Autolite India Ltd Management Discussions

1. OUTLOOK:

The Indian economy is one of the fastest growing despite softer growth during the year in automotive segment and is expected to rebound in FY 2020. The various factors like higher contribution to GDP, gradual revival in investment especially with a greater focus on infrastructure development supported implementation of reform measures like PSU Banks consolidation, higher allocation of funds for highway constructions will lead in the growth of the segment. Continuing positive effect of reform policies and improved credit off take will sustain the GDP growth.

The Company is in process of development of new headlamps, halogen lamps and LED lamps as per the requirements of various OEMs and for Indian market and for exports. This will add to the growth of Companys business and profitability.

2. INDUSTRY STRUCTUREAND DEVELOPMENTS: General:

The year 2018 is challenging year for the global car market as sales is declined. The global automotive market was affected by trade war between worlds biggest economies, political changes, etc. India is worlds fourth largest automobile industry and expected to emerge in next few years to become the third largest market by 2021.

The global economic scenario is expected to improve on account of better manufacturing, reduction in inventory and improvement in global market.

The Company operates inAutomotive andAutomobile Sectors and thus the Industrial outlook is as follows:

Automobile Industry:

The Automobile industry is one of the largest industry of the country which is the key industry for the Indian economy. It comprises two wheeler, three wheeler, car segment, commercial vehicles segments.

The automobile industry shows a marginal growth in the production trends as it has reported 309,15,420 units total production in financial year 2018-19 in comparison to 290,73,892 units in the previous fiscal year, marking an increase in total production of automobile by 6.33% in 2018-19 as compared to growth of 14.86% in 2017-18 .

Domestic Sales are reported to be 2,62,67,783 units in the financial year 2018-19 in comparison to 2,49,81,312 units in the financial year 2017-18 showing a marginal growth of 5.15% in total domestic sales trend in 2018-19 as compared to 12.48% growth in 2017-18.

Export Sales are reported to be 46,29,054 units in the financial year 2018-19 in comparison to 40,42,841 units in the financial year 2017-18 showing an growth of 14.50% in total export sales trend in volume terms.

The automobile industry registers declining trend of growth in comparison to last fiscal year. (Source: website of SIAM)

3. OPERATIONAL REVIEW

The Company has registered decline in revenue from operations Rs. 120.14 Crores in the year 2018-19 as against Rs. 126.21 Crores in the year 2017-18 and earned the profit after tax including comprehensive income Rs. 69 Lakhs under review as against Rs. 77 Lakhs for the year 2017-18.

Your Company covers the following marketing segment: -

(a) Export Market

Your Company exports the Head Lamps and Halogen Bulbs to more than 55 countries across the Globe among which the leading countries are like, USA, Peru, Columbia, Egypt, South Africa, Iran, Saudi Arabia, Poland, Turkey etc. In the Financial Year 2018-19 the Company has exported its products amounting to Rs. 2046 Lakhs in comparison to previous year export of Rs. 2101 Lakhs. The decline in export turnover is on account of unrest in some countries viz. Venezuela, Egypt, Iran, Iraq, Syria etc..

(b) Replacement Market

Your Company is having well established marketing network of dealers and distributors in Replacement market and supplying its products throughout India. The Company is regularly organizing dealers meet to understand their requirements and offer them various benefits and schemes to promote the business of the Company.

(c) Original Equipment Market

Your Company is supplying its products to the leading Original Equipment Manufacturers (OEMs) in automobile sectors like Tata Motors Limited, VE Commercial Limited, Mahindra & Mahindra, Isuzu SMLLimited, Force Motor Limited and Varroc Lighting etc.

4. OPPORTUNITIES & THREATS:

India is one of the largest manufacturer of automotive components of the world. With the increasing Government policies and Make in India concept, there are substantial opportunities for future growth. The announcement of Government of India regarding investment in construction of massive road infrastructure will lead to the growth of automotive industry. The government aims to develop India as global manufacturing hub and to implement automotive mission plan 2016-2026. This will further boost the Indian automotive industry. India;s transport infrastructure sector is expected to show a CAGR of 5.9% upto 2021 (Source: Economic times newspaper) The pricing pressure from Original Equipment Manufacturer is well known in our Industry to pursue aggressive marketing by price reduction each year with their suppliers. This may lead in reduction in profit margins. As new players are making a thrust in the Indian market with new technology for creation of additional manufacturing capacities. This would result in further intensification of competition leading to price pressures.

5. RISKAND CONCERNS:

The intense competition is expected to be more aggressive leading to price pressures. Uncertainty of global market condition is expected due to trade war between worlds two biggest economies i.e. USA and China will impact the growth rate of India and consequently the Companys operations. The growth in the industrial sector depends on government policies, better infrastructure, fluctuation in Foreign currency, International price of crude, etc.

6. INTERNAL CONTROL SYSTEMAND ITSADEQUACY:

Internal Control Systems are implemented:

• To safeguard the Companys assets from loss or damage.

• To keep constant check on cost structure.

• To provide adequate financial and accounting controls and implement accounting standards.

The system is improved and modified continuously to meet with changes in business condition, statutory and accounting requirements. Internal controls are adequately supported by InternalAudit and periodic review by the management.

TheAudit Committee meets periodically to review –

• Financial Statement with the management and statutory auditors.

•Adequacy/scope of internal audit function, significant findings and follow up thereon of any abnormal nature, with the internal auditors.

7. HUMAN RESOURCES:

The Company is having well experienced and motivated workforce which is contributing to the growth of the Company over the years. The personnel department is regularly conducting various training , personal development programs to update the knowledge of employees at regular intervals. The Company focuses on providing employees good working atmosphere at work place and enhancing employees morale by providing various motivational programs to achieve the organizational goals.

8. TRADE RELATIONS:

The Company maintained healthy, cordial and harmonious industrial relations at all levels. The enthusiasm and continuous efforts of the employees have enabled the Company to remain as reputed Industry inAutomotive Sector.

The Directors wish to place on record their appreciation for the same and your Company will continue in its endeavor to build and nurture strong links with trade, based on mutuality, respect and co-operation with each other and consistent with consumer interest.

9. DISCLOSURE OFACCOUNTING TREATMENT:

The Company has adopted Ind AS in last financial year in terms of the provisions of Companies Act, 2013. The accounting treatment followed by the Company is disclosed in the Notes to Financial Statement which forms part of thisAnnual Report.

10. CAUTIONARY STATEMENT:

Under the Management Discussion and Analysis, the Companys objective estimates, projections and exception may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed or implied depending upon economic conditions, demand/ supply, Government policies, tax laws, other statutes and other incidental factors.