electromechanical parts:

Standard electromagnetic components, such as chokes, inductors, magnetic filters, and transformers, are manufactured by the Company, along with high-volume manufacturing assemblies.

Financial highlights

Particular	FY 2023	FY 2022	YoY Change
Total Revenue (in millions)	20,921	12,843	63.0%
EBITDA (in millions)	2,315	1,437	61.0%
PAT (in millions)	1,231	765	61.0%
Total Debt (in millions)	3,468	1,942
Net working Capital Days (in times)	74	75
Interest Coverage Ratio (in times)	9.28	14.87
Inventory Turnover (in times)	3.52	3.8	(7.0%)
Current Ratio (in times)	1.43	1.34	7.0%
Debt/Equity Ratio (in times)	0.22	0.33	(33.0%)
EBITDA Margin (in %)	11.3%	11.3%	0%
Net Profit Margin (in %)	6.0%	6.0%	0%
ROCE (in %)	16.0%	19.1%	(16.0%)

Proforma Consolidated financials for Fiscal Year 2022 ending March 2022

Research and development

The Company emphasises the importance of R&D to retain a competitive edge in the market. Its R&D teams anticipate and identify emerging and cutting-edge technologies. The Company leverages this knowledge to develop internal proof of concepts and intellectual properties (IP) tailored to specific industry vertical applications. This approach enables the Company to accelerate new product development (NPD) timelines for their customers, providing them with a significant time-to-market advantage. The Company focuses on several key areas, including Smart-Connected-Electric Vehicles, Next Generation Telecom & Networking, Advanced Power Electronics, and Smart IoT Devices.

The Companys R&D team adopts a collaborative approach with Product OEM customers starting from the product ideation stage. They engage in a consulting capacity to define or refine the product specifications, features, architecture, and engineering approach. This collaboration is further strengthened through the development of Proof-of-Concepts to validate and demonstrate the feasibility of the proposed solutions. Additionally, the R&D team assists customers by providing technology scouting and evaluation services. They help in assessing various technology options and support customers in making informed decisions regarding the selection of specific components or solutions. The R&D team leverages its strong connections within the technology ecosystem, particularly with Semiconductor OEM companies, to identify and incorporate new technologies into their offerings.

The Research and Development (R&D) team collaborates with industry stakeholders to analyse and anticipate technology trends and shifts. This proactive approach enables the organisation to effectively adopt advanced manufacturing technologies. The R&D team is currently exploring and piloting various innovative technologies, such as System-in-Package (SiP), Low-Temperature Co-fired Ceramic (LTCC) Substrate, and 3D Printing, among others.

The R&D team plays a crucial role in enhancing manufacturing processes by driving advancements in Manufacturing Engineering. This includes the implementation of Manufacturing Automation, Material and Process Tracking based on RFID/Barcode systems, deployment of Smart End- of-Line (EoL) Testers, adoption of centralised Enterprise Resource Planning (ERP) systems, and the presence of a Strategic Sourcing Team. These initiatives improve efficiency and effectiveness of manufacturing operations.

The contributions of the R&D team have been instrumental in expanding product offerings and cross-selling to new customers, resulting in notable business growth. For a prominent global Medical/Healthcare customer, the Company extended its services by providing Teardown & Benchmarking, Value Engineering, New Product Design & Development, and Tester Development. In the Transportation sector, the R&D team successfully introduced New Product Design & Development services for Railway applications, catering to the needs of a key customer. By showcasing Engineering & Technology Services for New Product Development, the Company secured a Joint Design Manufacturing opportunity from a large HiTech Consumer/Enterprise Devices OEM. Furthermore, the R&D team facilitates seamless transitions from Engineering Proto Builds to Volume Manufacturing by offering Design for Manufacturability and Testing Services.

Moreover, the Companys R&D team engages in collaborative efforts with the global Engineering & Technology Ecosystem to establish cutting-edge infrastructure. This includes the acquisition and setup of state-of-the-art resources such as Electronic Design Automation Tools for Design, Simulation, and Verification. Additionally, the team procures Reference Systems/Development Kits for Embedded Software Development, Test & Measurement Equipment, and specialised labs dedicated to Validation and Pre-Certification activities.

The acquisition of SGS Tekniks has expanded the Companys R&D capabilities with a team based in Germany. It enables the Company to provide a near-shore interface for their European customers, enhancing their ability to cater to specific needs effectively. Additionally, the Company leverages the expertise of its R&D team in Germany for niche projects in areas such as Automotive, Industrial IoT, Medical, and Power Electronics technologies. Having a presence in Germany also benefits Syrma by providing local expertise in system integration and testing. It facilitates smoother operations and helps to meet the requirements of the European market.

The Companys R&D team works with OEMs, providing a wide range of services including turnkey product engineering, independent design house services, and contract manufacturing/electronics manufacturing services for build- to-print projects. It also collaborates as a JDM (Joint Design & Manufacturing) and ODM (Original Design & Manufacturing) partner, offering white-label products customised to meet OEM customers specific needs.

Besides, the Company promotes industry-academia collaboration through its Engineering & Technology Centre at a leading university. Its active membership in trade associations like IESA and ELCINA highlights its commitment to industry collaboration. Leadership involvement in the national executive committees and participation in global technology forums showcase the Companys dedication to staying at the forefront of industry developments.

ESG initiatives

As a responsible corporate entity, the Company adheres to all applicable environmental, social and governance objectives.

During the year under review, the Company has implemented several initiatives, which are discussed below:

# To ensure compliance to environmental norms, the Company maintains a checklist on emissions, leakage, waste management and the safety of employees.

# Syrma conducts periodic testing of emissions from its plants and machinery.

# The Company has partnered with renowned hospitals to ensure proper disposal of biomedical waste.

# To ensure smooth governance, the Company has various policies for employee grievances, equal employment opportunities and anti-corruption.

# The Company aims to reduce GHG emission intensity by 25% with a projected target of 5% Y-o-Y by FY2028.

# The Companys objective is to regularly provide ESG training to 80% of its workforce and it strives to maintain a diversity ratio of over 60% for womens employment.

# The Companys goal is to achieve 50% energy consumption from renewable sources, aiming for year-on-year growth of 10% until FY2028.

Quality control and services

The Company considers its quality control procedures a cornerstone of its business operations. It has a quality control department that regulates quality parameters across its operations.

Supplier quality department: This department is responsible for evaluating vendors and suppliers while also visiting their key suppliers and conducting audits on a periodic basis.

Incoming supply quality department: This department ensures that the parts received from the Companys suppliers match the drawings and requirements of customers.

Process quality control department: This department is responsible for making sure that ensuring adherence of Syrmas products with the control plans finalised by customers.

Outgoing quality control department: It checks the quality of the It checks the quality of the final product and helps to meet customer specifications.

Raw materials and suppliers

The raw materials required for manufacturing electronic equipment include:

(i) Electronic components (microcontrollers, IC, resistors, capacitors, LED, PCB and other semiconductors): These components are purchased directly from international producers or accredited distributors.

(ii) Wound components: Magnetic or wound components are either produced in-house or procured from trusted suppliers. To assure the quality of the wound components, periodic and non-periodic audits are undertaken.

(iii) Wiring harness: These are essential for maintaining the long-term quality of Syrmas products as it supports the actual electrical load. While the wiring harness needed for domestic markets is purchased from recognised vendors, for export requirements it is produced in-house. The wiring harness schematics Syrma offers include information on the make and substance of the insulation tape, the make and gauge of the wires, the number of strands in each wire, the insulation strength and the make and specification of the crimping pins. To guarantee quality, periodic and infrequent audits are also carried out.

(iv) Plastic parts: These are procured from dedicated plastic moulding companies. The drawings and specifications for the moulds are provided by Syrma and the moulds for these parts are also owned by the Company. Strict quality control procedures, including third-party testing, are conducted to ensure compliance with the Companys quality specifications.

(v) Sheet metal parts: These are manufactured on the basis of the Companys drawings and tools.

(vi) Process consumables: These are sourced from various third-party manufacturers. We rely on certified and recognised laboratories to verify the quality of these components.

The Company possesses a resilient supplier network that encompasses both domestic and international suppliers spanning 19 countries, including the United States, Singapore, and China. To ensure quality and reliability, the Companys supplier quality engineers conduct separate audits and verifications of all major suppliers. The Company follows thorough and well-documented procedures for vendor selection and certification. Additionally, regular audits are conducted to guarantee adherence to the Companys stringent quality standards and specifications.

Sales and marketing

For the purposes of boosting demand, obtaining quotes and securing orders, obtaining NPIs and managing programmes, the Company has internal procedures in place. The senior management regularly reviews and monitors the development of new products and undertakes initiatives to expand their business. A combination of digital marketing and cold calling is employed for prospecting and lead creation. In addition, Syrma runs advertisements in Indias weekly and daily periodicals, as well as numerous domestic and foreign industry-specific exhibitions.

To align Companys marketing strategies with customer needs and preferences, the Company stays up to date with the latest industry trends, technological advancements, and shifts in customer preferences. This helps to identify new customers and opportunities. The Company actively participates in various exhibitions and events to connect with potential customers. Additionally, it utilises CRM to track conversion rates and conducts market research to identify gaps in marketing strategies across locations.

Syrma SGS places high priority on marketing initiatives and ensures efficient allocation of resources by identifying and establishing marketing goals. Marketing initiatives are undertaken based on the potential of conversions in a particular domain and its ability to reach a target audience.

Additionally, the Company implements an effective monitoring system for its sales team members, specifically focusing on lead generation, nurturing, and closure. This allows them to closely track and evaluate the performance of the sales team, ensuring that they meet objectives and maximise opportunities for success.

The Company actively focuses on establishing and nurturing relationships with its existing customers, aiming to maximise cross-selling and upselling opportunities. To cater to customers with multi-site operations across the country, the Company undertakes initiatives to explore additional prospects for business development.

Regular communication is maintained with customers through status calls and review calls. The Company provides dedicated customer support through Project Managers (PMs) who address issues promptly. They also diligently handle the customers journey with the Company.

Health, safety and environment

The Company has always placed employees health and safety as a core priority. To this end, it has conducted the LOTO programme, which involved identifying hazards and ensuring safety of its workforce. The Company also undertook an annual Hazard Identification and Risk Assessment (HIRA) and developed an emergency preparedness and response plan. For better planning and response, the Company also has a Safety Organisation Chart.

To provide a safe working environment the Company encourages accident reporting, proper use of safety equipment and maintenance of clean and hygienic work spaces.

The Company also provides its people with personal protection equipment such as safety shoes, goggles, protective nitrile gloves and aprons to ensure workplace safety. Through regular safety inspections across its manufacturing plants and daily reports on steps for risk mitigation, the Company also helps employees to map risky locations and practices.

The Companys SHE care committee, consisting of members from all levels, actively identifies potential risks, unsafe conditions and actions within the shop floor. They promptly take corrective actions to address these issues and ensure a safe working environment. As part of their commitment to safety, health and the environment, the Company emphasises the importance of training programmes to increase awareness among employees.

The Company has an Occupational Health Centre (OHC) to address employees health concerns. They also regularly conduct inspections and audits to evaluate the effectiveness of health and safety measures. These assessments include both internal and external audits, that aim to ensure compliance and identify areas that can be improved. Furthermore, they organise frequent health awareness programmes and medical campaigns.

Syrma SGS has established various committees, including the SHE Care committee, ERT, First Aid Team, 6S, Canteen committee, grievance committee, and POSH committee, all with the aim of benefitting employees. The Company strongly encourages its employees to report safety concerns, offer feedback, and actively engage in safety committees. They follow a dedicated EHS training calendar to provide education to employees regarding workplace hazards, safe work practices, emergency response protocols, and machine safety. This proactive approach allows employees to be informed about potential risks and equips them with the necessary knowledge to respond effectively.

IT and Digitalisation

IT and Digitalisation have played a pivotal role in driving the success and growth of the Company by significantly enhancing the Companys business operations. The implementation of various IT solutions has led to notable improvements in automation and efficiency, communication and collaboration, data management and analysis, customer relationship management, as well as scalability and flexibility. These advancements have revolutionised the Companys manufacturing processes and had a profound impact on operational efficiency.

The existing IT infrastructure of the Company is robust and highly secure, incorporating advanced technologies such as firewalls, email security systems, endpoint security systems, and multi-factor authentication. These measures ensure the confidentiality, integrity, and availability of the Companys IT systems. Syrma SGS has obtained certifications such as ISO 27001 ISMS and 27701 PIMS, underscoring its commitment to maintaining a secure IT environment and meeting customer expectations.

Regarding production planning and reporting, Syrma SGS has successfully implemented critical IT solutions, including the SAP S4 HANA ERP system, the Manufacturing Execution System (MES), and the Shop Floor Control System (SFCS). These systems have enabled the Company to optimise its production processes, improve workflow efficiency, and generate accurate and timely reports, thereby enhancing decision-making and operational effectiveness.

Furthermore, technology has played a crucial role in supporting the Companys raw material purchase process, encompassing supplier selection, obtaining RFQs, comparing quotations, and releasing purchase orders. The SAP S4 HANA system seamlessly facilitates these steps, and streamlines procurement processes to ensure data consistency and accuracy.

The SAP S4 HANA platform provides real-time insights, a simplified data landscape, an enhanced user experience, advanced analytics and reporting capabilities, improved efficiency and productivity, integrated business functions, advanced planning and optimisation, scalability and flexibility, as well as the potential to leverage cloud capabilities.

The Companys centralised database for components, vendors, quality, and supply chain management has brought about remarkable transformations within its operations. This centralised approach has resulted in enhanced data consistency and accuracy, increased visibility and transparency, streamlined quality control, efficient inventory management, optimised procurement processes, improved supplier management, supply chain visibility and risk mitigation, and the ability to leverage data analytics and reporting for informed decision-making.

Recent projects at Syrma SGS have underscored the vital role played by IT solutions in the Companys success. Initiatives such as email domain migration, multi-factor authentication for email and VPN users, the establishment of a SharePoint portal, and patch management for updates have all contributed to enhancing operational efficiency, strengthening security measures, and improving productivity.

Within the realm of supply chain management, IT assumes a fundamental role at Syrma SGS. It facilitates essential aspects such as data management, demand planning and forecasting, inventory management, supplier management, logistics and transportation, warehouse management, supply chain analytics and performance monitoring, as well as collaboration and communication.

Further, the Company has outlined plans for further IT investments and upgrades. These initiatives include security enhancements for all north plants, digital transformation initiatives, enhancements in customer experience (CX), measures to ensure data security and privacy, as well as the adoption of cloud backup and Desktop-as-a-Service (DaaS) Virtual Desktop Infrastructure (VDI) environments. These endeavours will enable the Company to remain at the forefront of technological advancements, drive innovation, and consistently deliver value to its customers and stakeholders.

Human resources

The Company acknowledges outstanding achievements through the spot recognition award and recognition for leadership teams such as the Core team, Young leaders, and CFT. Syrma SGS actively engages in numerous competitions like Kaizen, Quality Circle, and Poka Yoke, both within their internal teams and external forums. These competitions provide substantial recognition and serve as a great source of motivation.

It also offers a diverse range of training programs encompassing both technical and behavioural aspects. It included Offsite Integration programs, Team Building exercises, Communication & Presentation Skills workshops, Outbound trainings like Pegasus and NTTF, corporate etiquette programmes, IPC certification, VDA certification, 6 Sigma certification, lean manufacturing workshops, Mentor-Mentee programmes and POSH training. Syrma SGS prioritises the promotion of good health and hygiene practices by ensuring access to clean facilities and providing personal protective equipment (PPE) whenever necessary. The Company takes proactive measures to enhance employee wellbeing, and conducts annual medical camps and health checkups for staff members aged 40 and above.

The Company actively engages with government and professional forums and organisations to attract top talent. This collaboration has earned the Company numerous awards and recognitions and achieving numerous innovations. The Company has also benchmarked employee welfare and compensation benefits, and has been recognised as a great place to work and it has signed Memorandums of Understanding (MoUs) with the government for various developmental programmes. As part of its talent retention programmes, the Company offers Employee Stock Ownership Plan (ESOP) schemes, Performance Management Systems (PMS), Reward & Recognition initiatives, Long-Term Stability bonuses, and Individual Development Plans (IDPs). These measures contribute to retaining and nurturing talent within the Company.

To further encourage employee engagement, the Company implements a suggestion system to ensure safety and health. Employees are encouraged to provide suggestions for improvement, fostering a sense of involvement and ownership within the organisation. The Company values and appreciates input from all employees, and implements it for organisational improvement.

Insurance Coverage

The Company maintains insurance policies that are renewable every year. Syrma maintains insurance coverage for all its assets to cover all normal risks associated with the operations, including fire and accidents. It typically maintains standard fire, special perils, and burglary policies for all its offices and manufacturing facilities.

The Company also maintains mediclaim insurance for its personnel and directors, along with officers liability insurance and cybersecurity insurance. These insurance policies are subject to customary exclusions and deductibles.

Cautionary statement

The Management Discussion and Analysis (MDA) section may contain statements that anticipate future prospects. The risks and uncertainties in these statements, which include both known and unknown ones, might cause material differences between the actual outcomes and the forward-looking statements. The estimations in the report are predicated on the Companys assumptions, which take into account the most recent internal and external data. However, the underlying factors of these assumptions are subject to change over time, which may cause corresponding changes in the estimates. Its important to remember that forward-looking statements only apply as of the date on which they are made and reflect the Companys current intentions, beliefs, or assumptions. The Company is under no obligation to revise, or update any forward-looking statements based on new information, future events, or other factors.