It gives me immense pleasure to share with you an update on the overallperformance of the Company for FY18. I feel grateful for your continuous support towardsEnkei Wheels (India) Limited.
In FY18 Enkei India made significantimprovement towards achieving itsgoal. Owing to the sustained favourable market scenario we grew our order booksignificantly during the year.
We achieved a capacity utilisation of 100% of the installed capacityduring the year - the watchword for the year for Enkei being "produce more and sellmore."
The year closed with a sale of 2.36 million wheels - (including both2-wheeler and 4-wheeler segment) compared to previous year's 2.27 million wheels therebywitnessing a growth of 4% which has been achieved owing to the process improvementsundertaken during the year.
Whilst 4% was increase in sales volume growth in terms of salesvalue was 14% which was achieved by enhancing the product mix thereby enablingmaximisation of revenue and delivered profit of AP 4.2 (Profit before tax Achieve Profit4.2%).
Standardisation and optimisation
For Enkei India the slogan for FY18 was "Standardisation
& Optimisation". Accordingly Enkei India has successfullyimplemented many Enkei standardisation projects like new testing lab CNC robotisation andconverting MAP process to MAT process among others. These standardisation are expected toimprove Enkei India's productivity and help meet the increasing orders from the customers.
Apart from this Enkei India has also adopted the Group concept"Build strong operation without Labour cost Impact" and followed it up withfurther group guideline of "10% increased output without labour cost impacts."This meant increasing the overall Enkei Group target by 10% - yet with no correspondingincrease in additional labour costs emphasising the Company's increased focus onautomation.
In FY18 the Board of Directors in their meeting held on 3rdAugust 2017 has approved proposed expansion plan in the land adjacent to existing factoryat Shikrapur. The expansion envisages 2 new MAT Lines (passenger cars wheels) &advanced paint shop with a completion target by December 2019.
Post-expansion Enkei India will be in a position to produce wheels ofbigger size which are currently in high demand from customers. Production capacity willbe nearly double for passenger cars wheels and with the advanced paint shop facility atShikrapur should improve painting quality.
Our customer's market share in the Indian Market is increasing everyday. With increase in capacity Enkei India will be able to fulfil customers demand.
Parent support and policy
A very strong point of Enkei India is the enriching experience of theParent Company in the realm of research and development of aluminium alloy wheels andcontinuous support from ASEAN Companies for benchmarking.
By sharing its rich knowledge bank Enkei Corporation helps us tosuccessfully maintain the leader position in the supply of alloy wheels to OEM supplier inthe hybrid industry producing 2-wheeler and 4-wheeler aluminium alloy wheels for theIndian market. Moving forward we remain committed to continue with the same growthstrategies.
The year 2017-18 was marked by a number of key structural initiativesin the Tax & Legal fields of India like implementation of GST and application of thenew IND-AS among others. Currently the economy seems to be on the path of recovery withindicators of industrial production stock market index auto sales and exports havingshown some uptick. India's economy is projected to grow 7.6% in FY19 from the 6.7% growthregistered in FY18.
However the increasing inflation steep depreciation in Indian rupeeagainst USD continues to hurt importers Enkei India being no exception. During the yeardue to US sanctions on Russia LME prices of aluminium increased rapidly. Smooth supply ofour raw material i.e. aluminium ingot was the biggest challenge for Enkei India.
With further preparation for the future and more contribution to thesociety we Enkei India & Enkei group continue to be recognised for its reputation anda company to be relied on for quality and consistency in performance by following SafetyFirst Health First & Green First.
At the end of this communication I would like to thank to all ourstakeholders shareholders customers suppliers vendors employees union our groupcompanies the Governments and regulatory agencies around the world for showing keeninterest in the Company and extending continuous support to us and we hope to receive thesame in future as well.
Vehicle pollution is a challenge for the automobile industry. Thussince the year 2017 there is a change in environmental standard (BS3 to BS4 BS=BharatStage). This will continue and assist the government in defining the regulations onemissions and fuel efficiency which can support EV adoption and focus on developing asupportive ecosystem. Considering the same lighter wheels will be in demand. Furtherbigger size alloy wheels trend with reface and multi-coloured wheels will be an attractionfor the customers. Enkei India has the experience and capacity to deliver bigger sizewheels with upgraded technology so we are looking forward to new orders in the year tocome. Enkei India with estimated orders and production schedule set profit target overand above last year i.e. profit of AP6 (Achieve Profit before tax 6%).
In order to achieve AP6 and to align with our Enkei Group 2018 CompanyPolicy "Build New Technology using Innovations" Enkei India will focus andupgrade the advanced technology for manufacturing the alloy wheels of passenger cars. Theupgradation in production processes smart factory automation robotization installationof MAT technology and procuring latest equipment for testing laboratory for better qualitycontrol are the priority agendas for the year ahead.
Enkei India set a 2018 slogan: "Proactive Actions towards theFuture". We will set clear targets in numbers and will continue and focus onimprovement in daily income statement and break-even point management for robust controlover process and further implement of 10% higher output and
10% reduction in fixed cost.
In order to embrace opportunities of favourable Indian automobilemarket and implement Diversity and Sustainability Enkei India will enhance capacity ofplant facility in the coming year and plan to increase production capacity.