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Alicon Castalloy Ltd.

BSE: 531147 Sector: Auto
NSE: ALICON ISIN Code: INE062D01024
BSE 00:00 | 23 Jul 820.55 10.15
(1.25%)
OPEN

822.95

HIGH

834.50

LOW

801.20

NSE 00:00 | 23 Jul 820.45 10.95
(1.35%)
OPEN

817.00

HIGH

835.95

LOW

799.00

OPEN 822.95
PREVIOUS CLOSE 810.40
VOLUME 5320
52-Week high 856.55
52-Week low 239.50
P/E
Mkt Cap.(Rs cr) 1,278
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 822.95
CLOSE 810.40
VOLUME 5320
52-Week high 856.55
52-Week low 239.50
P/E
Mkt Cap.(Rs cr) 1,278
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Alicon Castalloy Ltd. (ALICON) - Chairman Speech

Company chairman speech

Dear Members

We are currently faced with one of the greatest health crises of our generation onethat has led to enormous human suffering and had an extraordinary impact on the globaleconomy. As I write this year's annual letter economies across the globe are tentativelyemerging from lockdowns. This process will no doubt be challenging as we are faced withuneasy consumers tricky health protocols and an irregular business rhythm.

We at Alicon took immediate steps to handle the lockdown imposed in the wake ofCOVID-19 focussing primarily on employee safety and constant communication with ourcustomers. Through this period of economic uncertainty we remain committed todemonstrating resilience – strengthening our capabilities and setting ourselves on afirmer footing for sustainable value creation.

Entering CY 2019 the global economy was already showing signs of a slowdown in thewake of the US-China trade war and concerns over Brexit. Ongoing efforts tomitigate the slowdown were completely derailed by the COVID-19 virus which first came tolight in China in December 2019 and has since spread to more than 190 countries. Thesedevelopments resulted in a dismal global growth rate of 0.9% for CY 2019 much lower thanthe 3.6% growth recorded in CY 2018.

Given the significant moderation in economic activity the Indian economy was expectedto experience a slowdown in FY 2020. In an effort to try and recover the economy theGovernment of India took several steps - including a substantial direct tax benefit to thecorporate sector to boost investment. Unfortunately even without considering the impactof the pandemic the latest estimates of GDP and GVA growth released by the CSO on May 292020 reflected significant moderation in growth in FY 2020 - with the GDP growth for Aprilto June 2019 being 5.2% slowing down further to 4.4% in July to September 2019 4.1% inOctober to December 2019 and plummeting to a 3.1% growth January to March 2020. The GDPgrowth for FY 2020 was 4.2% the lowest it's been in the past 11 years.

The decline in domestic automobile sales witnessed since the second half of FY 2018-19continued in FY 2020 impacted by tepid demand and liquidity constraints faced byautomobile financiers. This decline in demand was further accentuated by the mutedwholesale demand from automobile manufacturers as they set about clearing inventory ofvehicles in the retail ecosystem in order to transition their production of vehicles thatcomplied with BS-VI emission norms (which were scheduled to be implemented with effectfrom April 01 2020). Muted global demand also led to a reduction in our overseasbusiness largely resulting from escalating trade tariffs and the COVID-19 relateddisruption of manufacturing activities and supply chains towards the end of the fiscalyear.

These unprecedented challenges have significantly impacted your Company's financialresults especially since our performance is so closely related to the performance of theautomobile industry. Our total revenue and EBITDA for FY 2019-20 declined by 19.5% and27.4% respectively when compared with the previous year. Notwithstanding our subduedfinancial results I am pleased to share that our operational highlights have beenencouraging. We have deployed focussed teams working alongside customers and havecompressed the timelines of new product development to react more quickly to changingrequirements. Our teams are also supporting customers in component design and detailingraw material selection and navigating new regulatory and technological changes. We haveteams focussing on improving our product portfolio to address changing technologies and tocater to the customised requirements of both domestic and global customers.

Alicon Group is driven by an unwavering commitment to quality products and solutions.This commitment is secured by our highly capable workforce including a team of 200engineers who apply their expertise to deliver products of the highest quality. Based onthe principles and benchmarks set by our Japanese partners we work hard to continuouslyimprove and streamline our management and manufacturing processes and systems year afteryear. Our commitment to ensure component optimisation and the lowest levels of productrejection makes us the partner of choice for leading customers worldwide.

Given the unprecedented economic crisis that the COVID-19 pandemic has caused globallywe expect a challenging FY 2020-21. It remains to be seen if the shuttered economy can befully restored without risking a major spike in infections. We however remain focussedon leveraging our competencies and are confident of the value we bring to our customersallowing us to strengthen these relationships. We continue to see improved enquiries andleads across markets and industries. The recent orders secured by us from class-leadingcustomers clearly demonstrate that we are able to compete for high value products in theglobal marketplace. We are also pursuing opportunities in various sectors likeInfrastructure Aeronautics Defence Energy and Agriculture. Our non-auto revenues havestabilised at 10% over the last few quarters proving that we can effectively capitaliseon potential opportunities beyond the automobile sector.

Most importantly we continue to focus on medium to long term objectives even as wework to address near term challenges. Strategic initiatives to pursue global customersstriving for higher share from emerging technologies and driving value accretion continueunabated. On the exponential technology front we have expanded the use of 3D printing andwill be focussed on the use of IoTs for production control and management.

We are also concentrating on talent for future-readiness. During the downturn andlockdown we are heavily investing in people development and future capabilities. Towardthis end we have put in place a robust talent management and leadership developmentprogramme. We have defined leadership competencies to develop leaders that will drive ourfuture. We have assessed and expanded the talent pool for critical roles and enhancedsuccession coverage. Leveraging technological developments like AI AVR and Blockchain weare harnessing technology and the potential of our people to realise our vision.

Challenging periods are the true test of a company's character. Great companies harnessthese moments and the urgency they create to reaffirm their long-term strategies. Weremain committed to ensure that Alicon does the same. With an unwavering resolve we shallnavigate the expected headwinds in the coming months and ensure that we arewell-positioned to benefit from the market's eventual recovery.

Additionally as part of our efforts to mitigate challenges we shall exercise prudencein managing costs and improving cash flow generation. Amidst all the disruption andeconomic fallout we also believe that this is an opportunity for India to acquire newoverseas markets as companies across the globe look to de-risk and diversify their supplychains or relocate their manufacturing hubs. We shall aggressively scout for such openingsto further enhance our resilience and growth.

In order to tackle the "next normal" created by the COVID-19 pandemic ourpeople are firmly guided by our "3R Mantra's" i.e. reflection Resilience andReimagine. In these challenging times we have been tested but not defeated. We aredetermined to come back stronger than before.

I take this opportunity to extend my gratitude to the Board and the Management team fortheir counsel and leadership. I would like to thank all members of the Alicon family fortheir outstanding commitment and performance particularly during this challenging period.We also thank our customers business associates bankers and all stakeholders for theirconstant support. Together we shall overcome.

Shailendrajit Rai

Managing Director

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