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Modi Rubber Ltd.

BSE: 500890 Sector: Auto
NSE: MODIRUBBER ISIN Code: INE832A01018
BSE LIVE 14:36 | 21 Nov 115.00 2.05
(1.81%)
OPEN

108.00

HIGH

115.00

LOW

108.00

NSE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 108.00
PREVIOUS CLOSE 112.95
VOLUME 196
52-Week high 128.00
52-Week low 37.00
P/E 62.16
Mkt Cap.(Rs cr) 288
Buy Price 109.00
Buy Qty 50.00
Sell Price 115.00
Sell Qty 47.00
OPEN 108.00
CLOSE 112.95
VOLUME 196
52-Week high 128.00
52-Week low 37.00
P/E 62.16
Mkt Cap.(Rs cr) 288
Buy Price 109.00
Buy Qty 50.00
Sell Price 115.00
Sell Qty 47.00

Modi Rubber Ltd. (MODIRUBBER) - Chairman Speech

Company chairman speech

1996 MODI RUBBER LIMITED CHAIRMAN'S REPORT On behalf of the Board of Directors and on my own behalf, I extend to you all a very warm and cordial welcome to the 25th Annual General Meeting of your Company. The Notice convening the Meeting, the Directors' Report and the Audited Accounts for the year ended June 30, 1996, have been with you for some time and, with your permission, I take them as read. PERFORMANCE You will be pleased to note that the performance of your Company has been satisfactory. The turnover of the Company increased to Rs. 1019.80 Crores in the current year from Rs. 869.98 Crores in the previous year. Thus the Company has for the first time crossed Rs. 1000 Crores mark, during the year. The Operating Profit before Interest and Depreciation increased to Rs. 69.49 Crores during the current year against Rs.46.01 Crores in the previous year. However, on account of higher interest cost, the Profit before Tax was placed at Rs. 15.73 Crores in the current year against Rs. 1.88 Crores in the previous year. These operation results have been achieved by taking various cost control and cost reduction measures besides the financial discipline at all levels of operations. THE ECONOMY The performance of Indian Economy in the first phase of Economic Reforms introduced in 1991 have led to a significant growth in the industrial production. The Economic Growth of 6.6% achieved in the current year was higher from the level of 6.3% in 1994-95. The record performance of Industrial Growth 13.1% added to the higher overall economic growth last year. I compliment the Government for achieving success at macro economic level. I am also happy that the present Government led by Prime Minister Shri Deve Gowda has assured that the liberalization of Indian Economy will not be reversed and steps will be taken to further liberalize the same. Although the present Foreign Exchange position of the country is at a satisfactory level at around US$ 22 billion but the recent slowdown in growth of export sector and lower production of oil is causing concern. The overall growth in export has slowed-down which grew merely by 9.8% in the first half of the current financial year compared with 12.3% in the corresponding period last year. The prevailing high rate of interest and the sluggish capital market are two major concerns of the Indian Industry. The industry as a whole is keen for massive infusion of funds in the economy for sustaining the growth in the industrial production of the Country. Progressive cut in corporate taxes would go a long way in stimulating investments and better tax compliance. The infrastructure sector in the country continues to be weak especially the Power Sector and Construction of roads. It is heartening that the Government is allowing private sector as well as foreign investment in the road construction activity. This will act as a major catalyst for the rapid economic development of the country. AUTOMOBILE INDUSTRY Automobile Industry which is a major contributor to industrialization of India has witnessed a sustained growth for about a decade. However, currently the Automobile Industry is witnessing a pinch of demand slow- down. Although the production of cars have gone up yet due to lack of proper network of roads, the benefits of this alternative mode of transportation is mostly limited to major cities. While cities are getting over crowded by cars, the common man in the country side and also in the cities and town is dependent largely on public transport. The bad conditions of existing roads and lack of wider roads and additional road network has not kept pace with the rising demand of road transport. Of late the Automobile Industry is faced with piling inventories. With the result, some car manufacturers have been forced to rethink. The position of two-wheeler manufacturers is also more or less the same. Some manufacturers have been forced to cut their production, ranging between 15% to 20%. Since the off-take continued to drop in two- wheelers segments, stocks have started piling up. While Finance Companies and Banks have helped in propping up demand, the novel schemes like own-your-car and various leasing and hire purchase schemes have brought about a significant change in the Automobile Industry. Continuous reviewing of such schemes in also necessary so as to be conducive to the preaviling market conditions for maintaining the automobile industry as a vibrant sector of Indian Economy. TYRE INDUSTRY The performance of Tyre Industry is linked with the developments in the automobile sector. With the growth in the automobile sector, the tyre industry has also witnessed a remarkable growth in the post liberalization period. The growing importance of the Tyre Industry could be gauged from the fact that a number of leading international tyre manufacturers have been seeking entry into India either on their own or through joint ventures. The entry of leading auto manufacturers of the world has therefore, added a new dimension to the Tyre Industry. With the opening of transport sector to the private sector, particularly in construction and maintenance of road network, it is hoped that the Tyre Industry would be able to sustain its production and performance. The future of the Tyre Industry in my view is bright. I hope that Government would not hike the petroleum prices as it will offset the buoyant economic growth fostered by increased trade and further liberalization. EXPANSION/DIVERSIFICATION Your Company has also embarked upon an ambitious expansion and modernization plan for manufacture of Passenger & Light Commercial Vehicle Radial tyres in collaboration with M/s. Continental Aktiengesellschaft of Germany. M/s. Continental have also agreed to give the latest technology of Radial Passenger and LCV tyres and patterns which are currently being used by them in Europe. I am glad to inform you that R & D Department of your Company has successfully been developing new sizes and patterns for different vehicles in India. Your Company has launched new truck tyres like 515, 436 & IC 60 for meeting the varied demand of truck and bus customers in various market segments. EXPORT I am happy to inform that inspite of competition from the leading international tyre manufacturers, your Company has achieved an export turnover of Rs.106 Crores. The network of our export market encompasses both developed and developing countries of Asia, Middle East, Europe and Latin America besides USA. In my view export performance of your Company at a time when India's overall exports have declined, is satisfactory. The Industry has represented to the Government to reduce the Value Addition Norm for value based advance licenses to 35% from the present 50%. The industry has based its representation on dilution of the original value based advanced licensing scheme by placing almost all raw materials in the restricted/sensitive list of import. The Company has undertaken vigrous export promotion measures and is confident that export will receive the much required boost if the Value Addition Norm is reduced to 35% from 50% under Value Based Advance Licensing Scheme. If this suggestion of the industry is accepted by the Government then it is hoped that the overall export of tyres will double within next two years from the current level of Rs. 600 Crores. RAW MATERIAL During the course of last one year the Industry has to accept multiple price increase effected by domestic manufacturers of nylon tyre cord fabric, rubber chemicals, carbon black and several miscellaneous chemicals. Natural Rubber prices rose sharply upwards in traditional lean season period as the Government did not accept the Industry's request for duty free import of Natural Rubber. Since the Government has accepted the recommendations of the Chilliah Committee report, it is committed to apply 3 - tier import duty policy to the Industry where the tariffs on raw materials and intermediates are lower than that of finished goods. It is, however a matter of regret that this policy is yet to be applied to the Automotive Industry the import duty for Automotive tyres is currently 52%, whereas the import duty on some of the major raw materials which go in the manufacture of tyres continues to be very high and needs to be reduced considerably. For example, the import duty on Synthetic Rubber and Nylon Tyre Cord Fabric is 52% and Carbon Black and Rubber Chemicals is 42%. It is suggested that the import duties on none of the raw materials required for the tyre industry should be more than 30%. The Company has been imposed with additional financial burden due to reversal of MODVAT credits on indigenous raw materials used for export production prior to April, 1995. The Industry has requested the Government to amend this provision of custom's notification No.203/92 for export under value based advanced licenses prior to April, 1995. The Government's stand is still awaited. TOTAL QUALITY MANAGEMENT A competitive environment has been created in the country as a result of economic reforms. In order that your Company is able to complete effectively, we have taken several measures. The first emphasis has been on the maintenance of the quality. A well drawn Quality Management Strategy has been prepared to produce tyres to match international standard. Constant reviews are made of processes by inducting latest know how and technologies in tyre manufacturing to remain as a leading manufacturer in the country and also to expand export market. I am pleased to inform that your collaborators Continental Aktiengesellschaft, Germany had conducted the Quality Audit of your plant in January, 1996 and rated the overall quality performance of your plant at 94.98% which is a record achievement if compared with the other plants of your Collaborator. AMALGAMATION OF MODISTONE LTD. Subject to your Company's obtaining requisite approvals and pending completion of necessary formalities tor legal merger of Modistone Ltd. (MSL) with the Company as a first step towards the proposal approved by the Board of Directors of your Company in principle, it has been decided to implement organisational/operational restructuring for which effective steps have already been taken. This will help both the Companies to minimise their expenses and increasing their productivity, range of products as well as profitability in the long run. A suitable proposal for seeking approval of the Shareholders and other concerned authorities will be initiated at the appropriate time. LABOUR RELATIONS Cordial and harmonious relations have been maintained in your Company. I must say that the successful operation of the Company is due to dedication and team work of your Company's human resources. It is, but for the unstinted co-operation, discipline and untiring efforts put in by the workers, staff, and officers at all levels that your Company has been able to achieve an impressive growth. ACKNOWLEDGMENT I take this opportunity to offer my sincere thanks to various Departments of the Central and State Governments for their unstinted support. Financial Institutions, Banks, Dealers, Customers and Shareholders deserve praise for their continued co-operation. I also place on record my sincere gratitude to our Technical Collaborators, M/s. Continental Aktiengesellschatt, Germany tor the valuable technical assistance being extended by them to your Company. I wish to place on record once again my deep appreciation for the services rendered by the officers, staff and workers of the Company at all levels for their dedication and loyalty. Wishing you all A Happy and Prosperous New Year. V.K. Modi Vice Chairman & Managing Director