Akshay S Pitti
Vice Chairman & Managing Director
At the beginning of another fiscal, I welcome you to an insightful review of our performance in FY 2020-21. The past year was particularly challenging, but I am extremely impressed by the resilience and perseverance of our team. Despite difficulties, we learnt to adapt to the ‘new normal’ and continued to provide uninterrupted service to our valued customers.
Our EBITDA improved to 15.06% in FY 2020-21, driven by a diversified portfolio of value-added products.
Operating environment
The Indian economy contracted 7.3% during the fiscal year 2020-21 due to the onset of the Covid-19 pandemic, which led to an unprecedented economic crisis. To aid economic recovery, the Reserve Bank of India and the Government of India adopted an expansionary monetary and fiscal policy to infuse liquidity in the economy. The measures were complemented by favourable policies such as the Production Linked Incentive (PLI) scheme, Extended Credit Line Guarantee scheme (ECLG S) for MSMEs and extensive budgetary allocation for infrastructure projects, among others. During the second half of the financial year, the country witnessed an economic revival but, the second wave of Covid-19 dampened chances of a speedy recovery.
Staying Agile
Despite challenges, we reported sustainable financial and operational performances during the year under review. We took proactive steps to develop unique solutions for customers and diversified our presence to enter new downstream sectors. We also won an order from Indian Railways for the supply of critical parts for 3 phase electric locomotive project at Chittranjan Locomotive Works. This was a major achievement for us, in line with our efforts to expand our operations in the locomotive sector. The Company also secured an order for supply of Induction Motor to Metro Rail projects in India.
I am pleased to report that the company is gradually making its foray in sunrise sectors such as the renewable energy space. We have collaborated with a Germanybased wind firm for the supply of windmill pedestals and bearing flange for its project in India. Along with it, we have received new orders for steam turbines and hydel pump parts for hydro power generation. We also acquired an order for supply of irrigation pumps from a renowned client.
Operational performance
Despite plummeting demand during the pandemic, the company successfully delivered strong operational performance in FY2020-21. Our EBITDA improved to 15.06% in FY 2020-21, driven by a diversified portfolio of value-added products. The profit margins also improved and return on equity (RoE) and Return on Capital Employed (RoCE) also increased significantly to 12% and 13% respectively.
The Company has done new investment of ₹ 161.54 crores up-to 31st March 2021 in its Aurangabad facility which is recognized as Mega Project by the Government of Maharashtra and is eligible to claim of industrial subsidy equal to the amount invested under IPS-2013 over 7 years starting from 2018-19, however the total claim subsidy is pegged to the total SGST paid by the unit during that period.
During the year, the Company has received approval for investment subsidy for the years 2018-19 & 2019-20 of ₹ 21.66 crore from Govt of Maharastra and sanction of ₹ 16.25 crore for the same period as per the policy which is accounted in March 2021.
Exploring opportunities
The Indian government has set a target of becoming a USD 5 trillion economy by 2025. To fulfil this objective, infrastructure development is anticipated to be on the rise in the years ahead. Infrastructure spending is also anticipated to create significant opportunities for the company, mainly on account of its presence in several downstream sectors, particularly in the capital goods sector. Moreover, accelerated digital infrastructure creation and the introduction of 5G telecom network is expected to increase power demand, thereby boosting the power and other ancillary sectors. Simultaneously, demand for energy efficient equipment such as pumps and progressive policy support for sectors such as the sugar industry augurs well for our company. Resting on our advanced technological capabilities, we remain poised to capitalise on emerging opportunities in various sectors.
Looking ahead, we remain optimistic about creating more value for our stakeholders through concerted efforts.
Looking Ahead
Although the Covid-19 crisis posed severe challenges, our people exhibited extraordinary courage in their personal as well as professional lives. Your company also benefitted from the strength of its workforce and learnt to efficiently adapt to a ‘new normal’.
Looking ahead, we remain optimistic about creating more value for our stakeholders through concerted efforts. The growing demand for our products in various applications produce significant opportunity for us to unlock better prospects in the days ahead. Besides, government initiatives such as Make in India, Aatmanirbhar Bharat & PLI Schemes are anticipated to add impetus to our business growth.
I extend my gratitude to all our stakeholders, including the Board of Directors, customers, employees and business partners who continue to repose their trust on the company and contribute to its development.
Warm Regards,
Akshay S Pitti
Vice Chairman & Managing Director