Dear Stakeholders,
I am glad to inform you that FY 2022-23 proved to be another eventful year in the
growth story of MTAR.
The company has clocked highest ever revenues of Rs 5,733.47 Mn FY 2022-23, maintaining
the accelerated growth momentum with 78% YoY increase. We have registered a EBITDA of Rs.
1,539.62 Cr with a margin of 26.85%, Net Profit of Rs. 1,040.75 Mn with a margin of
18.20%. Our closing order book as 31 March 2023 is at Rs. 11,729.46 Mn in line with our
guidance. There was a dip in EBITDA margins compared to the given guidance due to salary
corrections taken up in Q4, which is a one-of-a kind of scenario.
Operational Overview
MTAR has always embraced innovation that fostered the development of new products and
technologies. Continuing the legacy of innovation, we have developed ASP assemblies, a
specialised product and dispatched around Rs. 75 Mn of orders in the year under review.
The company has entered into an MOU framework with ISRO for the development of Small
Satellite Launch Vehicle project powered by Semi Cryogenic Technology with 100-ton engine
in the first stage and 10-ton engine in the second stage. We shall be developing the
engine systems and interstage structures in-house whereas the company has sought the
support of ISRO through IN-SPACe for Avionics. MTAR has roped in some of the eminent
scientists to work on this project. The developmental activity shall take 4-5 years, the
company shall be taking up three developmental flights before a commercial launch
The best part is that we have added new customers such as GE Power, Thales, Collins
Aerospace, GKN Aerospace etc and the company is in discussion with several customers.
Historically, MTAR is known for maintaining long standing relationships with its customers
and the company intends to turn each of the new customer account into key strategic
account going forward that could boost up our revenues significantly.
In Clean Energy - Fuel Cells division, delivered 4545 Yuma units and 138 units of
Electrolyzers in FY 2022-23. We have commenced sheet metal operations this fiscal year and
dispatched around Rs. 311.30 Mn of sheet metal assemblies for Solid Oxide Fuel Cells.
Overall, the company has registered a revenue of Rs. 4,245.60 Mn in Clean Energy- Fuel
Cells including the revenues from sheet metal. The company We have executed Rs. 171.60 Mn
of orders in Hydel sector through our new specialised fabrication facility that shall be
operational in a full-fledged way from FY 2023-24.
While Clean Energy- Civil Nuclear Power accounted for Rs.438.01 Mn of revenues the
company has delivered Rs. 494.05 Mn revenue in Space and MNC Aerospace segment. Our
revenues from Defence stand at Rs. 151.13 Mn and revenues from products & others are
pegged at Rs. 233.08 Mn.
In addition, the company has initiated the qualification process for cable harnessing
assemblies by commissioning our new electronics lab.
We have reduced our NWC to 230 days for the year under review as against 275 days in FY
2021-22. As the global supply chains have streamlined, there was a reduction in our
receivable days due to shorter shipping times. However, there is an increase in our
inventory days as we have procured inventories ahead of time for the development of new
products to ensure a smooth qualification process; we are working on reducing our
inventory days over the coming quarters
The company has on boarded a new COO with immense experience in Clean Energy - Fuel
Cells & Automotive sectors and MTAR is expected to reach new heights under his
leadership.
At MTAR, we strongly believe that effective systems and processes play a vital role in
business decision making and the company has worked on strengthening our systems and
processes further to cater to the significant growth the company is set to witness.
Industry Analysis
Clean Energy - Fuel Cells vertical is expected to grow at a CAGR of 30%- 35% over
the next decade. In the recent past, our customer Bloom Energy has built, installed and
operationalized a 4- megawatt Bloom electrolyzer span of two months is delivering the
equivalent of over 2.4 metric tons per day of hydrogen output, which is a great stride in
the production of green hydrogen.
Electrolyser production is expected to be ramped up over the next couple of years.
We are in discussion with other customers in Fuel Cells, however, their volumes have
not be ramped up yet for a company like MTAR to come into play. As
the pace for decarbonisation picks up, there is an immense potential available for the
solutions in storage systems.
MTAR is currently in advanced stages of discussions with Fluence Energy that is into
battery storage systems.Furthermore, the company has also initiated discussions with
customers that are into Hydrogen Storage Systems. Even revenues from Hydel sector are
projected to be ramped up once our fabrication facility is completely operational.
Clean Energy - Civil Nuclear Power -
There shall be a significant growth in this vertical due to the construction of civil
nuclear reactors on fleet mode. MTAR is anticipating Rs. 5,000 Mn tenders from Kaiga 5
& 6 reactors that shall be outsourced to a private player
Space: We are in the very exciting phase of Indian Space Industry and ISRO holds an
exceptional success rate. ISRO has successfully completed two missions for One-Web by
launching a constellation of 36 satellites in each mission. Indian Space sector that
currently contributes to 2%- 3% of the global space industry is estimated to capture 10%
of the market share of global space economy by 2030, which entails a CAGR of at least
15%-20% over the coming years on a conservative basis. In addition, the company has added
a lot of customers in Aerospace division and is in discussion with several MNC customers
that entails a 45%- 50% YoY growth in revenues from Aerospace vertical.
Defence: The Government of India opened the defence industry for private sector
participation to provide impetus to indigenous manufacturing and this emphasis on the Make
in India is set to generate immense opportunities in Defence. MTAR is in final stages of
getting Defence license; once we obtain the license it enables the company to be a
preferred manufacturing partner for global MNCs that are looking to capture the
opportunity in Defence in India.
Products: Our products basket comprising specialised products such as ball screws,
roller screws, water lubricated bearings, ASP assemblies etc. is set to witness an
exponential growth due to addition of new products consistently. The company targets to
execute around Rs. 1200 Mn - Rs. 1300 Mn orders in products category in FY 2023-24.
FY 2023-24 Outlook
As informed to our shareholders in the past earnings call, we are targeting a revenue
growth of 45% to 50% in FY 2023-24 backed by robust order book with an EBITDA of 28% +/-
100 bps. Based on the visibility on various orders across different sectors, we look
forward to a closing order book of at least Rs. 15,000 Mn by end FY 2023-24. Operating
leverage has enabled to improve our returns; In FY 2022-23, our ROCE stands at 20% as
against 14% in FY 2021-22. Ramping up the sheet metal and specialized fabrication
production is expected to yield better return ratios by end of FY 2023-24.
Strategic Roadmap
At MTAR, we strongly believe that revenue is outcome of the technological developments
we undertake and the products we develop. The company has a clear roadmap to expand its
customer base and enhance the product portfolio that could translate into potential top
line of Rs. 30,000 Mn with healthy margins over the next 5 years. To realise such a
growth, the company shall be undertaking the following initiatives
Development of new products: The company is focusing on expanding its product base
by adding new customers and enhancing its wallet share with the existing customers that is
expected to give us significant growth in revenues over the coming years.
Diversification of Customer Base: MTAR intends to diversify its customer base
further across geographies and sectors. In FY 2022-23 the company has added customers
including GE Power,
Collins Aerospace, Thales etc. We have long-standing relationships with all our
customers and we are a preferred manufacturing partner for their requirements. Our new
customers are expected to turn into key strategic accounts and generate recurring revenues
2-3 years down the line.
Reduction of NWC days: The company has worked on reduction of the net working
capital days from 275 at the end of FY 2021-22 to 230 days at the end of FY 2022-23. We
are working on reducing our NWC days to less than 200 days
by end of FY 2023-24 to increase operational efficiencies. The company aims to
gradually reduce the NWC to 170 days over the next couple of years
Augmentation of Capacities The company has established capacities ahead of time to
cater to the current growth. However, the capacities have to be augmented in bottle neck
areas to address the ramped up volumes. In addition, there could be project specific
investments as and when we foray into new verticals like battery storage systems, energy
storage systems etc. We look forward to grow organically over the next 5 years and the
company intends to maintain healthy debt to equity ratio while funding its growth through
internal accruals and debt.
Talent Management
We believe that our Employees are the backbone of our growth; the company grooms the
manpower in the organisation by training them in cross-functional areas and assigning
challenging projects. We have taken up salary correction in Q4 FY 2022-23 to ensure our
employees are compensated on par with the industry
Sustainability
Even as we chart out our growth strategy, we realise that embracing sustainability is
key to a healthy future for all our stakeholders. ESG has been integral part of our
business decision making since our inception. We have a robust corporate governance
framework where our strategic direction is being driven by an independent director
majority board. We look forward to increase our green product portfolio further by
expanding our presence in Clean Energy sector across geographies
Acknowledgements
Finally, I would like to thank all our stakeholders including our Board of Directors,
employees, customers, suppliers, and investors who extended their immense support to MTAR
and inspired us to strive for greater heights. As informed to our shareholders over the
last couple of years, the company is working towards building a world class institution
with a sustainable growth and health margins over the next 15-20 years
| Srinivas Reddy |
| Managing Director |