It is heartening to note that global economic recovery continued in 2015 despitechallenges. The pace of recovery was rather sluggish and fragile. The big picture has notchanged dramatically since my last communication to you. Overall businesses andgovernments have rather reconciled themselves to the fact that global economic activitywill not be consistent in the short to medium term; headwinds will come and go but theroad ahead has to be charted despite unpredictable scenarios. Challenges will be therebut as in sports winning is the only option. Strategies may differ but the objective isto clinch the best bargain in a slow-growth world.
In advanced economies the recovery was modest and largely uneven. The US economydemonstrated resilience undoubtedly supported by relatively easy financial conditionswith strengthening housing and labour markets. In the Euro area robust privateconsumption supported by lower oil prices and easy financial conditions outweighed aweakening in net exports.
The scenario for emerging markets and developing economies is not uniform. The collapseof Brazilian economy slowdown and rebalancing of the Chinese economy low commodityprices and geopolitical tensions in West Asia continued to weigh on growth prospects.
India's position is relatively better but it can't afford to be complacent. Corporatebalance sheets are to a very large extent overleveraged manufacturing is passing throughchallenging phases of either slow growth or contraction based on volatile demand; andinadequate rainfall and drought-like scenario is hurting agricultural growth and ruralincome. However low interest rates lower oil prices fiscal deficit does not lookthreatening and inflation is within manageable limits. These are definite positives.
The government is also focusing on across-the-board reforms and big-ticket publicinvestments (especially in the infrastructure sector) as India continues to be one of thebright spots in a slow-growth regime. Besides India is reaping significant gains from thecommodity cycle which can be channelised for building infrastructure and growsustainably.
The Government of India (GoI) has set an ambitious target of increasing thecontribution of manufacturing output to 25% of GDP by 2025 from 16% through the 'Make inIndia' initiative. Interestingly FDI into the country has increased by 37% after thelaunch of 'Make in India' programme till February 2016.
INDIAN AUTOMOBILE SECTOR PROGRESS
India's automobile sector production during April-March 2016 grew marginally by 2.58%.Passenger vehicle segment grew by 5.97% and commercial vehicle segment grew by 12.10% overthe last year owing to growth in the passenger vehicles and commercial vehicles segments.Overall automobile exports grew by 1.91% during the same period. (Source: SIAM)
India's auto-components industry has experienced sustainable growth in the last fewyears on account of high demand from end-user market improved consumer sentiment andrising vehicle demand. The country has become an automobile component sourcing hub formajor OEMs and exports to five continents. Europe accounts for the largest share followedby Asia and North America. With global auto component players adopting a dual-shoremanufacturing model India is poised to emerge as an outsourcing hub.
Going forward India's auto-components industry is set to become the world's thirdlargest by 2025. The country's auto-component makers are well positioned to benefit fromthis sector's globalisation as the exports potential could be increased by up to fourtimes to US$ 40 billion by 2020.
The country's working population is likely to help stimulate the growing market forprivate vehicles. Moreover rising affordability growing urbanisation and easieraccessibility to finance are expected to positively affect vehicle consumption.
OUR BUSINESS PERFORMANCE
Our performance has been encouraging throughout the year. During the period weregistered sales of ' 10875 million growing 30% from ' 8345 million during previous 12months. Our EBITDA was ' 973 million increasing by 38% from ' 707 million during previous12 months. Profit after tax was ' 348 million rising 74% from ' 200 million duringprevious 12 months. Subsequently our earnings per share stood at ' 23.01. Our consistentdrive to grow in the existing vertical and increased customer penetration new productdevelopments in existing and new verticals and enhanced cost optimisation has facilitatedthe growth paradigm.
We continue to work on new product development while driving down costs and servingthe needs of a large customer base. Our wide portfolio comprises auto components anddesigns efficient engineering modules or systems with high- efficiency gearing integralbrake to axle design wei ght option designs and driver-operated differential locks.
We continued to work on the concept of Built in Quality (BIQ) to achieve high standardsof advanced manufacturing architecture across all our plants. This initiative will ensurethat quality is ascertained by each and every operator by following a procedure toeliminate defects.
We expanded our manufacturing scale with a new plant in Jamshedpur which willprimarily manufacture brakes and trailer axles. Moreover we commissioned a specialtyaxles unit in our Mysuru plant as a part of our new product development strategy. Theplant can currently manufacture 300 sets of Hub Reduction Axles per month and goingforward we will enhance the capacity to 600 sets.
We ensure quality products are delivered to our customers every time. Our qualityperformance stood at 100 PPM for domestic customers and 80 PPM for overseas customers. Ourproduction facilities were developed consistently with the installation of flexible outputendo gas generator and robotic gear quenching to reduce gas consumption by 20%.
We have launched a new initiative called Mission 18 to drive revenue growth across allsegments and cost savings across all areas.
We have built an ecosystem encompassing integrated sustainable practices. We contributeto environmental wellbeing by using rainwater harvesting for manufacturing processes;recharging systems; and participating in green nurturing programmes among others.Moreover we have introduced induction lamps for shop floor solar roof panels andenergy-efficient motors. We are effectively utilising the power bidding scheme to reduceenergy consumption.
On behalf of my colleagues on the Board of Management I would like to take thisopportunity to thank our dedicated employees whose expertise and reliability drive theCompany's consistent growth. We are encouraging a progressive high-performing andinclusive culture that recognises and rewards talent enhances transparency and stimulatesopen communication.
We would also like to thank our valued customers shareholders suppliers and businessassociates for the confidence they have reposed in our Company.
Dr. B N Kalyani