Harsha Kadam
Dear stakeholders,
The past year has been a period of unprecedented disruptions coupled with major economic dislocations. This once-in-a-century incident cast unforeseen obstacles and highlighted how quickly the world can change. The safety and care of our employees was paramount and the appropriate and necessary measures to alleviate the stress and pain of the pandemic were deployed effectively. The pandemic also demonstrated our ability to collaborate, adapt and find new ways of keeping our promises to our customers, employees, shareholders in extraordinary situations.
This resilience and ability to overcome adversities is also reflected in our performance for the year 2020. Our sound strategies and strong execution capabilities have enabled us to deliver a good performance.
A year of distinction
Faced with the COVID-19 scenario, we enhanced our engagement with our stakeholders to be able to provide them with stronger support. At the same time, we continued to ramp up our capabilities and introduced some distinct products across business segments. We launched two new products – Schaeffler TruPower range of lubricants for Aftermarket customers and OPTIME solution for the industrial segment. Both have been received well in the market on account of their superior value proposition and multiple benefits to the consumers.
Green shoots of recovery
A large part of 2020 was full of uncertainties, owing to the developments related to the pandemic. However, it is important to note that economic activity has been picking up gradually over the past few months. Automobile sales, for instance, registered 11% y-o-y growth in the month of December. Though overall Index of Industrial Production (IIP) and core sector continues to decline, a deep-dive reveals positive growth in certain pockets (production of cement, steel, coal, and electricity).
Retail inflation remained above RBI’s comfort level of 4+/-2% for most of the year and started to cool off in December. While the overall consumer sentiment remains weak, especially in urban India, a path to recovery is surely emerging, aided by concerted efforts of the government and RBI to boost consumption over the medium term.
Driven by determination
After witnessing weak demand in the first half of the year, we saw signs of revival from the third quarter onwards with pent-up demand coming into play. Coupled with cost rationalisation and process optimisation measures to increase our operational efficiencies, we were able to maintain margins and healthy profitability. Thus, our revenues stood at ` 37,618.4 million and EBITDA margin came in at 14.4% versus 14.8% in 2019.
The well-diversified nature of our business helps us to
maximise opportunities and limit risks. The optimum mix
between automotive and industrial segments helps to
balance out the risks arising out of volatility in the respective
segments. The auto sector was among the few sectors that
led the economic recovery, while industrial activity picked
up with some lag. We were ready to capture this demand
and further solidify our market positioning.
As production
resumed to normalcy from June onwards, all plants started
operating at regular capacity. This aided our operational
performance and ensured that we were there to serve
our customers in a timely manner. Rail and wind sectors
continued to drive demand from the industrial segment for
another year.
Solid fundamentals, a promising future
The year 2020 reinforced our faith in our strategies, and we began 2021 on a positive note. Armed with the tools of innovation, agility, and forward-thinking, we are excited about our future journey. Reinvigorated by our parent’s newly launched strategic Roadmap 2025 and inspired by its tagline ‘We pioneer motion’, we are committed to tracing a new trajectory of growth. We are moving swiftly to complete capacity expansion at the Savli plant and are strengthening our capabilities in R&D and innovation.
Our drive to deliver a superior customer experience is centred on our ability to innovate and provide solutions that help respond as closely as possible to our customer’s expectations. The customer insights we gather help us innovate more effectively.
Onward and upward
We see significant potential for gaining share across all our business segments. In the automotive business, we are enhancing our capabilities to cater to vehicles across petrol, diesel, and hybrid categories. India’s thrust on EV adoption presents us a massive opportunity to get ahead by bringing in our global expertise in high-quality offerings in the hybrid and EV space. In the industrial business, our efforts are aimed at providing holistic solutions to our customers.
Underpinning all these efforts is our commitment to best-in-class governance practices. These are a key drivers of our ability to engineer trust among all our key stakeholders and deliver a consistent performance over time. We are confident in our ability to deliver sustainable growth.
We are also stepping up our commitment to sustainability in more ways than one. While our innovative products enable greater efficiencies across industries, acting as a multiplier by helping them to reduce their carbon footprint, we are steadily improving on our Environment, Social and Governance (ESG) reporting practices.
Our gaze is now fixed on achieving our strategic priorities and seizing emerging opportunities swiftly. Driving technological excellence, enhancing operational efficiencies, fortifying our connection with the customers, and leading the way in innovation are key focus areas for us.
In conclusion
Crises are often termed as the true test of character of an individual, or an organisation. Over the course of the year, Schaeffler India has shown that we are a Company that leads by its values – Sustainable, Innovative, Excellent and Passionate – and will continue to do so, whatever be the challenge ahead.
I greatly admire our customers, our network of partners and dealers, the members of the executive team, and our employees for their herculean efforts during a period of unconventional and unexpected challenges experienced both professionally and personally. Your courage, decisiveness, and vision have contributed to our resilience as an organisation.
I would also like to express our deep gratitude for corona warriors across the world, as well as pride in India’s success in developing the vaccine in a timely manner and initiative in reaching out to the world with the solution.
I am also grateful to all our stakeholders who continue to engage with us constructively on key matters that impact our businesses and support us along the way. Together, we make a strong ecosystem that is committed to large-scale progress for our communities and the country.
Sincerely,
Harsha Kadam
