It's amazing how time quickly flies by! We are again in a new Financial Year and I ampleased to inform you that our performance in the previous year has been above the mark inevery sphere as far as automotive components sector is concerned. Right from achievingprofit innovation and market exploration we have managed to exceed expectations.
For the Financial Year 2016-17 your Company on consolidation basis has recorded aturnover of Rs. 428 crores higher by more than 9% as compared to last Financial Year2015-16 with turnover of Rs. 392 crores. Profit Company on consolidation basis was at Rs.15.72 crores higher by approximately 62% as compared to PAT of Rs. 9.71 crores inprevious year 2015-16.
The volatile global scenario and a gradual shift towards new technology digitalisationand changing consumer preferences are making us put our thinking hats on. We are alsoseeing a world that is gradually inching towards a more co-integrated and cohesivebusiness module that is applicable to the automobile industry also. Globally the sales ofautomobile in the financial year 2016-17 have been moderate and the car segmenthappenedmargin to be an essentialnew part of revenue.
As for India automobile sector has registered an upsurge due to the ever increasingdemand. This has majorly happened due to changing consumer demand and increasingpurchasing power of the Indian consumer. Today people are more intorecreationalaftertax(PAT)for the spending than ever and the consumption expenditures areexpected to rise significantly in years to come.
In India automobile sector has extensive forward and backward linkages which in turnwill help in fuelling the growth in the sector. As per SIAM report the industry produceda total 25316044 vehicles in Financial Year
2016-17 including passenger vehicles commercial vehicles three wheelers two wheelersand quadricycle in as against 24016599 in Financial Year 2015-16 registering a growthof 5.41% over the same period last year.
The Financial year 2016-17 commenced with the stable growth in the automobile industrywhich sustained during the first two quarters of the financial year. However CentralGovernment's demonetization initiative negatively influenced consumer sentiments and alsoadversely impacted their purchasing power leading to temporary slowdon of the Industry inthird quarter a 16 year low in the month of December. As a result of demonetization theIndustry faced challenges. The company continuously evaluated market movements andstrategized well to navigate the volatile environment to registered growth in fourthquarter.
Going forward the Automotive Mission Plan 2026 is a collective vision of theGovernment of India and the Indian automotive industry and seeks to make India'sautomotive industry the propeller of the Make in India' initiative. Under themission various segments of the automotive and auto component industry need to bestructured in 2026 in such a way that it will contribute significantly to the economy. Italso aspires to put the automotive industry in the guild of top three nations inengineering manufacturing and export of vehicles and auto components.
One of the key reforms that the industry is looking at is Bharat Stage (BS) VI norm2020. The government has rolled up its sleeves to combat air pollution and has come upwith a straight-laced fuel standard as India has already skipped the BS-V norms. Yourcompany is ready to manufacture products which are BS-VI compliant.
Among all the initiatives by the Central Government the Make in India' hasproven to create a milestone not only in making Indian an innovation and manufacturing hubbut also propelling the growth of the indigenous industries. Our sector too is reaping thebenefit and several foreign companies are flocking to Indian shores and setting upmanufacturing facilities. On the home front Make in India' is also expected toincrease the purchasing power of an average Indian flare up demand thus triggeringgrowth. With Make in India' the automobile sector is definitely sailing on a safeboat where both investors and consumers are reaping the benefits.
The future of automotive industry seems bright and we are all in a win-win situation.The Indian automotive market is set to witness growth in several pockets in FY2017-18courtesy reforms. A good Rabi crop output and monsoon are also set to impact theshort-term sales volume across segments. SIAM has forecasted a 7-9% growth for thedomestic PV sales in Financial year 2017-18. With the strengthening of existing clientrelationship and expansion into new segments and new products your Company is wellpositioned to make the most of this forecasted market outlook.
In the gasket business we are going to focus vigorously on Original EquipmentManufacturing (OEMs) business both domestically and globally as there is a huge marketfor exports especially in the agri-offloader and the commercial vehicle segment. We havealso targeted new countries like Turkey Iran USA and Japan and are exporting to them.
In forging division we are focusing very aggressively in the domestic market and haveentered Volvo Eicher and we are trying to make an entry into Honda Scooters. We have alsosecured a very large order from BMW Germany for which supply will start shortly.
Our JV Company Nippon Leakless Talbros Private Limited (LTL) has been exploring variousoptions to increase its presence in two wheeler gasket business. LTL has been developinggaskets for new models to be launched by Hero Honda & Yamaha in the coming financialyear.
At our second JV Company Magneti Marelli Talbros Chassis Systems Pvt Ltd we are nowtrying to enter into higher value-added products such as front axle. We are talking withMaruti Suzuki India Limited on the same and also expanding our product range with them.This JV Company saw a 40% revenue growth during this financial year because of highervolumes. The Company also achieved the highest margin in this business in the last quarterof this financial year.
The third JV Company Talbros Marugo Rubber Private Limited saw a 47% revenue growth inthe financial year 2016-17 over the previous year. We are increasing our customer profileand are looking at Daimler Honda Fuso and looking very aggressively on exports as well.
We are all destined for a good andprofitableyear ahead as Talbros has managed to bagorders from domestic OEMs- Ashok Leyland Maruti Suzuki and export orders from KubotaCaterpillar and Ducati.The icing on the cake has however been new product launches and JVsthat has led to increase in the company's business footprint. The expectation of goodmonsoon and raise in revising of 7th pay commission are going also going to boostdemand.Right from gaskets to heat shields and forging we have created some of thestate-of-the-art products conquered new territories and set high standards in theindustry.
In closing I would like to thank our hardworking and energetic employees for theirongoing efforts. We thank our customers for giving us the opportunity to earn theirbusiness. We thank our bankers and financial institutions for their continuous support.And we thank you our shareholders for your investment in our Company. With your supportwe are pleased to have reached an exciting level in our journey and are optimistic aboutlong-term opportunities that lie ahead.
|NARESH TALWAR |