Dear Fellow Shareholder
Let me start by thanking all the Shareholders with pride for the continued support andfaith reposed on the company. The continued support has helped us to perform better andtake the company to greater heights.
ASM is majorly in three areas viz Product R&D Engineering Services and DigitalTransformation (Dx) and the details are part of this letter.
The new initiatives we have invested in the last few years are now the core to ourbusiness. We continue to invest in new technologies new geographies and R&D to alignwith the next generation wave growth. This is possible mainly by rapidly embracing the newexternal trends in the industry.
Central to our business philosophy are our "Customers" and we are theco-travellers in their growth thereby creating a true customer obsession.
i The size of the market in our areas of operation is growing
ii multifold with the market size for the Digital Transformation is
expected to grow to $2 Trillion globally by 2020. As per Nasscom Report EngineeringR&D space in India will reach to $42 billion by 2022 as against $28 billion atpresent.
The key highlights for the year 2018-19 are
1. The Revenues are Rs.760.59 Mn.
2. The EBIDTA is 108.16 Mn and has grown by 26.18%
V compared to previous year
3. Number of new customers added in 2018-19 is 16
4. New offices opened in Japan Canada and Mexico
5. Acquired a majority stake in manufacturing unit RV Forms and Gears LLP
6. Strategic Investments made in BARO Vehicles Ltd and Lavelle Networks Pvt. Ltd.
L The rapid advancement in technology is enabling the industry L to achieve scale andbusiness process efficiencies like never ft before and essentially re-write the rules ofcompetition. This ft provides tremendous opportunities for growth on one hand ft^ whileit also poses significant challenges of reinventing business ft models. Companies andcountries that have the talent needed ft to convert digital assets and IP to digitaladvantage are ftemerging as the new world leaders.
The Indian IT Industry is making convincing strides as their clients demand DigitalTransformation. Digital technologies now account for a third of the industry's businessand drive much of the buoyancy. Society in general and industry and government inparticular are spiritedly embracing digital technologies. Technologies such as ArtificialIntelligence (Al) Internet of Things (loT) Augmented Reality Virtual Reality MachineLearning (ML) Big Data Analytics and Robotic Process Automation are increasinglybecoming mainstream cutting across industries. As per Nasscom in FY19 the IT softwareand services revenues growth crossed $165 billion with the overall IT exports growing to$137 billion compared to $126 billion in FY18 and domestic revenues growing to $44billion from per cent $41 billion in FY18.
Engineering services research and development industry (ER&D) is at the point ofinfliction which is boosted by rising consumer demand and disruption in technology. Majorindustries are progressively concentrating on developing engineering research anddevelopment (ER&D) products that can assimilate with digital consumer network. As perNasscom report the engineering research and development market in India is expected togrow to $42 billion by FY22 from $28 billion at present. This growth is fueled by aninterplay of digital and ER&D.
Over the last few years ASM has invested in Product R&D Digital Transformation(Dx) comprising of Industry 4.0 (Smart Manufacturing) Internet of Things (loT) Big Dataleading to Artificial Intelligence (Al) Machine Learning (ML) Deep Learning (DL)Virtual Reality (VR) Augmented Reality (AR) Mixed Reality (MR) Mobile ApplicationsCloud Virtualization and related Cyber Security.
R&D & Co-Creation
The impact of investments in Innovation and R&D has accelerated growth of ASM andhas set the company into the forefront of Product Development whilst getting a globalrecognition. The initiative has therefore been on developing the products of the futureto align with the changing technologies market and customer demands.
While investment in R&D (Research and Development) for the development of "NewProducts and Services" is a must for the growth and future sustainability of theorganization Co-creation is one step ahead of the R&D activities wherein the newproduct and services is jointly developed with our customers to meet specific definedopportunity. ASM's Co-creation Product Development Model fosters closer partnerships withthe customers / consumers and is achieved by the "Shared Innovation and SharedDevelopment" to develop solutions for defined" High Impact Problems".
Today in the world which is adapting into "Industry 4.0" and "SmartManufacturing" one of the main focus is to increase Productivity by "IncreasedYield" and "Increased Throughput". This is essentially achieved by reducingthe human intervention and automating the process using various technologies.
ASM Technologies has over the years helping customers with extensive usage ofAutomation Robotics and Digital Transformation (Dx). This initiative has clearly been ofimmense benefit for its customers in quantitatively increasing Yield and Throughputresulting in "Improved Quality High Precision High Repeatability andReliability"
ASM with a proven experience in the Artificial Intelligence (Al) complexmanufacturing process consisting of inter-related parameters is effectively handled bycreating lot of automated data points through "application specific" Sensorsfurther processed through the loT Gateway incorporating Sensor Fusion Algorithm to createa Big Data. Each of the Sensors are set with "Value Thresholds" for instant"Alerts" to address the Machine Behaviour outside of the Thresholds. Withefficient and smart Analytics in the cloud a wide array of data crunched output leadingto Predictive Maintenance Analysis Machine Downtime Machine Behaviour etc can lead tothe "Productivity Enhancement'.
The thrust areas for ASM will continue to be in the Semiconductor Equipment MedicalDevices Hi-Tech Automotive Mobility Telecom industries. This "New ProductRevolution" has opened opportunities for companies like ASM in the space ofEngineering Services. The loT (Internet of Things) offers quality space for new productdevelopment and ASM is working on creating its own products as well as Co-Creation forcustomer's products. The next couple of years will be exciting in this space.
The future looks exciting and upbeat in the R&D - Products and Engineering ServicesOutsourcing (ESO) space. There are lot of drivers for the clients like Reducing ProductDevelopment Life Cycle and getting a first mover advantage by ring-fencing the IP. Theclients are equally excited to collaborate with the Engineering Service providers likeASM to leverage their capability for global regional and adjacent markets therebyoptimize the R&D Operations.
I am happy to share with you that during the year ASM acquired a 70% stake in RV Forms& Gears LLP a Chennai based firm. Forms & Gears founded in 1972 by RT Varghesea Mechanical Engineer from NT Kharagpur is a pioneer in Fixture building. The company hassupplied to most of the global automotive industry and machine makers by over 45 years.Forms & Gears has successfully implemented projects all over India UAE QatarThailand Japan Singapore Indonesia and Turkey. RV Forms & Gears will leverage ASM'sdigital expertise to develop world class Smart Manufacturing solutions the first of whichis an innovative solution called SmartFix 4.0.
On an overall basis on the standalone front your company registered a total revenue ofRs.760.59 Mn for the year ended 31 st March 2019. Domestic sales was Rs.78.84 Mn whileExport sales was Rs. 681.75Mn. EBIDTA was at Rs.108.16 Mn and Net profit after tax wasRs.70.33 Mn.
The Consolidated total revenue for the year ended 31st March 2019 was Rs.880.25 Mn.EBIDTA was at Rs.109.11 Mn and Net Profit after tax at Rs.70.07 Mn.
During the year 2018-19 the company declared an Interim dividend of Rs. 3.00/- on 3rdNovember 2018. In keeping with the Dividend policy your Directors are pleased torecommend for approval of the shareholders a final dividend of Rs.3.00 /-per equity shareof Rs 10/-each for the financial year 2018-2019. The dividend amount paid / payable ifapproved by members will be Rs.15.00 Mn interim paid Rs. 15.00 Mn while Rs.6.17 Mn willbe paid / payable by the company towards total dividend tax and surcharge thereon.
The company continued to sustain its profitability despite a challenging externalenvironment during the year under review with the unstinted support of its dedicatedcommitted and competent employees. We attribute our success to an experienced managementteam and to a customer-oriented organization that is dedicated to excellence. Steered bythe talent of our people and vesting faith in the resilience of our business model we lookforward to overcoming challenges that lie ahead of us.
On behalf of the management of the company and on my behalf I take this opportunity tothank
Our esteemed customers shareholders vendors business partners advisors andconsultants for their support.
Employees of the company for their valuable contribution efforts and spirit ofdedication
State Bank of India Incube Branch Bangalore Indian Bank Singapore HSBCBank New York USA and First Federal Bank Ohio USA for their support and guidance
Central and State Government Customs Reserve Bank of India SoftwareTechnology Parks (STPI) and NASSCOM.
Place: Bangalore Rabindra Srikantan
Date: 18.05.2019 Managing Director