We are living in extremely uncertain times. There are uncertaintiesabound - the trade war geopolitics COVID-19 induced disruptions and most importantly aneconomic slowdown which could take much longer to recover.
First and foremost I hope that each one of you and your family membersare safe and continues to adhere to prescribed guidelines while taking all necessaryprecautions. This is the only way to protect ourselves against the COVID-19 pandemic.
The global economy reeled under a multitude of challenges in the yeargone by. Protracted trade disputes weakened investment and manufacturing activitiesdecelerating international trade amid rising tariffs have subdued business
sentiments. The demand-side constraints affected global commodityprices including oil and metals. Consequently in FY 2019-20 global economic growthslipped to 2.9% the lowest since the financial crisis of FY 2008-09. The slowdown wasacross advanced developing and emerging economies.
Ushering into FY 2019-20 with the drag of NBFC crisis and an electionmood India was no different. Weak consumer sentiments amid tightened liquidity presenteda difficult business environment. The sequential deceleration in quarterly growth rate gotcoupled with the COVID-19 induced disruption. At 4.2% the country recorded its slowestGDP growth of 11 years.
Both our growth driving sectors auto and real estate had to weatherweak consumer sentiments and constrained access to retail credit. The impact was verysevere for the automobile sector. Consequently FY 2019-20 went on to become one of theweakest years for the auto industry. Commercial vehicles and passenger vehicles sawmassive de-growth as they posted a drop of 32.4% and 13.0% respectively pushing theoverall industry de-growth to almost 17%. The auto sector was particularly affected by mixof:
Sudden increase in upfront insurance charges
BS-VI emissions norms
NBFC crises leading to credit squeeze
Increase in registration and road tax charges
All the above factors increased the upfront cost of buying anautomobile which led to severe demand contraction.
The real estate sector too experienced turbulence across residentialcommercial and retail segments. Housing sales declined by 11% in FY 2019-20 across ninecities. The top 7 cities saw retail leasing activity drop by 35% in FY 2019-20 over FY2018-19. The commercial segment did better than the other segments and attracted privateequity investments totalling nearly $3 billion in the first three quarters of thefinancial year. COVID-19 pandemic is going to further the woes throughout FY 2020-21 forthe sector. However structural strengthening and consolidation that the sector witnessedunder RERA the first successful REIT in FY 2019-20 resilience of the commercial segmentand increasing shift towards affordable housing shall help the real estate sectornavigate this difficult phase.
Expected v-shaped economic recovery in FY 2021-22 coupled with pent updemand shall usher the sector back into its growth phase.
Given AIS's close proximity on both these sectors your Company'sperformance reflected the similar slowdown. FY 2019-20 consolidated revenue of ' 2656.13crores reflected a 9.40% drop over ' 2931.91 crores achieved in the previous year.Net profit before tax reduced to ' 170.69 crores in FY 2019-20 from ' 280.39crores in FY 2018-19 while EBIDTA decreased to ' 453.81 crores in FY 2019-20 from '534.12 crores previous year. Our Net Profit after tax saw a 19.17% drop to ' 153.72crores as compared to ' 190.18 crores for FY 2018-19.
In view of the financial performance of AIS in FY 2019-20 and in linewith AIS's Dividend Policy your Board of Directors disbursed an interim dividend of '1/- per share. The same is also recommended as final dividend for FY 2019-20.
During these difficult times we ensured safety of our employeesassets and brands deepening our relationships with our customers and employees andworked on several internal improvement activities.
We have put in place short term and long-term plans to instil agilitywithin. While we have been investing in digital technologies and platforms the new normalwill see us increasing our commitment to complete digitalization one that holisticallyenhances our stakeholder value proposition. We are looking at enhancing the customerexperience with our mobile and digital apps. We are initiating a slew of programmes toensure we strengthen our relationships with our partners. We are enhancing our efforts andinvestments in R&D.
Making enabling breakthroughs would help us convert this currentadversity into an opportunity. Breakthroughs are not just limited to innovative productsand solutions. We are pursuing meaningful breakthroughs across customer experienceproductivity employee engagement and a lot more. We continue to invest in our R&Dcapabilities.
Combined with our vision of 'See More' and guided by our
values we have adapted to the changing market realities. We willcontinue to pursue our profitable growth strategy focused on a multi-pronged approach -consolidate and strengthen our market position in existing industries and seek new markets/ new segments continue investment in the brands focus on capacity expansion and seekother growth opportunities. Though a recent entrant in the fast-growing fenestrationsegment AIS has already raised the industry benchmark in terms of delivery standards andcustomer expectations. Given our expertise in glass I am positive that AIS will quicklyexpand in the windows segment.
We continue to raise eco-consciousness across our operations. Glass byitself is a highly eco-friendly product. By steadily making our operations to be moreenergy resource and waste efficient we continue to reduce our carbon footprints. Our CSRprogrammes and initiatives continue to empower the local communities. Our structuredinterventions in education skill development and training continued to benefit thousandsof lives.
Looking ahead the impact of pandemic inflicted lockdown job andearning losses and other associated factors are going to weigh heavily on FY 2020-21growth prospects of our economy and industry as well as your Company. Then there would bean influx of opportunities in FY 2021-22 much in line with historical trends of the Indiagrowth story. We continue to pursue all these opportunities for the best interests of AIS.
On behalf of the Board I would like to thank all our stakeholdersincluding our customers employees partners suppliers shareholders bankerspolicymakers and the communities around our various manufacturing facilities for theircontinued support to AIS in FY 2019-20. As we navigate this period of heighteneduncertainties your continued support and encouragement would strengthen our resolve andresponse in shaping a bright future for all of us.
|With Best Regards |
|B. M. Labroo |