AMTEK AUTO LIMITED
ANNUAL REPORT 2002-2003
To the members of Amtek Auto Limited at the 17th Annual General Meeting
held on 27th December, 2003.
Ladies and Gentlemen, welcome you all to the 17th Annual General Meeting of
the company and express my thanks for having spared your valuable time to
attend the meeting.
The Annual Report of the company for the period ended 30th June, 2003 must
have apprised you of the achievements of your company during the year.
However, I take this opportunity to personally share with you the
strategies and future growth prospects of the company.
The Indian economy is one of the fastest growing economies of the world.
During the current year, the country has been blessed with good monsoon
which had a positive effect on the country's economy. The Indian Economy is
witnessing a mood of buoyancy with feel good factor. Both the manufacturing
and service sectors are performing well. Economy is expected to achieve GDP
of 8%. Indian Companies have started acquiring overseas companies to become
truly global players. The forex reserves are at an all time high. The
Indian Companies have proved that if provided with opportunity and
infrastructural facilities, they are comparable to the best of the world.
The Indian automotive components manufacturing industry is consistently
growing due to a sharp growth in the exports in the last 2 to 3 years. The
next big opportunity emerging for the Indian companies is the automotive
component exports as the global automotive OEMs are focusing on third world
countries especially India for their global sourcing programs. The total
worth of components procured by global OEMs from India last fiscal was US$
375 Million and the same is estimated to increase to a whopping US$ 1.5
Billion in the current fiscal. Thus has been a result of a silent
revolution in the Indian automotive component industry which has boosted
productivity and quality of the Indian component manufacturers and placed
them ideally to emerge as big another success story of our times.
Automotive components industry experts have pegged the worth of the global
automotive components industry at US$ 750 Billion of which the current
exports from India area mere $ 375 Million or 0.5% only. However, the
future of the Indian component industry looks very exciting. The Indian
component industry is likely to see a consistent growth rate of 35 to 40 %.
The Indian automotive component manufacturers are estimated to export
components worth a whopping US$ 15 Billion by the year 2010. The global
sourcing will not remain confined to the global OEMs only. Leading
automotive component assembly & systems suppliers who have multi-national
operations are likely to focus on outsourcing rather than manufacturing in
Europe and the Americas due to constant cost reduction pressures from their
The domestic automobile industry has had a good run in the last year which,
as per the industry experts, is likely to continue for some time. The
development of road networks and national highways has infused a new lease
of life to the commercial vehicle manufacturing industry in India with the
last year recording a year on year growth of43.20 % for the M&HCV category
and an overall growth of 34.60 %. The passenger car industry has also seen
a handsome growth during the last year in view of an ever increasing market
demand fuelled by the increase in the disposable income of the middle-class
of India. The two-wheeler industry, which has considerable volumes in
India, is on the verge of another boom. The growth rate of motorcycles over
the last few years has also fuelled the overall growth of the industry.
This translates into direct benefits to the local automotive component
Amtek Auto Limited is a leading manufacturer of automotive components and
assemblies serving the global automotive industry as an Original Equipment
supplier. The company has created an indelible mark on the Indian
Automotive Industry and is set to consolidate its position in the global
SALES AND PROFITS
During the period, your Company performed exceedingly well with sales
recording an increase of 85.89 % and net profit after tax recording
increase of 84.38% over the previous year.
I take pleasure to inform you that for the past eight years your Company
has maintained dividend consistently at 20% p.a.. The current year's
dividend is free of tax in your hands.
During the period under review, the company rewarded its shareholders by
way of bonus shares in the ratio of 1:1. The shareholders have been
benefited not only by way of additional shares but also by dividend on
existing as well as bonus shares taking the effective dividend on there
bonus issue to 40%.
GROWTH THROUGH ACQUISITION
Your company is moving in line with the strategies drawn by the board for
growth. I am delighted to inform you that during the period under review,
your Company acquired two companies engaged in the auto components sector
viz. Ahmednagar Forgings Ltd., Pune and Smith Jones Inc., USA.
Ahmednagar Forgings Limited has four units in Pune including one fastener
unit. The company has turnover of more than Rs.100 Crores. It has an
impressive clientele like Bajaj Auto, Tata Motors and Honda Scooters &
Motorcycles India to name a few. With this acquisition Amtek Auto Limited
has become the second largest manufacturer of forgings in the country with
combined installed forging capacity of 72500 tons per annum. The forging
facilities of Amtek Auto Ltd. And Ahmednagar Forgings Limited are located
indifferent regions of the country which enables it to meet the customers'
Another subsidiary, Smith Jones Inc. is based in State of Iowa in the
United States of America. This is the largest manufacturer of Flywheel Ring
Gears and Flex Plate Assemblies in U.S.A. The Company has two manufacturing
units which are accredited with QS-9000 certification. The acquisition of
Smith Jones Inc. will help Amtek to penetrate the U. S and European
markets. Smith Jones has turnover of US$19.45 Million and has most of the
U.S. and European auto giants as its clients.
CONSOLIDATION OF BUSINESS
Presently, Amtek Group is the leading player of various auto components
with over 300 varieties being manufactured by various Subsidiaries and
Associated companies in India and abroad. The company expects to benefit
substantially in form of outsourcing orders from its subsidiaries and
associated companies abroad. Amtek Group, in order to become a truly global
player with strong base and single identity, is planning to consolidate the
entire business of the group within a span of next two to three years under
the leadership of Amtek Auto Limited. In order to accomplish this goal the
Company has already appointed Ernst & Young as advisor for chalking out the
strategy for consolidation process. The management believes that the
consolidation of these businesses shall lead to enhanced stakeholders
FUTURE BUSINESS STRATEGY
In order to enter overseas markets with full strength, your company has
undertaken various initiatives that will help it to face the challenges in
the global market.
In today's world of changing technologies, it is very important for every
organization to keep abreast with new technologies. Towards this end, your
company is now investing heavily in new technologies and R & D facilities
especially in the form of latest software oriented designs and in-house
product development. This has not only improved product quality but has
also accelerated production. The company is also making capital investments
in the form of latest machines with higher capacities to meet the growing
demand. The company is also taking all steps towards cost cutting to
improve the profitability. With increased capacities, wider acceptability
and expanding markets, the future outlook of your company appears very
CAPITAL MARKET RECOGINITION
The improved performance of your company has attracted investment from
various quarters including FIIs. The Board of Directors of the company met
yesterday to consider enhancement of investment limit by FIIs from 24% to
49% of the paid up Equity Share Capital of the company and approved the
proposal subject to the approval of shareholders. The Board has also
convened the Extra Ordinary General Meeting of the company which is
scheduled to be held on 27th January, 2004 for shareholders approval. Your
Company's share has recorded reasonable growth in recent years. A large
number of analysts, who follow the progress of the Group, have almost
without exception been positive about the company and we have had a
good reputation in the market.
The most important parameter of our company's progress is how our customers
and investors perceive Amtek and I am sure in recent times the image of
your company has sharpened to a great extent.
I wish to place on record the sincere and dedicated efforts of all the
members of the company's team who have displayed their unstinted devotion,
Cooperation and commitment towards the pursuit of excellence. I also take
this opportunity to offer sincere thanks to the financial Institutions,
Banks, Govemment Agencies, our valued customers for their continued support
I also express my profound thanks to the shareholders for their faith and
continued support to the endeavors of the company. Finally, I express my
personal gratitude for the unstinted faith reposed by you in the company's
management and sincerely hope that we will continue to receive the same
kind of support and guidance towards achievement of higher goals.