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Our Consistent Focus Is On 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.
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Dear Shareholders,
I hope this letter finds you and your loved ones healthy and safe. This year was certainly challenging but it saw us proving our mettle once more. The pandemic induced disruptions have compelled businesses worldwide to rethink their strategies and change the course of actions.
The impact of the COVID-19 crisis on the global as well as domestic economy has been unprecedented and largely disruptive. Overall business environment remained muted with demand slackening in almost all sectors. However, the second half of the year saw a quicker and
remarkable recovery due to unlocking of restrictions, pick-up in economic activity, favorable government reforms, and mass disbursement of vaccine to halt the
spread of the virus. A rebound in the industrial activity, rising production and consumption, higher goods and services tax revenue collections and improvement in
the availability of finance have added buoyancy in the economic activity. Uncertainty about the third wave of coronavirus infections along with subsequent
restrictions may derail the economic recovery.
The Indian automotive industry is the pillar of the
manufacturing sector. The COVID-19 pandemic and the
strict lockdown measures put brakes on the growth of
the industry, with sales declining across all categories.
Already battered by a prolonged slowdown before the
pandemic due to factors such as regulatory changes and
migration to BS-VI emission norms, liquidity constraints,
and weaker demand environment; the sector now
seems to be showing signs of recovery.
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While the first quarter of the year was significantly
stressed, with unlocking of the economy, the consumer
sentiment revived, and sales of vehicles witnessed
improvement in the second half. Strong rural demand,
preference for personal mobility, new product launches,
and availability of finance have lent momentum to the
industry and are indicators of buoyant demand. Recovery
from the COVID-19 crisis has created a unique situation
in which automakers will reinvent their strategies and
emerge stronger, both within India and globally.
Through this period of economic uncertainty, we remained
committed to demonstrating resilience- strengthening
our capabilities and setting ourselves on a firm footing for
sustainable value creation and growth.
Our Performance
Operations of the Company were affected in the initial
months of the financial year because of nationwide
lockdown implemented by Government of India to curb
the spread of COVID-19 pandemic. Post lockdown offtake
from customers has been robust. As a result, overall sales
volume showed an upward trajectory on the back of
strong demand from OEMs. Revenue from operations for
the year has increased to ` 504.40 crores from ` 468.00
crores by 8% in comparison to the corresponding year.
Operations for FY21 resulted in EBITDA of ` 37.17 crores
vis-à-vis an EBIDTA of ` 23.51 crores for FY20. The
improvement is largely on account of increase in
contribution due to higher volumes. This was partially
set-off by higher incidence of premium freight.
Battling COVID-19 crisis
Our operations were severely impacted by the pandemic which resulted in an interruption to the production due
to the shutdown of our facilities and offices. During the lockdown, we had been monitoring the situation closely and were in constant touch with our suppliers, vendors,
and customers to ensure their demands are met. However, labour availability began increasing quickly once the lockdown was eased, and further, by May 2020, majority
of our operations had seen resumption of activity.
As a responsible organization, we stepped up and
ensured utmost safety of our people and surroundings.
We have been disseminating vital information on the
pandemic and ensuring adherence to the best health and
hygiene practices at our plants and offices. We provided
adequate systems to our employees so that they can
operate smoothly out of their homes, thus ensuring
business continuity.
Strengthening Capabilities
Our journey over the past decade has been about
investing in the future and capability enhancement
while simultaneously strengthening the balance sheet.
We have the same focus today - accelerating innovation
and leveraging technology to offer niche products and
solutions to diverse industries and OEMs globally.
Every crisis also presents a unique opportunity to improve
things internally. Keeping this in mind, we have effectively
managed this downturn and emerged stronger than
before. We have halted new capex. As we have built
sufficient capacity, our focus is on effectively filling the
capacity to develop new products and fulfill customer
requirements.
We have also undertaken multiple cost reduction exercises
across the organization. This, we expect, will result in
significant cost optimization and improvement in margins
and profitability. On the other hand, our focus on R&D
investment and portfolio expansion remains undeterred.
We, at Bharat Gears, are systematically digitizing our
operations and enhancing our manufacturing capabilities
to improve operational efficiencies. Our consistent
focus is on 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 key focus areas for us. Through retrofitting and
refurbishing of machines, we aim to continuously
enhance our productivity and efficiency.
At the same time, we are leveraging our relationships
with existing customers in India and overseas to increase
our product range with each of the customers. We are
also engaging with newer customers to strengthen our
presence and market share. Strong technical capabilities and vast expertise have made us a highly endorsed partner
in the automotive industry.
What is even more interesting is that we are constantly
at the lookout to include new and innovative products
to keep up with the customer trends. We are eyeing
opportunities in laser hydraulic parts and components for
passenger cars as well as tapping the replacement market.
Another important focus area for us is to capitalize on the
opportunities emerging from electric and hybrid vehicles
by leveraging our domain expertise. E-mobility is a mega
trend and the future of the automobile industry. With
the evolving norms in the backdrop coupled with the fact
that India is amongst the world’s fastest growing market
for automobiles, we foresee tremendous opportunities in
this space. The current situation is expected to accelerate
the rate of adoption of electric vehicles in the medium
term as customers look for environment-friendly and costeffective
mobility solutions.
Business Outlook
The outlook for the economy seems favourable with
revival in consumer sentiment, strong policy support
and positive vaccination drives. The recently announced
national budget has rightly focused on some of the key
elements that will be foundational for charting India’s
growth pathway. Special focus and fund allocation
for infrastructure in rural areas; digitization across the
agriculture value chain; improvement of healthcare
outcomes; vehicle scrappage policy – are all expected to
pump-prime the economy, along with agriculture and
construction sectors.
We constantly strive to innovate to optimise the product
portfolio, while strengthening manufacturing capabilities
and keeping pace with technological developments.
Equipped with strong fundamentals and technological
expertise, we are well-placed to capture the emerging
opportunities and drive sustained growth.
Conclusion
I take this opportunity to express my sincerest gratitude
to our employees, customers, partners, business associates
and all our stakeholders for their unwavering trust and
support. We continue to drive consistent value for our
stakeholders and scale new echelons of success.
Warm Regards,
Surinder Paul Kanwar
Chairman & Managing Director |
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