Vaksons Auto Mobiles limited is dealer and distributor of auto components and
spares parts more particularly involving Light Commercial Vehicles and other products
involved in the automobile value chain. Further we are a well-recognized dealer of metal
and metal related products using our strong network base of trusted counterparties in
Delhi and Haryana Area. Earlier our company is authorized dealer of products and parts for
Force Motors Ltd. However; due to the Covid-19 pandemic; our company has recently
completed revamped our business model and shifted to more profitable distribution model
for metal scrap and metal products used by Auto value chain. We have also made the company
completely debt free hence ensuring its survival through these tough times. We currently
employ 4 persons on our pay roll and slowly re-building the companys new found product
and business divisions.
We have further incorporated a subsidiary company in the name and style of Vaksons
Metaplast Private Limited (CIN: U37100DL2015PTC278744) in order to undertake trading in
auto parts, HDPE and LDPE polymer, aluminum scrap, and other metal and plastic items on a
larger scale with good trading margins. We believe that our experience of selling and
servicing vehicles would hold us in good stead with this diversification venture
undertaken by the company and also provide for increased financial size. We have over the
years developed a philosophy for quality and have also obtained ISO Certification for our
Quality Management Systems (ISO 9001:2008). We have also been awarded a "Certificate
of Appreciation" in February 2015, by Force Motors Ltd. for "Best Dominance in
the MUV Market Category".
The Global Economy
Due to a shift in supply chains, India can possibly increase its share in the global
auto component trade to 4-5% by 2026. By 2026, Indias auto component industry is expected
to reach US$ 200 billion, and the aftermarket of the industry is expected to reach US$ 32
billion. The auto components industry in India is predicted to increase by 10-15% in FY24,
driven by both domestic and foreign market demand. The growth of global original equipment
manufacturers (OEM) sourcing from India & the increased indigenization of global OEMs
is turning the country into a preferable designing and manufacturing base. 8% of Indias
R&D expenditure is invested in the automotive sector.
The global economy is predicted to be weaker in 2022 than originally anticipated. The
risk of new disruptive COVID variants has the potential to prolong the pandemic while also
causing fresh economic impacts. Furthermore, supply chain disruptions, energy price
volatility, and localized wage pressures all contribute to a high level of uncertainty
about inflation and policy Directions. Risks to the financial stability of debt-ridden
emerging markets and developing nations capital flows, currencies, and fiscal positions
may emerge as mature economies raise policy rates.
The global move towards electric vehicles will generate new opportunities for
automotive suppliers. The mass conversion to electric vehicles may generate a US$ 300
billion domestic market for electric vehicle (EV) batteries in India by 2030*. By 2025, 4
million EVs could be sold each year and 10 million by 2030. By 2026, India will need 4
lakh charging stations. By 2030, EVs in new two-wheeler and threewheeler vehicle sales
will rise to 50% and 70%
A cost-effective manufacturing base keeps costs lower by 10-25% relative to operations
in Europe and Latin America. Presence of a large pool of skilled & semi-skilled
workforce amidst a strong educational system. Second-largest steel producer globally,
hence a cost advantage. India is emerging as a global auto component sourcing hub due to
its proximity to key automotive markets such as ASEAN, Europe, Japan and Korea
Indian Economy
India has become the fastest-growing economy in the world in recent years. This fast
growth, coupled with rising incomes, a boost in infrastructure spending and increased
manufacturing incentives, has accelerated the automobile industry. The two-wheeler segment
dominated the automobile industry because of the Indian middle class, with automobile
sales standing at 19.45 million units in FY23.
Significant demand for automobiles also led to the emergence of more original equipment
and auto components manufacturers. As a result, India developed expertise in automobiles
and auto components, which helped boost international demand for Indian automobiles and
auto components. Hence, the Indian automobile industry has a considerable impact on the
auto component industry.
Indias auto component industry is an important sector driving macroeconomic growth and
employment. The industry comprises players of all sizes, from large corporations to micro
entities, spread across clusters throughout the country. The auto components industry
accounted for 2.3% of Indias GDP and provided direct employment to 1.5 million people. By
2026, the automobile component sector will contribute 5-7% of Indias GDP. The
Automotive Mission Plan (2016-26) projects to provide direct incremental employment to 3.2
million by 2026.
The industry is a leader in exports and provides jobs to over 3.7 crore people. From
FY16-FY22, the industry registered a CAGR of 6.35% and was valued at US$ 56.50 billion in
FY22. The auto component industry exported US$ 19 billion and imported US$ 18.3 billion
worth of components in 2021-22, resulting in the highest export surplus of US$ 700
million. The component sales to OEMs in the domestic market grew by 46% to US$ 27.27
billion (Rs. 2.23 lakh crore).
Due to the high development prospects in all vehicle industry segments, the auto
component sector is expected to see double-digit growth in FY22. The industry is expected
to stand at US$ 200 billion by FY26.
Competition
We face competition from various local and nationwide dealers of commercial vehicles
and auto part dealers. Competition emerges from small as well as big players. The
organized players in the industry compete with each other by providing high quality,
consistent and time bound products and value added services. There are a number of
competitors offering products similar to ours. We believe the principal elements of
competition in our line of business are easy finance options, consistent & quality
products prompt availability and strong relations with suppliers and vehicle
manufacturers. We compete against our competitors by establishing ourselves as a
trustworthy agency for our products in the State of Haryana which enables us to provide
our clients with products and services at appropriate rates to meet their requirements.
Strengths
Being a Authorized Dealer of auto parts and vehicles of Force motors limited the
Company Operates in both the upstream sector and downstream sector. This gives it an
additional advantage to avert potential interruptions in raw material sourcing and
end-products distribution. This strategy is very beneficial in driving margin expansion if
the integrated resources are managed efficiently.
Weaknesses
• The portfolio of the Company is not as diversified as compared to other industry
units. This will effect on financial position of the company.
• Having fewer mines of metal in India leads to price hike of raw material.
Increasing cost will adversely affect profitability.
Opportunities:
With continuous support by the Government towards entrepreneurship (e.g. ease of doing
business), India sees an increasing number of startups and small businesses. With the
advent of SME exchange, it has become easier for SMEs to get listed. Furthermore, the
rising penetration of private equity and venture capital in Indian startups is expected to
result in increased M&As and IPOs.
India is one of the fastest growing markets for metals and still has a low per capita
consumption, with growth opportunities. Further post covid effect on import export from
china in other countries, has open opportunity in local as well as global market.
THREATS:
Despite opportunities, there are significant factors presenting threats to our business
viz:
• Uncertainty and low business confidence due to pandemic Covid-19 will adversely
impact the business.
• Capital Market gets affected by events such as interest rate hikes, monsoon
performance, tax concerns, other global events & domestic political events such as
interim & state elections.
• Continuous downward pressure on the fees and commissions caused by heightened
competition and willingness of most players to deliver services at very lowfees.
• The effect of any of the adverse events on the capital market would pose a
threat for the process of capital formation and resource raising
REVIEW OF OPERATIONS:
The automobile component industry turnover stood at Rs. 4.20 lakh crore (US$ 56.5
billion) between April 2021-March 2022 the industry had revenue growth of 23% as compared
to 2020-21. The turnover of the automotive component industry grew 34.8% to Rs. 2.65 lakh
crore (US$ 33.8 billion) during April-September 2022 compared to the first half of the
previous year.
Domestic OEM supplies contributed ~81.1% to the industrys turnover, followed by
domestic aftermarket (~17.7%) and exports (~1.2%), in FY22. The component sales to OEMs in
the domestic market grew by 46% to US$ 27.27 billion (Rs. 2.23 lakh crore). Between April
2021-March 2022, exports of auto components grew by 42.9% to Rs. 141,550 crore (US$ 19
billion). As per the Automobile Component Manufacturers Association (ACMA) forecast,
automobile component exports from India is expected to reach US$ 30 billion by 2026. In
FY22, Indias auto component Industry for the first time reached a trade surplus of US$
700 million. The aftermarket for auto components grew by 15% in 2021-22 reaching Rs.
74,203 crore (US$ 10.0 billion), up from Rs. 64,524 crore (US$ 8.7 billion) in 2020-21.
Further there has been a similar lack of growth in financial performance of the
subsidiary; Vaksons Metaplast Private Limited (CIN: U37100DL2015PTC278744) However,
considering extremely difficult market conditions it is commendable that these
subsidiaries have not incurred any substantial losses.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has an Internal Control System, commensurate with the size, scale and
complexity of operations. The comprehensive system enables efficient operations, optimal
resource utilization, safeguard of assets and compliance with applicable laws and
regulations. These control measures strengthen the Company and protect it from loss or
unauthorized use of assets by way of adequate checks and balances. The Company authorizes
records and reports all transactions. The scope and authority of the Internal Audit
function is well defined, and an independent firm of Chartered Accountants serves as the
internal auditor to execute the internal audit function. The management and audit
committee of the Board observe and then recommend corrective measures, based on such
audits to improve operations.
RISKS MANAGEMENT:
The Company, like any other enterprise, is exposed to business risk which can be
internal risks as well as external risks. Any unexpected changes in regulatory framework
pertaining to fiscal benefits and other related issues can affect our operations and
profitability. A key factor in determining a Companys capacity to the Company to take
risks and manage them effectively and efficiently. However, the Company is well aware of
the above risks and as part of business strategy has put in a mechanism to ensure that
they are mitigated with timely action.
The Company has an elaborate Risk Management Framework, which is designed to enable
risks to be identified, assessed and mitigated appropriately. The Board of Directors of
the Company has constituted Risk Management committee which has, inter-alia, been
entrusted with the responsibility of overseeing implementation/ monitoring of Risk
Management Plan and Policy; and continually obtaining reasonable assurance from management
that all known and emerging risks have been identified and mitigated or managed. In the
opinion of the Board of Directors, none of these risks affect and/or threaten the
existence of the Company
HUMAN RESOURCES:
Your Company considers its Human Resources as the key to achieve its objectives.
Keeping this in view, your Company takes utmost care to attract and retain quality
employees. The employees are sufficiently empowered and such work environment propels them
to achieve higher levels of performance. The unflinching commitment of the employees is
the driving force behind the Companys vision. Your Company appreciates the spirit of its
dedicated employees.
FUTURE OUTLOOK:
We have entered 2022-23 with a notable momentum, bolstered by a strong financial
position. As we move ahead, we will remain focused on advancing our ambitious plans of
capacity expansion. We will also keep expanding our product portfolio with a focus on
quality. Among all our business verticals, expanding in the electronics vertical will be
one of our major focus areas. Government E-bike policy and promotion for battery vehicles
will open new door for your company with allied auto part sector, we are confident about
gearing up for our long term growth with the right products and well-defined strategies.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The Total Income of the Company stood at Rs. 1933.25 Lakhs for the year ended March 31,
2023 as against Rs. 1599.52 lakhs in the previous year. The Company made a net profit
(after tax) of Rs. 170.02 lakhs for the year ended March 31, 2023 as compared to the Rs.
34.68 lakhs in the previous year. The Revenue from Operations of the company was increased
by 17.27 % over previous year.
The Companys financial performance for the year ended March 31, 2023 is summarized
below.
(Amount in Lakhs)
PARTICULARS |
YEAR ENDED 31.03.2023 |
YEAR ENDED 31.03.2022 |
| I. Net Sales/Income from Operations |
8.97 |
30.87 |
| II. Other Income |
9.53 |
0.00 |
III. Total Revenue (I+II) |
18.51 |
30.87 |
IV. Earnings Before Interest, Taxes, Depreciation and |
0.56 |
5.04 |
Amortization Expense |
|
|
| V. Finance Cost |
0.007 |
1.12 |
| VI. Depreciation and Amortization Expense |
4.82 |
6.34 |
VII. Profit Before Tax (IV-V-VI) |
0.56 |
5.04 |
VIII. Tax Expense: |
|
|
| i. Current Tax Expense |
- |
0.78 |
| ii. Deferred |
0.41 |
0.25 |
IX. Profit After Tax (VII-VIII) |
0.15 |
3.99 |
SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
Sr. No. |
Ratio Analysis |
31-Mar-23 |
Ratio 31-Mar-22 |
Difference |
Reasons for Differences, if Difference is More than 25%. |
| 1 |
Debt Service Coverage Ratio |
0.02 |
0.10 |
-85.11% |
Due to company has repay Debt in current year. |
| 2 |
Trade Receivables Turnover Ratio |
9.14 |
3.91 |
133.61% |
Due to Jump in sales. |
| 3 |
Trade Payables Turnover Ratio |
- |
- |
- |
- |
| 4 |
Net Capital Turnover Ratio |
0.17 |
(0.24) |
-168.86% |
Due to decrease in turnover. |
| 5 |
Net Profit Ratio |
0.01 |
0.13 |
-93.51% |
Decreased due to decrease in revenue from operation |
| 6 |
Return on Equity Ratio |
0 |
0.01 |
-96.12% |
Decreased due to decrease in revenue from operation |
| 7 |
Return on Capital employed |
0 |
0.01 |
-90.66% |
Trade payable for the current period is increased due to increase in new
project and it is observed the respective decrease in trade receivables ratio |
| 8 |
Return on Investment |
- |
- |
- |
NA |
| 9 |
Current Ratio |
2.03 |
0.71 |
184.63% |
Due to increase in current assets |
| 10 |
Debt Equity Ratio |
0.55 |
0.17 |
227.17% |
Increase due to repayment of debts |
| 11 |
Inventory Turnover |
- |
- |
- |
- |
CAUTIONARY STATEMENT
Statements in this Management Discussion and Analysis describing the Companys
objectives, projections, estimates and expectations may be ‘forward looking
statements within the meaning of applicable laws and regulations and based on the fact
that the Resolution Plan for the Company has been implemented. These statements have been
based on current expectations and projections about future events. Wherever possible, all
precautions have been taken to identify such statements by using words such as
‘anticipate, ‘estimate, ‘expect, ‘project, ‘intend,
‘plan, ‘believe and words of similar substance in connection with any
discussion of future performance. Such statements, however, involve known and unknown
risks, significant changes in political and economic environment in India or key markets
abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and
other costs and may cause actual results to differ materially. There is no certainty that
these forward-looking statements will be realised, although due care has been taken in
making these assumptions. There is no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
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