I am pleased to write this message to you in the 34th year of the Company. In an era ofglobal uncertainties your Company continued to pursue its core values of excellenceintegrity commitment and transparency that guide our business conduct and underpin all ofour operations.
As the last financial year unfolded it brought with it several surprises that not onlychanged the global political and business landscapesignificantly a new threat to humanity.It has been more than three quarters since we began discussing the COVID-19 pandemic it'sspread at a global level and the extent of its grave impact. Most of the countriesincluding India went for a complete lockdown for early two to three months which explainsthe seriousness of the issue. All of us have been worrying about the growing numbers ofmortalities and crave for a solution through development of a vaccine apart from theusual instructions to stay safe.
Available economic data forecasts indicate an unprecedented decline in global activitydue to the COVID-19 pandemic. Figures released recently suggest even deeper downturns thanpreviously projected for all economies. At the same time commencement of unlocking andeasing of restrictions by the government has paved the way for self-restrictionself-regulation with increased responsibility on every single person to protecthimself/herself and those close to us while keeping economic activities operational. Whilethe situations prior to the spread of the pandemic across the globe were not favourableeither yet the spread of COVID-19 as global issue has not only impacted the liveslifestyles and social structures but also significantly impacted the economic framework.It is difficult to predict when the pandemic will end; hence the various economies willtake even longer to find their way along with getting back to a normal life. The Indianscenario is not any different. Even with all the relief packages and relaxations thesetback back to the economy is so significant its own time to recover.
The global economy continues to struggle; all economies across continents remain instress due to the economic slowdown. In line with what is happening around the world FY20 has been a disappointing year for the Indian economy also with GDP growth coming downto just 4.2 %. In FY 21 all estimates indicate that the GDP growth will be negative witha return to growth only in FY 22.
Global and Domestic Economic Affairs
The world economy has experienced significant volatility in the past few years and theperiod under review continued to be challenging due to numerous macro-economic factorssome of which are briefly discussed in my message. The last year and the present one hasperhaps been the most tumultuous in terms of global affairs with growth getting impactedby heightened uncertainties. The USA UK Japan and other developed countries registeredminimal growth despite expectations of improved economic activity. World economic growthin 2019 was just 2.8% due to the slowdown in global trade caused by both economic andpolitical factors. Emerging and developing economies growth are constrained by sluggishinvestment and risks are tilted to the downside. These risks include rising tradebarriers renewed financial stress currency depreciations as well as sharper slowdowns inseveral major economies. Growth in emerging markets and developing economies are expectedto stabilize in
2021 as some countries are still to move past periods of financial strain due to theglobal pandemic and other legacy issues. In the era of COVID-19 economists warn thatfurther escalation of trade wars and tension between China and US could slow global growthto a crawl. A full-blown trade war will damage both economies and spill over to otherregions including India South Korea Japan and Europe.
Geopolitical tensions are rising which will result in further trade imbalances.Clashes between Chinese and Indian troops over their disputed border in the Himalayas haveresulted in fatalities.
American officials have increased their criticisms of China's actions in the SouthChina Sea calling Beijing's claims to the disputed waters and taking control on HongKong's sovereignty completely unlawful.
There is a higher-than-usual degree of uncertainty around any forecast. The baselineprojection rests on key assumptions about the fallout from the pandemic. In economies withdeclining infection rates the slower recovery path is visible. For economies strugglingto control infection rates a lengthier lockdown will inflict an additional toll on allhuman activities. To summarise the
COVID-19 pandemic has had a more negative impact on activity in the first half of 2020than anticipated earlier and the projected to be slower than expected as the pandemic isnowhere under control. The adverse impact on low-income households is particularly acute.In view of this global growth is expected to be negative for sure this year as per theWEO which projects it at () 6.2%. Some stability is expected in 2021 supported bythe discovery of a vaccine easing of lockdowns improved market sentiments accommodativefinancial conditions and the return of domestic and international confidence.
Despite the above and headwinds from almost two years India is still enjoying thefastest growing economy tag. Indian GDP represents 2.4% of world's GDP. However India'sgross domestic product (GDP) is estimated to have slowed to a decade low of
I had raised a point of concern in my previous messages regarding the financial crisisin our economy; higher NPAs financial crunch liquidity problems rose to a new level asthe banks especially PSBs and NBFCs went into a high risk assessment mode and werereluctant to provide financial support at a reasonable cost to even well managedcompanies. The challenge before the Government is now that it will be required to findimpact of higher prices for certain essential commodities and relieve the burdenespecially on the poorer sections of the population to try and revive demand.
The rupee has hit historic lows against the dollar in recent times leading towidespread expressions of concern about what that means for the Indian balance of paymentsand the economy more generally. The consequences of rupee depreciation need to be thoughtthrough carefully as this might hamper the growth recovery in short and medium term. Theonly good news is that
India's current account deficit in FY 21 is estimated to be marginal orperhaps evenpositive due to the significant costs.
In view of the adverse circumstances various agencies have forecasted that the IndianEconomy is expected to contract by 8% to 14% in FY 21 and then grow by 5.0% in thefollowing year as economic activity normalizes gradually. The Prime Minister of India laiddown the target of making India a $5 trillion economy by 2024-25 something thatstimulated debate and discussion among economists and policymakers who sought roadmaps toattain this optimistic economic goal. However in present situation the discussion garnersmore significance and it seems that Indian economy may attain the $5 trillion mark onlyby 2027-28 due to the setback caused by the global pandemic. The long-term growthprospects of the Indian economy remain positive due to its young population the variousreforms being introduced by the government in various sectors including the AtmaNirbhar" campaign launched by the government. Improved business processes also make adifference for doing business in
India. India is now at the 63rd position as per World Bank's Ease of Doing Businessrankings. Similarly India's Balance of Payments position improved and now the forexreserve is US$ 538 billion as of second week of August 2020.
Fiscal Policies Going Forward
As the great lockdown begins to ease in several parts of the world fiscalpolicies havecome in to picture balancing the need to protect people stabilize demand and facilitaterecovery. Where the pandemic remains acute and stringent lockdowns continue fiscalpolicies have accommodated health care services to save lives. The objective of policiesis to save jobs provide employment and facilitate structural shifts in labor markets fora more resilient post COVID-19 economy.
Giving thought to the above principle more than two-thirds of governments across theworld have scaled up their fiscal to mitigate the economic fallout from the pandemic andthe stringent lockdowns as growth is revised further downwards. These measures have helpedsave lives protect livelihoods and preserve employment and business relations. Announcedfiscal measures are now estimated at near $12 trillion globally. One-half of thesemeasures are additional spending and forgone revenue directly affecting governmentbudgets. The remaining is liquidity support such as loans equity injections andguarantees including through state-owned banks and enterprises which help maintaincashflows and limit bankruptcies.
In May the Prime Minister announced a special economic package of Rs 20 lakh crore(equivalent to 10% of India's GDP) and the Atma Nirbhar Bharat' scheme with the aimof making the country independent against the tough competition in the global supply chainand to help in empowering the poor labourers migrants who have been adversely affectedby COVID. Following this announcement the Finance Minister announced the detailedmeasures under various economic packages.
The RBI Governor also underlined five positive shifts that are underway which willshape the future of the Indian economy leverage its strengths and position it as a leaderin the global growth.
The five areas are the farm sector global value chains information ways to offsetthe inflationary and communication technology (ICT) renewable energy and infrastructure.He also stated the need for both the private and public sector to play an important rolein the path to recovery.
Indian Automotive Sector and Future Outlook
The automotive industry makes a significant contribution to the global economy.Overall the industry's annual turnover is equivalent to the world's sixth largesteconomy. In 2019 global direct employment in the industry was estimated at nearly 16.5million workers. The industry has had a roller coaster journey; it recovered from the2008-09 global financial crisis enjoyed a boom in 2015 to 2017 and now it is once againfaced with great uncertainty. The industry was the first hit since the global pandemicbegan in China and the impact of COVID-19 has since become severe in all parts of theworld.
The automotive industry is facing a sharp drop in demand and investment. It is alsostruggling with an abrupt and widespread stoppage of economic activity as workers aretold to stay at home supply chains grind to a halt and factories close. Restrictions onthe movement of people and the sudden stoppage of economic activity are expected to causea severe contraction in sectoral output and GDP. It is estimated that factory closures inEurope and North America alone have caused some 2.5 million passenger vehicles to beremoved from production schedules at a cost of US$77.7 billion in lost revenue forautomotive and parts manufacturing companies.
India is one of the most promising global automotive markets and the size of India'sauto component industry is $57 billion. The Indian automobile market made its mark in theworld by manufacturing quality products at competitive prices. Similarly the Indian autocomponent industry has the potential to become one of the high growth industries in theworld if it receives the rightsupport and incentives. Seen as a significant in the globalautomotive supply chain India is a supplier of a range of high-value and criticalautomobile components to almost all global automobile manufacturers. The high quality lowpriced engine parts transmission parts brake systems and other components made in Indiaare amongst the worlds' favorite. Indian industry has been facing many challenges inrecent past including one for the auto sector on account of various regulatory changesespecially the transition from BS-IV to BS-VI and CAFE regulations. The uncertainty isfurther compounded by lower consumer sentiments resulting in inventory build-up and allOEMs are constantly realigning production in line with demand. Also shared mobilityelectric vehicles (EV) are being promoted by the Government which poses a threat toexisting production lines in the auto sector. The impact of COVID-19 was also felt in thelast quarter of FY 20 when the operations were stalled due to lockdown 1.0.
As such the automotive industry under performed in FY 20; as I explained in previousmessages not only the Indian auto industry but the entire industry at the world levelneeds to prepare itself for a paradigm shift and be agile and flexible to face growinguncertainities in various spheres. The industry is at an inflectionpoint where bothopportunities and challenges abound in equal measure and will shape the direction offuture events in the industry. According to the data released by SIAM in FY 20 theindustry manufactured a total 26362284 vehicles including passenger vehiclescommercial vehicles three wheelers two wheelers and quadricycles recording a decline of14.73 % over the previous year (30914874 vehicles). The production trends reveal thatthere is negative growth in all categories from passenger vehicles commercial vehicles totwo wheelers. In terms of sales the domestic Industry sold a total 21548494vehicles in FY 20; out of this passenger vehicles declined by
17.82% (2775679 vehicles). Also in commercial vehicle there is a degrowth by 28.75%(717688 vehicles). Scooters/ Scooterette sales declined by 16.94% while all timefavorite Motorcycles and Mopeds also registered a negative growth of 17.53% (11214640vehicles) and 27.64% (636940 vehicles) respectively taking the total two wheeler salesdecline to 17.76% (17417616 vehicles) for the year. Overall three wheelers sales alsoregistered a decline of 9.19% (636569 units) while Passenger Carrier sales decreased by8.28% (525015 units).
The sector's exports were almost flat automobile exports increasing by only 2.95%(4765754 vehicles). Passenger vehicles exports increased by 0.17% (677311 vehicles)however commercial vehicles exports registered a decline of 39.25% (60713 vehicles). Theexports of three wheelers declined by 11.54% but export of two wheelers recorded anincrease of 7.30% (3520376 Vehicles).
Since coming to power for the second term the Government's main concern has been therevival of growth in the Indian economy and crucially enough it has chosen to give theindustrial sector a structural push to achieve its goal. The Government's dream Makein India' initiative which intends to make manufacturing the engine of growth and alsogenerate employment is still to take full shape. Under this initiative there isincreased focus on new processes new infrastructure new sectors and creating a newmindset in order to increase the share of manufacturing in GDP to 25% from the current17%. The focus of Make in India Program is on 25 sectors out of which one of the importantsectors is Automobiles.
Company Performance and Strategy
The performance of your Company was in line with the industry performance in the yeargone by. As expected sales and profits were down however we were still able to showprofits mainly due to our operational excellency. To make up the gap your Company inaddition to tapping new markets will leverage its position by building its relationshipswith its existing and new customers and focus on product development. Some new productsare also under development in the field with the Company's expertise in gear &transmission manufacturing. The Company continues to focus on cost reduction efforts andmake improvements in operational efficiencies as well as value engineering activities toimprove margins. Additionally your company has made its mark as a leader of sustainablemanufacturing. Our state-of the-art plants In Bhiwadi and Manesar are capable ofmanufacturing world class equipment.
To summarise the financial results for the year FY 2020 the standalone turnover of theCompany decreased by 21.29% and touched Rs. 5155.28 million. As a result of the lowertopline the standalone profit before tax stood at Rs 153.02 million. After consolidatingthe financials of the Company with its subsidiaries the consolidated turnover registereda degrowth at 21.19% and stood at Rs. 7334.94 million. Despite the lower profits theCompany still chose to share the profits by declaring an interim dividend of 15 % for theFY 20. In FY 20 the Company had an export income of INR 1334.44 million (standalone)which decreased by 30.21% over the previous year due to obvious reasons explained in thismessage. The export programs are also expected to gain momentum in coming years. Goingforward the overall focus will continue to be on manufacturing excellence and quality atoptimum costs.
We have enough experience in our portfolio as manufacturers and suppliers of gears andtransmission equipment which will help us in tapping new markets. The Board is competentwith both executive and non-executive Directors possessing a wide range of expertise. TheBoard continued to perform its role of monitoring the Company's performance including itsoperational & financial performance and progress in delivering new growth. Further interms of new strategy your Company is following a consistent and long term approach togrow cash flow across the cycle and deliver competitive returns through focus on operatingefficiencies quality and timely delivery.
The North American subsidiaries are also facing the same issues as in all othergeographies however your management is confident that new and improved conditions willlead to growth opportunities by 2021.
COVID-19 will change the duringtheyearwithoverall way the world works; just like thegreat depression industry 3.0 dot-com bubble and the 2008 financial crash did in thepast. I've been pondering like many have what fundamental changes will take place in howpeople businesses and economies function. The next 12 months will be difficult. Manybusinesses will struggle some may even fold up. However as with economic adversities ofthe past new industries will emerge bringing with it renewed hope of recovery.Eventually things will go back to normal. Just that we'll have to change the definitionof normal.
I on my behalf and on behalf of my colleagues on the Board would like to thank andrecord our sincere gratitude to all our stakeholders for the confidence & trustreposed upon us and our deep appreciation to all employees of the Company for their hardwork commitment and whole hearted support for achieving company's goals and targets. Ifurther thank all our customers; our supply chain partners and our bankers for reposingtheir confidence & support in us.
Deep Kapuria Chairman
MANAGING DIRECTOR'S MESSAGE
I am happy as always to connect with you to reflect on the performance of your companyshare with you our thoughts and strategy for the future. The FY 2020 was eventful andchallenging in terms of the global and domestic scenarios. The economic environment isvarying almost on a daily basis for various economic and geo-political reasons and latelydue to the outbreak of COVID19.
The performance of the Indian Economy in FY 20 was disappointing in many spheres. Theautomotive industry was one of them and it declined in almost across the board. Obviouslyyour Company was also adversely impacted and it moved in line with the automotiveindustry's performance.
After considerable growth in previous years global economic activity slowed down fromthe last three years reflecting a confluence of factors affecting major economiesincluding USA and China. The growth in world output also grew by a marginal 2.8 % in 2019.Ongoing trade tussles are fuelling fears about damage to global economic growth andleaving the world on the brink of a trade war.
The global economy continues to struggle with almost little or no growth in the yeargone by. Slower trade liberalization obstacles to value chain integration elevatedeconomic policy uncertainty and the likelihood of financial market disruptions andoutbreak of pandemic are certainly the main reasons. The continuously increasing impact ofthe COVID19 global pandemic has the potential to derail a fragile trade recovery expectedearlier. The weakness in investment has been most pronounced in the largest emergingmarkets and commodity-exporting emerging and developing economies. The adverse impact onlow-income households is particularly acute extreme jeopardising the significant povertyin the world since the 1990s.
Global growth is projected between () 5% to (-) 6.5% in 2020. The COVID-19pandemic has had a more negative impact on activityin and the recovery is firstprojected to be more gradual than previously forecast. The baseline projection rests onkey assumptions about the fallout from the pandemic. In economies with declining infectionrates the slower recovery path; for economies struggling to control infection rates alengthier lockdown will inflict an additional toll on activity. And those economies thatare seemingly reaching a peak in infections should ensure that their health care systemsare adequately resourced. This outlook is subject to considerable downside risks. Thepossibility of disorderly financial market volatility has increased and the vulnerabilityof some emerging market and developing economies to such disruption has risen. The worldis developing and looking for a cure for COVID-19 and a lot of resources have beenallocated for it. Trade protectionist sentiments have also mounted while policyuncertainty and geopolitical risks remain elevated. Saving economies from the aftermathsof the pandemic and heightened geopolitical tensions continue to cloud the outlookatleast for the next one and half years.
India was one of the first countries to impose a nationwide lockdown to containCOVID19. It started on March 25 and stalled business activity in the country. It wasslowly eased and by June most non-essential services had also been allowed to operate innon-containment zones in the country subject to policies made by states. Many curbs onmovement have been relaxed though educational institutions cinemas local trains/metroetc are shut. At the same time government has taken prompt policy measures both in theshort and long term to revive the economy at the earliest. The Indian economy faced a hugeobstacle due to the lockdowns. Up to 63% of businesses have indicated a severe adverseimpact of shutdowns caused due to COVID-19 on operations as per a survey in June. Theunemployment rate had increased to 26% across India and more than 45% households acrossthe nation reported an income drop as compared to the previous year. Various business cutsalaries and laid off employees. A number of young startups have been impacted as fundinghas fallen. Government revenue has been severely affected with tax collection going downand as a result the government has been trying to find ways of reducing its own costs.India should prepare for a negative growth rate in FY21 as the Indian economy was expectedto lose over
32000 crore (US$4.5 billion) every day during the lockdown.
Certain facets of the Indian economy are important and I would therefore like to shareit with you for a better understanding of the situation today: India's real GDP grew at4.2 % in FY20 thereby experiencing moderation in growth when compared to FY19. Thismoderation was mainly on account of decline in all sectors such as manufacturing miningagriculture transport storage communication services & defence sectors. The pickupin economic activity is contingent upon how long it will take for each sector to return tonormalcy. Constraint in consumption demand can be expected to continue for few morequarters given the high unemployment rate and lower income levels. The government willhave to continue to play a crucial role for the revival of the economy. As per FinanceMinistry India's GDP is expected to contract 4.5% in the FY 2020-21 citing unprecedentedCovid-19 induced supply-demand shocks. Other estimates by International Financialinstitutions and international rating agencies estimate the decline to be even higherbetween 8 to 14 %. The economy has been fraught by idle capacity low demand and highcost of production. And the coronavirus pandemic has pushed it further. India beganemerging from the world's longest coronavirus lockdown in early June but despite orderingits population of 1.35 billion indoors for over two months it has watched cases risesteadily. There are mixed views on India's decision to gradually open its economy whichwas already in the grip of a decline ofslowdown before the pandemic struck withdevastating force. So where does India go from here? We'll have to wait and watch.
To bring the economy back on track and Government's commitment towards structuralreforms and social welfare measures have launched Atmanirbhar Bharat'[self-reliance] scheme and released various measures for Rs. 20 lakhs crores. The schemecovers almost all aspect of people and business in any way. Scheme is projected tostrengthen with the collective effort of all stakeholders and contribute to rebuilding astrong vibrant Indian economy. Prompt policy measures have been taken in the scheme torevive the economy at the earliest. The Department of Economic Affairs reported thatpreliminary readings indicate the emergence of green shoots from July onwards. These greenshoots have a conducive policy environment to grow further and nudge the economy early onthe path of economic recovery and growth.
As global economies contract because of the COVID19 pandemic the focus of most ofIndia Inc has now moved back to the home market where demand is expected to pick lack ofclarity onup in coming times. Despite all the turmoil the Long-term prospects for theIndian economy still looks good on the back of the return of a stable and stronggovernment at the Centre with its focus on growth and development along with ongoingconsolidation and restructuring activities. The Government is thinking of various ways tofurther assist the manufacturing and service sector and we should see positive steps beingtaken in this financial year.
The Automotive Sector:-
The Automotive sector is one of the most vibrant sectors of the Indian economy. Indiahas emerged as the destination of choice in the world for design and manufacture ofautomobiles and auto components. The automobile industry in India is the world's 4thlargest in numbers. India currently enjoys the tag of the world's 7th largestmanufacturer of cars and commercial vehicles respectively.
The domestic industry now has holistic capability to manufacture an entire range ofautomotive components e.g. engine parts drive transmission parts suspension &braking parts electricals body and chassis parts equipment etc. The auto sector is oneof the biggest job creators both directly and indirectly. It is estimated that every jobcreated in an automotive company leads to three to five indirect ancillary jobs. India'sdomestic market and its growth potential have been a big attraction for many globalautomakers. The last few years have been weak due to low demand regulatory pressuresincreasing the automation requisite for delivering quality products with a competitiveedge over the suppliers from other parts of the world etc. Now the pandemic has resultedin an unprecedented drop not only in business but in unemployment in the automotiveindustry across its supply chains. Many more jobs would have been lost if governmentemployers and workers had not taken immediate action to control the adverse impact. In2019-20 the industry registered a decline of 14.83% over the same period last year withsales of 26314248 vehicles compared to 30895228 vehicles in the previous year.
Two wheelers have always had a major share of volumes in the total output howeverthere was a decline during the year. The segment produced and sold 21036294 vehicles and20937992 vehicles compared to 24499777 vehicles and 24460688 vehicles
.14% in inprevious year thus registering a significant production and 14.40% in salesrespectively.
There has also been a further fall in volumes during the last few months. Thecumulative domestic sales of all vehicles continued to skid further in first quarter of2020-21. Recently the Society of Indian Automobile Manufacturers announced 89.35 %decline in total vehicles sales for April-May period the lowest in nearly eight years.Looking at the downtrend the liquidity crunch facing nonbanking vehicle financierschanges rural distress etc the OEMs had also cut their production significantly.
We can expect return in sales in this second half on improving socio economicsentiments effects of fiscals announced to boost economy as part of Atma Nirbhar Bharatease on movement stable commodity prices re-start of mining activity and infra projectsand higher industrial activity with an improved investment climate. The Indian Auto andAuto component sectors have been working tirelessly in all areas and are geared forfurther improvements & growth in the coming period. Despite the fact that the firstquarter recorded a decline for the auto industry seeing the green shoots demand to pickup from the second quarter onwards when dispatches are stronger due to coming festiveseasons. Further a normal monsoon and announcement of a higher farm support price alsoaugurs well for automobile sales especially two- wheelers and tractors.
Performance of the company
Your Company is one of the few industrial enterprises which has become a world-classIndian brand with a green and sustainable strategy of growth despite an increasingvolatile economic and business environment. Besides being cost competitive delivering tostrict schedules and adhering to high quality standards are the main keys of success forauto component manufacturers especially to enter into and grow export markets.
In the first half FY20 the Company made reasonable progress in all verticals except inheavy vehicles and off-road vehicles vertical. However the second half was highlyvolatile due to low demand and an increasingly unfavourable economic and businessenvironment. In the last month of the financial year the impact of the lockdown alsoadversely affected sales. The total sales turnover of the Company decreased to Rs.5155.28million registering a de-growth of 22.29%. Profit before tax was Rs.153.02 million andafter tax stood at Rs. 77.42 million compared to Rs. 531.22 million and Rs. 354.84 millionin FY19. Earnings per Share also decreased to Rs. 4.13 from Rs. 18.91 in the previousyear. The Company recorded an export turnover of Rs. 1334.44 million compared to Rs.1912.10 million in the previous year thus recording a decrease of 30.21 %.
Post consolidation with the overseas subsidiaries the turnover stood at Rs.7334.94million compared to Rs. 9306.81 million in the previous year registering de-growth of21.19 %. The consolidated financials of the Company with its subsidiaries are attached tothe
34th Annual Report. Recognizing the importance of sharing the gains with shareholderswho have placed their funds and trust in the Company at all times an amount of Rs. 28.15million was paid out as interim dividend for FY 20.
In my entire experience of the auto sector it was probably during the lockdown periodthat the force majeure clause was invoked by major participants in the industry whichshows the severity of the situation faced by the industry in this pandemic. We were allfaced with a great shortage of resources. The Promoter / Directors of your company havewaived off their remuneration and commission to support the company in this situation.Similarly the employees came forward and agreed to work on reduced salaries. As Imentioned in my previous messages that the "people are the company's greatest assetsand must be valued measured and developed". This is an emotional point and I muststate that the statement is hundred percent true with the gesture they have shown. Withthis strong belief your company continues to invest in building its most the entiresignificant team is working hard to enable the company to achieve its goals despite theglobal pandemic. The management of the company is proactive and took various measures forthe safety and security of its employees and society a brief of some of initiates arementioned in the Management Discussion Analysis attached to the Directors' Report. Goingforward not only the domestic but the export programs are also expected to gainmomentum. Overall the focus will continue to be on quality delivery at optimum costs. Newinitiatives are taken by your company in North America to integrate into the Global ValueChain with our footprints in both Canada and the USA. The objective of these initiativesis to further strengthen our processes build better relationships with our customers andconsolidate our position as a manufacturer of quality products for the auto sector.
In respect of internal controls your Company has been working with M/s. Grant ThorntonIndia LLP Internal Auditors of the Company with the objective of strengthening internalcontrols and improving internal processes. In a vibrant economy downturns can come andgo. Disruptive change opens opportunities for new players who drive innovation newproducts and services as some of the entrenched struggle and vacate space. Your companyhas the capability to achieve excellence in the coming years because it has bothconsolidated and diversified its production capacity through significant internalre-organization in both its core and strategic areas to prepare for the future. On behalfof The HGL team I thank you for your continued support and assure you of our unceasingefforts to improve your company's performance and image year after year. I place on recordmy sincere thanks to our valued customers supply chain partners banks and all ouremployees for their valuable and continuing support in all our endeavours.
Pranav Kapuria Managing Director