It is my privilege to present to you the Annual Report of SKF India for FY 2016-17. Iam pleased to share that we have made commendable progress in building a resilientbusiness capable of generating long-term value through the economic cycle. This isreflected in this year's strong performance in the face of economic and global headwinds.Revenue from Operations for the year ended March 31 2017 amounted to ` 28355 million ascompared to ` 32265 million in the previous year. The Profit after Tax for the periodamounted to ` 2439 million compared to 2559 million during the previous year (as you knowthe previous year's figures are for 15-month period not directly comparable with currentyear).
India is on the edge of a very rewarding economic journey. The Government's continuedthrust on digitalisation of the healthy federal relationships and commitment towardsdisciplined fiscal targets augur well for economic prosperity. The rollout of the GSTidentified as one of the most important Indian tax reforms post-independence is expectedto make the formal sector of the economy stronger.
The economic environment in the year under review was tough yet full of hope. India'seconomic performance gained momentum gradually primarily on the back of continuedinvestment in public infrastructure even as private investments did not pick up to thedesired level. Some of the traditional drivers of economy such as construction housingand capital goods sector faced a slowdown in activity. This resulted in unutilisedcapacities in core sectors of the economy such as steel cement and mining. On the otherhand Food & Beverages Automotive Railways & Renewable Energy and Logisticsbuilt an impressive momentum.
Industry is readying to usher in a revolution - Industry 4.0 - Smart manufacturingenabled through big data analytics & Internet of Things (IoT). A whole new platform ofopportunities and value creation is at the doorstep being economy ushered in by thisrevolution. An organisation's ability to Listen-Detect-Resolve will create acompletely new field of opportunities and value creation much beyond the present hardware/software sale. I will talk about this a bit later as I pen down some of the happenings inthe year gone by
Even as external factors presented their own sets of challenges and opportunities wedecided to bring in two critical dimensions into our approach which we felt were necessaryto consolidate our leadership position.
We are a technology and knowledge driven company and our ability to deliver thisknowledge in forms of products and solutions is critical to our success. In a global rollout SKF is now offering two distinctive value propositions to the customers.
In addition to the above two offers we decided to enhance our focus on the dimensionof Customer-Centricity to enhance our ability as a solution provider. This isa big change and it is testing some of our held beliefs to the core. Our qualityperformance is no longer an internal measurement alone - we now have an equal weightmeasure on what our customers say about quality of our product and services all newdevelopment starts with asking the customers what they want. Our teams now focus oncreating a positive experience for all customers at all times our response and resolutiontimes for complaints are set to crash... The list is a continuum. Creating aCustomer-Centric organisation is an exhilarating and demanding journey we all haveresolved to undertake. A significant portion of our customers depend upon importedbearings to meet their needs. We are committed to localise as warranted andpermitted by the scale of demand. In the meanwhile we decided to take the uncertaintiesand long lead times associated with importing out of the equation for our customers. Weestablished a world-class Centralised Distribution Centre at Chakan Pune. Spread over64000 square feet this India Distribution Centre (IDC) will reduce delivery lead timesand provide a wider range of products to our customers and distributors.
Let me return to the discussion on Industry 4.0. We see a clear and emerging need fromour customers to help them improve their Rotating Equipment Performance (REP) on apredictive basis. Customers are seeking innovative solutions to reduce the cost associatedwith unplanned breakdown and lower asset availability. Any organisation capable ofListen-Detect-Analyse-Resolve by providing a one-stop solution will have asignificant competitive advantage.
In a significant development towards realising the potential of unfolding Industry 4.0we inaugurated Remote Diagnostic Centre (RDC) at Pune. By deploying state-of-the-arttechnology and combining it with our knowledge the RDC will enable delivery of REPprogrammes and also help our customers to implement a world-class predictive maintenanceprogramme for periodic and/or continuous monitoring of critical assets understand theinterplay between various systems learn machine behaviour under different circumstancesand enhance safety in their operations - and all this delivered on their smartphonescreens! This when combined with our network of Solution factories in the North West andEastern regions (and soon Southern region too) our expanding Certified MaintenancePartner (CMP) programme which is located in the vicinity of our customers and reach of ourstrong distribution network will further enhance our presence and capability. Combinedwith the REP approach we believe this step will create a significant competitiveadvantage for us in an aligned effort in our quest to consolidate our position asundisputed leader in bearings business.
A continuous focus on enhancing operational effectiveness is a basic requirement toenhance cost competitiveness. SKF Production System (SPS) is a global roll out to ensurethat our factories are future ready and continually improving. All our facilities areranked amongst the top 6 on SKF Production System implementation with Pune occupying thetop position within SKF globally.
YES (Youth Empowerment at SKF) - the vocational skills programme - imparts requiredskills to young and underprivileged readying them for serving or even creating their ownbusiness in the field of modern automobile repair - represents our earnest support to theSkill India Mission. Steered by the conviction that the answer to sustained economicprosperity lies in encouraging self-reliance and building confidence we are committed toscaling up the project and enhancing its reach. Over 350 young boys and girls have takenadvantage of the programme with over 90% of them finding gainful employment. Holisticdevelopment of children which is another continuing programme under the YES umbrellacontinues to help children from underprivileged background imbibe life-skills of teamworkresilience and entrepreneurship while developing their grasp of English and Science and afocussed development on physical and psychological dimension all the while playingfootball. This year too both the boys' and girls' team travelled to Sweden for the GothiaCup tournament to get an exposure to international culture and cooperation. ThroughSustEn our environment care initiative we have continued our focus on carbon emissionreduction. Aligning our business towards a green future we have installed solar rooftopsand enhanced the share of renewable energy in our operations.
Growing number of working women in the workforce calls for a special sensitivity tocreate an enabling environment. We undertook to not only be an enabling environment butalso sought to become a preferred place for a working mother through a slew ofinitiatives. Endorsing our commitment towards building an inclusive work environment weare proud to share that SKF India was selected among the 2016 Working Mother & AVTAR100 Best Companies for Women in India. Through our diverse leadership programmes we arecommitted to encourage employees to develop their own unique leadership style drive awinning culture and in turn inspire future leaders.
It is an honour for us to receive appreciation and recognition from our customers - avirtual who's who of Indian industry namely Tata Steel Bajaj Auto Tata Motors andHindalco. Our manufacturing excellence has been consistently recognised at the covetedFrost & Sullivan Awards. This year too it was no different; Pune and Bengalurufacilities were rated with Platinum and Gold Certificate respectively - Pune is now ratedas Future Ready facility. For the 9th year in a row at the Dun and BradstreetCorporate Awards 2016 SKF India was awarded as the best Bearing Company.
As India journeys on the path of a prosperous future our resolve to be aCustomer-Centric Innovative leading technology player will help us to unearth newopportunities and consolidate our position as undisputed leader in our business. Thisquest has been ably supported by our employees whose dedication initiative and energyare second to none. I sincerely thank all our employees for their efforts. I would alsolike to express my gratitude to our customers for the trust and confidence reposed in usyear-on-year.
My sincere appreciation to our distribution partners suppliers and our bankers fortheir continued support; and our valued shareholders for believing in our story andreposing immense faith in us.
At SKF India we remain committed to growing and delivering value for our stakeholderswhile balancing our responsibility to society and communities at large.