Today, we are the preferred supplier of automotive gears to a wide range of industries and leading OEMs across the world. Our diverse product basket, technology competence, talented team and zeal to make a difference for our customers give us the confidence of embracing the headwinds and moving ahead.

Dear Shareholders,
It is my privilege to present to you the Annual Report of your Company for FY 2019-20 and share the key highlights and the strategic roadmap going forward. As a Company, we have always strived to better our performance by continually deepening our domain expertise, strengthening capabilities and expanding our product portfolio. Also, our unwavering focus on technology and R&D has made us a highly trusted partner for leading global companies.

MACRO-ECONOMIC SCENARIO
In global macro-economic terms, 2019 was a challenging year. Factors including concerns over trade wars, geopolitical tensions, tight financial conditions and macroeconomic strain in several emerging economies weighed down the outlook. The widespread outbreak of COVID-19 pandemic in the fourth quarter of FY 2020 forced the entire world into a lockdown and has inflicted a global economic recession. Societies, business and economies have all suffered as people have sequestered themselves from others to prevent the spread of the virus.

In India, slowdown in consumption, decline in private investment and liquidity constraints in the non-banking finance sector combined with global trade slowdown compressed growth. Stringent restrictions imposed to curtail the spread of the virus and the subsequent nationwide lockdown have disrupted livelihoods, supply chains and overall economic activity in the country. The crisis has dimmed the growth outlook for the global economy for the coming year, including for India.

SUPPORT MEASURES
A series of stimulus packages have been enforced by major economies and financial institutions to limit the economic fallout from the global pandemic. Particularly, in India, a mammoth ₹ 20 lakh crores economic package has been announced under the 'Atmanirbhar Bharat Abhiyan' to help the economy tide over the crisis. Being one of the biggest relief packages, it focusses on making India self-reliant and places special emphasis on medium and small businesses, agriculture, labourers, urban and rural poor. Along with this, the Reserve Bank of India (RBI) has also announced a couple of measures including rate cuts, loan repayment moratorium, additional liquidity support etc. to maintain financial stability.

INDUSTRY REVIEW
The automotive sector is one of India's core industry and plays a vital role in the growth of the Indian economy. Increasing consumption demand, mass urbanisation, burgeoning working population and easy accessibility of finance are the key drivers for growth of this industry. However, the sector witnessed some challenges during the year due to overall economic slowdown, credit crunch, low consumer spending, higher purchase costs and transition to newer emission standards.

Further, the rapid spread of COVID-19 pandemic has significantly impacted the automotive sector in India. Economic slowdown, supply chain disruptions and shutdown of manufacturing units have crippled production and import of automotive components. Further, consumer sentiment is seen plummeting on account of growing uncertainty surrounding the pandemic. On the positive side, however, the Indian auto component industry could emerge as an alternative source of supply for key markets.

GROWTH PROSPECTS
India is fast emerging global hub for automobile and automotive component manufacturing owing to its costeffective manufacturing, availability of skilled labour and raw materials and being geographically closer to key automotive markets. Growth in commercial vehicles is expected to pick up, driven by increased infrastructure spending, proposed vehicle scrappage policy and fleet replacement demand. Government's ambitious infrastructure programmes and fast-tracking of ongoing projects will contribute to demand growth of construction equipment.

PERFORMANCE REVIEW FOR THE YEAR
FY 2019-20 was a challenging year for your Company. During the year, our gross revenue fell ₹ 131.15 crores to ₹ 468.00 crores from ₹ 599.15 crores in the previous year. There is a net loss of ₹ 18.78 crores as compared to net profit of ₹ 12.53 crores in FY 2018-19.

The gears business saw a slump of ₹ 115.95 crores to ₹ 408.04 crores, down from ₹ 523.99 crores in FY 2018-19.

Even though our results were affected by external conditions, we did not pause in our commitment to invest in our business. This ensures that we are strongly positioned to strengthen our business over the coming years and move to a high growth trajectory.

STRENGTHENING DYNAMICS
Over the years, we have worked hard to maintain our position as one of the prominent industry leaders. Today, we are the preferred supplier of automotive gears to a wide range of industries and leading OEMs across the world. Our diverse product basket, technology competence, talented team and zeal to make a difference for our customers give us the confidence of embracing the headwinds and moving ahead.

Innovation is a key differentiator for us. We have always strived to derive an edge by enhancing our manufacturing capabilities and creating technological breakthroughs for our customers. In line with this strategy, we continue to leverage our existing competencies in technology and engineering to explore new growth opportunities. Technology upgradation and process innovations are the major focus areas for your Company. Through retrofitting and refurbishing of machines, we aim to continuously enhance our productivity and efficiency.

Robotics in furnace division, highly automated operations and installation of finest equipment and machinery are some of the other salient highlights. I believe that these will contribute towards cost reduction, productivity improvement, new product development, quality enhancement and faster time-to-market.

Having incurred significant investments over the last two years, we are controlling our capital expenditure spends. We continue to pursue with consolidation of capex and modernisation of existing capacities, with a strategic focus on cost controls and increasing margins.

ACCELERATING PORTFOLIO EXPANSION
We are expanding our business to include new and innovative market leading products that are aligned with customer needs. Our product mix comprises a range of gears and shafts, along with spiral bevel gears and differential gears. We have also developed multiple CW&P ratios for a new HCV model for one of our major customer. You would be delighted to know that your Company is also exploring opportunities in laser hydraulic parts and components for passenger cars. This will help us to attract new business opportunities and grow our portfolio.

EXPANDING CUSTOMER BASE
We are working towards increasing our customer base by way of tapping newer segments and strengthening our export business, particularly in North American and European markets. We continue to focus on reducing our dependence on agricultural segment and increase volumes in automotive and construction equipment industries. Our aim is to minimise the risk of segment concentration. With the replacement market continuing to show abundant opportunities, we intend to bolster our share in the aftermarket segment.

At the same time, we are augmenting our global footprint across major markets of North America and Europe. Our endeavour is to become a global player with presence across countries and growing our domestic business. I am quite confident that our team has the will and the skills to drive our business forward.

BUSINESS OUTLOOK
Though the short-term economic outlook may appear gloomier in the wake of the pandemic, government stimulus package and gradual resumption of economic activities are expected to revive consumer sentiment. Sustained spending on infrastructure and thrust on domestic manufacturing will lead to a rise in business activity. Measures such as reduced tax rates for individuals and greater allocations to agriculture and allied sectors will invigorate consumption and boost the rural economy.

With the rapidly changing landscape in the automotive market, it is exciting to see what opportunities it holds for the business. Electric vehicles and stricter emission norms are the trends shaping the direction of the industry. Extensive R&D will be required to bring the right technology solution. This will involve huge investments in people, products, capital, technology and newer markets. For us, this scale of change is a boost to our growth strategy. Further, there is a positive focus towards agriculture and infrastructure segments, which will benefit the respective business divisions and drive momentum for your Company.

As we prepare ourselves for the next phase of growth, we are taking strategic steps to achieve strength and scale. We are leveraging pioneer technologies, maximising operational efficiencies, developing world-class products to expand presence, reducing costs and enhancing equipment efficiency to achieve economies of scale. We are progressing with our focus on tomorrow's need while gearing up for it today.

ACKNOWLEDGEMENT
I would like to extend my sincerest gratitude to our employees, customers, partners, business associates and our stakeholders for their undying faith and support. Each one has been a part of our exciting and enriching journey. We continue to seek value creation for our stakeholders and persevere in building a sustainable business. Here is hoping for a brighter and stronger future together.


Warm Regards,


Surinder Paul Kanwar
Chairman & Managing Director