Danlaw Technologies India Ltd Management Discussions.


The financial statements have been prepared in compliance with accounting standards IND AS. The financial statements for Danlaw Technologies Inc. (our US subsidiary) have been prepared in compliance with US GAAP. Our Management accepts full responsibility for the integrity of these financial statements.

Market Scenario and Trends

The turnover of the automotive component industry stood at INR 3.4 lakh crore (USD 45.9 billion) for the period April 2020 to March 2021, registering a de-growth of 3% over the previous year. This is for the second year in a row that the turnover of industry has moved to the negative zone.

The decline from FY20 to FY21 is easy enough to understand. Two back to back waves of COVID-19, sharp rise in commodity prices in 2019-2020 and semiconductor shortage in 2020-2021 wiped out the industrys revenue.

The nationwide lock-down in wake of the pandemic, one of the severest in the world, put the entire supply chain in a disarray. The entire industry took a significant time to stabilise again post the gradual unlocking of the economy. While vehicle sales and production improved quarter-on-quarter from second quarter of FY20-21 onwards, however the first quarter of FY 21-22 was once again confronted with another round of disruptions due to the second wave of the pandemic. While this wave was a much severe humanitarian crisis, the lockdowns, however, were regional.

The challenges on the front of availability of semiconductors, escalating prices as also availability of raw materials, challenges on the front of logistics including non-availability and high prices of containers, among others, continue to hinder a smooth recovery.

The domestic auto sector could continue to face supply chain headwinds, especially due to semiconductor chips shortages, over the remainder of FY2021-22. This is likely to reduce the expected sales growth for the passenger vehicles (PV) segment, and to trim profitability, India Ratings and Research (Ind-Ra) said in a latest report.

It is expected that the semiconductor chips shortage to continue to the end of the first half of FY2022-23, though availability may gradually improve over this period. Original equipment manufacturers (OEMs) are reassessing supply chains to diversify and/or partially localise their raw material requirements over the near-to-medium term.

A third wave of pandemic is also anticipated, however the lessons from the first and second waves could help in coping with the overall crisis and current revival in demand could be a sustained one. However, the Indian OEMs are keen to adopt new age Digital solutions like Telematics and associated services, where your company continues to stay focussed, invested to create cutting edge products and solutions.


The next decade for the Indian automotive sector, the industry is being shaped by electronics which is one of the fastest growing automotive component segments.

Multiple factors are driving the growth of electronics in vehicles. Government safety norms, consumer demand for safer vehicles, and adoption of telematics systems are growth drivers for this market. As the mid and small-segment carmakers and two-wheeler companies also are starting to provide advanced features, demand for electronics is expected to remain robust in the near future. The major applications include safety, ADAS, infotainment, body electronics and powertrain. The shift is further catalysed by electrification.

The future of automotive is smart mobility. The car of the future will be software-driven. The Internet of Things (IoT) will make it connected and capable of not only monitoring its own components health and the safety of conditions (telematics) around it but also communicating with other vehicles and with an increasingly intelligent road infrastructure (C-V2X). These features will become a must for all cars, and the exterior or body will become commoditized.

Globally, the vehicle telematics market is expected to grow from $39 Billion to about $103 Billion by 2022. In that time frame APAC, which includes India, is expected to grow to be the leading contributor to the CV telematics market. (Courtesy Roland Berger report). Commercial Vehicle telematics market is expected to grow at 25% per annum.

Telematics ecosystem will involve diversified competencies:

• Manufacturing of hardware

• Distribution Connected Vehicle devices

• Connectivity Hardware

• Connectivity Services

• Data Analytics and knowledge generation

• Creation of applications and software.

The opportunities for Indian telematics providers include:

• Connectivity solutions

• Driver assistance and related services

• IT services including Cyber security

Threats, Risks and Concerns

A critical shortage of this important electronic component that began in the first quarter of 2021 has halted assembly lines around the world and India is no exception. The ongoing global chip crisis may douse the approaching festive season sparkles as the industry may have to scramble to meet the increased demand during this period. The situation has compelled vehicle makers to redesign products, source from the open market, and get into a three-way tie-up - i.e. car maker-tier I vendor and chipset maker. Due to the shortage, the vehicle makers are compelled to source parts from the open market at higher prices, affecting their margins.

According to analysts, chip supplies are expected to improve from Q3CY21 onward.

Moreover, the Indian telematics industry remains highly competitive. The competitive environment is further expected to intensify with increasing product extensions, more advanced offerings, technological innovations, and Mergers & Acquisitions.

Having recognized this, we have embarked upon re-design of our products to remain competitive at the same time combat the semiconductor parts shortage. We keep abreast of global developments as well as emerging technologies and develop innovative solutions of our own.

The exchange rate between USD and Rupee has fluctuated significantly in recent years and may continue to fluctuate in the future. Currency fluctuations can adversely affect our gross margins. The global economic uncertainties may lead to economic slowdown and hence our clients may defer their technology spending significantly. This may negatively affect our revenues and profitability. These risks are broadly industry wide risks. Your company has taken steps to address these unforeseen events and minimize the impact on the company.

Performance and Business Outlook

Your companys Engineering Division continues to create Intellectual Property by developing various hardware and software solutions to address the domestic opportunities. Some of the products are going into production phase as well as new products are being piloted at several existing and potential new customers.

While we continue to serve our existing automotive OEMs and Tier-1s with embedded software and testing services, we also place heavy emphasis on emerging technologies and opportunities. Our continued relationship with Danlaw Inc. enables us to stay in the forefront of the "connected vehicle" space

Your company continues to expand its customer base and invest in the advanced technologies. These along with our continued commitment to customer satisfaction enables us to grow our revenues.

Internal Control System and its Adequacy

Your Company has a policy of maintaining effective internal control system and focuses on strict implementation of these policies and procedures to safeguard the assets and interests of the Company.

Your Company has an Audit Committee comprising of two-thirds of Independent Directors of the Company. The findings of internal audit are periodically placed before the Audit Committee and the Board of Directors of the Company. The Audit Committee also reviews periodically the performance of statutory and internal auditors, and adequacy of the internal control systems.

To ensure that the financial transactions comply with current legislative requirements and accounting standards, your Company has developed a Financial Accounting Procedure Manual (FAM). The FAM contains procedures, which cover the effective and efficient financial administration of the Company.

Financial Performance

During the year under review the Paid Up Share Capital of the Company as on date is Rs. 3,70,74,900/ comprising of 37,07,490 Equity Share of Rs. 10/each.

The net Revenue for current year are Rs.10,042 Lakhs as compared to Rs.5608 Lakhs in the last fiscal year. The net profit after tax is Rs.160 Lakhs as compared to Loss of Rs.520 Lakhs in the previous FY.

Material Development in Human Resources

We are employee centric and believe that our employees are the heart of the organization. The managements responsibility is to care and support our employees. We continue to provide them with opportunities for career enhancement and growth. We continually strive to provide our employees with competitive compensation and benefit packages.

We are committed to provide the necessary training opportunities to enable them to adapt to the latest technological advancements. Additionally, we are taking steps to ensure the resources we have are utilized optimally.

As on date the Company has a total strength of 125 Employees.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companies objectives, projections, estimated and expectations may be forward-looking statement. Actual results may vary materially from those expressed or implied.


We, Sirish Batchu, Managing Director and A V R K Varma, Chief Financial Officer of Danlaw Technologies India Limited, to the best of our knowledge and belief certify that:

1. We have reviewed the Balance Sheet, Profit and Loss Account, its schedules & notes to the accounts and cash flow statement for the year ended 31st March 2021 and that to the best of our knowledge and belief:

a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

b) these statements together present a true and fair view of the Companys and are in compliance with existing accounting standards, applicable laws and regulations.

2. We also certify, that based on our knowledge and the information provided to us, there are no transactions entered into by the Company during the year which are fraudulent, illegal or violate the Companys code of conduct.

3. We accept the responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and the steps taken or propose to take to rectify these deficiencies.

4. We have indicated to the Auditors and the Audit Committee:

a) significant changes in internal control during the year;

b) significant changes in accounting policies during the year and the same have been disclosed in notes to the financial statements; and

c) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the companys internal control system.

DATE : June 30, 2021 Managing Director CFO
Email:csvrassociates@gmail.com DIN: 0008335245