I am happy to share with you the financial and operating performance of Eastern TreadsLimited (ETL) for the financial year 2017. The year was eventful with external headwindsthat impacted business performance. In the second half of the year the Government'sdemonetization initiative adversely impacted the cash-based Indian economy. The Indiantyre retreading industry was affected as ~80% of end users comprising fleet owners havetraditionally been almost entirely cash operated.
Despite these macro uncertainties ETL registered a topline growth oRs. 7% in FY17. TheCompany introduced new superior products and enhanced its distribution network to drivegrowth in volumes. We have also expanded our overseas presence in key markets and ourinitiatives are already yielding positive results. However profitability was lower due tointensifying competition pressure from raw material prices and our continued commitmentto investing in several aspects of the business with an eye to future growth. We havetried to manage the impact from increased rubber prices by actively maintaining higher rawmaterial inventories but the transitional increase in working capital has increasedinterest cost. This is expected to normalize in FY18.
During the year we have made some key strategic initiatives to expand customerengagement. Having invested in brand building people and growing our footprint we remainconfident of emerging as a leading player in the tyre retreading sector. We believe thatthe Indian tyre retreading industry continues to gain traction and has a significantopportunity for long term growth based on monetary and environmental benefits. The longterm growth story is intact with macro factors such as improving infrastructureincreasing economic activity and shift towards radial tyres are all expected to furthergive impetus to the industry. ETL is well poised to derive this advantage from long termadoption of retreading across various usage segments. With the implementation of GST inthe coming months and due to lasting effects of demonetization we expect that organizedplayers like us will gain more traction.
Over the years ETL has gained prominence as a premier tyre retreading solutionprovider with a broad range of products that deliver excellent performance in diverseweather and road conditions. We will continue to build and expand presence in the ensuingfiscal year by expanding our distribution system and by offering comprehensive services tocustomers making us a one-stop solution for all retreading needs.
In conclusion we are enthused about future opportunities and believe that our focusedinitiatives will help us to deliver enhanced business performance over the long term. Iwould like to thank all our colleagues for their high level of commitment that we believewill take the Company to greater heights in times to come. I would also like to express mydeepest gratitude to all my colleagues on the board for their significant contributiontowards providing direction to ETL's performance. I am deeply thankful to our customersbusiness associates suppliers bankers and legal authorities for their loyalty and trustin us. Lastly my sincere appreciation to all our shareholders for continued support inour journey to create long-term value.
With warm regards
Navas M Meeran