The year began with trends of a positive change in the world economy with signs ofstabilisation from the accommodative monetary policies rolled out by Governments of manycountries to boost business. However geo-political posturing protectionist tradepolicies and stress in key emerging market economies weighed down global economic growthparticularly manufacturing and trade in the second half of 2019. The Covid-19 pandemicimpacted this further in great measure and hence global growth which was estimated toreach 3.3% in 2020 plunged to an all time low of -3% registering a sharp decline in thefortunes of almost all countries across the world.
The Indian Economy began the year with a slowdown in core sectors such as automotiveconstruction mining iron and steel etc. It was further accentuated with muted marketgrowth credit stress and deferred discretionary spends dictating customer sentiment.Signs of a revival were evident in the second half of the year with manufacturing activityshowing a moderate increase based on supportive Government policies to accelerate growth.However the pandemic and the resultant lockdown in March brought all business activity toa standstill with the GDP plunging to 1.9% for the fiscal 2019 -20.
The Indian automotive sector witnessed a weak market response. The Government mandatedtransition from BS IV to BS VI emission standards a halt in the launch of new technologyproducts inventory accumulation and finally the lock-down all of which had a hugeoverall impact on the sector. Sales in the last month of FY20 plummeted to the lowest infour years registering a drop of nearly 40-80% across segments.
TII with a large presence in the Auto sector was impacted by the industry slowdown dueto reduced offtake from OEMs recalibrating their capacity utilisation. Despite the fall inthe order book the Company increased its customer engagement partnering with auto majorsand leveraging its engineering expertise to develop new products for the BS VI migrationin Passenger Vehicles tubular front fork products for the two wheeler segment and safetycritical parts in seating solutions for both the Indian and global market. To counterbalance the slowdown in the OEM business the Company's strategic sectoral shift to minethe opportunity in the Aftermarket with innovative products and an expanded channelproved a game changer in a challenging year.
An agility to adapt to a changing environment and embrace new technologies has alwaysbeen TII's main forte. The Company is focusing on its inherent strength and strongbusiness fundamentals to build a resilient edge.
The Railway sector proved a major growth engine for the Company. With the Government ofIndia's focus on the expansion and modernization of the Railway network and its Makein India' drive the sector is poised for accelerated growth. TII as a trusted supplierof quality assemblies and components for the Railways is well positioned to mine theburgeoning growth potential of the sector.
The Bicycles Business has reinvented itself and despite its strategic exit from theinstitutional segment has managed to emerge stronger and more resilient with a roadmapfor growth going forward.
At TII we focused on building resilience for long term growth in each of the businesswith strategic capacity expansions and creating new process capabilities. A manufacturingfacility at Rajpura for high strength tubes and telescopic front fork products expansionsof the manufacturing facilities at Thiruninravur Sanand and Bawal for auto components anew greenfield facility for conveyor chains and expansions at Kakkalur and Uttarakhand forrailway parts and sub assemblies were established during the year.
The Company continued its efforts in expanding its global footprint with new market andcustomer development in Europe South East Asia and China in the Engineering business andbuilding new distributors and channel partners in Central America and SAARC in MetalFormed Products. The focus during the year was on internal capability development tosustain and grow in the export market.
Our subsidiary Shanthi Gears while focusing on its financial priorities strengthenedits presence in the Servicing and Replacement segment of gears. Service centres instrategic locations across the country helped sustain the competitive advantage. Thebusiness continued to build relationships through high level of customer engagement duringthe year.
To build resilience and growth Sedis focused on a strategic deepening of its end-userengagement expanding the distribution channel outside of France and ramping up presencein new high potential areas in addition to improving margins with various costmanagement initiatives and better working capital management.
Our people are our greatest asset and they have demonstrated great commitment andresilience in these challenging times. The TQM (Total Quality Management) and TPS (ToyotaProduction System) work culture has embedded a transformational future-ready ecosystem ofgoal driven teams working in tandem to take TII forward.
A relentless focus on cost management and fiscal prudence value engineering andcustomer partnering has enabled the Company to record a creditable performancedemonstrating its resilience despite being in a challenging year.
As we brace ourselves to face the headwinds of an economic slowdown of a mammoth scalewe need to reinvent new methods build new competencies to stay resilient. I am sure TIIunder the able leadership of Mr. Vellayan Subbiah and the Senior Management team wouldrise to the occasion as they have always done and take the Company forward on the growthpath while facing many a challenge.
Mr. Pradeep V Bhide Independent Director on our Board retires in July 2020. Mr.Bhide's association with TII spans well over a decade both before and after its demerger.He has contributed immensely to TII's growth as a senior Member of the Board and asChairman of the Audit and Risk Management Committees. We at the Board thank him for hisoutstanding contribution and wish him the very best.
The members of the Board continue to be a great source of support and encouragement tothe Company's management team and to me in particular. I thank them for their insight andinvolvement in building the business.
I also take this opportunity to express my gratitude to all of you our esteemed andvalued shareholders for your continued support and the trust you have reposed in theCompany.