Dynamatic Technologies Ltd Management Discussions.


Incorporated in 1973, Dynamatic Technologies Limited (‘Dynamatic Technologies or the ‘Company) is a manufacturer of highly engineered, mission critical products for the Aerospace, Automotive and Hydraulic industries. With futuristic design, engineering and manufacturing facilities in Europe and India, Dynamatic Technologies serves customers across six continents.

The Company is one of the worlds largest manufacturers of hydraulic gear pumps and automotive turbochargers and has held the leadership position in hydraulic gear pumps market for over 45 years. Dynamatic Technologies has 75% share of the Indian organized tractor market with supplies to almost all OEMs in India. Dynamatic Technologies is a pioneer and leader, both in the Indian private sector and the UK for the manufacture of precision flight critical, and complex airframe structures and aerospace components. It is a Tier-I supplier to the global aerospace OEMs such as Airbus, Boeing, Bell Helicopters and Hindustan Aeronautics Limited. The Company also manufactures high precision, complex metallurgical ferrous for performance critical components such as turbochargers and exhaust manifolds and has capabilities to develop automotive components on single-source basis. Dynamatic Technologies facilities located in India (Bengaluru, Chennai, Coimbatore, Nasik), United Kingdom (Swindon, Bristol) and Germany (Schwarzenberg), are lean, green and clean, and designed to support neighbouring communities as well as the environment. The Company is vertically integrated, with its own alloy-making and casting capabilities as well as its own captive green energy sources.

Dynamatic Technologies operates in three business segments: Hydraulics, Aerospace & Defence and Automotive & Metallurgy.

Dynamatic Hydraulics is one of the worlds largest Hydraulic Gear Product manufacturers with three state-of-art manufacturing facilities located in India and a facility each in UK and Milwaukee, USA. This division manufactures hydraulic gear pumps in aluminium or cast iron and multiple frame sizes. Dynamatic Technologies products include low torque high speed hydraulic motors, hand pumps, hitch control valves, rock shaft assemblies, power steering valves and mobile control valves for construction equipment and global OEMs. It also commands a strong market share on most of these products. The division also manufactures very high flow scavenging and lubes oil pumps, and water pumps for high horsepower engines, which find applications on off highway vehicles, marine and offshore equipment. The Company also designs and builds customized hydraulic solutions, from simple hydraulic pumping units to complex marine power packs and aircraft ground support systems to turnkey industrial installations. The division is equipped with advanced innovation and development centers in Bengaluru (India) and Swindon (UK) and holds a number of patents to its credit.

Aerospace & Defence: The products include control surfaces such as wing, ailerons and wing flaps, fuselages, and other key flight critical airframe structures such as flap track beams. The Aerospace Division has developed excellent capabilities in automated robotic machining, 5 axis components in aluminium, steel and titanium. Tooling is another proven expertise the division has demonstrated. Dynamatic-Oldland Aerospace is a pioneer and leader in the Indian private sector for the manufacture of high precision airframe and aerospace components. The Company has large infrastructure to cater to the needs of global OEMs such as Airbus, Boeing, Bell Helicopters and HAL as a Tier-I supplier.

The Automotive & Metallurgy division supplies performance critical automotive parts for global passenger car and commercial vehicle manufacturers. It produces high precision, complex metallurgical ferrous castings for engine, turbocharger, steering, brakes and chassis components. The Company possesses state-of-the-art manufacturing facilities in India and Germany. Dynamatic Technologies can vertically integrate the competence and locational advantages of its facilities to deliver greater value to its customers. The Company divested its aluminium business in FY2019 to rationalise its product mix and enhance margins.


With three design laboratories across India and Europe, Dynamatic Technologies is a leading private R&D organization, with several inventions and patents to its credit. The Company has defined an Intellectual Property (IP) strategy to build an effective portfolio for future monetization, collaboration and risk mitigation, focusing on future technologies.

The Company owns 21 patents to its credit in various countries including India, USA, UK, Germany, and other European countries. There are few patent applications pending for registration. Besides the patents mentioned above, the Company has registered eight trademarks and applied for multiple others in various countries including India, USA and UK. Dynamatic Technologies employs over 65 scientists and 615 engineers and technicians with expertise in Mechanical Engineering, Advanced Computer Aided Engineering, Computer Aided Manufacture, Materials & Metallurgical Engineering, Fluid Dynamics, and Defence & Aerospace & Medical Devices Research. The state-of-the-art JKM Science Center brings together Design Engineering, Development, Prototyping, Metallurgical and Manufacturing Infrastructure enabling the Company to comprehensively address the needs of its global customers.

The Dynamatic Hydraulics Research Laboratory in Swindon, UK, has advanced design knowledge, focused on the Mobile Hydraulics, best in class engineering capabilities and intellectual property with several patented products and designs. This facility provides testing and validation of new products for various OEM customers.


With a 4.9% decline in world GDP forecasted by IMF in 2020, the global economy seems likely to experience its worst recession, far worse than the financial crisis of 2008. Developed economies are projected to contract by 8.0% in 2020, owing to the containment measures undertaken by governments to contain the COVID-19 outbreak. The lockdowns and movement restrictions have also dealt a major blow to economic activity. Emerging markets and developing countries are projected to decline by 3%. Severe demand shock, tightening in global financial conditions and a drop in commodity prices will impact the economic activity severely. Even economies that have not been affected by the pandemic will face spill over effects of other economies. Due to the unpredictability of the pandemic, demand and supply disruptions, changes in spending patterns and behaviour and confidence levels, there is an uncertainty in gauging the global growth forecast. Central banks have injected monetary stimulus and liquidity facilities to stimulate individual economies and reduce systemic stress. This will ensure smoother recovery and reduce the burden during the pandemic. [Source: IMF World Economic Outlook June 2020]


The pandemic has brought an already struggling economy to a grinding halt, drastically increasing uncertainty. As per the IMF, India is projected to contract by 4.5% in 2020 due to the extended lockdown period and slower recovery. The lockdown completely disrupted the manufacturing sector and services industry resulting in supply side and demand disruptions. Sharp FPI outflows led to the weakening of Rupee against the Dollar. Even with FPI outflows the BoP (Balance of Payments) remained resilient due to the sharp decline in crude prices and rests on a manageable current account deficit. As a response to the economic effects of the lockdown, RBI has infused the banking sector with liquidity and reduced reverse repo and repo rates to curtail banks from depositing funds with them. The government has responded with two stimulus packages in March and May 2020 to further stimulate the economy. COVID-19, the accompanying lockdowns and the expected contraction in global economy in 2020 weigh heavily on the growth outlook for India. It would also depend upon the speed with which the outbreak is contained and economic activity returns to normalcy. Significant monetary and liquidity measures taken by the Reserve Bank and fiscal measures by the government would mitigate the adverse impact on domestic demand and help spur economic activity once normalcy is restored. [Source: IMF World Economic Outlook June 2020]


Dynamatic Hydraulics is one of the worlds largest manufacturers of hydraulic geared products with state-of-the-art manufacturing facilities located in India, UK and USA. This division manufactures widest range of hydraulic gear pumps in aluminium and cast iron construction, different frame sizes, pressure and flow ratings and designed bespoke for each application, high speed low torque motors, hand pumps, hitch control valves, rock shaft assemblies, lube and water pumps, mobile control valves, Orbitrols and complete hydraulic solutions for the Indian and overseas markets.

Industry Overview and Outlook Farm Mechanisation

The domestic tractor industry in India experienced a slow down this year. Q1 and Q2 of FY2020 had witnessed negative year on year growth with some signs of recovery towards the end of Q3 largely due to the improved sentiments around the festival season. However, the COVID-19 pandemic which started around December 2019 had started showing stress signals and the lockdown measures hampered any signs of recovery. The industry overall witnessed a 15-16% Y-o-Y drop in production volumes. India has remained closed for April 2020 and there are certain parts of the country which are still under lockdown while others are having restrained operations with limits on number of people to cater to the social distancing norms due to unavailability of migrant labours who have since moved to their respective hometowns. Unless every single link of the supply chain ecosystem is fully up and running, industries will find it hard to ramp up quickly. The monsoon is expected to be good and that augurs well for the Tractor Industry. Government of India continues to come up with pro-farmer, pro-agriculture and pro-rural reform measures and that could also improve the demand for tractors. With all this, FY2021 is still expected to be flat at best. Exports could remain weak due to logistics constraints and the impact COVID-19 has had on all economies. However, exports form a very small percentage of total tractors produced in India (10%), and therefore the impact is expected to be relatively low.

Construction and Material Handling

The construction and off highway vehicles sector experienced a muted performance mainly due to large stressed assets acting as a deterrent to banks for lending. The long-term outlook is positive, with the Governments plans of spending on infrastructure development. Challenges include efficient utilisation of capital and support from the state and private sector. In the near term, this sector is expected to remain under pressure.

Segment Overview

Dynamatic Hydraulic manufactures high precision hydraulic aggregates for tractors, construction equipment, material handling and machine tool industries. The Company has three state-of-the-art manufacturing facilities at Bengaluru for aluminium pumps, cast iron pumps and agriculture sector valves. This manufacturing facility is supported by the Department of Scientific and Industrial Research (DSIR) approved design and R&D center and a rapid prototyping laboratory.

The Company continues to enjoy a leading market share of approximately 75% in the organized Indian tractor industry and is the partner of choice for almost all the tractor OEMs globally. Dynamatic Technologies also designs and builds hydraulic hitch control valve with draft control and complete rockshaft assembly for the agricultural tractors.

The demand for equipment with higher horsepower (i.e. over 50 HP) is expected to continue to grow faster than the industry both in the domestic market as well as internationally. Dynamatic Technologies is strategically positioned to cater to this market sector with highest installed capacity in India to produce tandem pumps. The tractor industry in India is expected to grow with current farm mechanisation levels only at around 50% as compared to Europe or America where the mechanisation levels are to the tune of 85%. This local demand will continue to drive growth for Dynamatic Technologies, from the local tractor manufacturing companies in India. There is also an increasing global demand for mid HP tractors (up to 75 HP) that most Indian tractor companies are manufacturing. Current levels of exports stand at meagre 10%, which in next 5 years is expected to rise to over 25%. The growth for Dynamatic Technologies will be driven not just by the domestic demand but also by the demand for domestic tractors in global markets. The Company is also increasing its share of business with all tractor manufacturing OEMs which will further aid future growth. While continuing to consolidate its market leadership position in agriculture sector and given the growth potential in the construction equipment sector, Dynamatic Technologies is investing in the development of high pressure, heavy-duty cast iron pumps to cater to the construction equipment sector. These products are in various stages of development and testing, which will cater to the global OEMs. The Company has already developed hydro motors for this sector, which are currently undergoing trials with various global OEMs. The Company has also integrated its supply chain into a global supply chain for hydraulics which provides the Company with better bargaining capabilities and enables it to keep its costs competitive.

Operational and Financial Performance: Rs ( in Lakhs)

Particulars FY2020 FY2019 Change (%)
Revenue 29,500 36,310 (18.8)%
EBITDA 2,286 4,155 (44.9)%
Margin %



Adjusted EBITDA 1,493 4,155 (64.2)%
Margin %



EBITDA adjusted for the impact of IND AS 116 to make it comparable with previous year.

The Hydraulics segment was impacted by the global slowdown and the pandemic led lockdowns. Q4 FY2020 witnessed reduced aftermarket sales that impacted the growth. The Company is focused on shifting from outsourcing to in-house production for reducing dependency on third party vendors, increasing utilisation levels, minimising wastages, and enhancing cost controls.

The UK operation reported a flat performance in FY2020 largely due to uncertainties around Brexit. Tractor market in the US had a subdued performance. These two factors impacted the overall performance at Dynamatic Swindon operations. Swindon engineering team has been involved extensively in new product and new market development and have been awarded some interesting projects through large OEMs which are expected to hit full scale production in 2021. Swindon plant has continued to focus on its cost reduction and efficiency improvement projects which is expected to result in margin expansion and will also enable the Company to gain market share. The agrimarket sentiment for FY2021 in the USA looks better compared to the previous year and the Company is experiencing a rising demand from tractor OEMs.


Industry Overview and Outlook

Factors driving progress in the aerospace and defence industry include strong economic growth leading to rapidly expanding domestic demand (Atmanirbhar Bharat) liberalization of civil aviation policies, offset requirements, a robust domestic manufacturing base, cost advantages, a large talent pool, the ability to leverage IT competitiveness and a liberal Special Economic Zones law that provides attractive fiscal benefits for developers and manufacturers. The airport sector expects an infusion of US$ 6 billion in the next 5 years and there could be a demand for more than 2,100 new aircraft in India over the next two decades, which would be dominated by single-aisle aircraft. However, the industry is facing certain challenges such as access to technology, high cost of raw material and stringent certification processes.

Commercial Aerospace

Govenment of India has launched UDAN-RCS, UDAN (Ude Desh ka Aam Naagrik) is a regional airport development and "Regional Connectivity Scheme" (RCS) with the objective of "letting the common citizen of the country fly", aimed at making air travel affordable and widespread, to boost inclusive national economic development, job growth and air transport infrastructure development of all regions and states of India. At the beginning of the scheme, out of total 486 airports, 406 were participating unserved airports, 27 were well served airports out of 97 non-RCS airports and 12 were operational airports out of 18 participating underserved regional operational airports (Nov 2016) with regular fixed-wing scheduled flights. UDAN scheme will add to this number by expediting the development and operationalisation of Indias potential-target of nearly 425 unserved, underserved, and mostly underdeveloped regional airports with regular scheduled flights.

The Indian aviation industry is currently the seventh largest aviation market in the world and is growing at a strong rate and is expected to become the third largest aerospace industry by 2024. Driven by the rapid increase in passenger traffic over the last few years, almost all Indian airlines are focused on increasing their capacities. The commercial aircraft order backlog is at its peak of more than 14,000, with about 38,000 aircraft expected to be produced globally over the next 20 years. By 2027, the Indian operators fleet size is expected to total more than 1,000. Key focus is on modernization of airports, communications, navigation and surveillance systems for air traffic management, radars and facilities for maintenance, repair and overhaul of aircraft and subsystems.

Defence Aerospace

The Defence industry of India is a strategically important sector in India. The total budget sanctioned for the Indian military for the financial year 2019 is 4,31,011 ($60.9 billion). In 2020, India with third largest annual defence budget (US$70 b) behind USA (US$732 b) and China (US$261 b), and second largest defence imports behind Saudi Arabia making up 9.2% of global arms import, also has domestic defence industry 80% of which is government owned public sector including DRDO and its 50 labs, 4 defence shipyards, 5 defence PSUs and 41 ordnance factories, has come up with new draft 2020 Defence Manufacturing Policy to reduce imports and enhance domestic manufacturing.

Government of India has taken initiatives to achieve higher levels of indigenization and self-reliance in the defense sector, by harnessing the capabilities of public and private sector industries in the country.

In order to further encourage procurement from local Indian suppliers, in May 2020, the central government issued a Public Procurement Policy to encourage the Make in India initiative, and promote manufacturing and production of goods and services indigenously in India. As a part of the Aatmanirbhar Bharat Abhiyan, initiated by the Government of India in June 2020, the Indian defense ministry has proposed to ban the import of defense weapons that can be indigenously manufactured. These steps by the government are expected to boost private sector participation in the defense manufacturing industry.

Segment Overview

Dynamatic-Oldland Aerospace ("DOA") India, is the lorgest aerostructures Tier - I suppler in south-east Asia and a recognized leader in the Indian private sector. The Company is vertically integrated to manufacture CNC and sheet metal components, with soft and hard tooling assembly, jig manufacturing along with comprehensive engineering capabilities. The Aerospace & Defence Division has the largest infrastructure in the Indian private sector for the manufacture of complex aero structures. QMS is AS9100 approved, NADCAP approved for heat treatment, spot welding, non-destructive testing and metrology, the Company is also approved by major OEMs like Airbus, Boeing, Bell Helicopters and HAL. This is the first time such capabilities have been developed in the Indian private sector.

The Companys modern and state of the art manufacturing facilities in India and UK deliver high value to its customers, by seamless integration of highly skilled workforce in India and cost of capital for manufacturing in UK. The Company has launched ‘Mission Zero as the language of change to drive continuous improvement culture for sustainable growth and increase value to the customers and shareholders.

The Company has delivered over 5,500 aircraft sets till date and is working closely with Spirit Aero Systems to ramp up production requirements. Dynamatic Technologies has secured a contract to supply flap track beams for the long-range aircraft variants in the Airbus A330 family. First article was delivered in FY2018 and the project has a deep industrialization with over 96% of details manufactured within Dynamatic Technologies and the final assembly shipped to Airbus. The Company is a single source supplier making us the largest flap track beam manufacturer in the world. In FY2020, Dynamatic Old land-Aerospace received industry wide recognition and won a few major awards: April 2019: 2nd place in the TPM Kaizen competition organized by CII and TPM Club of India July 2019: 1st and 2nd place in Kaizen competition organized by CII

July2019: Global Awards for Excellence in Quality Management & Leadership for the ‘Best Process Improvement Category" organized by World Quality Congress July 2019: 1st place in 3M Competition organized by CII and TPM Club of India Sep 2019: 5 Gold awards in QCC Competition organized by QCFI

Nov 2019: 1st place in Quality Excellence Award organized by Qualtech Jan 2020: 4 Gold awards in Poka Yoke Competition organized by QCFI

Operational and Financial Performance Rs ( in Lakhs)

Particulars FY2020 FY2019 Change (%)
Revenue 49,760 46,885 6.1%
EBITDA 15,252 11,684 30.5%
Margin %



Adjusted EBITDA 12,316 11,684 5.4%
Margin %



EBITDA adjusted for the impact of IND AS 116 to make it comparable with previous year.

Continuing order book execution and delivery led to revenue growth in FY2020, in particular, ramp up of orders from Bell Helicopters. The last quarter was partially impacted due to COVID-19 lockdown and subsequent postponement of deliveries. With all this, during FY 2021, owing to COVID-19 there is a demand drop primarily because of Customer Order deferment. The Company has won orders from the Indian Defence Public Sector Undertakings (PSUs) to mitigate the slowdown in the civil aviation sector. This segment is focused on developing capabilities in large aero-structural assemblies, composites and high precision aero- structure designing and manufacturing.

Dynamatic Homeland Security, offers cutting edge security products and technologies such as unmanned aerial vehicles, mobile surveillance vehicles, under vehicle scanners, bollards, boom barriers and RFID based access controls. These solutions are aimed at enhancing the potential customers capabilities in countering modern day security threats. The Company has industrial defence production licenses from the Ministry of Commerce & Industry, Government of India for the manufacture of drones (unmanned aerial systems).


Industry Overview and Outlook

The automotive industry has evolved significantly over the past decade. Digital technology led changes in customer preferences and economic health have played a vital role in this evolution. OEMs are taking note of this evolution and investing heavily in non-commercial business practices of manufacturing vehicles. Alternative revenue sources are rapidly taking over the market. Mobility companies have grown exponentially over the past few years. Connected technology has become even more important and fundamental to the advancement of vehicles, bringing in a host of new features and offerings.

The global automotive industry faced a challenging phase in 2019 with OEMs impacted by multiple headwinds all over the world. China faced its first decline in vehicles sales in over 20 years and the USA market grew only marginally. The adverse impact of the Brexit and NAFTA 2.0 deals were only accentuated by the US-China trade war. This is expected to play out till 2020 with global markets expected to rebound by around 2023.

The fundamental growth drivers in the automotive industry remain intact and the sector is likely to see an upward trend in demand in the coming years as the economic environment improves and investments increase. The governments ‘Make in India initiative has played an important role in elevating the countrys position and it has improved on ease of doing business in the last few years. Today, India is looked upon as a favourable destination for low-cost manufacturing. The World Economic Forum has ranked India 30th on the Global Manufacturing Index, which assesses the manufacturing capabilities of countries. Currently, Indias automotive industry is at an inflection point and is witnessing five megatrends that are expected to transform the industry in a big way. Rapidly evolving customer needs, the disruptive impact of technology, the dynamic regulatory environment, changing mobility patterns and global interconnectedness are all impacting the way auto companies are doing business today globally and in India.

Disruptive impact of technology

According to a report by Bloomberg New Energy Finance (BNEF), India will see progress on electric two-wheelers, rickshaws and electric buses over the next 10 years and by 2040, EVs will constitute 40% of the total passenger vehicle fleet in the country. However, while transportation infrastructure continues to be augmented, EV charging infrastructure (with less than 1000 charging stations in India) is yet to take off. In this scenario, the industry is expected to face unique challenges with changing mobility infrastructure, the specifications of fast-charging standards and exploration of enhanced technology options.

Globally interconnected industry Global and local markets offer a sustained growth potential for the Indian automotive industry. An increase of FDI in India and the emergence and adoption of globally emerging megatrends and technologies in India are expected to result in the countrys increased dependence on other countries at every step of the automotive value chain, e.g. R&D, purchase of raw material, power electronics, manufacturing support and sales. Therefore, automotive companies ability to put in place and implement effective global and local strategies to manage risks and build their capability to drive their strategies will be of paramount importance.

Segment Overview

JKM Ferrotech Ltd (JFTL), subsidiary of the Company located in Chennai, possesses best-in-class manufacturing and testing facilities with the capability to produce and supply performance critical automotive components. It produces high quality technology oriented components for engine, turbocharger, steering, brakes and chassis for Indian and global automotive OEMs like Volkswagen (Germany), BMW (Austria), Daimler (Germany and India), MAN (Germany) Hyundai Motors (India) and Isuzu (India). JFTL offers unique locational advantage to the OEMs and Tier-I suppliers in and around Chennai. JFTL is the preferred supply partner to Hyundai Motors, India for more than two decades for the exhaust manifolds in High Si-Mo metallurgy. It is also one of the major suppliers to Daimler, India for the chassis and cabin parts for their heavy-duty trucks.

JFTL specialises in manufacturing of brake parts and is a strategic supplier for Foundation Brakes International and Haldex India for the passenger car and commercial vehicle brakes, respectively. The Company is the single source supplier for Foundation Brakes International and is currently partnering with them in the development of next generation, Zero Offset Harmonized evolution (ZOHe) brakes. Maruti Suzuki India has approved JFTL as a Tier-II supplier for their chassis brakes. The Company is one of the major suppliers to Haldex, Nasik for the commercial vehicle brake parts and presently engaged in the development of complex designed parts for Haldex Hungary. JFTL has consistently achieved best results in terms of number of cycles in the endurance tests. New business from Myunghwa Automotive for the safety critical Steering Knuckle, BSIV parts from Daimler, India and Turbo Energy Ltd were some of new orders in the last year. On line fully robotic X-ray testing equipment is under commissioning for 100% checking of the Steering Knuckles and its a key addition to the in-house testing facility at JFTL. Eisenwerk Erla GmbH, Germany, is a preferred supplier of precision, complex metallurgical products for automotive engines and turbochargers to leading global automotive OEMs including Audi, BMW, Borg Warner Turbo Emission Systems, Daimler and Volkswagen and off-high way vehicle majors. With a history of over 630 years, Eisenwerk Erla possesses one of the finest ferrous foundries in Europe, capable of manufacturing extremely intricate ferrous castings in exotic metallurgy. It also has strong R&D capabilities with patented technologies specific to the automotive industry. Eisenwerk Erla continues to provide access to the latest technology and the European markets, which differentiates us from our peers in this industry. The Companys machining facility is fully robotized which incorporates the latest technological innovations and will allow Eisenwerk Erla to increase its competitiveness in manufacturing high value precision parts of BMW.

Operational and Financial Performance Rs ( in Lakhs)

Particulars FY2020 FY2019 Change (%)
Revenue 52,613 66,833 (21.3)%
EBITDA 2,884 2,509 14.9%
Margin %



Adjusted EBITDA 1,370 2,509 (45.4)%
Margin %



EBITDA adjusted for the impact of IND AS 116 to make it comparable with previous year.

During the year FY2020, the automotive segment saw a reduction in top line growth due to the slowdown of the global and domestic auto industry. However, with the Companys continued focus on margin expansion, low margin products rationalisation continued during the year. Over the longer term, the Company expects to derive further synergies. The shift in production facilities from China to Europe will help improve Companys product base and in turn drive business. Overall, Dynamatic Technologies continues to focus on high margin product mix, exports, ramp-up of existing products, performance-critical components, customer diversification, steel castings and capacity utilization for this segment.


Dynamatic Technologies being a Tier-I supplier for OEMs has continuously invested in technology to make the business more cost effective and world class. The Companys best practices include implementing lean manufacturing and continuous improvement programs. Dynamatic Technologies has also launched QSP Quality, Safety & Productivity, as its new business initiative to emphasise these aspects to the customer.

The Company has state-of-the-art rubber press, inspection equipment like CMM and laser tracker, paint booths, high accuracy 5-axis machines which are one of the largest giga milling machines in the country. This giga milling machine comes with a special probing software system enhancing the capability of the machine beyond a CMM.

Dynamatic Technologies has also launched a skill initiative for its direct and indirect work force using a software called CATI (Competency Assessment & Training Identification). The software is designed to map each of the employees skill level and training needs. This in turn enables the management to provide the required training for the work force.

The Company has also established an in-house Skill Development Center to train and mentor new recruits. Having adopted a Government ITI under PPP, Dynamatic Technologies provides training to the students, preparing them to serve in any Aerospace and Defence industry in order to make the ‘Make In India drive a great success.

In November 2019, Airbus Group had conducted an Industrial Process Capability Assessment (IPCA+) on DOA. DOA surpassed this evaluation with a fabulous score of 78.6%, which is the highest score any supplier in the aero- structures portfolio had ever achieved. With this score, DOA remains at the top, amongst the list of aero-structure suppliers in Asia Dynamatic-Oldland Aerospace, UK is a demonstrated leader in the development of exacting airframe structures and precision aerospace components. It has two unique state-of-the-art facilities in Bristol and Swindon, possessing complex 5 axis with robotic machining capabilities for the manufacture of aerospace components and tooling. It also offers a fast track facility, working with all the major primes and manufactures necessary holding fixtures. Dynamatic Technologies specializes in reverse engineering, fixtures and design manufacturing. This division is a certified supplier to Airbus UK, GKN Aerospace Europe & USA, Spirit AeroSystems, Boeing, Magellan Aerospace, GE Aviation Systems and Leonardo. It is compliant with BSI ISO 9001:2000 and AS 9100 Rev D standards. Dynamatic Technologies has also been accredited with Environmental Management System (EMS) certification under ISO: 14001. The Aerospace Division has been continuously expanding to build capabilities in large aero-structures and complex engineering both in the UK and India. The Swindon facility has been expanded and now manufactures main landing gear parts and over wing details for the Airbus fleet. The Company is a pioneer in the Indian and UK private sectors, with a demonstrated track record for the manufacture and development of complex aerostructures. Dynamatic Technologies offers its customers a comprehensive solution of high capex, highly skilled multi-axis machining from the UK and high value added, highly skilled sheet metal details and assembly from India. This provides customers with offset credits and best value from two cost models.


An analysis of key ratios for the period under review is as follows: ( in Lakhs)

Profitability FY20 FY19 Change Comments
Ratios (%)
EBITDA 18,986 17,524 8.3% Due to adoption of IND AS 116, effective April 1, 2019, results for FY2020 is not comparable with previous
(in lakhs
EBITDA 14.4% 11.7% 270bps
Net Profit 5,506 3,116 76.7% Deferred Tax reversal on Impairment of investment in subsidiaries
(lakhs Consolidated from continuing operations)
Net Profit Margins 4.2% 2.1% 210bps
Liquidity FY20 FY19 Change Comments
Ratios (%)
Debt Equity 2.0 2.0 (1.9)% -
Current 1.5 1.6 (5.4)% -
Interest 1.2 1.6 (24.2)% Lease rentals have been reclassified to depreciation
Return FY20 FY19 Change Comments
Return on Net Worth 15.8% 9.8% 602 bps Improved earnings
Return on Assets 3.8% 2.2% 161 bps -
Return on Capital 10.2% 13.4% (319) bps -
Turnover FY20 FY19 Change Comments
Ratios (%)
Creditors 2.3 2.8 (18.5)% Cash conversion cycle remained flat y-o-y
Debtors 5.6 6.5 (21.4)%
Inventory 2.4 2.7 (14.0)%


Share Capital Rs ( in Lakhs)

Year Ended 31st FY20 FY19 Change
March (%)
Share Capital 634 634 -
Reserves & Surplus 36,679 31,855 15.1%

As at 31st March 2020, the Company had an authorized share capital of Rs 2,500 lakhs, divided into 2,00,00,000 equity shares of Rs 10/- each and Rs 500 lakhs divided into 5,00,000 redeemable cumulative preference shares of Rs 100/- each. During the year under review, there is no change in the Companys issued, subscribed and paid-up equity share capital. The Reserves and Surplus were Rs 36,679 lakhs, as on 31st March 2020, increase of Rs 4,827 lakhs compared to 31st March 2019.

The increase is attributable to Rs ( in Lakhs)

Profit generated during the year 3,906
Credit balance arising on consolidation 997
Total 4,903
Other Comprehensive loss during the year 76
Total 76
Net Comprehensive Income for the year 4,827
Borrowings (Rs in Lakhs)
Year Ended 31st March FY2020 FY2019 Change
Long term borrowings 38,755 44,316 (12.5)%
Short term Borrowings 21,995 21,604 1.8%
Total 60,750 65,920 (7.8%)
Lease Liability 13,533 - -
Total 74,283 65,920
Fixed Assets (Rs in Lakhs)
Year Ended 31st March FY2020 FY2019 Change
Property Plant and Equipment 58,863 52,594 11.9%
Intangible Assets 2,339 2,541 (7.9)%
Capital work in Progress 301 556 (45.9)%
Right-of-use assets 11,723 - -
Total 73,226 55,691

Capital Expenditure

During the year under review, your Company incurred capital expenditure of Rs 5,666 lakhs for physical infrastructure and Rs 139 lakhs for procurement of intangible assets. Significant investments have been made in building infrastructure, state-of-the-art machinery, design software, data security, information systems, and design and development activities for the future benefits of your Company.


The inventories of the Company mainly comprises of raw materials of Rs 8,760 lakhs, work in progress of Rs 13,887 lakhs, finished goods of Rs 2,692 lakhs and, stores and spares of Rs 1,157 lakhs.


Manufacturing for India, in India: Going forward, Indias appeal to potential investors will be more than just its low-cost labour as manufacturers are building competitive businesses to tap into the large and growing local market. Further reforms and public infrastructure investments could make it easier for all types of manufacturing businesses to achieve scale and efficiency.

Increasing Farm Mechanization: Indias proportion of mechanised farming is considerably lower than other developed agricultural geographies. The growing need of modern agricultural equipment and mechanization is driving the demand for equipment such as tractors, harvesters, and tillers. However, this is an uphill battle as farm mechanisation is region specific and a large part of India is yet to transition to mechanisation and reduce manual labour. Government of India continues to come up with pro farmer, pro- agriculture and pro-rural reform measures and that could improve the demand for Agri tractors.

Favourable Industry Dynamics: Rising disposable income and a young population will bode well for the auto industry. Policies issued by the Government will also be favourable to the auto sector in the long term. In addition, with increasing acceptance of digital solutions, a new wave of emerging technologies is on the cusp of affecting the industry at various levels. Although, due to the pandemic, the Industry is expected to remain under pressure in the near term.

Strong Technology and Manufacturing Platform: Dynamatic Technologies is always committed to enhance its existing capabilities and with that focus it has made significant investments, in particular, the Aerospace segment. The Companys performance is expected to benefit from the ramp up in the order book of the Aerospace segment.

Diverse Product Portfolio and End Market Segments: Dynamatic Technologies product portfolio is diversified across three key business segments, namely Hydraulics, Aerospace and Automotive. This spread ensures that the Company performance is relatively stable and not dependent on any single industry segment. The Company has an optimum mix of high growth and stable end markets.

Regulatory changes: Increased stringency and compliance requirements in regulations related to environment and safety standards such as BS VI are expected to increase cost and complexity for the component manufacturers. Further, as OEMs seek to develop alternative powertrain technologies, suppliers will be required to provide more value-added content per car. With a wide product portfolio and a strong R&D base, Dynamatic Technologies is positioned to capitalise on the industry opportunities. Government investment in the automotive sector and infrastructure development will also help Dynamatic Technologies grow.


Growth in Indian economy: As per the IMF, India is projected to contract by 4.5% in 2020 due to the extended lockdown period and slower recovery. Contraction in Industrial activity has eased as compared to the earlier part of the year and manufacturing recorded a year on year decline of more than 75% in April and May 2020. Although there are near term uncertainties and challenges, the long-term dynamics of India growth story remain intact.

Competition: The business environment in which the Company operates is highly competitive in nature. In the Auto sector, most OEMs maintain multiple suppliers for their products and do not prefer exclusive contracts. However, Dynamatic Technologies believes that this is not a major concern as they focus on enhancing the quality of the product and ensure customer satisfaction. Furthermore, the longstanding relationship that it has with the global OEMs is an added advantage.

Impact of COVID-19: The pandemic has taken the whole world by surprise. Lack of preparedness to deal with such calamities and lack of a unified global voice will be a concern. While globalisation has always given us the best of technologies and resources at the most competitive prices, pandemics like this emphasise the importance of building a local ecosystem, a local cluster in and around our areas of operation. That is a new paradigm. Working from home, which is going to be the new normal, will throw up data security concerns which need to be tackled.

Technological Changes: The business segments in which the Company operates are very technology driven and therefore the Companys products tend to have a shorter life cycle. Dynamatic Technologies is always focused on Research & Development and believes that technological enhancement is an integral part of the culture of the organization. The Company works closely with its customers to better understand their needs and develop suitable products tailored to their requirements. The dedicated R&D center of the Company is engaged in design and prototyping of new products, improvement of existing designs and continuous improvement of existing processes.

Foreign Currency Fluctuations: Given the nature and scale of the business, the Companys operations are exposed to various foreign currencies. The volatility in the foreign exchange rates can impact the financial performance and hence the Company is closely monitoring these risks and adopting appropriate hedges / forward contracts to mitigate such risks, whenever required.

Global Macroeconomic Uncertainty: The Companys business operations are global in nature and thus impacted by the economic volatility prevalent across the world currently. Over the last few years, global economic growth has remained subdued and several key markets have faced economic challenges. These are further impacted by US China trade tensions, escalating protectionist trade policies being implemented worldwide and the growing socio-political instability. This is further being elevated by the pandemic that has caused disruptions to global production and manufacturing. The Company closely monitors the factors impacting the macroeconomic performance in its key markets and to counter these risks continues to broaden its product segments, increase customer base and enhance geographic reach.


Effective risk management is fundamental to the business activities of the group. While we remain committed to increasing shareholder value by developing and growing our business within our board-determined risk appetite, we are mindful of achieving this objective in line with the interests of all stakeholders The Company emphasizes on achieving the corporate strategic objectives by following best practices in Risk Management. It has formulated a risk management policy and has in place a mechanism to inform the Board Members about risk assessment and minimization procedures and periodical review to ensure that executive management controls risk by means of a properly designed framework. Our policy is based on the following principles: The Board of Directors and Management are responsible for monitoring internal risk management

Effective risk management and internal monitoring will reduce the likelihood of errors, wrong decisions and surprises due to unforeseen circumstances; In order to thrive, an enterprise must take risks. The Management Board is responsible for determining the limits of what is acceptable (referred to as ‘risk appetite). Line managers are responsible for the implementation of risk management for the processes for which they are responsible. This mechanism is implemented as an integral part of our business processes across the Dynamatic Group Companies and includes recording, monitoring, and controlling internal enterprise business risks and appropriate actions are immediately taken to mitigate such risks.


Dynamatic Technologies is always focused on achieving international quality standards for its products and services. In pursuit of this goal, Dynamatic Technologies has established a comprehensive Quality Management System which encompasses all aspects of the business with a focus on establishing a quality assurance ecosystem that is designed to consistently deliver quality products and superior service. To achieve product quality assurance, the Company focuses on excellence in in-house production processes while ensuring that suppliers consistently produce components as per specifications.

Aerospace: Dynamatic-Oldland Aerospace is always focused on achieving international quality standards for its products and services. In pursuit of this goal, the Company has established a comprehensive Aerospace Quality Management System which encompasses all aspects of the business with focus on establishing a quality assurance ecosystem that is designed to consistently deliver quality products and superior service.

During FY2020 your Company has successfully completed the surveillance audits to ISO: 14001 specifications for its Environmental Management System and Information Security Management System (ISO/IEC 27001). Your Companys QMS which is compliant to ISO: 9001 and AS9100 standards since 2006, has evolved and matured and is highly system driven and was audited by DQS and Novostar, India with ZERO nonconformance.

Dynamatic Technologies is also NADCAP accredited (accreditation for special processes in the aerospace and defence industry) for special processes like heat treatment, spot welding, non-destructive testing, measurement, and inspection and in the current year got NADCAP for Alodine procases.

For the first time, Boeing carried out a General Performance Assessment (GPA) Assessment of Dynamatic-Oldland Aerospace, India covering the following categories.

Management, Schedule, Quality, Technical, Cost

The assessment was successfully completed with maximum GOLD rating on the above categories. While the official rating on the Boeing portal is awaited, the General Performance Assessment (GPA) rating is a major critical step in qualifying Dynamatic-Oldland Aerospace for Boeing Performance Excellence Award. Hydraulics: Dynamatic Hydraulics has successfully completed the surveillance audits to ISO: 9001 specifications for Quality Management System and also to ISO:14001 specifications for its Environmental Management System. These two management systems which are merged and called as Integrated Management System (IMS) was audited by UL DQS India. The Company has also successfully completed IS0 45001 AUDIT for occupational health and safety management systems OHSAS.

Automotive & Metallurgy: In FY2020, preparations have been completed for the AS9100 standards, at the facility of Eisenwerk Erla GmbH. The certification is planned for FY2021. The Dynamatic Quality Management System (DQMS) addresses the quality requirements and management expectations set out by the global automotive OEM such as BMW, AUDI, VW, Daimler, MAN, Hyundai Motors India, Maruti Suzuki, Nissan India and Brazil, Toyota Motors India, Honda India and Mahindra & Mahindra. DQMS utilizes some of the best tools such as 5S, 8D, FMEA, APQP, Ishikawa, Business Process Re-engineering, Overall Equipment Effectiveness, Root Cause Analysis, Six Sigma, Statistical Process Control, Total Productive Maintenance, Visual Control, Learning-by- Doing and Employee Participation Program (EPP).

Lean Management concepts together with quality tools are being used on the shop floor by management to increase the overall equipment effectiveness (OEE) of the operations. This is achieved by reducing rejections, set ups, cycle time and through effective material management. The EPP has resulted in the participation of employees in innovative activities and their contributions have resulted in continual improvements to work and work processes.


Dynamatic - Oldland Aerospace has a well-established Information Security Management System (ISO/IEC 27001) and has been certified by DQS, India since March 2018. During the current year, the company has successfully completed the routine internal audits on Information Security Management System. Over the years, with due training and awareness sessions, the system has matured and data security measures are well established. In the ISMS Policies and Procedures, Data security risks are all addressed in the process and followed in accordance to the ISMS requirements The Information Security Management System (ISMS) addresses the Data Security requirements and expectations of aerospace customers like Airbus, Boeing, Bell and HAL and hence it is a key responsibility of the management to protect and safeguard the customer data.

Having the Data Centre upgraded from traditional physical servers to high end "virtualization", wherein, virtual servers are configured and used for various applications, the performance has enhanced and it is now a more effective and reliable data storage. To ensure Business continuity, backup of the entire data of the server is required and is maintained at a different location outside the Dynamatic, Peenya premises. Awareness training is continuously given to all the employees on Data Security and Password Protection. Encryption has been adopted to ensure data security. Data transfers with customers and suppliers is through secured File Transfer Protocol. Having established a highly reliable system, the customers are comfortable to share the technical information with the Company. Separate virtual servers for each customer, are configured and maintained. The Company has always ensured and protected IP rights of the customers.

Apart from maintaining and upgrading the system, data security features are enabled for remote access where it can be effectively used for data centre resources.


Dynamatic Technologies supply chain is modelled around the delivery of enhanced customer and economic value through synchronized management of the flow of physical goods, services, and associated information from sourcing to consumption. Your companys robust supply chain management enables sustainable flow of critical raw materials and acts as a powerful source of competitive advantage. At Dynamatic Technologies there is a continuous effort to adopt the best practices and tools to achieve excellence in supply chain, driven by a sharp focus on revenue growth, better asset utilization, inventory turns, cost reduction and accelerating cash to cash cycles. Flexibility, reliability and cost efficiency are the key drivers for our Supply Chain Management practices. In order to further enhance the cost efficiency model, the Indian Aerospace operations have been converted into an EOU. During the year, focus was laid on seamlessly integrating our strategic corporate objectives, engineering and IT systems and methods towards an optimum supply chain and productivity model.

Speed to market management tools like Just in Time (JIT) manufacturing and distribution, vendor managed inventory (VMI) of detail parts and efficient customer response.

Improving quality and productivity within operational areas such as warehousing, logistics, inventory management and packaging

Value Addition & Value Engineering (VAVE) involvement with suppliers to drive the cost down

Supplier rating linked scheduling

Supplier audits and onsite training

Global tax minimization including transfer pricing & customs duties

Integrated customer services cell to handle customer complaints and warranty claims Significant productivity increases can come from effectively managing relationships; information and material flow across enterprise borders. The Companys initiatives to leverage information technology in supply chain activities have resulted in improved efficiency through real-time information exchanges and processing. Dynamatic-Oldland Aerospace has a 3-tier approach Strategic, Tactical and Operational to ensure that the Supply Chain Management is operating efficiently and generating highest level of customer satisfaction at optimum cost. These measures have helped your Company improve cost and efficiency in a year, which was otherwise faced with global macroeconomic challenges.

Export Oriented Unit (EOU)

The conversion of Indian Aerospace Division into EOU will also drive business efficiencies. The scheme helps in promoting exports, enhance foreign exchange earnings, attract investment for export production and employment generation.

Following are the additional advantages of being an EOU:

1) Allows imports without payment of custom duties and IGST

2) Imports allowed for undertaking Job work

3) Import of second hand goods and machinery allowed

4) Permits longer time duration for fulfilment of Export Obligations

5) DTA sale is permitted on payment of applicable GST

6) Time savings in case of clearance of imports due to green channel mode


Dynamatic Technologies always plans and executes actions to ensure the protection of the environment, conservation of energy resources and at the same time has focus on the health and safety of all its employees. The Dynamatic campus at Peenya has a well-managed green park. Dynamatic Technologies takes steps to ensure sustainable use of resources, maintaining ecological balance, and takes protective steps to minimise waste generation. Compassionate attitude towards environment is an integral part of operations and the Companys vision of sustainable and responsible growth. Dynamatic Technologies Limited believes that managing its environment footprint is of the utmost importance especially given the growing awareness and stringency concerning environmental laws globally and the need for industries to responsibly account for their impact on the environment. Accordingly, the Companys policies are aimed towards optimizing usage of natural resources and implementing green technologies for production wherever possible. Techniques such as rainwater harvesting and waste water treatment have been adopted at all plants to minimize water consumption and wastage, considering shortage of water has become a growing concern in our country.

The new factory at Devanahalli is constructed with thermal roofing and thermal walls to conserve energy required to cool the interiors. The design also ensures 100% harvesting of rainwater. The Companys facilities are non-polluting and are ISO: 14001 certified. This enables adoption of systematic and quantifiable approaches and techniques to minimize impact on the environment.


Dynamatic Technologies is focused on creating and ensuring a healthy workplace, free from occupational hazards, to realize its aim of zero incidents. To achieve this vision, emphasis has been on making and implementing rules, training employees on preventive measures, and setting up fool-proofing measures on site. This is further complimented by the implementation of best in class engineering standards for design and project execution. This has enabled the company to keep workplace hazards to a minimum. The Company also provides various health benefits such as regular health check-ups and health-related awareness programmes for the employees. These initiatives are conducted across all Company facilities and are in line with the Companys objective of maintaining a healthy and motivated workforce.

The Company also undertakes activities which are focused on health and safety of its employees on the shop floor. Awareness campaigns have been undertaken to enforce the use of personnel protective equipment (PPE) at work. At the same time, the Company has been successful in merging the EMS and OHSAS requirements into a common management system called IMS. This has avoided unnecessary duplication of work in monitoring and maintenance of records. The facilities are also certified for ISO 45001 on Occupational Health and Safety Management System by DQS.


Dynamatic Technologies is always focused on creating a harmonious and inclusive work environment where employees feel motivated to contribute towards the collective goal. This outlook involves providing our employees the requisite perks and benefits, but also equal opportunities for growth and skill development.

The Company is committed to improving day to day work life for the employees through safe work practices, use of personal protective equipment on the shop floor and by continuously educating the workforce through training programmes and demonstrations. The management team also works towards implementing the industry best practices for safety and productivity across locations. Onsite health care facilities, health and accident insurance coverage, medical feedback from experts and support in maintaining Special health requirements form part of the initiatives undertaken by the Company.

Dynamatic Technologies strength lies in its extremely competent and committed workforce, who feel cared for. Some concrete efforts made towards welfare of employees are medical insurance at very low premium for self and family alongside conversion to Corporate salary account, generating better benefits for account holders including zero balance, accident insurance, free demand drafts and better terms for withdrawal through ATM. The Company undertook negotiations with Indian Bank to provide cheaper personal loan to employees. The trust and credibility that the Company enjoys among its employees enables the Company to develop a well enabled and engaged work force (including workers on contract) of over 2756 personnel with very low attrition rate.


Dynamatic Technologies is always proud of its workforce, which is matured, involved and identifies itself with the companys mission. The Company is constantly focused on creating a conducive work environment through constant bilateral communication with an aim to achieve mutual growth. The Company has put in place an HR development framework to ensure employees career progression and greater connect with the vision and mission of the Company. This framework rides on multiple programs and opportunities for individual training and development, skill up-gradation schemes, congenial atmosphere for labour-management relationship and equal opportunities. HR policies, practices and the work environment are constantly reviewed to make them current, inclusive and enjoyable. The Company also strives towards acquiring, developing, management and retention of best talent in the market as we focus on optimizing workforce productivity and achieving growth for all.

The focus of the HR team is to promote the recognition of merit and hard work across the work force. They also work towards improving transparency and trust across the organisation. HR teams work towards inculcating Dynamatic vision and values through training, sharing, inspiring, and celebrating, to promote a sense of belonging amongst all the employees of the Company.

Highlights for the Year

All women employees of the company were given training on "women safety", wherein topics such as self-defence techniques, stress drills, basic strikes and defence were addressed. A workshop on Prevention, Prohibition and Redressal of Sexual Harassment of Women at the Workplace was conducted. An exclusive session on workplace etiquettes for women employees was organised. Competency Assessment and Training Identification (CATI) software being used by the HR department captures training provided to each employee. The number of hours training imparted is duly captured and also the effectiveness of such training is evaluated. A new HR Information System Called "Dynamatic Employees Services Kiosk" (DESK) has been commissioned and is being extensively used. This is the advanced digital HR tool which captures every data and transactions pertaining to each employee between his entry and exit phase. This avoids huge paperwork transactions earlier used by HR department. The data remains non-editable and safe with necessary back up measures.

Training programs on first aid, emergency preparedness and response were given to concerned employees. Emergency evacuation mock drill was carried out in the premises to ensure the system is working well and employees would get evacuated safely in case of emergency.

As part of Wellbeing Programs, Dental camp and International Yoga day were organised on 20th June 2019 and 21st June 2019 respectively. Sports and other fine arts competitions were held amongst the employees, strengthening Employee Engagement.

The Football Tournament conducted by Dynamatic Technologies had a huge response and participation from every department. The sports spirit, mutual understanding, spirit of friendship and fair play was excellently visible. The Potluck lunch organised by Dynamatic-Oldland Aerospace for its employees had an excellent success. It was a great experience as a variety of ethnic food prepared by employees was shared and relished by all. COVID-19 disrupted operations at the end of the financial year. However, Dynamatic Technologies took initiatives to raise awareness amongst employees and the safety measures to be followed were explained. The MD and CEO addressed the employees in a town hall meeting, briefing them on the proactive steps taken by the Company. Although the entire country was under lockdown, your Company restarted the operations from 6th April 2020, after obtaining necessary approvals from authorities.


Statements in this Management Discussion and Analysis contains "forward looking statements" including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Dynamatic Technologies future business developments and economic performance. While these forward looking statements indicate the Companys assessment and future expectations concerning the development of business, a number of risks, uncertainties and other unknown factors could cause actual developments and results to differ materially from expectations. These factors include, but are not limited to, general market, macro-economic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with the Company, legislative developments, and other key factors that could affect the business and financial performance. Dynamatic Technologies undertakes no obligation to publicly revise any forward looking statements to reflect future/likely events or circumstances, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with the Company, legislative developments, and other key factors that could affect the business and financial performance. Dynamatic Technologies undertakes no obligation to publicly revise any forward looking statements to reflect future/likely events or circumstances.