Atul Auto Ltd Management Discussions.


We are among the fastest growing 3 wheeler companies in India, with a Pan-India presence. The company is also expanding with dealership, sales, services and spare parts network across 20+ countries.

Our vision is to contribute towards making the common people self-reliant, with our state-of-the-art technology, products and services. We strive to contribute in the eradication of poverty.

Our mission is to fulfill our customers needs and aspirations for mobility and solidity and to set benchmarks in technology, style and quality. We devote ourselves to cater to the common mans transportation needs by introducing environment friendly vehicles, empowered by technological advances.

We have organized our sales and marketing strategies in such a way that focus on specific geographies and niche, enabling us to customize our offerings to our customers needs.


High trade tensions and policy uncertainty in many countries continue to damage prospects for global economic growth. Following an expansion at 3.0 percent rate in 2018, world gross product growth is now moderated to 2.7 per cent in 2019 and 2.9 per cent in 2020. Among the emerging markets of the world, India and China are on top and now, they have also faced the slowing down in growth in scal 2019.

The first advance estimates of national income released by the Central Statistics Office (CSO) had estimated Indias real GDP growth for financial year 2018-19 at 7.2 percent as compared to the growth rate of 6.7 percent in 2017-18. This have been made lowered by the second advance estimates to 7 percent and further lowered to 6.8 percent, slowest in last five years with fourth quarter growth rate of 5.8 percent in provisional estimates of CSO. Amid slowing economic growth and rising global uncertainty, RBI, for the fourth time in a row, decreased the short-term lending rate (repo rate) by 35 basis points to 5.40 percent. The Monetary Policy Committee of RBI had also decided to change the stance of monetary policy from neutral to accommodative.

Growth in eight core industries decelerated sharply in April 2019, pulled down largely by coal, crude oil, fertilizers and cement. Credit ows from banks to large industries strengthened, though they remained muted for micro, small and medium industries. GDP decline in last quarter was due to temporary factors like stress in NBFC sector affecting consumption finance.


The Indian automotive industry accounts for 7.1% contribution in countrys GDP. The three-wheeler segment is one of the fastest growing industries among auto sector. India has emerged as the largest three-wheeler producing industry with a large domestic market and export base on the back of strong demand from local as well as international markets.


The domestic three wheeler sales crossed the mark of 7 Lakhs units in scal 2019. The domestic sales grew by 10.27 percent in FY 2018-19 against 24.19 percent last year. The growth is less than half of the previous year.

The performance of three wheeler industry in financial year 2018-19 needs to be reviewed in two parts; the industry was very strong in first half and for next half it turned negative where there was a sudden drop in demand in passenger vehicles on account of various factors whereas it registered small positive growth for cargo three wheelers.

The table below summarizes the growth pattern in two half:

Segment H1 2019 H1 2018 Growth (%) H2 2019 H2 2018 Growth (%) FY 2019 FY 2018 Growth (%)
Passenger 291982 205244 42.3 280410 312179 -10.2 572392 517423 10.6
Cargo 62297 54304 14.7 66322 63971 3.7 128619 118275 8.8
Total 354279 259548 36.5 346732 376150 -7.8 701011 635698 10.3

The factors contributed for the strong growth in first half were positive sentiment, especially in rural parts of the country, good economic growth, an outlook of a normal monsoon, good rainfall in June & July, good MSP increases, availability of affordable finance and a low base from H1 FY 2018.

However in H2 of the scal it has marked slowdown in demand was principally a result of muted demand from rural parts, buying cost escalation due to increased insurance cost, tight credit conditions arising from stress in NBFC sector, which has a significant share in wholesale and retail nancing; lower Government capital spending; uncertainty over fuel prices and high base effect from H2 FY 2018.

Against this industry trend, Atul sold 44,513 units in domestic market with growth of 13.17 percent in financial year 2018-19 against 7.74 percent in 2017-18. This growth came from around 25 percent increase in sales of passenger vehicles. Apart from its proven and successful range of diesel three wheelers, penetration of Alternate Fuel vehicles in urban part has driven this growth.

International Market

The international market for three wheeler industry showed booming demand. Indian three wheeler industry exported 5,67,689 units in scal 2019 by registering growth of 49 percent compared to the last years sales of 3,81,002 units.

Consistent higher crude prices during the year drove economic growth in many international markets dependent largely on crude export income. Improved foreign exchange availability in Africa further aided the growth of export industry over last year. Latin America, Africa and few countries in Asia are some of the markets where demand improvement was witnessed.

Faster than the industry pace, the Company achieved the growth of 62.30 percent with export of 5536 units in scal 2019 in compared to 3411 units last year. This growth has come from surge in demand from Ethiopia, Nepal and few Latin American countries. During the year, the company was able to identify and appoint distributors in few more countries and have introduced its products. By end of FY 19, the penetration is in 20+ different countries.


Our Company continues to derive sustainable benefit from the strong foundation and long tradition of R&D which differentiates it from others. New products, processes and benefits flow from work done in various area of product development and upgradation in existing product/s. With modern facilities and technology culture, we attract the best talent to provide a significant technology differentiation to its products and processes.

Alternate Fuel 3W

The seeding done in Alternate Fuel 3W segment in last few years has been ripping now. The Company has been committed to make constant embellishments in its Gemini Alternate Fuel (Petrol/ CNG/ LPG) 3W to deliver best in class comfort and economy in 0.35 ton passenger segment. During the year company was able to introduce its Alternate fuel 3 wheeler on 0.5 ton segment.

BS VI Compliant Vehicles

From April 01, 2020, India will switch over to BS VI emission norms. The technical team has been geared up with the necessary strength to migrate into new emission norms and con dent enough that all models in compliance with BS VI norms will be ready before the deadline.


Backed with the rich experience in the three wheeler industry, the Company understands the need of the day, value of environment and importance of sustainability. The Board considers the introduction of Green 3Wheeler as beginning of new era for the industry as well as for the Company. The strong steps have already been taken for the development of electric autos even before the announcement of mandatory transition to electric mobility by Niti Aayog. All together new model with upgraded features is under development powered with Lithium-ion Battery, which will be able to compete conventional 3 wheelers and will carry distinct advantages like low operating cost, less charging time and comfort for passengers.


The whole automobile industry has been transforming towards greater safety and greener environment. Considering the importance of automobile industry to the economy, its potential for generating employment opportunities and its backward and forward linkage with several sectors, the Government is keen to support its development.

The Indian Auto industry is set to migrate to BS VI emission norms from

April 01, 2020. The industry is gearing up to meet the challenges involved. The forecast of demand and inventory management at the end of dealer during second half of 2019-20 will be crucial for all players of the industry.

With an objective of improving air quality and reducing the fuel import bill, the Government is actively pursuing the plan for electri cation of the vehicle eet and has announced the FAME II (Faster Adoption and Manufacturing of Hybrid & Electric Vehicles) policy. The industry is gearing up for meeting this challenge on the technology and product fronts. By developing prudent product in this segment, the Company is set to maximize the benefits from e-mobility era.

The pace with which the business is coming from export market, the Company will grab the opportunities lying in foreign countries by seeding the vehicles and to taste the ripen fruits where the product of the Company has already been established.


A normal monsoon is important for agriculture as well as the rural economy and sentiment at large. Any negative deviation from normal monsoon is a cause of concern.

Uncertainty of demand due to upcoming emission regulation will be there throughout the year with its high impact will be seen in second half of 2019-20. In order to leapfrog from BS IV to BS VI emission norms in domestic market from April 1, 2020, product readiness, supply chain readiness and dealership readiness will be crucial. The cost involved in meeting BS VI emission for Diesel vehicles is higher than the petrol vehicle. This is likely to put pricing pressure on the Diesel fuelled vehicles with BS VI implementation.

Fiscal 2019 saw a moderate increase in commodity prices. In scal 2020, commodity price increases are expected to be benign. Your Company continues to work on mitigating the in ationary impacts through cost re-engineering and value engineering activities.

International factors such as geo-political scenarios and rising crude oil prices are being continuously monitored for both risks and opportunities.

Increasing need for advanced technologies in the vehicles, competitive intensity and ever spiraling customer expectations - calls for increased R&D, closer working with suppliers, shorter product life cycles and rigorous monitoring of costs.

The Company recognizes these risks and has developed action plans to mitigate the risks suitably.


Fiscal 2019 was good year for the Company in which the Company has crossed the sales of 50,000 units a year, grown well in international market as well as achieved good numbers in domestic market. SIAM estimates the growth of 3W industry at 7-9 percent in scal 2020 considering the various factors related to the auto industry.

The management considers e-mobility, BS VI emission norms and consistency in availability of retail finance from NBFCs as major factors which will drive the market in upcoming years.

The industry will undertake a significant change in migrating from BS IV to BS VI emission norms effecting from April 01, 2020. The unwarranted price war to dump the unsold BS IV inventory may be seen and will be detrimental to all.

Green mobility and target to become energy independent are the major factors for policy push in India. The future of three wheeler industry seems to be dependent on responsiveness of the players to recent announcement by Niti Aayog on transition of all three-wheelers to electric by 2023, reduction in GST on electric vehicle from 12 percent to 5 percent and FAME II Policy.

The early steps towards development e-auto, adaptability to government policies - emission norms, strong rooted dealer network, strong R & D support, availability of foreign exchange in international market and attempts towards making the finance available to the customer will push the growth of the Company.


Your company maintains adequate internal control system which is continuously evaluated by professional auditors of repute. The company continues to improve the present internal control systems by implementation of appropriate policy and processes. The Company is focused on incorporating the controls and checks in ERP system of SAP.

An increased emphasis has been laid on Internal Control Systems and Vigilance Systems to ensure ef cacy and monitoring of the Companys operations.


Human Resource Development activity includes workforce planning, employee engagement, performance & compensation management, learning and development, career & succession planning and organization development. Towards sustenance and delivering improved results, these activities have a structured approach, policies and standard operating procedures which are reviewed and updated periodically. The Company is committed to nurturing, enhancing and retaining top talent through superior Learning & Organizational Development. As on March 31, 2019, the number of employees working with the Company was 927. Continuously, the Company maintains good industrial relations without any disruption in work.


The Company has outperformed in financial year 2018-19 and achieved many milestones in operations which have been explained below:

The Company has clocked the sales of 50,049 vehicles in FY 2018-19 in compare to last year gure of 42,744 vehicles which consist 5,536 vehicles sold in international market in compared to 3,411 vehicles last year.

The income from operations increased to Rs.66,676 Lacs in FY 2018-19 compared to Rs.56,933 Lacs last year. The Income from operations consists of Vehicle Sales Turnover in export of Rs.5,884 lakhs which is 60% more compared to previous year. Moreover, domestic vehicle sales turnover has also increased by 13.76% compared to previous year.

EBDITA ratio for the year is 13.36% which was 13.63% during last financial year.

Average Sales Realization P/Vehicle has gone up by Rs. 2,932/- as compared to last financial year, it has increased by 2.37%.

Material cost in FY 2018-19 stood at Rs.49,497 Lacs in compare to Rs.41,755 Lacs in last year. Cost of material consumed vis a vis sales during the year has increased to 74.84% from 73.33% of previous year due to change in sales mix and revision in raw material prices.

Employee benefits expenses were Rs. 4,768 Lacs in FY 2018-19 as compared to Rs.4,013 Lacs last year. During the year employee Benefit expenses have gone up due to overall increase in employees count by 59 employees in current year (total employees joined during the year is 217 and no. of employees left during the year is 158). Moreover, labour charges have been increased from Rs. 289 Lakhs to Rs. 389 Lakhs, staff welfare expenses have been increased from Rs. 251 Lakhs to Rs. 291 Lakhs. Directors Salary is also increased from Rs.285 Lakhs to Rs. 312 Lakhs.

Finance cost increase from Rs.42 Lacs in FY 2017-18 to Rs.86 Lacs in FY 2018-19 due to increased payment of interest on income tax and dealer deposit.

Other expenses have increased from Rs.3,910 Lacs in FY 2017-18 to Rs.4,263 Lacs in FY 2018-19. This is due to increase in various expenses like export, freight, advertisement, sales promotion, finance subvention etc.

Net profit for the year is Rs. 5,312 lakhs as against Rs. 4,619 lakhs during last financial year; it is grown by 15.00%


The key financial ratios of the Company are as under:

Particulars 2018-19 2017-18
Debtors Turnover (Days) 43 40
Inventory Turnover (Days) 29 27
Current Ratio (Times) 2.11 2.56
Operating Profit Margin (%) 7.43 7.91
Net Profit Margin (%) 8.03 8.38
Return on Net Worth (%) 20.54 21.05

The Company is maintaining debt-free status since 2012 and hence, debt equity or interest coverage ratios have not been provided. There was no significant change in the above key financial ratios during the year in compare to previous year.

Cautionary Statement

This document contains statements about expected future events, financial and operating results of Atul Auto Limited, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on\ forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirely by the assumptions, qualifications and risk factors referred to in the managements discussion and analysis of Atul Auto Limiteds Annual Report FY2019.