The world has changed drastically with the coronavirus pandemic. This is an extremeevent one for which there is no precedence. Rane Engine Valve Limited (REVL)started experiencing the adverse impact of the pandemic from March 2020 with theGovernment announcing lockdown to contain the spread of coronavirus. This came after sixquarters of decline in the automotive market which created an even more challengingbusiness environment. Even with the lockdown eased in various parts of the country itwill take considerable time before normalcy returns.
I would like to share details around the Company's performance in FY2020 and theoutlook for the business in these unprecedented times.
The global economy grew at a slower pace in 2019 compared to 2018. There was increaseduncertainty driven by rapid shifts in trade policies and resulted in deterioratingbusiness confidence and dampened investment growth across most regions. The Indian GDPgrowth dipped to 4.2% in FY20 significantly slower than 6.8% in FY19. This slowdown isattributable to credit squeeze negatively impacting consumption investments and exports.The manufacturing sector remained flat in FY20. The Indian automobile industry faced majorheadwinds caused by global factors and rapid policy changes which made transition verydifficult. An example was limited time given for transitioning to BS6. During the fiscalyear the demand environment remained severely impacted by slowdown in the economy.
REVL continued to improve productivity and quality during the year despite drop incapacity utilization. REVL continued the good performance on customer quality pursuedproactive R&D engagements to align technology development and won new businesses.Total Quality Management (TQM) principles continued to rule as a basic mantra and enhancedBusiness Excellence Model' helping the company become a Great Place To WorkCertified Company and win several accolades. REVL's sales declined 15.7% due to drop indomestic and export volumes. EBITDA declined 33.2% due to steep drop in volume. EngineValve business has some high fixed costs due to legacy. While in last few years actionshave been taken to correct this such a drop in volumes could not be remedied in the shortrun. This was partially mitigated by operational performance improvement and favourableraw material price.
Covid-19 is significantly impacting the performance of FY21 and the Company is workingon various cost savings initiatives to reduce the impact. These measures are targeted atimproving productivity optimizing manufacturing cost and includes management staff takingsalary reductions ranging from 10% to 35% from Junior to Senior levels.
The Covid-19 pandemic has significantly affected the business and disrupted theturnaround efforts. An excellent dedicated and professional team of employees continue todrive forward the Company's efforts on winning new orders and improving the operationalperformance and examining options to expedite the improvement. I appreciate your patienceand faith in us. On behalf of the entire Board of Rane Engine Valve Limited I would liketo thank all our stakeholders Customers Employees Vendors Investors BankersGovernment and most importantly our shareholders who have conferred immense confidencein us throughout this long journey.