Looking Back at FY21
The domestic automotive component industry is one of the major sectors being a backbone of India’s USD 100 billion automobile industry. The industry suffered a steep 35 per cent decline in turnover in the first half of 2020-21 as the pandemic piled on more misery on an industry that was anyway reeling under an unprecedented slowdown. All aspects of the industry were severely affected, from the shop floor to retail and the spread of the corona virus compounded the woes of the sector. The auto sector which was struggling since 2019 went through a major change post the pandemic; new trends emerged, and it took a while but business has been resuming bit by bit. The situation seems to have improved slowly.
People bought cars to rely on personal transport more than the public one, a trend which was majorly in effect due to the pandemic. For the last 75 years, NBC has been a witness to many economic, political, social and policy changes in the country. However, the company has always managed to keep up the pace with the changing times by plugging in the gaps within the company as and when required and strengthening relationships with its customers. The year 2020, however, was quite challenging since the economy had slowed down and the entire world was standstill for a couple of months.
Businesses were affected and at NBC we registered minimal sales for two whole months. During the April to August period, NBC had reduced inventory by 20%. This was in line with ongoing slowdown which had resulted in 15% dip in automotive sales which accounts for 70% of our total revenue. NBC’s business started picking up once the nationwide lockdown started lifting in phases. For the last couple of months, we have done better than the same period previous year.
Takeaways and Positives from Challenging Year
2020 was a year which caused major shift in trends and ideas. We were receptive and willing to change with the times. We gave into the new trends and consumer demands and worked around making those things better by accelerating out digital transformation. We are making constant strides to support the vision of our prime minister to make India self-reliant. The company has invested extensively in three areas — research and development or quality of products, people, and technology. These steps have helped the company to keep up with the increased demand over the years and compelled it to focus on its quality management and other areas more closely.
With the help of technology, NEI has been able to digitise its supply chains, optimise inventory, and predict machine breakdowns using data analytics. In fact, amidst the corona virus pandemic — when most of the businesses had come to a standstill — through a digital platform, the company was able to gather a pool of ideas to cope with the situation and was able to work on some massive cost-reduction strategies as well. NEI aims to fully digitise its manufacturing and non-manufacturing operations in the coming years.
We were also ranked amongst top 100 places to work for in India and best workplaces in the auto and auto components industry. Our sustainability efforts also paid off when our Jaipur site was awarded IGBC Platinum certificate, making it one of the oldest buildings to get this certificate which is a benchmark for sustainably designed buildings.
Thoughts on PLI Scheme, Scrappage Policy
The government had announced an outlay of Rs 75,000 crore for automobiles and components under the newly announced Production-Linked Incentive (PLI) scheme. Given that the automobiles/automotive industry account for more than 40% of India’s manufacturing GDP, the scheme aims to accelerate domestic manufacturing. The PLI scheme could be the catalyst that we all require to boost OEM exports and help in the long term by safeguarding India’s future.
The scrappage policy that recently got a green signal from the government will lead to new investments and also generate jobs, which will be a good contribution to our economy. This will also be helpful for the environment.
India cannot afford to miss the EV revolution given that its automotive sector is one of the largest contributors to national GDP. Policy and regulatory push like scrappage policy can push India further towards EV transition plans. Such measures by government can leverage to capitalize on the great opportunity to accelerate the growth that lies ahead for India.
Plans for Current Year
2021 is an important milestone for us as we complete 75 years of our incorporation. We have chalked out aggressive growth plans both organically and inorganically. Organically, we will keep working towards expanding our portfolio based on the evolving landscape and needs of our customers. This year, we have invested in new lines to manufacture needle bearings – a requirement from our customers. In the coming period, lot of our R&D projects will be completed. We will be introducing more bearings for electric vehicles along with smart bearings and high-speed bearings. Our industrial range of bearings is being enhanced with spherical and cylindrical bearings. Our partnership with Indian Railways has been for many decades now and will continue to work with them to support their future expansion.
We are also actively exploring aerospace, defence, space exploration and other sectors to grow. We have also launched services like condition based monitoring, bearing training, etc. to add another revenue stream to our mix. Apart from the activities we are doing in India, we will continue to expand our presence in international markets. We have customers in over 30 countries and good relationship with OEMs across US and Europe. Adding to this, Kinex – our European subsidiary, will boost up our reach in the international markets and also in the segments like aerospace and textile. We will also continue to look for mergers and acquisitions opportunities to fuel our growth.
FY22 Outlook
The auto industry will be very vibrant in the coming year with innovations and slated to see stronger growth. Electric vehicles, especially two-wheelers, will also be the flavour for next year where companies will be busy in conceptualising and rolling out new models. We are working with the industry players to discuss their requirement and are well-placed to provide them with our bearings solutions.