SAL Automotive Ltd Management Discussions.


SAL Automotive Limited (SAL) manufactures automotive components and agricultural implements. SAL is a preferred supplier to most of the leading manufacturers of passenger vehicles, commercial vehicles and tractors. The product line of the Company includes seats, seat adjustors/sliders and seat recliners. In addition to the production of automotive components, it also manufactures agri-implements viz. rotavators and tractor trollies.


While details of financial position and performance are available in the Balance Sheet, Statement of Profit & Loss, along with related notes, key aspects are highlighted in the following paragraphs:

(A) Statement of Profit & Loss Income:

Total revenue for the year was Rs.86.70 crores (previous year Rs.131.48 crores) with the following breakdown:

(Rs. in Crores)

2019-20 2018-19
Seats, Seat mechanism & its components 67.51 97.94
Agriculture implements 17.47 31.88
Others 0.49 0.83
Net Revenue from Operations 85.47 130.65
Other Income 1.23 0.83
Total Revenue 86.70 131.48

With a comfortable fund position throughout the FY20 and after meeting operations requirement, interest income for the year was Rs. 1.16 crore (previous year Rs. 0.73 crore). Other miscellaneous income for the year stood at Rs. 0.07 crore (previous year Rs.0.10 crore).


Material cost as a percentage of net revenue from operations at 71.7% was lower than last years level of 75.3%.

Personnel cost during the year was Rs. 17.76 crores (previous year Rs.18.73 crores) and in terms of percentage of net revenue from operations comes to 20.8% (previous year 14.3%).

Other expenses, consisting of manufacturing expenses, administrative expenses and sales & distribution expenses during the year were Rs. 7.04 Crore (previous year Rs. 7.88 Crores), 8.2% in terms of percentage of net revenue from operations (previous year 6.0%).

Depreciation for the year at Rs. 1.44 crore was higher as compared to previous years Rs. 1.37 crore.

Reflecting the above and after considering finance cost and prior period adjustments, Profit/Loss before Tax reached Rs. (1.22) crores (previous year Rs. 4.82 crores). Considering exceptional items and after providing for corporate tax, Profit after Tax for the current year was Rs. 1.25 crores (previous year Rs. 3.47 crores).

B) Balance Sheet

Equity & Reserves

The Companys net worth as on 31st March,2020 stood at Rs. 33.42 crores comprising of an Equity component of Rs. 2.40 crores and Reserves & Surplus of Rs. 31.02 crores - a book value of Rs. 139 per share (previous year Rs. 139 per share).

Fixed Assets

Gross Block and Net Block as on 31st March, 2020 stood at Rs. 27.15 crores (previous year Rs. 30.22 crores) and Rs. 9.09 crores (previous year Rs. 13.57 crores) respectively. Additions during the year were primarily towards plant & machinery and software.

Capital work in progress at the year-end stood at Rs.0.07 crore (previous year Rs. 0.07 crore). Inventories

Year-end inventories of raw material & components and stores & spares marginally increased to Rs. 3.47 crores (previous year Rs. 3.38 crores) which was equal to 15 days of the operating revenue (previous year 10 days).

Trade Receivables

Nation-wide lockdowns hamper the collections from the customers which resulted into increase in trade receivable. Figures at the year-end stood at Rs. 20.96 crores (previous year Rs. 26.14 crores) which was equal to 76 days (previous year 62 days) of the operative revenue (including GST).

Trade Payables

Trade payables stood at Rs. 20.92 crores (previous year Rs. 22.07 crores), at the end of the year . INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has established procedures for an effective internal control. The policies and procedures have been laid down with an objective to provide reasonable assurance that assets of the Company are safeguarded from risks of unauthorised use / disposition and the transactions are recorded and reported with proprietary, accuracy and speed. These aspects are regularly reviewed during internal audit and statutory audit. The Company has also laid down adequate internal financial controls. During the year, such controls were tested and no material weakness in their operating effectiveness was observed. The Finance and Accounts function of the Company is adequately staffed with experienced and qualified personnel. Operations and progress of the Company is monitored at regular intervals by the Board of Directors and the Audit Committee with the help of business plans, budgets, internal audits, financial reporting etc.


The Company has a highly committed, loyal and dedicated team. The Company promotes an atmosphere which encourages learning and informal communication within the organisation. The Company is having Performance Management System (PMS) to objectively measure the performance of the individual and the organization. The overall remuneration structure is linked with PMS. The Company also has a training need identification system in place for enhancing the learning and competency level of the employees from time to time. This has made a significant contribution to the Companys business.

Industrial relations were cordial throughout the year under review.

Regular employee strength as on 31st March, 2020 stood at 203 (31st March, 2019 - 205). INDUSTRY STRUCTURE AND DEVELOPMENTS

The Company is in the business of manufacturing and supplying seats, seat mechanisms and agriculture Implements to various tractor, LCV, Car and Agri product manufactures. The performance of your Company is largely dependent on the performance of automotive and agriculture industry.

For last several years, the automotive industry has been showing a clear growth trend. During FY 20, the Indian auto industry produced total 2.63 Cr vehicles including passenger, commercial, three wheelers and two wheelers segments, vis-a-vis 3.09 Cr produced in the FY19, showing a de growth of 14.7%. A comparison of production numbers across these segments show a de growth during FY-20. (Source: SIAM website)

The Indian tractor industry witnessed a growth for the last few years. But in FY20 tractor production de grew by 15% at 7.61 Lac as compared to 8.97 Lac of FY19. Agri implements industry also de grew in FY20. (Source: The Economic Times and Tractor Manufacturers Association website)


Overall industry is facing serious impacts of ongoing COVID 19 pandemic due to lockdown, migrant labour movement and slow production in initial months of current fY. The automobile industry is severely impacted by this and individual choices are expected to vary due to various factors of COVID 19. The agriculture sector prospects looks positive due to overall record production of crop and lot of Govt initiatives.

The recent sluggishness is also linked to the significant increase in insurance and fuel costs.

We, however, believe that the recent developments to be temporary and demand in both automotive and tractor industries shall bounce back in medium term. The Automotive Mission 2026, a collective vision of the Industry and Government of India aims to set a new trajectory for the evolution of the ecosystem for the automotive industry with its size, global foot-print, technological maturity, competitiveness and capabilities in mind.

Other factors like government continuous thrust on strengthening rural sector, infrastructure development, make in India, skill India, and launch of new models by vehicle manufactures, changing buying pattern, replacement demand etc. too shall role as a catalyst to the growth of the Industry.


Under "Make in India" initiative of Indian government, India is poised to become manufacturing hub. The Automobile sector is one of the prominent sector to contribute to the manufacturing industry in India. Most of the international automobile giants have either set up their plants or they are in the process of setting up their manufacturing facility in India. Western and Southern regions of India has become manufacturing hub of automobile sector. Automobile Manufacturers (OEMs) prefer its suppliers to be nearby of their plant. Your Company is actively exploring opportunities to set up new facilities in the plant to give a boost to its focus to its auto ancillary business.

Given its high growth potential, your company has forayed into another strategic business segment of "Agriculture implements". The Agri-implements segment, which predominantly comprises of contract manufacturing of Rotavators, added 22% to the revenue .Company has seen a substantial spurt in view of sustained demand from our customers.

Your company is also diversifying products range to Indian Railway coach components like seats and berths. We are in process of executing development orders to Railways in the current year and also putting efforts for supply of different types of berths to all coach factories of Indian Railways.


As your Company supplies components to tractor and automobile OE manufacturers, the Company would be directly affected by the factors impacting tractor industry and automobile industry. These would include issues like quantum of rains spread, Government policy on procurement, enforcement of safety / emission regulations, availability of credit, change in interest rates, commodity price trends, increasing intensity of competition etc.

In the short term, the automobile industry is showing trends of downturn due to various reasons impacting demand from urban and Rural India.


Statement in the Management Discussion and Analysis Report describing companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.