Hawa Engineers Ltd Management Discussions.


Pursuant to amendment made in Schedule V to the SEBI Listing Regulations, details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in Key Financial Ratios and any changes in Return on Net Worth of the Company (on standalone basis) including explanations therefore are given below:

Sr Particulars F.Y. 2020-21 F.Y. 2019-20 % Changes
1 Operating Profit Margin 4.95% 4.58% 0.37%
2 Net Profit Margin 2.11% 1.83% 0.28%
3 Return on Net Worth 6.93% 6.20% 0.73%
4 Debtors Turnover 7.31 7.79 -0.48
5 Inventory Turnover 2.99 4.77 -1.78
6 Interest Coverage 1.74 1.67 0.07
7 Debt / Equity 2.72 2.59 0.13
8 Current Ratio 1.86 1.75 0.11

Return on Net worth ration is increased due to increase in net profit of the company.

Global Economy

Global Economy The global economy which was already facing a slowdown received yet another setback due to the COVID-19 outbreak which caused major economic disruptions leading to a contraction of global growth by 3.5% in FY21. Industrial production and global trade declined substantially due to the enforced lockdown and travel restrictions. However, the economy recovered in the second half due to easing of lockdowns and the rapid deployment of policy support at an unprecedented scale by Central banks and Governments around the world. The fiscal support by Governments, extensive rate cuts, liquidity injections, and asset purchases by Central banks helped in restoring confidence and aided demand recovery preventing a full-blown recession. According to the International Monetary Fund (IMF), the global economy is expected to move towards recovery and is predicted to increase by 5.5% in 2021 on the back of policy support and roll out of vaccines which are expected to lift economic activity across the world and lead to pick up in trade and investment. Growth is likely to be boosted by the strong economic rebound in China, and across advanced and emerging economies across the world as the impact of the pandemic begins to fade. Growth is likely to vary across economies and will be driven by the success and speedy deployment of vaccines along with continued accommodative fiscal and monetary policies.


Valves are used to control or divert the flow of liquids, gases, slurries, dry material or steam in all types of industries. They are also used to control or isolate the rate of flow volume, pressure, direction or a combination of these parameters. There are only two known ways of controlling the flow of liquids and gases, and all valves are based on one of the two principles. Your Companys primary business is the design, manufacture and sale of Industrial valves, valve cores and accessories.

Indias economy is estimated to have contracted by 7.5% in FY21 as lockdowns and other containment efforts to control the COVID-19 pandemic reduced domestic consumption despite substantial fiscal and monetary stimulus. However, there was a sharper recovery in the second half of the fiscal in terms of consumption and investment. The manufacturing sector indicated notable traction as industrial units were able to function with greater capacity. The infrastructure and construction sector also saw resurgence owing to the governments Capex push, easing of movement restrictions, and repressed and festive demand. According to the IMF, the economy is expected to grow 12.5% in FY22 led by favourable policy support and recovery in economic activity. However, the second wave of coronavirus and resultant lockdown has impacted the economic activities in FY22. In order to attract more investments, generate employment and boost exports, the Government introduced production-linked incentive (PLI) scheme to boost cost competitiveness in various manufacturing sectors. The recently announced budget has increased allocation to sectors like infrastructure to revive economic growth. Going forward, rollout of vaccines should lead to increased economic activity and increased mobility which should help in gradual and sustainable economic revival. U.S. new-light vehicle sales in 2020 declined by around 15% year over year to 14.5 million units. The industry was hit hard due to the COVID-19 pandemic which brought the economy to a standstill and impacted sales. However, the year ended on a surprisingly upbeat note with car and truck sales rebounding sharply in December on the back of positive news related to the passage of the stimulus package, more certainty around the election outcome coupled with news about possible vaccine approval which lifted consumer sentiments. The National Automobile Dealers Association (NADA) expects the U.S. new-vehicle sales to increase by 7% to 15.5 mn in 2021 on the back of improving consumer sentiments, low interest rates, consumer preferences for personal vehicle ownership over rideshare services and public transportation. However, continued increases in COVID-19 cases, global shortage of semiconductor microchips, and tight inventory on dealer lots are some of the headwinds for the auto industry. According to European Automobile Manufacturers Association (ACEA), the European new-car registrations declined by 24% to 9.9 million units in 2020 due to the COVID-19 pandemic. However, the market share of electric cars went up notably to 10.5% as compared to 3% in 2019. The fallout of pandemic is likely to prevail in the first half of the 2021 but the demand is expected to pick up in the second half as vaccination program progresses with sales expected to rise by 10% compared to 2020. The global automotive industry has been witnessing subdued demand for the last two consecutive years due to shrinking economic activity, rising competition, slowdown in BRIC economies, and tightening lending norms. The COVID-19 pandemic in_icted severe blow to the already struggling industry and brought a decade of expansion in the global automotive industry 20 Annual Report 2020-21 Rane Engine Valve Limited to an abrupt halt. However, the global auto industry is witnessing signs of revival and continues to show resilience boosted by a low interest rate and consumer shift towards personal mobility over public and shared transport. Share of Electric Vehicles is expected to increase in the years ahead with digital transformation expected to be major growth driver going forward. Diverse mobility, connectivity and powertrain choices and increasing level of autonomy are the key disruptive technologies that will shape the future of mobility


• India is poised to grow faster than most of the large economies over the next decade giving rise to tremendous opportunities. The industry is staringat immense growth prospects in terms of exports, enhancing import substitution, expanding aftermarket offerings, developing data-enabled services and solutions, and offering new or modified features in line with constantly shifting market dynamics and changing OEM needs. The automotive value chain is likely to see significant shift to non-traditional sub-segments such as EVs, advanced driver assistance systems (ADAS), data enabled services, etc. in the coming future. Adapting to the required changes to seize these upcoming opportunities, the auto component manufacturers will be in a strategic position to leapfrog into the global arena.

• As uncertainties prevail in the global economy, the industry continues to face a range of business risks related to supply chain and changing customer preference. Delay in economic recovery, increase in commodity prices and forex volatility are some of the headwinds being confronted. Moreover, evolving regulatory and trade environment, technological changes and environmental regulation, continue to pose challenges to the sector.


There is no segment in the company.


The Indian economy is expected to rebound and attain a growth of 12.5% in FY22 on the back of improvement in trade and manufacturing against the backdrop of widespread vaccination campaigns. Responding to the recent pandemic crisis, the policymakers announced various fiscal and monetary stimulus to stimulate demand and revive manufacturing growth.


Apart from the normal business risk, no major risk is foreseen.


The Company has proper and adequate systems of internal controls. Internal audits and checks are carried out at regular intervals. An audit committee, headed by an Independent Director, reviews control systems and their adequacy.


The details of the financial performance of the Company appear in the Balance Sheet, Statement of Profit and Loss and other Financial Statements. Highlights for the year 2020-21 are as under:

(Amounts in rupees)
Particulars Year Ended 31/03/2021 Year Ended 31/03/2020
Revenue from Operations 48,10,70,111 47,19,55,265
Other Income 37,18,509 32,01,992
Profit/loss before Depreciation, Finance Costs, Exceptional 321,12,182 3,01,34,191
items and Tax Expense
Less: Depreciation/ Amortisation/ Impairment 83,02,114 85,27,920
Profit /loss before Finance Costs, Exceptional items and Tax 238,10,068 2,16,06,271
Less: Finance Costs 13,667,532 1,29,68,602
Profit /loss before Exceptional items and Tax Expense 10,142,536 86,37,669
Add/(less): Exceptional items 0 0
Profit /loss before Tax Expense 10,142,536 86,37,669
Less: Tax Expense (Current & Deferred) 21,61,170 1,66,776
Profit /loss for the year (1) 79,81,366 84,70,893
Total Comprehensive Income/loss (2) 0 0
Total (1+2) 79,81,366 84,70,893
Balance carried forward 111,077,204 10,41,41,944

The financial performance of the Company has been explained in the Directors Report of the Company for the financial year ended 31st March 2021 appearing separately.


Human Resources are a key focus area of the Company. The Company endeavours to attract and develop the best talent available in each area of its operations. The Companys policy is to create a conducive environment for nurturing talent and developing the requisite skills needed to keep pace with the ever-changing needs of the market. Training is imparted to employees at all levels and covers both technical and behavioural aspects.

The Industrial Relations scenario during the year under review was smooth. The Company has an excellent track record in this regard and has maintained cordial relationships with all its employees.


Certain statements in the Management Discussion and Analysis describing the Companys views about the industry, expectations, objectives, etc ... may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the statement. Factors like supply and demand situations, input prices and their availability, changes in Government regulations, economic developments, etc. may influence the Companys operations or performance.

By order of Board of Directors
Hawa Engineers Limited
Aslam Kagdi
Date: August 14, 2021 Chairman
Place: Ahmedabad DIN: 00006879