ELECTREX (INDIA) LIMITED
The performance of your company is reflective of the sustained investment
and development efforts we have put in over the last decade. Inspite of
fairly difficult environment, company has enhanced it's scale of operation
in manufacturing and pursued an aggressive marketing policy both of which
have greatly contributed in production and sales going up as per the
projections. Your company has achieved sales turnover of Rs.7530 lacs for
the year ended March 31, 1998 as compared to Rs.5323 lacs of the previous
year, a growth of 41%.
The year under review has been a difficult one but your company has
outperformed the industry in growth in production, sales and operating
profitability. However due to outgo of large amount of interest on the
debts raised by the company for the project expansion and the provision of
depreciation, the net profit has been Rs.572.04 lakhs for the year ended
March 31, 1998 as against Rs.685.33 lakhs of the previous year.
Despite the effects of economic recession, the market for portable power
tools stand at the threshold of an unprecedented period of success because
of following factors.
* Power Tools find diverse applications in a variety of industries and
their demand is not dependent on any one type of industry.
* After almost 50 years of control of imports and licencing regime during
which time minimal new product development & applications were done in
India, the end user suddenly finds a variety of specialist tools which can
enhance the quality of their work and reduce cost and labour.
* For your company the fastest growing segment has been in the masonry
related tools like MARBLE CUTTER where the company is the undisputed leader
and has majority of the market share.
* Your company has launched a new IMPACT DRILL which is already accepted
very well in the market.
During the current year your company will aggressively push up the sales of
this new drill and hopes to garner a substantial market share.
FROM PRICE TO QUALITY: A SHIFT IN CONSUMER VALUE
With the large choice available to customers and the increasing number of
internationally known brands as well as cheap unbranded products available
now, end users have become very price sensitive. However professional
market is beginning to show signs of favouring quality and performance over
Your company's motto has been - International Quality - International
Volume but Indian Prices. Single minded dedication in following this motto
has resulted in your company being acknowledged as the No.1 power tool
manufacturer in India.
EMERGING TRENDS & CHALLENGES FACING POWER TOOL INDUSTRY IN INDIA
1. Globalisation is the most important movement in the market. Indian
businesses require to globalise quickly. Globalisation threatens survival
of manufacturers who do not respond. Your company intends to pursue the
policy of affiliation with international brands but with domestic strategy
which will help in cost savings and truncate the learning curve.
2. Product developments and modifications are essential to enhance
competitiveness and ensure market survival. By developing innovative new
products, focusing on new applications and accelerating the rate at which
products are introduced into the market place. Your company plans to
generate interest in its products and encourage end-users to upgrade their
product at more regular intervals.
3. High rate of market penetration from China and other South East Asian
countries requires response.
Your company has drawn up a suitable business plan and marketing strategy
including design adjustments and differentiation of products to combat the
influx of such cheap imports.
4. Discovering new growth area is necessary to offset declining
profitability. Your company has been in the forefront to spot new
applications and accordingly position the products and will continue to do
5. Growing importance of distribution channels threatens companies with no
coherent strategy. Your company has an exceptionally well developed dealer
and distribution network & proposes to strengthen it further by adopting a
"Service-Oriented" philosophy into company's strategy.
6. Revenue growth rates for high performance products dedicated to the
construction, metal working and woodworking sectors are forecast to be more
pronounced than those of other products.
By analysing end-uses demands and identifying potential growth areas, your
company has been successful in being the first company to launch many new
products in the market in the market and gain a head start on other market
THOUGHTS FOR FUTURE
We have consciously built up a cadre of talented individuals and I believe
we have the intellectual capital to make best use of manufacturing &
marketing infrastructures built by the company to surmount the challenges
posed in the millennium. As we progress, we will pursue to be multifaceted
company in the electro-mechanical tools and appliances line. The future
thrust of your company will be to seek knowledge and develop talent in
India. Your company must put ever-increasing effort into research and
development, production, sales and marketing to achieve competitive goals.
Continuous investment in technology is a pre-requisite for sustained
competitiveness All these require vast investments which your company hopes
to do in a phased manner. For the immediate future your company is working
to put an Enterprise Resource Planning (ERP) package which will link the
customer, the distribution network, factory and the vendors to achieve twin
objective - flexibility in manufacturing and give a product to the customer
when he wants it. It will require lot of efforts and time to put in a
complete system which will extend from the dealer in the field at one end
to the vendor at the other. We have set the year 2000 as a target by which
time your company hopes to replace and integrate existing system to the
proposed ERP package. I hope this will lead to a dramatic transformation in
the way we do business.
ANANT V. HEDGE
Bangalore, August 20, 1998