Him Teknoforge Ltd Management Discussions.

Economic Overview

The Board reviewed the progress of our response regularly. The fact that all the productions facilities had partially resumed operations after the lock-downs, is a testament to the commitment and skill of our people as well as the effectiveness of the actions taken. The onset of the Covid-19 pandemic in the final quarter of the financial year presented significant challenges for the business, its operations and employees.

It is our constant endeavor to keep learning how best to serve the changing needs of our esteemed customers. We take pride in being perceived as a safe pair of hands to protect the supply-chain of our customers.

As specialists for last over four decades in our product range - transmission gears, pins, axles, shafts, propeller shaft components, non-gear components, for lift parts, off-road parts and many more, we leverage our rich experience and strong technical capabilities to help our customers serve more convenience, deliver sustainable solutions, and keep pace with the rapid change in customer demands. For us, quality is much more than what just goes around a product.

We pride ourselves in being responsive to customer needs and requirements, so far.

Global Economy

The swift and massive shock of the corona virus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction. According to World Bank forecasts, the global economy will shrink by 5.2% this year. That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870, the World Bank says in its June, 2020 Global Economic Prospects.

Economic activity among advanced economies is anticipated shrink 7% in 2020 as domestic demand and supply, trade and finance have been severely disrupted. Emerging market and developing economies (EMDEs) are expected to shrink by 2.5% this year, their first contraction as a group in atleast sixty years. Per capita incomes are expected to decline by 3.6%, which will dip millions of people into extreme poverty this year.

The impact of the pandemic is likely to hit hardest in countries where the pandemic has been the most severe and where there is heavy reliance on global trade, tourism, commodity exports and external financing. While the magnitude of disruption will vary from region to region, all EMDEs have vulnerabilities that are magnified by external shocks. Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development.

Factors such as rising trade barriers, growing uncertainty surrounding trade and geopolitics, the macroeconomic strain in several emerging market economies low productivity growth and ageing demographics were responsible for this subdued growth.

Since uncertainty around the outlook remains exceptionally high, alternative scenarios will help the range of plausible global growth outcomes in the near term. In particular, the baseline forecast for 2020 could prove optimistic. If COVID-19 outbreaks persist longer than expected, restrictions on movement and interactions may have to be maintained or reintroduced, prolonging the disruptions to domestic activity and further setting back confidence. Disruptions to activity would weaken businesses ability to remain in operation.

Around six months into COVID-19 crisis, we are starting to see patterns i.e. Flatten, Fight, Future , in its impact on countries and cities, as well as in these areas responses.

The efforts on research & development are going on across the world to get the breakthrough for Treatment of this novel Coronovirus.

Industry Structure & Development

India is considered to be the worlds 4th largest automobile industry, beating Germany.It is soon on its way to become the 3rd largest by FY 2021, riding on rapid economic development, rising urbanisation, burgeoning middle class, supportive regulations and the Governments strong push for growth.

The Government aims to develop India as a global manufacturing as well as a research and development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) centres as well as a National Automotive Board to act as facilitator between the government and the industry.

The domestic automotive industry has been adopting new technology and capabilities in order to keep pace with the changing global landscape. The diversified nature of the domestic automotive industry not only provides scale, but also the risk-hedging ability to face market vagaries.

Opportunity and Threats

The industry is supported by factors such as the availability of low-cost skilled labour and low-cost steel production. Indias automobile industry has the potential to generate upto USD 300 billion in revenue by FY 2026, generating 65 million additional jobs and contributing over 12% to Indias GDP.

The Governments push to develop India as a global manufacturing and R&D hub is also lending heavy support to the automobile sector.

India is fast being recognised as a hub for high-quality managerial talent. Domestic players have been leveraging local talent for driving innovation through R&D centres, driving growth in the medium to long-term. In the next few years, the automobile sector is expected to record robust growth, given the infrastructure push from the Government and schemes like PMGSY.

The opportunities generated by the disruptions are changing the competitive game for players willing to step beyond their traditional roles and engage with customers in a new and digital environment.


Presence of large number of players, domestic as well as multiational, in the automobile industry, results into intensive competition. Moreover, Government of Indias aim to propel the Indian Automotive Industry to be the engine of the "Make in India" programme will intensify competition as the existing entity will have to compete with settled as well as new players entering into the market with some privilege under "Make in India" initiatives.

Segment wise or products wise performance

The operations of the Company are limited to one segment, namely automotive components.

Business Operations

The company is sucessfully running its units located in Vadadora- Gujarat, Baddi- Himachal Pradesh, Pithampur - Madhya Pradesh.

While the Company continued on its legacy of operational efficiency, factors such as technological advancements and product innovation continued to be its key drivers of differentiation. Enhanced productivity through retrofitting and refurbishing of machines and optimising efficiencies at various levels helped the Company to achieve an improved performance and gain a competitive edge.

Resource Upgradation

The Company has undertaken the project to improve the production processes like Leas Manufacturing to improve the efficiency and productivity. It has also focused on resourcing the technical manpower from the ITIs, Skill Development Centres under Apprenticeship Programme. Besides, the Company has also added certain machines to balance the existing machinery installed at its various locations.

Technology Upgradation

The Company has set-up and commissioned the Warm- Forging project at one of its Forging Plants. This is latest technology in the Forging Industry and will help in savings in material cost and labour cost besides improvement in the quality of precision products. The company is also consistently upgrading the other machines with the latest generation machines to remain updated with the latest technology.


We plan to continue and expand our product portfolio for Automotive products. The areas of design and manufacturing for automotive components will be systematically expanded. We are also working specifically on developing our manufacturing capabilities.

In the manufacuring, additional measures will be implemented to improve processes and create transparency with the planned introduction of modern systems. We are also working specifically on developing our manufacturing capabilities and processes to support further growth.

The market response to the profile of Him Teknoforge continues to be very positive. The management is confident that, with the improvement in economic environment and further developments within the organization, it will be able to benefit from the investments. These developments can be summarized for the Company in many opportunities for continued expansion and positive development of the business in the next few years.

Risks & Concerns

Your Company regularly evaluates and reviews potential risks on account of various factors such as government policies, natural/ man-made disasters and political risks. Apart from above, the Company is exposed to changes in foreign exchange rates and commodity prices, global competition, technological changes, high dependency on few customers. Any change in laws & regulations, whether domestically or internationally could affect the business and financial condition of your Company.

The management of your Company has put in place adequate risk management system so as to minimize and/or eliminate the adverse impact, if any, of these risks.

Internal Control Systems and their adequacy

The Audit of Internal Control Systems is carried out by Independent firm of Chartered Accountants on a quarterly basis and corrective actions are taken where shortcomings are identified. The Internal Auditors submit their quaterly reports to the Audit Committee and the Board of Directors. All the fixed assets of the company are physically examined and recorded at regular intervals.

Discussion on financial performance with respect to operational performance

Your Company has achieved turnover of Rs. 22311.27 Lakhs for the financial year 2019-20 as against turnover of Rs. 32379.30 Lakhs in the previous financial year 2018-19. Further, the Company earned a profit of Rs. 324.63 in the 2019-20 as compared to Rs. 1830.08 Lakhs (including profit of Rs.783.89 Lakhs from sale of land & building at Kalali, Vadodara in 2018-19).

Material Developments in Human resources/Industrial relations front

The Company regards its human resources as the most valuable asset and proactively reviews and evolves policies and processes to attract and retain good people. The Company continues its focus on attracting and retaining the best talent in the industry. The Company further makes continuous efforts to upgrade the knowledge and skills of its present employees. As new business challenges emerge, there is a need to continue to be a learning organization that supports operational excellence, continuous improvement and rising standards of performance at all levels.

Details of significant changes in financial ratio:

Details of significant changes as compared to the immediately previous financial year in key financial ratios, along with detailed explanations therefor, including:

Particulars F.Y. 2018-2019 F.Y. 2019-2020
(i) Debtors Turnover 9.51 7.86
(ii) Inventory Turnover 9.66 15.93
(iii) Interest Coverage Ratio 2.76 1.86
(iv) Current Ratio 1.15 1.20
(v) Debt Equity Ratio 0.26 0.30
(vi) Operating Profit Margin (%) 23.97% 26.62%
(vii) Net Profit Margin (%) 5.36% 1.39%

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:

Particulars F.Y. 2018-2019 F.Y. 2019-2020
Return on Net Worth 12.98% 2.28%

Disclosure of Accounting Treatment:

The financial statements for the year ended 31st March, 2020 have been prepared as prescribed in accounting standards and accounting policies and have been followed consistently. There is no change in treatment of the said accounting standards & accounting policies, therefore, no explanation by the management is required for the same.

For and on Behalf of Board
Vijay Aggarwal
Dated: 15.09.2020 Chairman
Place: Baddi DIN: 00094141