NDR Auto Components Limited: A Detailed Financial Analysis for 2024
1. Financial Statements: A Snapshot of NDR Auto’s Performance
Financial statements are the company’s report card, revealing its financial performance. NDR Auto Components Limited provides three key statements: the Balance Sheet, Income Statement, and Cash Flow Statement. These documents highlight the company’s assets, revenue, expenses, and cash management.
Balance Sheet: Assets, Liabilities, and Equity
The Balance Sheet outlines what NDR Auto owns (assets), what it owes (liabilities), and the value left for shareholders (equity) as of March 31, 2024. Here’s a breakdown:
- Assets:
- Trade Receivables: Increased to ₹8,711.59 lakhs from ₹3,110.06 lakhs in 2023, reflecting higher credit sales, especially to major customers.
- Cash and Cash Equivalents: Rose to ₹2,188.95 lakhs from ₹906.87 lakhs, indicating improved liquidity.
- Corporate Loans: Invested ₹1,700 lakhs, showcasing strategic financial planning.
- Bank Balances: Stood at ₹1,153.71 lakhs, supporting operational needs.
- Liabilities:
- Borrowings: Reported at ₹170.01 lakhs, a manageable level.
- Lease Liabilities: Total ₹2,946.92 lakhs, tied to commercial premises.
- Trade Payables: Increased to ₹10,175.09 lakhs from ₹7,418.70 lakhs, reflecting higher operational activity.
- Adjusted Net Debt-to-Equity Ratio: Improved to 0.04 from 0.10, signaling a stronger financial position.
- Equity:
- Total equity grew to ₹25,354.40 lakhs from ₹21,792.31 lakhs, driven by retained earnings and a bonus share issuance.
Income Statement: Revenue and Profit Growth
The Income Statement details NDR Auto’s revenue, expenses, and profits for the year. Key highlights include:
- Revenue:
- Total revenue from contracts with customers surged to ₹59,777.71 lakhs, a 54% increase from ₹38,754.42 lakhs in 2023.
- Driven by strong demand from original equipment manufacturers (OEMs), with two customers contributing ₹54,964.51 lakhs (over 90% of revenue).
- Other Income:
- Dropped to ₹358.55 lakhs from ₹631.36 lakhs, primarily due to lower sundry liability write-backs.
- Interest income from fixed deposits and corporate loans was ₹226.28 lakhs.
- Expenses:
- Cost of Materials Consumed: Rose to ₹46,641.83 lakhs from ₹29,808.48 lakhs, aligning with increased production.
- Employee Benefits Expenses: Increased to ₹1,700.88 lakhs (up 37% from ₹1,239.04 lakhs) due to higher salaries and welfare costs.
- Depreciation and Amortisation: Grew to ₹1,479.38 lakhs from ₹867.63 lakhs, reflecting investments in new facilities.
- Profit:
- Profit after tax jumped to ₹3,871.27 lakhs from ₹2,810.73 lakhs, a 38% increase.
- Basic and diluted earnings per share (EPS) rose to ₹32.55 from ₹23.63.
Cash Flow Statement: Managing Cash Effectively
The Cash Flow Statement tracks cash inflows and outflows. Key points include:
- Operating Activities:
- Strong cash inflows from higher sales and efficient working capital management.
- Investing Activities:
- Investments in new plants and equipment, reflected in increased depreciation and capital work-in-progress.
- Financing Activities:
- Paid a final dividend of ₹297.32 lakhs for 2023.
- Proposed a dividend of ₹445.97 lakhs (₹3.75 per share) for 2024.
- Secured a ₹2,000 lakhs working capital overdraft facility from HDFC Bank.
2. Management Discussion and Analysis (MD&A): Business Insights and Developments
The MD&A section offers a narrative on NDR Auto’s operations, market environment, and strategic plans, providing context to its financial performance.
Business Overview
NDR Auto Components Limited manufactures auto component parts, primarily for OEMs in India. Key details include:
Manufacturing Facilities:
- Gurugram, Haryana (Plant I: Pioneer Industrial Park, Plant II: Sector 37)
- Bengaluru, Karnataka (Plant III: Harohalli Industrial Area)
- Surenderanagar, Gujarat (Plant IV: Nihon Industrial Park)
Key Customer:
- Bharat Seats Limited, contributing ₹33,009.57 lakhs in sales in 2024.
Business Segment:
- Operates solely in auto component manufacturing, focusing on seating systems and interior components.
Geographical Focus:
- Exclusively serves the Indian market.
New Developments
- Expansion:
- New facility in Gujarat’s Nihon Industrial Park to tap into India’s growing automotive sector.
- Bonus Share Issuance:
- Issued 59,46,326 bonus equity shares (1:1 ratio) in July 2023, increasing paid-up capital to ₹1,189.27 lakhs.
- Revenue Growth:
- 54% increase driven by strong OEM demand, particularly in passenger vehicles.
- Corporate Social Responsibility (CSR):
- Spent ₹35 lakhs on education initiatives, up from ₹15 lakhs in 2023, meeting Companies Act requirements.
Challenges and Risks
- Rising Costs:
- Higher raw material costs and supply chain disruptions were managed through efficient inventory and supplier contracts.
- Income Tax Search:
- Conducted in May 2023, with no demand notice issued; management believes no financial adjustments are needed.
- GST Notice:
- Karnataka GST Authority issued a ₹3,587 lakh notice for alleged misclassification; management contests the claim.
3. Auditor’s Report: A Clean Bill of Health
The Auditor’s Report, prepared by S S Kothari Mehta & Co. LLP, independently verifies NDR Auto’s financial statements. Key points include:
- Unqualified Opinion:
- Financial statements present a true and fair view per Indian Accounting Standards (Ind AS).
- Key Observations:
- Noted the May 2023 Income Tax search but agreed no adjustments are required.
- Accounting software includes a transaction-level audit trail, though not enabled at the database level due to technical constraints.
- GST Issue:
- Referenced the ₹3,587 lakh GST notice; management believes the case is defensible.
4. Notes to the Financial Statements: Digging Deeper
The Notes provide detailed explanations of the financial statements. Key highlights include:
- Revenue and Customers (Note 28.1):
- Single segment: auto component manufacturing.
- Two customers contribute over 90% of revenue, indicating concentration risk but strong OEM ties.
- Employee Benefits (Note 37a):
- Provident fund contributions: ₹58.33 lakhs.
- Gratuity expenses: ₹20.47 lakhs, funded with Life Insurance Corporation of India (obligation: ₹84.53 lakhs).
- Related Party Transactions (Note 37d):
- Sales to Bharat Seats Limited: ₹33,009.57 lakhs.
- Corporate loan to Bharat Seats: ₹1,700 lakhs, at arm’s length terms.
- Leases (Note 37j):
- Lease liabilities: ₹2,946.92 lakhs, with an 8.30% incremental borrowing rate.
- Financial Risk Management (Note 37g):
- Low credit risk due to timely OEM payments.
- Liquidity supported by ₹2,500 lakhs in undrawn credit facilities.
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