The start of the financial year 2021-22 (FY 2022) was once againovershadowed with waves of infection sweeping across the world. The impact of the secondwave was felt in early 2021 as the 'Delta' variant devastated lives across India. Althoughthe disruption to economic activity was less severe than in the first quarter of financialyear 2020-21 (FY 2021) the Delta variant had a woeful impact on lives. After a slowstart the vaccine immunisation programme of the Government of India accelerated and wasexecuted seamlessly. It saved thousands of lives and livelihoods.
The third wave of the pandemic with the 'Omicron' variant spreadrapidly across the world. Fortunately while highly transmissible it was not as lethal asthe 'Delta' variant and the fear of further disruptions to lives and livelihoods soonreceded.
The Indian economy had started to recover in the second half of FY2021.Despite the disruptions caused by the 'Delta' wave it was expected that GDP in FY 2022would surpass the pre-pandemic level of the financial year 2019-20. While this didhappen it was a marginal increase over the pre-pandemic year. Despite the overallincrease there were many sectoral imbalances. The COVID-19 pandemic eventually did resultin the country and we at Alicon losing two years of growth.
More importantly through these disruptions over the last two fiscalyears we continued to prioritise the health and welfare of our people across locationsand ensured adherence to protocols and guidelines across all aspects of operations. Wefirmly lived up to our responsibilities towards our employees and their families vendorsbusiness associates and the communities within which we function. I had shared with you inmy previous years' message that the Indian auto industry was facing a deep structuralslowdown even before the pandemic. The impact of the pandemic induced lockdowns werefurther accentuated in FY 2022 with several challenges that impacted demand and consumersentiment. We termed them as the '6C' challenges: (i) COVID-19-induced disruptions leadingto a slowdown across domestic and international markets; (ii) chip (semiconductor)shortages impacting the production schedules of Original Equipment Manufacturers (OEMs)and resulting in a loss of volumes for the auto industry; (iii) cost-based inflationleading to a sharp rise in vehicle prices by OEMs and affecting consumer purchasing power;(iv) cost of new product development increasing with the demand for complex products forelectric vehicles; (v) disruptions in global auto supply chains impacting productionlevels and (vi) conflict between Russia and Ukraine leading to a chaos in global commodityprices which had a severe impact of global inflation which was already a cause of concern.
The impact of these challenges was felt in the domestic auto industry.While the passenger vehicle commercial vehicle and three-wheeler segments registered animproved performance on a year-on-year basis the sales volume of two-wheelers saw asignificant de-growth amid rising vehicle and fuel costs. Further though the demand anduptake of the commercial vehicles and the passenger vehicle segments remained strongthroughout the year supply-side constraints limited the upside. Overall domesticautomobile sales saw a decline of 6% in FY 2021-22. Globally the 2021 global autoproduction was moderately higher by 1.8% year-on-year driven by US and China numberswhile Europe witnessed a decline.
Effectively manoeuvring through these challenges Alicon delivered anencouraging performance for the full year. Our total revenue increased by 27% from theprevious year. This creditable growth was driven by (i) addition of new customers (ii)addition of new parts from the existing customers (iii) increasing penetration offour-wheelers in our overall revenue mix (iv) increased contribution from the electricvehicle segment and (v) strong exports. Alicon's global auto sales marked a strongincrease of 63% from the previous year on the back of recovering supplies to globalcustomers and deliveries to the new order pipeline.
Despite sustained inflationary pressures our improved product mix andcost optimisation measures helped improve our EBITDA margin to 10.7% as against 10.1% inthe previous year. We also maintained our focus on our leverage and our net debt ratioremains comfortable at 0.58x.
I am also happy to share with you that Alicon has been approved as oneof the beneficiaries of the PLI scheme for automotive components under the ComponentChampion Incentive Scheme which is a sales value link scheme applicable to advancedautomotive technology components of vehicles. It is aimed at fast-tracking the developmentof a green mobility ecosystem in India.
Our endeavours over the last few years to capitalize on our R & Dcapabilities and positioning ourselves as providers of end-to-end solutions to ourcustomers have borne fruits. We also bagged significant order wins for our auto divisionand non-auto division with higher value additions.
Further we are seeing a strong response from the customers forlight-weighting of the products in the auto and electric vehicle (EV) space and remainupbeat about converting these enquiries into sales. We have won several contracts frommultiple existing and new OEMs during the year for electric mobility. The share ofrevenues from EVs standing at 7% of total revenues in FY 2022
The demand momentum in domestic and international markets is steadilypicking up. Global supply chains are showing some signs of stabilisation. However along-drawn conflict between Russia and Ukraine may exacerbate the situation as both thesecountries are key suppliers of components used in semiconductor manufacturing. Furtherlockdowns in China could also trigger shortages of crucial manufacturing components.Meanwhile domestic auto OEMs have commenced sourcing semiconductors from alternatevendors enabling them to mitigate cost pressures to some extent and keep their productiongoing. This provides some cheer for the industry as a whole.
In June 2021 the Indian government announced financial incentives forEV manufacturers under the FAME (Faster Adoption and Manufacturing of Hybrid and ElectricVehicles) Phase II scheme. The government is also accelerating the installation ofelectric charging facilities across the country. In the Union Budget 2022 a batteryswapping policy with inter-operability standards was announced for easier charging of EVs.All these initiatives are expected to speed up EV adoption in the country. A report byIndia Energy Storage Alliance estimated that the EV market in India is likely to increaseat a CAGR of 36% until 2026. We have achieved strong growth in our EV division in justthree years. Our focus remains on capitalising on the unfolding opportunities and scalingup the contribution of our EV division.
On the macro front The Government of India has announced a growthoriented and expansionary budget for FY 2023 with a strong push on investments to lifteconomic growth. The compounded annual growth rate for capital expenditure of FY 2023 overFY 2020 is projected at 28% while revenue expenditure is contained at 12%. It is expectedthat this capex-led policy would take India on a growth path.
The developments on the macro front and the emerging trends in theAutomobile sector augur well for Alicon to capitalize on the opportunities that presentthemselves. We have a growing customer base an excellent product suite strong innovationcapabilities world-class manufacturing facilities an experienced leadership team and arobust balance sheet. While inflationary headwinds persist we expect these conditions tosteadily ease over the medium term.
I would like to take this opportunity to express my sincereappreciation to my fellow Board members and the Management team for their constant supportand guidance. I would also like to extend my heartfelt gratitude to the Alicon team fortheir continued commitment and hard work. Finally my thanks to our customers businessassociates bankers and all stakeholders for reposing their trust in our business. Withyour steadfast support the future journey holds considerable promise and optimism for ourCompany.
Chairman & Managing Director