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AXISCADES Engineering Technologies Ltd.

BSE: 532395 Sector: IT
NSE: AXISCADES ISIN Code: INE555B01013
BSE LIVE 19:40 | 19 Oct 115.25 -1.25
(-1.07%)
OPEN

117.40

HIGH

118.50

LOW

112.00

NSE 19:46 | 19 Oct 115.05 -1.25
(-1.07%)
OPEN

117.00

HIGH

118.00

LOW

113.00

OPEN 117.40
PREVIOUS CLOSE 116.50
VOLUME 18590
52-Week high 243.35
52-Week low 107.50
P/E 52.87
Mkt Cap.(Rs cr) 435
Buy Price 115.25
Buy Qty 15.00
Sell Price 0.00
Sell Qty 0.00
OPEN 117.40
CLOSE 116.50
VOLUME 18590
52-Week high 243.35
52-Week low 107.50
P/E 52.87
Mkt Cap.(Rs cr) 435
Buy Price 115.25
Buy Qty 15.00
Sell Price 0.00
Sell Qty 0.00

AXISCADES Engineering Technologies Ltd. (AXISCADES) - Chairman Speech

Company chairman speech

Dear Stakeholders

It gives me great pleasure to report that the fiscal year 2016-17 was a milestone yearfor AXISCADES. It marked the completion of the acquisition of AXISCADES Aerospace &Technologies Private Limited (ACATL) which we had commenced upon in the previous year.Driven by this synergistic acquisition as well as the progress we have made across ourvarious verticals we are distinctly better positioned for growth and value creation.

BUSINESS DEVELOPMENT & GROWTH

Reinforcing our technical capabilities and high standard of quality we are proud toshare that AXISCADES has won the contract for the dedicated offshore development centrefrom Airbus with enhanced scope covering Fuselage Wings and Defence. Your Company hassecured an order to deliver advanced simulation products to the Ministry of Defenceagainst stiff international competition. the year saw us being selected as the PreferredGlobal Supplier by a global oEM in Europe for supply of Automated testing Equipment. Wehave added many new clients in the year seven of which have the potential to contributesignificantly to your Company's growth in the coming years. Further we have opened asubsidiary in Germany to meet the requirements of European Defence and Space sector. Wehave strengthened our team through the appointment of domain experts with extensiveexperience in newer focus areas like medical & healthcare and embedded engineering.The efforts have started delivering value with good customer traction and a good salespipeline across these segments.

While we continue to remain focussed on growing our business organically our strongbalance sheet enables us to aggressively mine for other opportunities and to grow thebusiness inorganically. Select areas like embedded software innovative and sustainableproduct development and medical & healthcare segments provide ample opportunity toexpand our scope of services and the addressable market.

INVESTING IN OUR COMPETENCIES

We continue to invest in development and acquisition of competencies that will provideus with the agility and technical superiority to deliver exceptional offerings. During theyear we signed agreements with many leading European Technology companies which willenable us to address the growing market for new age technologies in the Indian Defence andAerospace sector. In addition our recent MoU for a joint venture with one of the world'sleading engineering company enables us to unlock huge opportunities in the Energy andNuclear engineering sector.

We continue to develop an eco-system around technical partnerships which over a periodadds to our in-house capabilities. This strategy has served us well enabling us to growone Aerospace account from scratch to excess of USD 20 million in 6 years.

ACATL ACQUISITON

In the third quarter of FY2017 we closed the acquisition of ACATL a company providingproduct system integration and deep technology solutions to aerospace defence andhomeland security sector. With this acquisition we now have expanded opportunities thatleverage our combined strengths technical capabilities processes talent and globalreach. the integration will enable us to deepen existing relationships with cross-sellingopportunities while enhancing our client base moving us progressively forward on ourobjective of delivering sustained shareholder value.

With this strategic acquisition AXISCADES has a competitive edge to address largedomestic and global programmes. Given the government's strong focus on developingindigenous manufacturing capabilities in Aerospace & Defence and on the Make in Indiainitiative this offers enormous opportunities for us as an offset partner for global oEMsand to be a part of their global supply chain.

FINANCIAL PERFORMANCE

FY 16-17 was a challenging environment on multiple fronts; this was further compoundedwith slow-down particularly in our heavy engineering segment resulting in a marginalincrease in total income by 0.5% fromRs. 3793 million in FY 15-16 toRs. 3813 million inFY 1617. However total income on a consolidated basis increased fromRs. 3793 milliontoRs. 4990 million a growth of 32% over FY 2015-16 mainly attributable to theacquisition. operating margin excluding the impact of the acquisition stands at 8.6%vis-a-vis 15.1% in the previous year. The decline is largely attributable to challenges inHeavy Engineering segment one specific account in aerospace additional partner costs todeliver contracts in new areas and further investments in leadership hiring. Operatingmargin for ACATL stood at 18.4%. The consolidated profit after tax (PAT) after minorityinterest for the year stood atRs. 131 million impacted by lower revenue and higherexpenses.

MARKET OPPORTUNITY

On the macro-front the global ER&D market offers a broad array of opportunities.As per NASSCOM's Strategic Review 2017 for ER&D global sourcing of ER&D is at USD80 billion; India's share in global sourcing stood at 28% amounting to USD 22.5 billion.Going forward India's ER&D segment is attractively poised for a high CAGR of 15% toreach USD 70-90 billion by 2025 a three-fold increase in revenue. As a reputed andwell-established company in this industry we remain optimistic of benefiting from theseexpected developments.

The offset opportunity is estimated to be USD 8 billion per year in the next five yearsbased on the current capital purchase programme of the Indian Defence forces. AXISCADES isinvolved in meeting the critical needs of Indian Defence forces and has established itselfas a key partner to the country's Defence requirements. Leveraging our strong track recordand industry expertise the government's ‘Make in India' opens a gamut ofopportunities for your Company.

In the heavy engineering segment as I write this we are witnessing encouraging signsof investments starting to flow into infrastructure development globally which makes ushopeful that revenues from this business vertical should revive in the coming quarters.

PARTING THOUGHTS

AXISCADES will continue to push the envelope in terms of innovation and executionexcellence. Driving and achieving operating efficiency is the key to our successregardless of the headwinds that we may face. This uncompromising commitment toperformance is what we firmly believe advances client addition expansion of projects andour longterm success. Leveraging our long expertise in highly regulated sectors likeaerospace and defence and world-class product engineering capabilities for high-technologyindustries we will expand our solutions to new areas and improve our value proposition.And last but not the least; unleashing the new strength of AXISCADES post acquisition weremain upbeat about expanding our horizons and delivering beyond expectations in the longrun.

On behalf of the Board I would like to thank every member of our team for theircontributions to another successful year. I would also like to express my gratitude to ourshareholders partners customers vendors and creditors for their continued support. Weare prepared and excited for the journey ahead as we lead AXISCADES into newpossibilities.

Dr. Vivek Mansingh

Chairman

Mr. Sudhakar Gande Mr. Kaushik Sarkar Ms. Shweta Agrawal
Vice Chairman & Executive Director Chief Financial Officer Company Secretary & Compliance officer