1. Industry Structure & Developments
Industry registered a healthy growth in Financial Year 2022-23 as compared to the
previous Financial Year 2021-22 on account of normal monsoon, good crop output &
government support.
Tractor sales in India have surpassed their all-time record and have registered a new
high record of selling 9,44,000 units in Financial Year 2022-23, which shows an increase
of 12% from the previous years sales.
The major reason behind achieving this growth according to the industry is a rise in
minimum support prices (MSP), which led to an increase in farm income, as well as another
year of aboveaverage monsoon significantly helped the Farm Business. Technological
advancement in high HP tractor ranges is another factor responsible for the increase in
demand for tractors in the market.
The Company has maintained overall leadership in Farm category. The Company worked with
its customers collaboratively and with agility to sustain business growth to deliver sales
and marketing excellence together with innovation and operational excellence and win in
the market.
In Consumer Replacement Business, according to SIAM (Society of Indian Automobile
Manufacturers), OE industry grew by approx. 22% YoY in the year 2022 largely driven by
robust auto demand and easing out of semiconductor supplies whereas replacement sales grew
at slower pace due to challenges like persistent high inflation, weak rural demand, low
consumer sentiment and geopolitical disruption impacting supply chain.
In Financial Year 2022-23, the Company continued its focus on retail expansion and
extraction to drive volume growth and introduced two best-in class products in the Luxury
car and SUV segments. The Company also launched Modernized Tire portal/ Dealer Mobile App
to leverage technology in sustaining high levels of engagement with channel partners.
2. Strength, Weakness, Opportunities and Threats
Indian tyre Industry is dominated by the Commercial category (Truck & Bus) which
contributes more than 50% of the tyre industry revenue. However, the Company has limited
presence in the Commercial tyre category which limits its ability for portfolio selling
and ability to mitigate risk of the Farm category.
Despite the above constraints, the outlook of the Company remains positive.
India is the most populous country in the world accounting for 18% of the total worlds
population (Source: World Population Review). With an increase in the population, the need
for various agricultural products has increased significantly. Agriculture sector
contributes to ~20% of Indias GDP and is also the Governments top priority sector.
Additionally, more than 50% of Indias population is dependent on agricultural products
which is further fueling the growth of this sector. This growth has prompted the farmers
to adopt newer and more advanced technologies to deliver higher productivity.
The Farm industry outlook for mid to long-term (3 to 5 years) continues to be positive.
The Company continues to maintain its leadership position in the Farm category and grow in
line with the industry. Capacity enhancement plan is in line with meeting the growing
market demand.
The outlook of consumer replacement industry is positive. With the shift of consumer
preference towards SUV and luxury vehicles, the demand for larger rim sizes is increasing.
This trend is expected to shape up the future demand of consumer replacement market. In
line with this trend, the Company is focusing on driving growth in premium segments, which
in turn improves overall profitability.
The Company is focusing on leveraging its technological superiority and best-in-class
products to create differentiation, thereby gaining market share.
The competitive intensity continues to remain high. Your company would continue to
drive business growth through focused initiatives like channel expansion and extraction,
driving channel loyalty by enabling better service by effectively leveraging technology
and introducing contemporary products in Luxury and SUV segments in line with evolving
consumer needs.
3. Segment-wise/ Product-wise Performance
The Company manufactures and sells automotive tyres viz. farm tyres and commercial
truck tyres at its Ballabgarh plant. The Company also markets and sells passenger car
tyres which are manufactured by Goodyear South Asia Tyres Private Limited (GSATPL),
Aurangabad, in the replacement market. Other products which the Company markets and sells
include tubes and flaps.
The sales performance during the year is as follows:
|
(Rs. in Lakhs) |
| Tyres |
278,106 |
| Tubes |
13,556 |
| Flaps |
114 |
4. Outlook
Key drivers of the Farm industry like monsoon, rabi crop harvest, government support
through increased MSP and water storage levels are positive. However, due to El Nino
effect, geopolitical situation and high inflation, the industry may get impacted in
Financial Year 2023-24.
The Company continues to focus on maintaining leadership position in the Farm category.
The Farm OE business will focus on delivering excellence in customer service and key
account management. In the Farm Replacement business, the Company continues to focus on
channel expansion, channel engagement and operational excellence by delivering the right
tyre, to the right place, at the right time, at the right cost.
In Consumer Replacement Business, as per ICRA, the demand is expected to improve with
improving consumer sentiments will rise further throughout Financial Year 2023-24, led by
a normalization of domestic economic activity in the post Covid era. Moderation in
inflation will help drive consumption of low and middle-income households. The consumer
preference towards SUV and premium vehicles will drive growth in consumer replacement
business especially in the higher rim sizes. The key focus areas in Financial Year 2023-24
include modernizing product offering by launching contemporary products and driving
channel expansion as well as extraction.
5. Risks and Concerns
There are certain key Macro events to keep a watch out for in the short term such as
volatility in the commodity and raw material prices, continued fuel inflation impacting
running costs, El Nino phenomenon impacting agriculture sector, any new Covid-19 variants/
global developments affecting economic activity, current Geopolitical conditions,
liquidity, and availability of skilled Farm workforce.
6. Internal Control Systems and Adequacy
The Company has a proper and adequate system of internal control including internal
financial controls. The Company has an Audit Committee headed by a Non-Executive
Independent Director, inter-alia, to oversee the Companys financial reporting process,
disclosure of financial information, and reviewing the performance of statutory and
internal auditors with management. The internal control system, including internal
financial controls of the Company, is monitored by an independent internal audit team,
which encompasses examination/periodic reviews to ascertain adequacy of internal controls
and compliance to the Companys policies. Weaknesses noted, if any, along with agreed upon
action plans are shared with the Audit Committee, which is designed to ensure orderly and
efficient conduct of the business and effectiveness of the internal control system.
The audit function also looks into preventive controls, investigations, as well as
other areas requiring mandatory review as per applicable laws. The powers of the Audit
Committee, inter-alia, include seeking information from any employee, obtaining outside
legal or other professional advice, and investigating any activity of the Company within
the Committees term of reference. The internal audit department shares regular updates
regarding the work that is done, coverage, weaknesses noted and other relevant issues with
appropriate management levels including Audit Committee. Observations/ weaknesses noted
from time to time are suitably acted upon and followed up at different levels of
management. The internal control is supplemented by an extensive program of audits and
periodic review by the management.
7. Discussion on Financial Performance with respect to Operational Performance
The details of the financial performance of the Company are reflected in the Balance
Sheet, Statement of Profit & Loss and other Financial Statements, appearing
separately. Highlights are provided below:
|
|
(Rs. in Lakhs) |
| Particulars |
March 31, 2023 |
March 31, 2022 |
| Total Income |
294,380 |
245,889 |
| Profit Before Tax |
16,538 |
13,845 |
The financial performance of the Company has been further explained in the Boards
Report of the Company for the Financial Year 2022-23 appearing separately.
The financial statements have been prepared in accordance with the requirement of
Companies Act 2013, and applicable accounting standards issued by the Institute of
Chartered Accountant of India.
8. Human Resources
Industrial harmony was maintained during the year through peaceful and productive
employee relations. To augment the skills of employees, multiple training sessions were
imparted to employees on matters related to ethics and compliance, discipline, safety of
the employees and environmental awareness. Wide-ranging employee engagement initiatives
e.g., Skip level connects, Career assessment centers, celebrations of milestone &
festivals were organized to sustain the engagement levels of employees, which led to
Goodyear India Ltd. being named as one of the best "Organizations to work for
women" by Economic Times in September 2022 and getting re-certified as a "Great
Place to Work" in March 2023.
Additionally, Employee engagement scores stood at 87%. basis global employee engagement
survey conducted in October 2022. The total number of salaried and hourly paid employee as
on March 31, 2023 stood at 969.
9. Details of significant changes in key financial ratios along with detailed
explanations thereof, include:
| S. Particulars No. |
Financial Year 2022-23 |
Financial Year 2021-22 |
| 1 Debtors Turnover |
10.20 |
9.32 |
| 2 Inventory Turnover |
9.94 |
11.19 |
| 3 Interest Coverage Ratio* |
43.73 |
34.60 |
| 4 Current Ratio |
1.28 |
1.57 |
| 5 Debt Equity Ratio** |
0.02 |
0.02 |
| 6 Operating Profit Margin in percentage |
5.2% |
4.9% |
| 7 Net profit margin in Percentage |
4.2% |
4.2% |
| 8 Details of any change in Return on Net worth as compared to the immediately previous
Financial Year along with a detailed explanation thereof** |
18.6% |
13.2% |
*Due to higher profit in current year
**Primarily due to dividend of Rs. 23,067 lakhs paid in Financial Year 2022-23 has
changed the total equity
10. Cautionary Statement
Certain statements in the Management Discussion and Analysis describing the Companys
views on the industry, expectations/ predictions and objectives etc. may be forward
looking within the meaning of applicable laws and regulations. Actual results may differ
from those expressed or implied in these statements. The Companys operations may,
inter-alia, be affected by the supply and demand disruptions due to Geo-political
conditions or any other reason, as the case may be, input prices and availability,
continued fuel inflation, changes in Government regulations, tax laws, government or court
decisions and other factors such as industry relations, global economic developments,
and/or restrictions in certain geographies with the possible risk of new Covid variant
etc. Investors should bear this in mind when considering the above statements.
|
On behalf of the Board of Directors |
|
Sandeep Mahajan |
| May 29, 2023 |
(Chairman & Managing Director) |
| Place: Delhi |
DIN: 08627456 |
+91-9892691696
