Shivam Autotech Ltd

FY23 was a busy year for your Company as it navigated these challenges to successfully strengthen the fundamentals of the business with an EBITDA of Rs.52.30 Cr (EBITDA margin 11.11%), as compared to previous year Rs.75.44 Cr (EBITDA margin 16.07%) the decrease in EBITDA is due to under-utilization of Capacity and your company management is working for optimum utilization.

Dear Stakeholders,

I hope this letter finds you safe and in good health.

In the last fiscal year, the global economy continued to face multiple challenges and uncertainty due to prevailing geo-political events like Ukraine war and Non availability of Semi-conductor resulting in a slowdown across the world. Spiraling costs of raw materials, supply chain disruptions and tighter monetary policies have all had an adverse impact on demand across industries, including the 2 wheeler industries. This resulted in a reduction in demand of 2 wheeler components and significant pricing pressures on Shivam. Additionally a subdued demand coupled with rising raw-material costs and indirect material costs which is also adversely impacting our sales volumes and hence, financial performance.

As the world makes a slow and uneven recovery post Covid pandemic and is still grappling with various geopolitical complexities, the one thing that is certain, is that we live in an increasingly uncertain world.

The global economy slowed down due to various macro-economic events and, the overall businesses have faced several crises. Shivam was no exception. Notwithstanding, the recent setbacks the Company is re-energized to perform better, and emerged stronger in the coming years than ever. Shivam continues to be a resilient company built on a strong foundation, committed towards its longterm strategy, and is poised for growth.

AUTOMOTIVE SECTOR

According to Society of Indian Automobile Manufacturers (SIAM), 2022-23 has been a year of consolidation, post Covid. The year started again with supply chain disruptions from Ukraine conflict. However with efficient management of supply chains and better availability of commodities especially for the electronics items, prices have moderated over the year, though it remains a concern. Indian Automobile Industry seen a significant 21% increase in domestic sales in FY 2022-23. In its total growth, passenger vehicle achieved its highest sales figures with a growth rate of 27% surpassing the previous peak in 2018-19. Commercial vehicles and three wheelers also witnessed substantial growth, with respective increases of 34% and 87% primarily attributed to the higher demand for passenger carriers. However, these segments are yet to reach the pre-pandemic levels as per SIAM Inspite of good growth in domestic sales in three-wheelers, they are still below the 2010-11 levels and the Two- Wheelers domestic sales are still below the 2014-15 levels. Favourable Policy initiatives ranging from impact of new PLI Schemes, encouraging announcements in Budget, forward looking Logistic & Foreign Trade Polices and recently announced Gas pricing Guidelines would go a long way in supporting the growth of the Industry."

FY23 was a busy year for your Company as it navigated these challenges to successfully strengthen the fundamentals of the business with an EBITDA of Rs. 52.30 Cr (EBITDA margin 11.11%), as compared to previous year Rs, 75.44 Cr (EBITDA margin 16.07%) the decrease in EBITDA is due to under-utilization of Capacity and your company management is working for optimum utilization.

The business diversification strategy devised and implemented to manufacture components for new business verticals like off road vehicles, steering components and construction equipment have been encouraging.

Despite the setbacks in the last two years, Shivam has clearly mapped and factored the various extrinsic and intrinsic influences in its long-term strategy. We are poised to leverage these opportunities and regain growth, further consolidating our market leadership position. However, we will maintain our current levels of rigorous fiscal discipline, optimize our operations and control costs to bolster our competitive edge and improve our financial performance.

Shivam Autotech's investments are also focused on the global market and the current geopolitical issues are providing new opportunity to export and also increase in domestic demand propelling our growth. It also remarkable that the Bangalore plant of the Company started its production indigenous products for four wheeler customers resulting in saving foreign currency for the country and have also diversified our product portfolio in steering products, components for alternator etc in the reporting financial year. The Company also successfully developed products for automobiles, commercial vehicles (for Indian as well as global market), tractors, aviation, Electric E-Rickshaw & Three Wheelers, non automotive, etc.

Considering the results of Shivam Autotech, its product diversification to tap newer potential and an upbeat industry scenario, I have no doubt about our ability to materialize our vision and to work strongly towards creating immense value for you, our stakeholders.

No doubt, an environment of fear is eclipsing the industry. But it is equally true that the industry is all set to become the third-largest in the world by 2025, and globalization is considered auspicious rather than a menace.

Shivam Autotech Limited has planned its growth trajectory in the coming quarters by planning product launches. This includes differential axles used by the three-wheeler EV segment, currently undergoing trials, besides other products for the aftermarket in both twowheeler and four-wheeler category viz. filters for twowheeler. The EV market is expected to grow at a CAGR of 49% between 2022-2030, with annual sales reaching 10 million units by 2030 and the Company is looking forward for this growth.

The product and vehicle category application mix is as per below table -

Although it has been a difficult and demanding year, it has been an immensely rewarding one. Our people have demonstrated to us that resilience, creativity, and collaboration can overcome the most challenging of situations. I am confident that our success this past year has inspired all of us at Shivam to Re-energise. This strategy has served us well and I believe that it will help build the necessary momentum to leap forward into a brighter tomorrow.

I would like to conclude by expressing my heartfelt gratitude to all our stakeholders for their continued dedication, hard work, guidance, and faith in us. I look forward to growing together with all of you and achieving our collective dream of being a leading global player in the pigments industry and leaving behind a better world.

Stay Informed! Stay safe!

Neeraj Munjal

Managing Director.