After a lackluster outturn in 2016 the economic activity is projected to pick up pacein 2017 and 2018 especially in the emerging market and developing economies. Howeverthere is a wide dispersion of possible outcomes around the projections given globaluncertainties and geo-political ramifications. While I do see that the outlook foradvanced economies has improved for 201718 but growth prospects have marginallyworsened for emerging market and developing economies where financial conditions havegenerally tightened. Near-term growth prospects were revised upwards for China due toexpected policy stimulus but were revised down for a number of other largeeconomiesmost notably India Brazil and Mexico.
In such an environment conducting business could be akin to travelling through atunnel without sight of the end. However the Government of India has taken multipleactions aimed at promoting the Indian economy notwithstanding the short term pains.
The narrative is no longer can India be the destination of growth' today thefocus is on when' and how' and not if'. The current environment understeady hands will help the companies ride the storm into calmer seas.
In short as India strives to improve the quality of life for its citizens and lays thefoundation for a sustainable future the country is generating many lessons ondevelopment.
Although there are few blueprints for development on such a large and diverse scaleIndia has pioneered a host of bold new initiatives to address these and other challenges.Since the current government has the political will to drive this blueprint to its logicalend India could grow rapidly during fiscal 2018 to 2022 powered by greater access tobanking technology adoption urbanisation and other structural reforms. India is on trackto achieve a major reform of indirect taxes through GST without increasing the burden onthe poor. Given the efficiency and revenue gains that the reform will eventually achievethe overall impact of GST on both equity and poverty can be expected to be positive.
India's economy was slowing down in early FY 2016-17 until the favorable monsoonstarted lifting the economy but the recovery was temporarily disrupted by thegovernment's "demonetization" initiative. On November
8 2016 the government demonetized (i.e. removed legal tender status from) anestimated 23 billion INR 500 and INR1000 banknotes corresponding to 86% of India'scurrency in circulation. Demonetization caused an immediate cash crunch and activity incash reliant sectors was impacted. GDP growth slowed down to 7.0 % year-on-year during thethird quarter of 2016-17 from 7.3 % in the first quarter.
As a result a modest slowdown took place in the GDP growth in FY 2016-17 to 6.8 %.According to a recent update growth is expected to recover in FY 2017-18 to 7.2 % and isprojected to gradually increase to 7.7 % in FY 2019-20.
Since our last report despite a strong customer base led by our long termrelationships with key OEMs in the Optical Media space as also healthy growth prospectswithin the Solid State Media and Solid State Lighting segments your company had to facesevere headwinds caused principally on account of severe liquidity constraints resultingin lack of working capital to fund operations in order to meet the on-going businessopportunities. The company made every effort within its means to augment its liquiditywhether in terms of securing additional customer advances enhanced vendor financing saleof noncore assets as also a continuing dialogue with lender banks towards restructuringand resolution of the existing debt. However despite our perseverance the efforts didnot yield the desired results and the resultant shortfall in liquidity has led to aprogressive decline in our operations. During this period every effort was made torationalize costs and while healthy progress was made towards optimizing the coststructure this was not adequate to compensate the shortfall in overall margins resultingin higher levels of stress and financial strain.
We continue to work on garnering support from all our stakeholders including banks andfinancial institutions customers vendors and other business associates to help usthrough these difficult times and I remain fully committed to help us traverse this path.We have done it in the past and I see no reason why this cannot be done in the future.However it must be said that there is still some way to go to achieve the requisiteconsensus as also to impart the much needed liquidity to be able to tread the potentialrevival path.
The Company has been constantly working on consolidation measures and restructuring ofits operations according to business imperatives while it continues to make in-roads intothe energy efficient LED lighting business and remains a key player in the Solid StateMedia Segment.
I am indeed proud and feel humbled to have the support and commitment of ourstakeholders. Our perseverance along with the grit and determination will help overcomethe challenging times that are being faced by your Company. Together we will continue towork on our revival for a better tomorrow.
|Best Regards |
|(Deepak Puri) |