affecting our revenues and results of operations. Other factors, such as our competitiveness, quality and pricing,
have an effect on our market share and our ability to win customers in competitive situations, but the overall
direction of the automotive industry tends to have a more pronounced effect on our revenues and results of
operations.

See “Industry Overview” on page 96, for a discussion of macroeconomic conditions in the global economy and
Indian economy, respectively, and a more detailed description of the automotive components industries in the
markets in which we operate.

Raw Material Costs, Operating Costs and Efficiencies

Our business, financial condition, results of operations and prospects are significantly impacted by the prices of
raw materials purchased or imported by us as well as any changes in global metal prices, particularly, aluminium
ingots and ferrous castings and tools.

Raw material costs (consisting of the costs of materials consumed and changes in inventories of finished and
work-in-progress non-machined goods) constitute the most significant portion of our expenditures, representing
42.13%, 39.09%, 38.41% and 37.81% of our total income for the nine months ended December 31, 2020 and
Fiscals 2020, 2019 and 2018, respectively. Our financial condition and results of operations are significantly
impacted by the availability and costs of raw materials, particularly steel, aluminium ingots, ferrous castings and
tools.

We rely significantly on five of our suppliers for procurement of aluminium ingots required for manufacturing
aluminium products and a limited number of foundries which are nominated by our customers for raw castings
required for our powertrain products.

Raw material pricing can be volatile due to a number of factors beyond our control, including global demand and
supply, general economic and political conditions, transportation and labour costs, labour unrest, natural disasters,
competition, import duties, fuel prices and availability, power tariffs and currency exchange rates, and there are
uncertainties inherent in estimating such variables, regardless of the methodologies and assumptions that we may
use. This volatility in commodity prices can significantly affect our raw material costs. Further, volatility in fuel
prices can also affect commodity prices worldwide which may significantly increase our raw material costs. In
addition to market fluctuations, our average raw material prices can be affected by contractual arrangements and
hedging strategies, if any. We do not currently have long term contracts or exclusive supply arrangements with
any of our suppliers.

Historically, as a practice, we have priced our products so as to largely pass the increase in cost of metals,
especially aluminium and steel, onto our customers for our operations. Further, our contracts with our customers.
generally provide for pass through of any variation in the raw material costs. However, our cash flows may still
be adversely affected because of any gap in time between the date of procurement of those primary raw materials
and date on which we can reset the component prices for our customers, to account for the increase in the prices
of such raw materials. In addition, we are especially not able to pass all of our raw material price increases to our
customers for our operations, as we sell integrated systems rather than individual components. The inability to
pass fluctuations in raw material prices on to our customers may materially and adversely affect our profits and
profit margins.

Given the nature of our business, our ability to manage our operating costs and efficiencies is critical to
maintaining our competitiveness and profitability. Our profitability is partially dependent on our ability to spread
fixed production costs over higher production volumes. In addition, we face pressure from our key customers to
reduce prices, and in order to maintain our profitability, we must be able to boost our productivity and reduce our
operating expenses. We continually undertake efforts to reduce our costs in order to protect our margins, such as
interchanging capacity, product mix and manpower between facilities by moving machinery from one location to
another, rationalising suppliers, negotiating volume discounts, outsourcing non-critical processes, reducing energy
usage and rationalising our manpower. Our ability to reduce our operating costs in line with customer demand is
subject to risks and uncertainties, as our costs depend, in part, on external factors beyond our control.

The improvements in operational efficiency is generally a gradual process. Most of our general purpose machine
tools with change in attachments such as jigs, fixtures and tools certain modification are capable of being used
interchangeably amongst our three business segments, depending on the demand for products under each segment.
Our expanding production facilities, particularly the aluminium casting lines have added capacity to capture new
business, which has helped to grow our revenue. For the nine months ended December 31, 2020 and Fiscals 2020,

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