JTEKT India Ltd Management Discussions.

ECONOMIC SCENARIO

Global Economic Overview

Global growth in 2019 recorded its weakest pace, since the global financial crisis a decade ago, reflecting common influences across countries and country-specific factors. Rising trade barriers and associated uncertainty weighed on business sentiment and activity globally. In some cases (advanced economies and China), these developments magnified cyclical and structural slowdowns already underway. Further pressures came from country-specific weaknesses in large emerging market economies such as Brazil, India, Mexico, and Russia.

With the economic environment become more uncertain, firms turned cautious on long-range spending, and global purchases of machinery and equipment decelerated. Household demand for durable goods also weakened. This was particularly evident with automobiles, where regulatory changes, new emission standards, and possibly the shift to ride-shares weighed on sales in several countries.

According to the International Monetary Fund (IMF), much of the slowdown in world GDP growth from 3.8% in 2017 to 3.0% in 2019 results from a sharp decline in world exports. Growth rates in world exports have fallen from 5.7% in 2017 to 1.1% now.

IMF in its World Economic Outlook (WEO) published in January 2020 stated that Global growth, estimated at 2.9% in 2019, is projected to increase to 3.3% in

2020 and inch up further to 3.4% in 2021. IMF stated that on the positive side, market sentiment has been boosted by tentative signs that manufacturing activity and global trade are bottoming out, a broad-based shift toward accommodative monetary policy, intermittent favorable news on US-China trade negotiations, and diminished fears of a no-deal Brexit, leading to some retreat from the risk-off environment that had set in at the time of the

October WEO.

The economic forecast as was done by IMF in January 2020 completely changed with the onslaught of a global pandemic. World Bank in its Report titled Global Economic Prospects published in June 2020 stated that the COVID-19 pandemic has, with alarming speed, delivered a global economic shock of enormous magnitude.

Leading to steep recessions in many countries. The baseline forecast envisions a 5.2% contraction in global GDP in 2020 the deepest global recession in eight decades, despite unprecedented policy support. The pandemic represents the largest economic shock the world economy has witnessed in decades, causing a collapse in global activity. The pandemic and associated mitigation measures have sharply curbed consumption and investment, as well as restricted labor supply and production. The cross-border spill over have disrupted financial and commodity markets, global trade, supply chains, travel, and tourism. International Monetary Fund (IMF) in its World Economic Outlook (WEO) published in June 2020 also projected a 4.9% contraction in global GDP in 2020.

Indian Economic Overview

International Monetary Fund (IMF) in its World Economic Outlook (WEO) published in January 2020 stated that Indias growth is estimated at 4.8% in 2019, projected to improve to 5.8% in 2020 and 6.5% in 2021 (1.2% and 0.9% point lower than in the October WEO), supported by the monetary and fiscal stimulus as well as subdued oil prices. It stated that growth markdown largely reflects a downward revision to Indias projection, where domestic demand has slowed more sharply than expected amid stress in the non bank financial sector and a decline in credit growth.

The economic impact of the coronavirus pandemic in India has been largely disruptive and this completely changed the economic forecast as done by IMF at the start of the Year 2020. Indias growth in the fourth quarter of the fiscal year 2020 went down to 3.1% according to the Ministry of Statistics. Amidst the frenzied global policy climate, India faces an increased likelihood of contraction in FY-2021 GDP growth after registering a subdued 4.2% growth in FY-2020. To address the economic fallout, the policymakers have announced a mix of fiscal and monetary relief packages. As on date, the cumulative economic package (fiscal and monetary) under ‘Atmanirbhar Bharat comes to around INR 20.97 lakh crore or 10.0% of GDP.

INDUSTRY

Global Scenario

The global auto industry plunged deeper into recession in 2019, with sales dropping more than 4% as carmakers struggled to find buyers in China and India. The number of vehicles sold across major global markets dipped to 90.3 million, according to analysts at LMC Automotive. Thats down from 94.4 million in 2018, and well below the record 95.2 million cars sold in 2017. The biggest blow to carmakers last year came in China, the worlds largest market for vehicles, where a sharp slowdown in economic growth and the elimination of tax incentives for electric car purchases caused demand to plummet. China reported its second year of declining vehicle sales and production, with 2019 showing a 9.2% reduction in car production to 21.360 million, even before the coronavirus (COVID-19) arrived in the country in January 2020. According to Fitch Ratings, this was due to weak credit growth, a rise in used car sales, and new emission standards that depressed new car sales in China.

Japan, Asias second-largest vehicle producer, saw car production holding up in 2019 with just a 0.2% decline to 9.215 million units. In the USA, the light vehicle market (cars and light trucks) ended 2019 with just under 17 million units (-1.3%), which is the first time the US market has missed the 17 million mark since 2014.

The U.S. auto sales were struggling with environmental concerns about diesel cars, anticipated regulatory responses, and the growth of ride-hailing and car-sharing schemes. In Europe, a total of 15.8 million passenger cars were sold in 2019, around 1% more than the previous year. The UK recorded a drop of 14.2% in car production in 2019 to 1.303 million units.

The year 2020 looks set to be a difficult year for the global automotive industry and its suppliers because of market uncertainty caused by the coronavirus. Many global car companies have already reduced production in the first quarter of 2020 because of lack of components from China, and whilst some Chinese car Plants are said to be restarting operations after a nationwide shutdown, analysts state that any hits to the supply chain will take months to recover.

Indian Scenario

Demand for new cars declined sharply in FY 2020, forcing automakers to cut production across the year. Sales were expected to revive during the annual festive season from October 2019 but failed to do so. There was an encouraging spike in sales in Q3 stimulated by promotional offers, aggressive discounts, new model launches, and the increasing availability of models offering Bharat Stage-VI (BS-VI) emission standard, comply with additional mandated safety equipment requirements including anti-lock/combined braking systems, driver side airbag, speed warning alarm, rear parking sensors, front seatbelt reminders, and crash test standards.

All adding to investment costs and increased pricing to customers across all models. The impact of mandates introduced in 2018-19, e.g. five-year third-party insurance premium for two-wheelers to be collected in advance, had its full-year effect in 2019-20 on overall vehicle sales, and two-wheeler sales in particular. By April 2020, all vehicle types, two- and three-wheelers, cars, and commercial vehicles – are mandated to conform to BS-VI emission standards.

Having increased prices already at the beginning of January 2020 by 2-3% to offset economic cost increases, OEMs are faced with the dilemma of potentially absorbing some of the extra costs or loose volumes.

Production

The industry produced a total of 26,362,282 vehicles including Passenger Vehicles, Commercial Vehicles,

Three Wheelers, Two Wheelers, and Quadricycles in April-March 2020 as against 30,914,874 in April-March 2019, registering a de-growth of (-) 14.73% over the same period last year.

Domestic Growth

The sale of Passenger Vehicles declined by (-) 17.88% in April-March 2020 over the same period last year. Within the Passenger Vehicles, the sales of Passenger Cars and Vans declined by (-) 23.58% and (-) 39.23% respectively while sales of Utility Vehicles marginally increased by 0.48% in April-March 2020 over the same period last year.

The overall Commercial Vehicles segment registered a de-growth of (-) 28.75% in April-March 2020 as compared to the same period last year. Within the Commercial Vehicles, Medium and Heavy Commercial Vehicles (M & HCVs) and Light Commercial Vehicles declined by (-) 42.47% and (-) 20.06% respectively in April-March 2020 over the same period last year.

Sale of Three Wheelers declined by (-) 9.19% in April-March 2020 over the same period last year. Within the Three Wheelers, Passenger Carrier and Goods Carrier declined by (-) 8.28% and (-)13.27% respectively in April-March 2020 over April-March 2019.

Two Wheelers sales registered a de- growth of (-) 17.76% in April-March 2020 over April-March 2019. Within the Two Wheelers segment, Scooters, Motorcycles and Mopeds declined by (-) 16.94%, (-) 17.53% and (-) 27.64% respectively in April-March 2020 over April-March 2019.

Exports

In April-March 2020, overall automobile exports registered a growth of 2.95%.

While Commercial Vehicles and Three Wheelers exports declined by (-) 39.25% and (-) 11.54%, respectively. However,

Passenger Vehicles exports marginally increased by 0.17% and Two-wheelers exports registered a growth of 7.30% in April-March 2020 over the same period last year.

OUTLOOK

The Indian automobile industry is fourth-largest in the world, fourth-biggest car manufacturer globally, and the seventh-largest manufacturer of commercial vehicles in 2019. Indian automotive industry (including component manufacturing) is expected to reach INR 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Indian automobile industry received Foreign Direct Investment (FDI) worth US$ 23.89 billion between April 2000 and December 2019. Five percent of the total FDI inflow in India went to the automobiles sector.

The Government aims to develop India as a global manufacturing and research and development (R&D) hub. It has set up National Automotive Testing and R&D Infrastructure Project (NATRiP) center as well as National Automotive Board to act as a facilitator between the Government and the industry. Under (NATRiP), five testing and research centers have been established in the country since 2015.

NATRiPs proposal for “Grant-In-Aid for test facility infrastructure for Electric Vehicle (EV) performance Certification from NATRiP Implementation Society” under FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme was approved by Project Implementation and Sanctioning Committee (PISC) on January 03, 2019.

The outlook for FY-2021, especially the first half, remains weak given the macroeconomic headwinds because of recent pandemic outbreak coupled with price hikes because of the transition to the new emission norms. The outbreak of coronavirus is causing ad hoc interruptions in the supply chain, with each OEM, plant, and model expected to have different levels of exposure, requiring different countermeasures. The long-term impact of coronavirus on the industry remains uncertain. However, its prolonged spread may affect automotive sales adversely.

According to CRISIL Ratings, muted income growth, discretionary spending will take a backseat this fiscal. Small PVs and used vehicles will find affordability. Also, given increasing social distancing, consumers may reduce, if not avoid, travel by public, pooled, and shared transport in the short term. However, the benefit from the change in commuting-pattern will only partly offset the steep downturn.

OPERATIONS

Manufacturing Rationalization

JTEKT India Limited (JIN) has been working on the rationalization of its manufacturing operations to enhance overall operational efficiency changesand serving (i.e., its customers efficiently. The activities include the relocation of manufacturing lines, product relocation to yield better line loading, reduce inventory, and improvement in productivity. Currently, manufacturing operations of JIN are spread across seven plants in North, West, and South of India. JIN has established a structured roadmap for completing the rationalization process in a phased manner.

As part of its backward integration initiative, in the past, the Company set up two manufacturing facilities in the area of Aluminum Die Casting and Sheet Metal Parts. During the current financial year, as part of manufacturing rationalization activity, the manufacturing operations of sheet metal units were merged with the other unit engaged in aluminum die casting. Since both the facilities were producing parts mainly for captive consumption, the combining of these manufacturing facilities has brought synergies of operations and has helped to optimise costs in various areas of business operations including logistics, compliances, administration, and all other operations which can be aligned.

OPERATIONAL PERFORMANCE AND FINANCIAL REVIEW

Ratio Analysis

Details of significant change of 25% or more as compared to the immediately previous financial year) in the key financial ratios are as under: - Companys Abridged Profit & Loss Account (INR in

Particulars Consolidated Standalone
2019-20 2018-19 2019-20 2018-19
Net Income from Operations 14989 17391 15194 17585
Other Operating Income 116 148 115 146
Total Revenue 15105 17540 15309 17731
Raw Material 10149 11564 10748 12144
Staff Cost 2136 1939 2018 1836
Other Expenditure 1453 1820 1362 1743
EBITDA 1369 2216 1181 2008
Other Income 88 116 110 126
Depreciation & Amortisation 928 959 865 906
EBIT 529 1373 425 1228
Finance Charges 99 156 99 155
PBT before Exceptional Items 430 1218 326 1073
Share of profit of associates - - - -
PBT 430 1218 326 1073
Tax 78 435 51 387
PAT 351 783 275 686
Other Comprehensive Income (23) (1) (22) (1)
Total Comprehensive Income 328 782 253 684
Profit Attributable to Owner 328 726 253 684
Capital Expenditure 391 693 332 607
EPS 1.24 2.98 1.13 2.80
D/E Ratio 0.12 0.33 0.13 0.33

Debt Equity Ratio

The ratio has improved from a level of 0.33 to 0.13. The borrowings have significantly reduced from a level of INR 1884 million at the start of the financial year to end at a level of INR 740 million.

Net Profit Margin

Net Profit margin declined from 3.9% to 1.7% mainly due to a decline in sales volumes. This adversely impacted the interest coverage ratio which declined from 7.91 times to 4.30 times despite a major decline in Bank Borrowings. Further Return on Capital Employed declined from 14.5% to 4.9%.

Current Ratio

The current ratio has improved from 1.30 times to 1.57 times due to a reduction in the current maturity of Long-Term Loans. Further Quick Ratio improved from 1.04 times to 1.11 times. There has been no significant financial ratios including debtor turnover, inventory turnover, and fixed assets turnover ratios.

SUBSIDIARY PERFORMANCE HIGHLIGHTS

JTEKT Fuji Kiko Automotive India Limited (JFIN)

(formerly known as Sona Fuji Kiko Automotive Limited):

During the year under review, this subsidiarys revenue decreased by 3% to reach INR 1000 million. Despite severe stress in the Auto sector, JFIN continued to work with better capacity utilization to reduce the negative impact on profitability. It also achieved a 100% OTIF (On Time in Full) delivery track record and accomplished a smooth start of production of Jacket Column Assembly for MSIL Xpresso.

(INR million)

JFIN 2019-20 2018-19
Revenue 1000 1036
EBITDA 194 213
EBITDA Margin 19.4% 20.6%
PAT 99 113
PAT Margin 9.9% 10.9%

RECOGNITION

During the year, the Company received acclamation from Fiat India Automobiles India Pvt. Ltd. by achieving ‘Zero PPM and Zero Warranty and from Isuzu Motors India by achieving ‘Best Delivery Performance. These recognitions are testimony to our commitment to excellence in the delivery of products and customer satisfaction.

AUTO EXPO 2020

The 15th edition of Auto Expo 2020 Components organized jointly by Automotive Component Manufacturers Association of India (ACMA), Confederation of Indian Industry (CII) and Society of Indian Automobile Manufacturers (SIAM), concluded successfully on 9th February 2020. The expo themed ‘Technovation - Discover Innovations for Future reflected the potential of the Indian Auto Component Industry to adopt the latest advancements in BS-VI & Emissions, EVs, Safety, and Mobility. ACMA claims that with over 1500 exhibitors and 1.15 lakh visitors, the 15th edition of the Auto Expo 2020 Components stays as the biggest auto component expo held till date.

JTEKT India showcased a host of made-in-India auto components at the event under the theme “No. 1 & Only One” at the Auto Expo Component 2020 at Pragati Maidan. JTEKTs Toyota Prius cut section displaying column-type EPS, driveshaft hub unit, plug-tube gasket, ball bearing for motor, KE & LFII bearing for counter driven, input shaft seal, etc. grabbed everybodys attention and appreciation. This time, JTEKT also showcased DP-EPS and a modular type power steering used for off-highway vehicles called I-EPS. Apart from that, various types of bearings were displayed at the event.

Key customers and leaderships visited our stall were from Maruti Suzuki, Mahindra & Mahindra, Toyota, Honda Cars, Tata Motors, Ford India, Groupe PSA, and many others. The Companys management team hosted more than 2000 visitors at its stall.

Technical Capability / Research &

Development

One of the major initiatives in our journey to attain self-reliance, in the area of product Designing and testing, is to establish a state of art Technical Centre, which will be fully capable to handle all local requirements and, also assist our other Global Technical Centres on need basis.

By this time, Phase-1 out of a total of 3 phases has been completed and Phase-2 is under progress. During Phase-1, we have consolidated and enhanced the testing facilities to validate our core products. We have also enhanced the skills of our Design Engineers by focused training programmes.

The Technical Centre in India would add substantial capabilities and tremendous value to the Company by reducing turn-around time for new product development, providing cost-effective solutions, and develop products specific to the Indian market.

The inherent advantage of India including the availability of high quality, skillful, and knowledgeable workforce at a competitive cost has the potential to become a huge opportunity for the Company in the years ahead. Proving the same, recently our Indian Technical Center has taken up design responsibility for some projects, for which, otherwise, we would have been dependent on Japanese Technical Centre.

During the year, we have locally designed and developed Proto ECU for the passenger car segment, which will enhance our cost competitiveness. We will keep on progressing with our focus on self-reliance and cost-effectiveness and achieve our goal of “To be No.1 Development Partner”.

HUMAN RESOURCES

Engagement of fresh & bright talent

To bring the best talents in the organisation, and to drive growth, we emphasise on the engagement of fresh, and qualified Diploma & Graduate Engineers. To filter the talent pool according to the Companys culture and technical requirements, we are conducting the AMCAT test for GETs and written tests for DETs which helps us in hiring bright candidates for our organisation. During FY-2020, we hired 153 DETs & 11 GETs across JIN.

Induction & Training

In JIN, we focus on development training that turns into action; training that makes a difference. Our strategy is to improve the technical and behavioral skills of all employees and we ensure that all our employees go through for technical & behavioral programmes every year. This helps them to not only become better in their domain but also learn many behavioral aspects like team building, positive attitude, leadership skills, and managerial skills. During FY-2020, we provided 93,724 training hours, spread across 1,619 training sessions.

For the new incumbents (at all levels), the following process is being adopted: - Induction for two to seven days. DOJO Training (Practical training) to Production Employees on Safety, Production, Maintenance, etc.

Performance exam after DOJO training (Those who pass the criteria, are only allowed to run the production lines).

To develop a common mindset, our internal trainers are imparting training on JTEKT WAY on regular basis to all JIN Employees also they are imparting a unique programme called “Eight Step of Problem-Solving Techniques”, to all our staff members. In this methodology, participants, while separated into the groups, are given a specific problem.

They are further asked to design a solution to the “Case Problem” by using all eight steps of problem-solving. A detailed presentation is made in front of the audience. That gives the reflection of the learning.

Employees are also getting overseas training in our parent company JTEKT Corporation where they get the training minimum for three days and maximum for six months and after getting the training in the supervision of qualified & experienced technical trainers in JAPAN, they impart the same in India to our employees/ trainees.

The Company also provides an opportunity for external training.

Domestically, we have a tie-up with Maruti Centre of Excellence for leadership development. We also have our tie-up with Japan Globus University.

SUPPLY CHAIN MANAGEMENT

A structured techno commercial Supply

Chain organisation has been put in place and uniform business procedures have been established. The sourcing team continuously works on establishing Commodity Strategies to finalize a mid-term plan for strategic suppliers. Kitaichi (expected achievement) Meetings have been initiated with strategic suppliers to achieve mid-term cost competitiveness. To strengthen the new product development process, the Company also initiated SPTT (Supplier Parts Tracking Team) activities to manage and deliver new projects on time. Additional cost reduction activities comprising of value analysis & value engineering and localization continued at the Company level to improve competitiveness.

The Company organised an annual conference of suppliers to communicate our objectives and share expectations from them. The event witnessed participation from over 100 suppliers.

During the year, 12 low-performance suppliers were selected for focused improvement in their performance with close support by the Companys cross-functional team. Representatives from 20 suppliers were trained on safety measures to propagate safety culture in their respective organisations.

SAFETY, SECURITY & SUSTAINABILITY

The Company continued to promote the ‘Zero Accident vision to prevent workplace accidents. During the fiscal, the following safety initiatives were taken to further the cause of the safety vision.

1. Improving Safety ‘Dojo The company has renovated Safety Dojos (a type of Safety training cell) across all Plants. Various ‘Safety risk simulators are designed and implemented where the trainees can feel the danger without getting hurt. Every employee has to attend the Dojo. This develops the sense of identifying the danger and being safe.

2. Red Machine Elimination This involved systematic Safety risk analysis and categorization of some machines as ‘red. Kaizens are then implemented so that such machines do not remain in ‘red category any more. The Company wants to ensure that none of the accidents will be due to machine failure.

3. Men – The Company has implemented a Safety mindset improvement program. Detailed trainings/counselling sessions of each and every employee are planned. Such employees are identified on the basis of detailed Safety Survey across all employees.

Apart from the above actions, we provide a mandatory 2-day safety training for every new employee. We have full time doctors in our plants and regular health check-up of our employees are carried out.

INFORMATION TECHNOLOGY

Resilience and connectivity will be the new watchwords in the current situation caused by coronavirus pandemic as organisations seek to adjust to this unpredictable future. During the lockdown, our IT team reacted quickly and put in place the facilities to Work from Home for the employees. We believe that the facilities now built will remain useful in a post coronavirus pandemic world as we see a renewed focus on business continuity and resilience.

During the year, we continued with our various ongoing initiatives to ensure the implementation of IT systems and processes that meet the best practices. The IT Team completed the entire consolidation project for Infrastructure and Security systems. Application consolidation is in progress across the Indian Region. The Company has set up its in-house DR (Disaster Recovery Site) to ensure business continuity, data Safety and Cost effectiveness. Apart from consolidation one of the key areas was to enhance the Company capability for Design & Development by upgrading the PLM system to its latest version to optimise the NPD cycle.

RISKS AND CONCERNS

JINs risk management policies have been designed in a manner by that the Company can respond by swiftly and implement the necessary mitigation actions. In compliance with the prudential norms, we have constituted a Risk Management Committee and developed a risk management framework. The objective was to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating, and resolving risks associated with the business.

The Committee meets periodically to review the framework given the dynamic business environment. This risk management policy has helped enhance process robustness, ensuring that business risks are addressed effectively.

The Companys business risks are broadly classified into the following four major categories:

Economic risk: Refers to risks resulting from the economic and political scenario in the country.

Operational risk: Refers to the risks that are inherent to the business and includes manufacturing and distribution operations.

Financial risk: Refers to the risk that results from fluctuations in the currency market.

Human resource risk: Refers to the risk of losing out on a skilled workforce due to competition.

The Committee recognises that risk management is an integral part of good management practices. Thus, it has made risk management as an essential element in achieving business goals and deriving benefits from market opportunities. While the

Company cannot completely rule out the possibility of a negative impact owing to risks, we continue to take cautious steps to mitigate risks.

INTERNAL CONTROL AND ADEQUACY

The Company has an effective and reliable internal control system commensurate with our size and operations. The internal controls are aligned with global standards and processes while adhering to local statutory requirements. The internal controls systems are supported through management reviews, verification internal auditors, and verification statutory auditors. The internal audit plan is also aligned to the business objectives of the Company which is reviewed and approved by the Audit Committee. Further, the Audit Committee monitors the adequacy and effectiveness of the Companys internal control framework.

In addition to policies, procedures, and guidelines, the internal controls system is facilitated by an automated “Compliance Manager Tool”. This enables self-assessment by process owners on the status of all applicable regulatory compliances and internal controls. This includes the following:

Safeguarding our assets and prevention and detection of frauds and errors Accuracy and completeness of the accounting records Controls relating to adherence to the Companys policies Timely preparation of reliable financial information Each self-assessment is approved by an immediate superior Senior management review and deliberate upon and review self-assessments periodically Verifying the accuracy of sample self-assessments through periodic internal audits

Our internal control system provides a high degree of assurance for: effectiveness and efficiency of operations reliable, timely, and transparent reporting, and compliance with laws and regulations.

CORPORATE SOCIAL RESPONSIBILITY

The Company reiterates our continuing commitment to behave ethically and contribute to economic development while improving the quality of life of the local community and society at large.

We firmly believe that it is important to operate in ways that enhance society and the environment.

The Companys CSR initiatives are on the focus areas approved by the CSR

Committee and include healthcare and rural development programmes.

During FY 2019-20, the Company has further extended these activities and has significantly increased its financial commitment to these projects. The Company has always focused to directly implement these projects in local areas after a detailed assessment of the requirements of the community to derive maximum benefit from these activities.

In the area of Healthcare, the Company has participated with Bharat Vikas Parishad, a charitable organisation, for setting up an advanced Eye Centre at its Unit Vivekanand Arogya Kendra in Gurugram. The Eye Centre has started providing specialised eye testing and surgery facilities at affordable charges during the year. Following specialized types of equipment costing INR 55 lacs were purchased for setting up the Eye Centre:

a) ZEISS Cirrus 500 Optical Coherence Tomography Machine

b) ZEISS HFA3 Model 840 Visual Field Recording Equipment

c) ZEISS Visuals YAG-III Ophthalmic Laser

d) ZEISS SL115 Split Lamp for Bio- Microscope

ADOPTION OF GREEN TECHNOLOGY

The Company made further efforts towards harnessing solar energy for generating electricity for our manufacturing units. Currently, our six manufacturing locations have solar power generating facilities, and the total solar power generating capacity stands at 1697 KWp. The Company has an ambitious plan to double this capacity in the next two years. In addition to this, all other energy-saving efforts such as the adoption of energy-efficient fixtures and equipment, zero water discharge through water recycling, etc. continue to receive the focus of the management.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be forward-looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the automobile sector, significant changes in the political and economic environment in India, exchange rate fluctuations, tax laws, litigation, labor relations, and interest cost.