customers, particularly in the commercial vehicles, farm and construction equipment, two-wheelers and passenger
vehicle segments. The fluctuation in demand for OEMs from end customers therefore impacts us. The levels of
demand for automotive components depend primarily on the prevailing business conditions in the automotive
industry. This in turn, depends to a large extent on general macro-economic conditions in these markets. We are
particularly affected by factors impacting the Indian commercial vehicles, farm and construction equipment, two-
wheeler and passenger vehicle markets. In respect of our Industrial and Engineering segment products like storage,
material handling, gears, aluminium castings for power transmission, being capital goods by nature have a
degree of correlation to the gross capital formation and capital expenditure. Some of the general macro-economic
factors that can affect demand for our products and as a result for our business, include the following:

. global and local economic or fiscal instability in particular the general level of GDP growth in a country
or region, and growth in personal disposable income in that country or region impacts the affordability
of the people in buying of two or four wheelers and demand for products;

. agriculture and industrial growth of the country and its impact on the goods movement, levels of
agricultural activity, farm income impacts the farm equipment demand, rural household income and their
affordability;

. gross capital formation, planned expenditure and government revenues and its impact on the capital

expenditure funding in respect of power distribution and spending on railway expansion/modernization;

. global oil prices, which impacts the automotive industry and subsequently the components industry, both
globally and in India;

. global and local political and regulatory measures and developments;

. demographic conditions and population dynamics, such as the absolute size of a market and the growth

rates of the population in that market;

. availability of auto financing options;

. volatility in exchange rates;

. government initiatives such as Make in India and manufacturing subsidies;

. trade agreements with nations and international trading barriers by India and other countries; and

. laws on minimum wages, labour laws, pay commissions and other factors shaping the income levels of

the middle class population.

The outbreak of COVID-19 has significantly and adversely impacted and will likely continue to impact economic
activity and has contributed to significant volatility in global financial markets and led to operational challenges.
In response to the COVID-19 outbreak, the governments of many countries, including India have taken preventive
or protective actions, such as issuing advisories and imposing country or state wide lockdowns, which have
significantly slowed down economic activity. According to the CRISIL Report, this, coupled with the effects of a
troubled global economy, resulted in the worst ever real GDP contraction on record of 23.9% on-year in the first
quarter of Fiscal 2020. According to the CRISIL Report, the COVID-19 curve appears to be flattening in India,
with high frequency data in September evidencing improving economic conditions. For further details, see “Risk
Factors - The extent to which the coronavirus disease (COVID-19) affects our business, results of operations
and financial condition will depend on future developments, which are uncertain and cannot be predicted.”
and “Business - Impact of COVID-19 on our business operations” on pages 22 and 187, respectively.

Stronger macro-economic indicators tend to correlate with higher demand for automotive vehicles and industrial
and engineering products while weaker macro-economic indicators tend to correlate with lower demand for
automotive vehicles and other products.

The cyclical nature of general macro-economic conditions and, therefore, of the automotive and engineering
industry means that our results of operations can fluctuate substantially from period to period. We expect that
these macro-economic factors and conditions in the automotive industry, particularly changes in consumer
confidence, employment levels, fuel prices, consumer spending on two-wheeler, four-wheeler and commercial
vehicles, urbanisation, government policies and interest rates, will continue to be the most important factor

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