Coventry Coil-O-Matic (Haryana) Ltd Management Discussions.

Management Discussion and Analysis Overview

Coventry Coil-o-Matic (Haryana) Limited (CCHL) is one of Indias leading integrated spring solutions Company offering a comprehensive range of products and solutions catering to multiple industries. It is a leading manufacturer of Auto Suspension Springs as well as Power Brake Actuator Springs for Commercial Vehicles and is one of the leading market players in springs for other Industrial Applications. Business from the Auto Suspension Springs and Power Brake Actuator Springs accounted for more than 90% of the total turnover.

Macro-Economic Review Global

More than a year since the inception of the COVID-19 outbreak, the global economy is set to stage its most robustpost-recession recovery in eight decades in 2021. Although the rebound is expected to be uneven across countries, a way out of the pandemic is increasingly visible. Owing to the tireless efforts of the scientific community as well as frontline workers, millions of people are being vaccinated across the world. Governments are stepping up to support economic recovery and prioritise healthcare spending. Economies are also continuing to adapt to new ways of working despite social distancing restrictions. Global growth is expected to accelerate this year, largely on the back of major economies such as US and China. That said, growth will be partly dampened by the renewed outbreaks in many countries, particularly the emerging market and developing economies. Among low income economies, where vaccination has lagged, expansion is anticipated to be slow. With these varying rates of recoveries, policy actions will provecrucial. Policymakers will need to take into consideration the stage of the pandemic while balancing fiscal and monetary measures. Policies must take a far-sighted approach, boosting human capital, expanding access to digital resources and investing in a green, resilient and inclusive path. Global cooperation remains key to end the pandemic, facilitate widespread vaccination and lower macro-economic vulnerabilities.

In 2020, the world experienced a crisis like no other and it was expected to continue in 2021. Governments took bold steps to save lives and the economy with nearly USD 12 trillion in fiscal and about USD 7.5 trillion monetary action. The World Bank estimated4.3% contraction of the global economy in 2020. The pandemic has caused heavy toll on life and livelihood and pushed millions into poverty. This may impact economic activities and the income level for some time. Assuming success of the vaccine rollout, the World Bank indicated that the global economy will expand by4% in 2021. However, the latest surge of Covid-19 infection in the leading economies may dent the expansion to some extent.


Even before Covid, it was clear that real GDP growth was on a downward trend. Then came the full nationwide lockdown from 25thMarch 2020 right up to 31stMay 2020. GDP growth crashed by 24.4% in April-June 2020, which was the worst quarterly slump ever. July-September 2020 also posted a negative GDP growth of 7.3%. Then things slowly began to look up. For October-December 2020, GDP growth swung into the positive zone — tiny at 0.4% versus same quarter in the previous year, but positive nevertheless. As of now, we do not have the data for January-March 2021.

However, the Central Statistical Organisation estimates annual GDP growth for FY 2021 at (-)8%.

The writing on the wall is clear. In a pandemic wracked year, when virtually all segments showed serious de-growth in sales.


The Indian Automotive industry faced one of its most difficult years in FY 2020-21. The overall slowdown in demand, BS-VI compliance burden on costs and time line, and outbreak of COVID-19 pandemic weighed heavily on the entire industry. Consequently, it witnessed negative growth in all its key categories.

The Indian auto industry continues to work hard, amidst the challenge spresented by COVID-19, to maximise production and sales, while ensuring safety of its stakeholder fraternity, including employees, partners, customers and the surrounding communities. Cyclical sluggishness in the sector, exacerbated by the pandemic, reversed growth across all categories

As per data from Society of Indian Automobile Manufacturers, Passenger Vehicles closed the financial year with a de-growth in production by 13%. Commercial Vehicles production recorded an even sharper contraction of 32.4%. In a year that witnessed even Medium & Heavy Commercial Vehicles (MHCVs) and Light Commercial Vehicles (LCVs) post negative growth of 47.3% and 22.5% respectively, the overall industry production posted a drop of 17%.

India entered complete lockdown in early FY 2020-21, like most parts of the world, to contain the surge in infections and as the International Labour Organization correctly estimated, COVID-19 crisis proved not just a health crisis, but a social and economic one too. Stalled economic activity plunged Indias GDP growth below zero for two quarters in a row. GDP declined by 24.4% in the April-June 2021quarter and 7.4% in the next. With the rollback in restrictions and greater public expenditure, the economy stepped out of recession and registered a growth of0.5% in the third quarter and 1.6% in the fourth.

Automotive Spring Market size will witness growth owing to increasing focus on passenger safety, convenience and comfort. Positive outlook for automotive industry drives the auto parts and components demand. Expanding automobile sector in developing countries coupled with rise in disposable income and increasing spending on comfort and luxury will support the automotive spring market.

Based on products, automotive spring market is categorized in to coil, leaf, balance and flat spring. Coil springs acquires substantial share owing to its use in passenger cars and two wheelers for smooth vehicle experience. Leaf spring can bear high weight of cargo, absorbs vehicle shocks and carry tons of cargo for longer distance. Increasing demand of commercial vehicle will fuel product demand.

Based on vehicle type, automotive spring market is categorized in to PCV, LCV and HCV. PCV dominates the overall market owing to highest demand across the globe. OEMs focusing on improving driver experience and convenience will support the demand. Demand from LCV is driven by increasing public transport and taxi hire services.

The app-cab aggregators are expanding their operations extensively, resulting in higher demand for passenger vehicles.

The Company has received certifications from its United Registrar of Systems TS 16949 for quality of the products of the Company.

Automotive is one of the core pillars of the Indian economy. Any decline in the industry therefore significantly hurts the economy. The industry has been ravaged by multiple challenges in recent years. More recently, the situation has looked brighter. At the close of the fY 2020-21, the auto industry demonstrated early signs of having overcome its structural inhibitors and being poised to stage a strong comeback, fuelled by improving personal incomes and rising public spending on infrastructure

Financial Performance:

The year 2020-21 was a very uncertain & extremely tough year for the Company. The Indian Automotive industry faced one of its most difficult years in FY 2020-21. The overall slowdown in demand, BS-VI compliance burden on costs and timeline, and outbreak of COVID-19 pandemic weighed heavily on the entire industry and particularly on our Company. Moreover, Increase in Labour costs, Increase in Legal fees and in addition to that the cost of Inputs was also raised. Under the situation we witnessed an decrease of around 14.22% of turnover when compared with last year Turnover.

With new spring manufacturers coming into the Passenger Vehicle segment, thereby increasing huge competition, CCHL had to offer huge volume and cash Discounts to its Customers to retain and increase its Order Books. The Companys operations were under pressure to generate profits as this contributed to the Companys losses and put a lot of stress on its cash flow. Also, with developing of new segment and to maintain quality and delivery schedules, there was high stress on internal efficiencies resulting in spurt in elevation of raw material and operational costs. Concerted efforts are being made to reduce and control the raw material and operational costs in the current fiscal.

Product Development:

Because of high operational costs as explained above, CCHL was not able to adapt the new technology to increase its foray in the Front Suspension Springs for passenger cars and MUVs so as to further enable it to increase its presence in this segment again. However, with better control on its operational costs and reduction in raw material, the Company expects to start generating profits and be able to adapt the newer technology.


The shift towards zero emission mobility is an inevitable transition happening across the world and India cannot remain insulated from it. With growing focus on climate change and global warming, it is essential that India must move fast and take a leadership position in global electric mobility revolution. We at CCHL are already working towards that and trying to find better ways to support the electric mobility.

Moreover, the Government is already offering a number of incentive. Manufacturers such as Hyundai and Tata have already rolled out their EVs. In fact Tata Nexon EV was launched very recently. The Government shall continue to support EV segment and we at CCHL are continuing with our efforts to produce better products for EV segments.



Springs are being used in automobiles since a very long time because of the vital service in terms of comfort, safety and convenience that they provide. In case of suspension, they enhance the drivers handling over the vehicle as well as provide the comfort. The automotive spring market has been classified by type in Coil spring, leaf spring, balance spring, flat spring, and others. The automotive spring market is further segmented on the basis of the application in air bags, seat belts, suspension, fuel injection, clutch, valve, and others.

Increase in disposable income is one of the factors which has fuelled the demand for passenger vehicles. With changing buyers perspective there is an increase in demand for luxury and comfort. Additionally, with increase stringency in safety norms, the demand for safety features has increased. Alternatively, increase in infrastructure investments, and industrialization there is an extensive commercialization. This in turn has also led to a high demand of commercial vehicles. As a collective result of all factors, there is an increase in demand for automotive springs in the market

We are witnessing a transformational shift in the mobility domain, where the world is shifting towards shared and connected form of transport. India will be driver of shared, connected and zero mobility. By 2030 India is expected that nearly 35% of miles travelled shall be shared. Any change in the mobility landscape should be viewed through this prism. The slowdown is only temporary phase. The Automobile sector will bounce back.

In the wake of the continued drop in inflation and interest rates and favourable macro-economic sentiments, the RBI softened its stance on monetary tightening. Various policy measures were undertaken in FY 2019-20. Similarly, the Automobile segment is witnessing growing demand led by entrance of increasing number of foreign players.

Automotive Mission Plan 2016-26

• Indian automotive industry to grow 3.5-4 times of the current value of USD 74 billion to USD 260 -300 billion by 2026.

• India to be among top three automakers in the world along with China and US Auto Component to grow from the current levels of Rs120 billion to Rs 593.5 -732 billion

• Passenger vehicles likely to increase between 9.4 -13.4 million units from the current level of 3.2 million units Generate 65 million jobs (both direct and indirect) by 2026.

• OEM Domestic to touch 9.32 lakh and component market to 6.62 lakh by 2026.

• BSV norms to be adopted by 2019 and BSVI norms to be implemented by 2023 for passenger vehicles.

Moreover Global Automotive Leaf Spring Market 2021-2026 Research Report provides key analysis on the market status of the Automotive Leaf Spring manufacturers with best facts and figures, meaning, definition, SWOT analysis, expert opinions and the latest developments across the globe. The Report also calculate the market size, Automotive Leaf Spring Sales, Price, Revenue, Gross Margin and Market Share, cost structure and growth rate.


The Company faces several risks due to various uncertainties in external and internal factors. Prudent risk management system protects the Company and strengthen the business operations, as it is better prepared to face unforeseen challenges.

Human Resources

The Company believes that the key to excellent business results is an excellent talent pool. It values its human capital and provides them ample opportunities to grow. The Company ensures a safe, conducive and productive work environment in its plant and office. It provides regular skill and personnel development training to enhance employee productivity. Employee engagement is encouraged through increasing participation in QC (quality control) circles, kaizen and other suggestion schemes. Leadership development is a major thrust area, involving grooming at the next level for managerial and leadership roles. During the year under review, the Company considered the NEEM model for Skill India and Empowerment for the young professionals. This was a step in the direction towards Zero defect requirement from major OEMs suppliers. To enhance intra-functional and inter-functional effectiveness, the Company strives to develop synergy across different functions. As a part of the TQM culture of developing and growing talent internally, the Company focuses on education and training infrastructure. These initiatives have been acknowledged by multiple awards from customers and prestigious HR forums.

The Company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent development, information or events.