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AXISCADES Engineering Technologies Ltd.

BSE: 532395 Sector: IT
NSE: AXISCADES ISIN Code: INE555B01013
BSE LIVE 15:40 | 27 Jun 141.95 -4.75
(-3.24%)
OPEN

149.15

HIGH

149.65

LOW

141.25

NSE 15:31 | 27 Jun 141.65 -5.75
(-3.90%)
OPEN

148.00

HIGH

150.10

LOW

140.90

OPEN 149.15
PREVIOUS CLOSE 146.70
VOLUME 12369
52-Week high 267.60
52-Week low 126.95
P/E 40.91
Mkt Cap.(Rs cr) 536
Buy Price 142.15
Buy Qty 50.00
Sell Price 0.00
Sell Qty 0.00
OPEN 149.15
CLOSE 146.70
VOLUME 12369
52-Week high 267.60
52-Week low 126.95
P/E 40.91
Mkt Cap.(Rs cr) 536
Buy Price 142.15
Buy Qty 50.00
Sell Price 0.00
Sell Qty 0.00

AXISCADES Engineering Technologies Ltd. (AXISCADES) - Chairman Speech

Company chairman speech

Dear Stakeholders

As I reflect on the year gone by i.e. FY 2015-16 it gives me pleasure to report thatwe have made good progress in our transformation journey. This included diversification ofour offerings across new sectors strengthening of internal systems and processesenhanced focus on innovation and on our value proposition and giving a push to organicgrowth through investments in sales and marketing. Further the acquisition of AXISCADESAerospace & Technologies is moving in the right direction. We expect to receive theapproval in Q2FY17. The acquisition will align all our interests and unlock greater valuefor shareholders.

FINANCIAL PERFORMANCE

The revenue from operations on a consolidated basis increased from Rs 3175 million toRs 3754 million a growth of 18% over FY15. EBITDA margin increased by 150bps to 14.7%over FY15 mainly contributed by expansion in gross margin. The other positive has beenimprovements in PAT and EPS. PAT is at Rs 286 million up 47% from FY15 and EPS is at Rs10.51 which has improved by 36.7% over FY15. The increase in EBITDA margin demonstratesour success in improving business mix operational efficiency and the proportion of ouroffshore business.

ENHANCING INVESTMENTS

We are making significant investments to enter into new areas of work. An importantaspect of this is developing an ecosystem of niche competencies wherein we are servicingour existing customers with new offerings. In the long run the benefits from thisengagement model - initially enhancing revenue from these new services provided andsubsequently acquiring new competencies and entering new areas of specialisation - willdrive long-term value. Moreover as this model becomes more evolved the costs willcontinue to reduce as we internalise the competency and deepen our relations with ourcustomers.

In line with our commitment to outpacing the industry growth we continue to pushorganic growth through investments in sales and marketing. We have hired a Global Head ofSales based out of the US putting a special emphasis on serving the US aerospace marketand a Director of Business Development and Strategy based out of Paris. With considerableyears of experience in their respective fields they will be looking at putting in placethe right systems and processes to drive higher growth. Apart from this we continue toreinforce our human resources through effective recruitment. Our focus on strengtheningour team has proved valuable as we have secured 19 new customers during FY 2015-16.

The Company has consistently been able to win projects offshored by both originalequipment manufacturers for aerospace heavy engineering and automotive industries and bydefence manufacturers looking to fulfil their offset obligations. We hope to expand ourpresence in the defence sector going from being a trusted offset partner to a directbidder for Indian Air Force contracts through AXISCADES Aerospace & TechnologiesPrivate Limited. The Government of India is at the moment one of the biggest buyers ofdefence equipment in the world. Under the ‘Make in India’ initiative thecountry will very likely move towards developing its indigenous defence manufacturingcapabilities. That is promising for AXISCADES a company that has already crossed theentry barrier for a highly regulated sector like aerospace and made a name for itselfthere. That reputation will bolster our efforts to enter other highly regulated sectors.

DIVERSIFYING VERTICALS

I believe FY 2015-16 was a seminal year for our strategy of diversifying verticals.During the year we signed a contract to set up a dedicated offshore development centre toprovide design and engineering services to a leading manufacturer of wind turbines. Thisstrategic contract will give AXISCADES a great opportunity to further solidify itsposition in the renewable energy sector among the sunrise industries across the world.

The Company has also set up a dedicated centre of excellence for a major helicopterOEM which has the potential to grow into a multimillion dollar account. This is the firsttime this OEM is moving work out of Europe.

The Company is also looking at opportunities in other fast-growing areas where ourstrong points - excellent track record in a highly regulated sector like aerospace; andworld-class engineering design capabilities for high-technology industries - would standus in good stead.

STRATEGIC ACTIONS

Most of our partners are global OEMs or marquee clients with major outsourcing budgets.Through innovation we are continually focussing on expanding our service offerings anddriving higher outsourcing business from them.

In the aerospace and defence sector by effectively serving customer needs we createthe opportunity of a long-term business relationship through multi-year contracts.Moreover our success in serving our existing customers opens up opportunities forsecuring orders from new customers from the same or different verticals.

During the year under review our strategic efforts in reinforcing customerrelationships paid us rich dividends. Our achievement draws further merit as we retainedPreferred Engineering Supplier status with European Aerospace global OEM reaffirming thatwe are doing the right things and providing engineering services par excellence.

BOARD COMPOSITION

I am pleased to announce that Mr. Sudhakar Gande who has extensive experience inventure development investment banking and general management across aerospace technologyand banking sectors has joined the Board as Vice-Chairman & Executive Director. Hispresence on the Board will provide the necessary thrust and impetus in the transformationof the Company and in driving future prospects.

MARKET OPPORTUNITY

While our order book is progressing in the right direction and we are expanding ourofferings to new customers across diverse verticals I believe this is only the tip of theiceberg as far as market opportunities in engineering services are concerned. Aerospaceitself holds great promise for our Company. In the ‘Point of View’ reportpublished by NASSCOM in December 2015 it is estimated that by the year 2020 offshoredengineering research and development (ER&D) for the aerospace sector will be US$ 4.5-5billion with India’s share in global offshore (aerospace) market expected to grow to40-50 per cent.

As per this report the global ER&D spend is set to touch US$ 1.7 trillion by 2020up from US$ 1.4 trillion in FY13. India’s ER&D industry has been seeingdouble-digit growth in the recent past and by 2020 it is expected to reach exports ofUS$ 30-38 billion. With Asia becoming an attractive offshore destination due to its costand talent pool advantage India is expected to further strengthen its position in theglobal sourcing arena.

FINAL THOUGHTS

The engineering design services opportunities are enormous. Our business strengths of atalented workforce the enduring nature of customer relationships and our global platformwill serve us well in the years ahead enabling us to create higher value. We arecommitted to innovating and remaining on the path of relevance to our customers. On behalfof the Board I would like to thank the entire team of AXISCADES for the dedication andprofessionalism that they have demonstrated throughout another successful year. I wouldalso like to express my gratitude to our shareholders partners vendors customers andcreditors for their continued support. You can be assured that we shall work diligently totake this Company to greater heights.

Dr. vivek Mansingh

Chairman