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.

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.
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.

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