Lumax Auto Technologies is exposed to a diverse range of risks and uncertainties. Some threats can materialise in no time while some emerge gradually. It is crucial to continuously improve risk management capabilities for eliminating or minimising the impact of risks. And this ongoing strengthening of risk management is key to the Company’s smooth operations. It forms an active part of our growth strategy.
Prudent risk management helps undertake a systematic approach to anticipate risks in the Company’s constantly changing business environment. This, in turn, helps being more responsive and alert while tackling critical risks to reduce the likelihood of its impact. It brings the Company closer to its ambitions while also delivering value to its stakeholders.
We are exposed to fluctuations in national economies; societal unrest and geopolitical uncertainty, evolving legislation, natural crises and so on. Automobiles are the core of our business and their demand is directly affected by any uncertainty caused in the economic situation. Therefore, economic recession and an ensuing decline in market demand can negatively impact the Company’s performance and financial position.
To mitigate this, we continuously evaluate potential short-term market volatility and longer term socio-economic and political scenarios.
A pandemic has a potential to cause serious disruptions and cause devastating economic losses. It can severely damage the social, economic, and political scenario leading to great losses. Casting its shadow over several economies, the repercussions of Covid-19 are being felt more strongly with every passing day. Despite the unprecedented steps and cumulative efforts undertaken by governments, businesses, and individuals to stem its growth has caused loss of life and struck businesses across industries and verticals.
To effectively respond to these threats, we have adopted a two-pronged approach. We established preparedness strategies that cover emergency response, crisis management, and crisis communications. Secondly, we chalked out our business continuity plans while adopting to the new normal.
It is defined as probability of loss from decline in a firm’s competitiveness on account of rivalry. The Company’s market-leading position can be challenged by existing and potential competitors. Consolidation among competitors creates large-scale players
We operate in a highly competitive market and expect competition to increase further in the future. We always strive to meet the challenges by satisfying our customers by offering wide range of products with the right quality at right time and with better services and after sales services.
Factors that can affect commodity prices include political and regulatory changes, seasonal variations, weather, technology, and market conditions. Being heavily dependent on raw materials for our desired outputs, sourcing raw materials at the right price becomes imperative for us. Any failure in procuring the right quality material could affect the quality of end product and brand’s image.
We operate in a market where commodity/raw materials/finished goods prices fluctuate. We try to minimalise this effect through vendor management programmes and hedging policies.
Our business is dependent on certain major customers, with whom we do not have firm commitment agreements. The loss of such customers, a significant reduction in purchases by such customers, or a lack of commercial success of a particular vehicle model of which we are a significant supplier, could adversely affect our business, results of operations and financial condition.
Our healthy relations with our customers play an important role in this situation. Apart from this, our price competitiveness and diverse product, segment and customer portfolio help us to offset the potential risks.
Changes in consumer preferences, regulatory or industry requirements or in competitive technologies may render certain of our products obsolete or less attractive. Our ability to anticipate changes in technology and regulatory standards and to successfully develop and introduce new and enhanced products on a timely basis is a significant factor in our ability to remain competitive. However, failure or delay in achieving the required level of technological sophistication or a gap in assessing market needs properly, can negatively impact the Company’s performance and financial position.
Our global synergies and state-of-the-art research centres aid us in keeping up with the global trends and preferences. Our 3 research centres host experienced as well as indigenous designers that are constantly involved in new product development and upgradation of technological products.
