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Message From
Chairman

Message

Surinder Paul Kanwar

Chairman & Managing Director

Dear Shareholders,

With great pride and gratitude, I present to you the 52nd Annual Report of Bharat Gears Limited for FY 2023-24. As we navigate this journey together, we remain steadfast with our unwavering commitment to excellence in technology, product innovation, manufacturing,engineering capabilities and customer delight. This dedicated focus will continue to power our vision of profitable and diversified growth and sustain our market leadership.

Economic Landscape

I am delighted to share that, despite navigating through global economic challenges, the Indian economy showcased remarkable resilience, achieving a robust growth of 7.6% in FY 2023-24. This growth was underpinned by broad-based expansion across various sectors, with construction and manufacturing emerging as significant drivers.

India’s continued status as the world’s fastest-growing major economy speaks volumes about our robust domestic demand, supportive government policies and substantial foreign direct investment (FDI) inflows. Amidst global supply chain disruptions, the adoption of the ‘China Plus One’ strategy to reduce dependency on China has gained traction. Our robust manufacturing sector, coupled with strong R&D capabilities and abundant low-cost skilled labour has further positioned India as an attractive manufacturing destination

Despite rising inflation, the Reserve Bank of India (RBI) maintained stability by opting to keep repo rates unchanged. Though challenges like underperformance in the agriculture and allied sectors are a key concern, they are being actively monitored and addressed.

WE are continuously expanding our product portfolio and technological capacities and capabilities to achieve operational excellence and drive market share gains across all our segments.

Additionally, the government’s allocation of significant capital expenditure for infrastructure projects in FY 2024-25 interim budget, alongside initiatives like simplified trade policies, the Make in India campaign and increased digitalisation are all poised to drive economic growth and development. Furthermore, with the general election results announced, India’s economic fundamentals remain robust, with the new government expected to continue the pace of governance and administration reforms.

Industry Scenario

Against the backdrop of robust economic growth, the Indian Automobile Industry achieved an impressive growth of 12.5% in the fiscal year, driven by a burgeoning middle class, increased disposable incomes, evolving consumer preferences and enhanced infrastructure. Notably, substantial growth was witnessed across various segments, with Passenger vehicles leading the growth, followed by robust performance in the 2W and 3W segments, albeit marginal CV segment growth.

While the tractor segment faced a decline due to agricultural slowdown and erratic rainfall, we anticipate a resurgence in the segment backed by the imperative need for enhanced food production and adoption of technology, coupled with farmed backed initiatives like Pradhan Mantri Kisan Samman Nidhi (PM-KISAN). Moreover, the automobile sector showcased its commitment to sustainability and eco-friendly solutions, with a surge in the production of environmentally compliant vehicles and significant growth of 90% in Electric Passenger Vehicles and 30% in Electric Two-Wheelers.

Supported by favourable government schemes like the Production-Linked Incentive (PLI) Scheme and Advance Authorisation and Export Promotion Capital Goods Scheme, along with a promising monsoon outlook, the industry remains optimistic about continued growth in FY 2024-25.

FY 2023-24 Performance

During FY 2023-24, your Company reported revenue from operations at ` 66,305 Lakhs vis-à-vis ` 76,636 Lakhs reported in FY 2022-23. Owing to the headwinds in the tractor segment – our largest customer segment, we witnessed a sales decline of approximately 13.48% in FY 2023-24 compared to the previous year. Additionally, the global Agriculture Tractor Market has suffered large drop. BGL being market leader in Exports of Tractor Gears for European and American market suffered revenue loss.

Despite this, our strategic focus on diversifying the customer base resulted in significant value order acquisitions across all business segments in the fiscal year.

Our EBITDA stood at ` 2,716 Lakhs in FY 2023-24 against ` 5,475 Lakhs in FY 2022-23. The sharp drop in EBITDA resulted from decreased volumes, leading to under absorption of fixed costs. Your Company promptly reacted to this drop in demand by implementing significant cost reduction measures such as Plant shut down for a week, lower running of shifts and stopping all discretionary expenses.

Your Company has embarked upon a journey of rigorous efficienc improvement in all aspects, with an aim to further improve the bottom line, with the full impact of such actions to be realised in subsequent periods.

Strategic Priorities

In the dynamic landscape of the automotive industry, your Company continued to be a frontrunner, driving innovation and excellence. We sustained growth by expanding our capabilities, investing in cutting-edge technologies, ensuring cost efficiency and adapting industry trends.

Our commitment to customer-centricity propelled us to diversify our customer base across segments and regions, strengthening partnerships with key OEMs and expanding into emerging sectors like electric and hybrid vehicles.

Continuously reinforcing our technology leadership, we invested in new technologies such as bevel gear grinding and gear honing, setting new benchmarks, leveraging our technical expertise and robust R&D competency to handle complex product development with the latest technologies. Focussing on the next level of growth, we extended our innovation focus to aftermarket offerings, with plans to introduce new products in a phased manner while prioritising forward integration in Sub-assemblies business, enhancing our technical superiority and competitive advantage.

Our Capex investments were directed towards new technologies, quality enhancement and automation, particularly for investing in robotic lines for hybrid vehicles and advanced gear grinding technology.

We made significant strides in driving efficiency and sharpening our competitive edge by optimising costs, particularly focussing on variable costs and asset utilisation alongside revamping our order sourcing model. Furthermore, our commitment to quality led us to improve machine capability to support Built in Quality (BIQ) standards through retrofitting and refurbishing machines. Our focus on reducing manpower by eliminating machinery led to enhanced productivity and operational efficiency at all our plants.

With a keen focus on future trends such as EVs, we ventured into hybrid and EV segments, leveraging our technical expertise and market insight to sustain our leadership position and remain at the forefront of innovation in the automobile ecosystem

Outlook

Despite potential challenges, I am thrilled to convey that the macroeconomic outlook appears promising.

Brimming with confidence, your Company eagerly anticipates the future, with vigour and optimism. Staying attuned to market dynamics and the Industry 4.0 agenda, we remain dedicated to powering progress and delivering cutting-edge sustainable clean mobility solutions. Our commitment to relentless innovation is evident in our robust next-generation product development, integration of new technologies, implementation of BIQ measures and expanding capabilities to drive operational efficiency and maintain market leadership. Furthermore, we are aggressively pursuing order acquisition across various segments for both domestic and global markets, aiming to expand our customer and market reach.

In conclusion, I extend my heartfelt gratitude to all shareholders, the Board, our management team, business partners, customers, employees and all other stakeholders for their unwavering support and trust in our capabilities to consistently deliver enduring value.

As we reaffirm our commitment to profitable growth, let’s remain vigilant, agile and poised to seize opportunities in this dynamic landscape, towards a more sustainable future.

Warm Regards,

Surinder Paul Kanwar
Chairman & Managing Director

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