ECONOMIC REVIEW
Global Review
The World has witnessed an exceptional uncertainty due to the
outbreak and spread of the global pandemic . As per the World Economic Outlook by the
International Monetary Fund (IMF) "the global economy is projected to grow 5.5
percent in the year 2021 and 4.2 percent in the year 2022 . The forecast in the year 2021
may improve based on expectations of a vaccine-powered strengthening activities later in
the year 2021 and additional policy support in a few large economies . "
The projected growth recovery in the year 2021 follows a severe
collapse in the year 2020 that has had acute adverse impacts on women, youth, poor,
informally employed people, and those who work in contact-intensive sectors . The global
growth contraction for the year 2020 is estimated at -3.5 % . The strength of the recovery
is projected to vary significantly across countries, depending on access to medical
interventions and effectiveness of policy support
Indian Economy
The Indian economy contracted by 7.3% in FY21, as compared to 4.2%
growth recorded in the previous fiscal year. The first half of the fiscal year witnessed
overall economic slowdown, due to COVID-19 onset resulting in stringent lockdowns severely
impacting economic activity, bringing manufacturing and trading activities to a halt As
the economy emerged out of the pandemic-induced recession in the second half, it
registered a positive GDP growth of 0.4% in Q3 and 1. 6% in Q4 on the back of a tailored
fiscal stimulus of Rs . 20 trillion under ‘Self-Reliant India movement, robust
financial market and structural reforms initiated by the government, along with revival of
consumer confidence The growth reflected through uptick in manufacturing activity and GST
revenues crossing Rs 1 trillion mark for a stretch of six months since October 2020 and
hitting a record figure of Rs 1 23 trillion in March 2021
The resurgence of COVID-19 cases since March 2021 is posing a serious
risk to economic recovery and weighing down Indias GDP growth projections for FY22 .
Considering the impact on economically important states, Q1FY22 could witness lower
economic activity and demand than anticipated due to stringent lockdowns and restrictions
Multiple states have been enforcing lockdowns of varying severity, leading to reduced
mobility and unemployment, leading to economic distress
However, the government has taken and taking several initiatives with
the objective of revitalizing the economy. Proactive measures taken by the Government is
expected to offer a sustained long-term recovery of the economy Favorable fiscal and
monetary reforms, ease in credit policies and concentrated stimulus packages for
distressed sectors and vaccination roll-out are expected to enable revival in economic
growth
(Source:https://www.financialexpress.com/budget/unionbudget-2021-fm-sitharaman-proposes-steps-to-
increasefunding- for-national-infrastructure-pipeline/2184391/).
INDUSTRY OVERVIEW
SHIVALIK caters to a broad spectrum of applications which include
Switchgears, Energy Meters, Industrial, Electrical applications, Automotive &
Electronic Devices . Our growth is directly connected with the Electrical, Electronics and
Automotive Industries
Electrical Industry: The Electronics System Design &
Manufacturing (ESDM) marketing India is anticipated to increase at a CAGR of 16.1% between
2019 and 2025, owing to strong demand, supportive government policies and increased
digitalization The Government of India attributes high priority to electronics hardware
manufacturing as it is an important pillar of Make in India, Digital India and Start-up
India programmes
The Electrical Consumer Durables (ECD) segment in India is likely to
grow owing to a demographic profile with higher disposable income, access to easy finance
options, increasing electrification of rural areas, rapid urbanization and growth of
nuclear families, and emerging consumer trends of ‘Home Proud and ‘Health
& Wellness etc . Continuous focus on innovation to drive differentiation and
creating value has provided a growth impetus to this sector
Smart Meter: Global Smart Mstsrs Market is sxpsctsd to grow at
~7.3% CAGR during ths forecast period, 2021-2027. Global Smart Meters Market is expected
to witness high growth due to the rise in demand for devices in every sector. Smart meters
are rapidly replacing traditional meters due to their accuracy and their proving better
information . Smart meters are electronic devices that accurately monitor energy
consumption Smart meters offer a host of benefits such as reduction of meter reading cost,
removing inefficiencies, disconnection and reconnection cost in billing, and re-connection
costs to corporations and consumers . There are a number of factors influencing the growth
of the market including fiscal incentives and appropriate policies of the government.
Furthermost, the rise in investments from governments to support the smart meter
installation in the end-user sectors such as industrial, residential, and commercial are
increasing the growth of the global smart meter market
Automotive Industries: The global electric vehicle market size is
projected to grow from 4,093 thousand units in 2021 to 34,756 thousand units by 2030, at a
CAGR of 26.8% . Factors such as growing demand for low emission commuting and governments
supporting long range, zero emission vehicles through subsidies & tax rebates have
compelled the manufacturers to provide electric vehicles around the world This has led to
a growing demand for electric vehicles in the market Countries around the world have set
up targets for emission reductions according to their own capacity
EVs had a growing demand in the covid-19 period. This led to a
growing demand for EV production around the world. In the first few months, however, the
production of most companies was affected due to lockdowns and logistics problems .
However, post lockdowns, demand for EVs surged as governments around the world
increasingly encouraged changing to low emission fuel vehicles Many countries also
increased their EV charging stations and hydrogen fueling stations across their states .
Overall, there wasnt much of a loss for the electric vehicle market during the
pandemic due to its increase in demand
The Indian auto industry is expected to record strong growth in
2021-22, post recovering from effects of COVID-19 pandemic . Electric vehicles, especially
two wheelers, are likely to witness positive sales in 2021-22 . According to NITI Aayog
and Rocky Mountain Institute (RMI) Indias EV finance industry is likely to reach Rs
. 3.7 lakh crore (US$ 50 billion) in 2030. A report by India Energy Storage Alliance
estimated that EV market in India is likely to increase at a CAGR of 36% until 2026
In addition, projection for EV battery market is forecast to expand at
a CAGR of 30% during the same period. This is a huge opportunity for India to not just
achieve its sustainability targets but also emerge as a global EV manufacturing hub The
current trends are in favour of growth and the revised policies under the FAME-II scheme,
which are already in place, are bound to increase traction in the segment
Switchgear Industry: The Global Switchgear Manufacturing Market is
expected to exceed more than US$ 137.10 Billion by 2024 at a CAGR of 6 .3 % in the given
forecast period .
The global switchgear market is enrolling solid growth because of
expanding access to power in developing nations and growing investments in smart grid
networks in developed economies The worldwide switchgear manufacturing market is growing
because of expanded interest for cutting edge switchgear from power age and dissemination
organizations and manufacturing companies These elements alongside innovative advances,
for example, smart grids and IoT technologies is expected to drive the switchgear
manufacturing sector globally
The Indian switchgear market is expected to see high demand due to
exponential growth in residential, commercial, and industrial sectors that the country is
witnessing. With the expansion of smart grids, the need for quality power is also
increasing Therefore, for smart grids to function optimally the communication between the
switchgears, other network equipment and operators also become progressively important
COMPANY OVERVIEW
"Shivalik" is engaged in the business of manufacturing &
sales of Thermostatic Bimetal /Trimetal strips and Components, Current Sense Metal Strip
Shunts/Resistors, SMD Current Sense Resistors and other electron beam welded products .
The Company specializes in joining of metals by various methods such as diffusion bonding,
electron beam welding, continuous brazing and resistance welding The Company offers
precision manufactured components specific to the application requirements of our
customers . The Company is a single vendor to many prestigious OEMs since 1986 and has
successfully met the most stringent of demands set by multiple large global organizations
The application of
"Shivalik"s Products are mainly in Switchgears,
protective relays, metering, various Automotive Devices and Energy and Battery Management
Devices and various other Electrical Electronic and Automotive Devices . The
Companys products are exported to over 40 industrialized countries around the world
.
Our vision for our business is "To earn our clients trust
and maximize the value of their business by providing solutions using our knowledge and
technology. " We seek to emphasize on our core values of being passionate about our
clients success, treating each person with respect, being global and responsible and
maintaining unyielding integrity in everything we do
The year was marked by profound disruption on account of COVID-19
pandemic and healthy rebound in the second half. First quarter was radically impacted by
nationwide lockdowns . Our factories, warehouses, and offices were temporarily shut, in
line with relevant guidelines from local and national authorities
The Company maintained tight operating controls and functioned with
increased agility, resulting in an improved liquidity position which helped it comfortably
sail through challenging business environment. Gradual unlocking from June showcased
progressive signs of improvement as the restriction in movement eased . Infrastructure and
economic activities started picking up and also started charting a broader recovery path
from the second quarter onwards
It has been a challenging year with several macro headwinds
encompassing several industries Slow economic activity and liquidity challenges impacted
the overall demand scenario in the industry. However, your Companys cost saving
measures, robust business continuity plan and strong brand proposition led to decent
overall growth and a healthy balance sheet
The assessment of impact of COVID-19 is a continuous process given the
uncertainties associated with its nature and duration The company will continue to monitor
any material changes to future economic conditions
FINANCIAL REVIEW
Standalone financial performance is as under:
Equity Share Capital: The Equity Share Capital of the Company as on
31* March, 2021 stood at Rs . 768.06 Lakhs . There was no fresh issue of capital during
the year
Turnover: The Companys sales and other income has increased from
Rs . 19,162.97 Lakhs to Rs . 20,776.77 Lakhs, an increase of 8.42% over the previous year.
Net Profit: Net profit available for appropriation for the year 2020-21
stood at Rs . 2,406.68 Lakhs as compared to Rs . 1,256.34 Lakhs in the previous year.
Earnings per Share (EPS): The Companys Earnings per Share during
the current year is Rs . 6 .27 as compared to Rs 3 27 in the previous year
Net Worth:
| Particular |
FY 2020-21 |
FY 2019-20 |
CHANGE |
CHANGE % |
| Net Worth |
13,823.46 |
11,531.99 |
2,291.47 |
19.87 |
Net Worth has increase by 19.87% from Rs . 11,531.99 Lakhs in FY
2019-20 to Rs . 13,823.46 Lakhs in FY 2020-21. The book value per share has increased to
Rs. 36.00 in FY 2020-21 from Rs . 30.03 in FY 2019-20.
FUTURE OUTLOOK
Outlook for the SHIVALIKs business in the medium to long-term
remains positive given the diverse usage of its products . It is a promising sign that the
governments plans and policies are conducive towards the growth of the SMART
Metering, EVs and Switchgear market. In fact, the major factor that drives the smart
meter, EVs market growth is supportive government policies and financial incentives such
as production-linked incentive (PLI) scheme in automobiles & auto components with an
approved financial outlay over a five-year period of Rs .57,042 crore (US$8.1billion) to
boost Indias manufacturing capabilities, exports and promote the ‘Atmanirbhar
Bharat initiative, FAME II (Faster Adoption and Manufacturing of (Hybrid) and
Electric Vehicles in India) scheme, Automotive Mission Plan 2016-26 and Liberalization in
the FDI policies
Whils hsalthy growth in forssssn in all the ssctors catsrsd to
by SHIVALIK, (switchgear, mstsring, power electronics and automotive) the most promising
market for the Company will be the EVs sector. The Companys products find many
applications not only in the Electric Vehicle itself, but also in the charging station(s).
The charging stations will require both Switchgear as well as Current Sense Resistors .
As far as Global market in concerned, three million new electric cars
were registered in 2020. This was 41% higher than those registered in 2019 . Further, the
rise in electric car sales in 2020 came even as the worldwide automobile market contracted
by 16% due to the Covid-19 pandemic. Apart from that, the number of electric cars, buses,
vans and heavy trucks on roads is expected to hit 145 million by 2030 and several
Government agencies are also providing numerous subsidies and financial aids for promoting
the adoption of Electric Vehicles in the country, thereby catalyzing the demand for
Electric Vehicle Batteries and their Management Systems .
The second wave of COVID-19 that is impacting the nation along with the
increasing commodity prices is expected to pose challenges for your Company. However, your
Companys adequate liquidity position, surplus cash and operational efficiencies will
enable it to protect its profitability and meet all statutory requirements and obligations
Further, during this time, we prioritized safety of our employees and partners and by end
of August 100% of our workforce will be fully vaccinated
Opportunities & Threats Opportunities
• Favourable Government Schemes and Programmes
• Introduction of new ELECTRIC vehicle models in the Global
market.
• Rise in affordable housing projects of the Govt, such as
"Housing for All" and the "Pradhan Mantri Awas Yojana" offers
potential to generate demand for electrical products
• Governments plan to convert traditional meters into smart
meters and replacement and retrofitting programmes . Threats
• Commodity inflation: Sharp increase in commodity prices could
lead to increase in cost of finished goods impacting competitiveness and working capital
cost;
• Supply chain Disruptions: Shortages of shipping container and
covid impacted logistics
• Pandemic: Deterioration in demand due to ongoing pandemic .
Risks & Concerns
The Company adopts a comprehensive and integrated risk appraisal,
mitigation and management process The risk appraisal and risk mitigation measures of the
Company are periodically for reviewed
The Company has internal audit systems which assesses the effectiveness
of internal controls, risk identification and mitigation processes prevailing in the
Company Audit Committee of the Board of Directors also reviews the internal audit reports
and takes appropriate actions w r t Deviations, if any
The various heads of operations have regular interactions and
communications to keep themselves abreast with the developments in the market, products,
competition and other relevant areas
Internal Control System and their Adequacy
SHIVALIK has an adequate system of internal controls in place which has
been designed to provide a reasonable assurance with regard to maintenance of proper
accounting controls, monitoring of operations, protecting assets from unauthorized use or
losses, compliance with regulations and for ensuring reliability of financial reporting
Company has documented procedures covering all financial and operating functions
Company has robust internal audit programme, where the Internal
Auditors, an independent firm of chartered accountants, conduct a risk-based audit with a
view to not only test adherence to laid down policies and procedures but also to suggest
improvements in processes and systems Internal audit observations and recommendations are
reported to the Audit Committee, which monitors the implementation of such recommendations
Occupational Health & Safety
SHIVALIK gives great importance to all the matters related to Health,
Safety and Environment and ensures compliances of all statutory regulations . Training of
employees on emergency response, firefighting, rescue and first aid are some of the
regular features at manufacturing sites
Occupational Health & Safety is an area concerned with protecting
the safety, health and welfare of employees engaged in the Company. The goals of
occupational safety and health programs include fostering a safe and healthy work
environment. Occupational Health & Safety has been recognized as an integral and key
part of the Companys Business Process . The management believes that people working
with the organization are of key resource for the success of the Organization . The
sincere efforts put in by the employees have translated in to Quality improvements,
Productivity improvements and Cost reduction etc . Management firmly believes in
developing and nurturing its human resources and improving their talents which
subsequently help in the growth of the Company. Proper care is taken for safety, health
and welfare of the employees The Company ensured employee safety through investments in
pollution mitigating equipment, the selection of safe processes, adequate safety training
and provision of safety equipment Our aim is to remove unsafe situations and practices by
any/all pre-emptive steps required . For the safe return of the employees to their homes
all precautions are taken to avoid accidents
Human Resource and Industrial Relations
The organisation aims to achieve sustained growth through developing a
skilled, motivated and committed workforce
Your Company is continuously striving to create appropriate
environment, opportunities and systems to facilitate identification, development, and
utilization of their full potential and inculcating a sense of belongingness . Your
Companys industrial relations continued to be harmonious during the year under
review
Cautionary Statement
Statements in the "Management Discussion and Analysis"
describing the Companys objectives, projections, estimates and expectations or
predictions may be ‘forward looking statement within the meaning of applicable
securities laws and regulations . Actual results could differ substantially and materially
from those expressed or implied . Important factors that could make a difference to the
Companys operations include economic conditions effecting demand/supply and price
conditions in the domestic and overseas markets in which the Company operates, currency
(forex) fluctuations, changes in government regulations, tax laws, other statutes and
other incidental factors
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