On behalf of Sona Koyo Steering Systems Limited I extend my best wishes to all of you.I feel privileged to be associated with your esteemed organisation in the capacity ofChairman.
Your Company continues to be India's largest supplier of steering systems for passengercars and utility vehicles. In FY'17 your Company registered its highest growth in thelast 5 years. Your Company on a standalone basis reported 8% growth in revenue; salesincreased to Rs 11542 mn in FY'17 as compared to Rs 10690 mn in FY'16. On a consolidatedbasis Sona Koyo reported net sales of Rs 15646 mn compared to Rs 15090 mn in FY'16registering a YoY growth of 3.7%. The Financial Year 2017 was a historic one for yourCompany as it witnessed many significant and strategic changes. The most important changewas the increase in shareholding of JTEKT Corporation Japan in Sona Koyo which hasresulted in a change of management control.
Consequently your Company and its subsidiaries have become members of JTEKT Group.
JTEKT has a comprehensive strategic partnership with your Company since its inception.JTEKT (erstwhile Koyo Seiko) became Technology Partner of Sona by providing its technologyfor Manual Steering Gear Systems in 1985 Hydraulic Power Steering Systems in 1996 andColumn Electric Power Steering in 2004. Besides your Company and JTEKT together formed 2joint ventures JTEKT Sona Automotive India Limited (51% JTEKT and 49% SKSSL) and SonaFuji Kiko Automotive Limited (51% SKSSL and 49% JTEKT) in the year 2007.
JTEKT is a trusted system supplier of automotive components bearings and machinetools providing customers with world-class No. 1 products and technologies that has addedvalue to the Indian automobile industry. It has pioneered the successful development andmass production of electric power steering systems and continues to hold No.1 share inthe global market today. JTEKT was also the first manufacturer in Japan to develophigh-precision durable bearings capable of reliable performance in extreme environmentssuch as steel rolling mills where temperature exceeds 1200C thereby contributing tothe expansion of various industries.
In May 2017 the leadership of Sona Koyo was reconstituted and I was elected Chairmanof the Company Mr. Kiyozumi Kamiki was elevated to the position of Managing Director Mr.Seiho Kawakami was appointed as Additional Director and Mr. Sudhir Chopra was elevated tothe position of Director (Corporate Affairs) & Company Secretary. This was done to setin motion the process of extracting synergies available due to fusion of business modelsof Sona Koyo and JTEKT. We will strive to ensure smooth integration of best practices ofboth Companies to realise the integral value in this transformation.
The change in management of your Company will result in fruitful synergies in the fieldof technological advancement innovation and will help in broadening customer base inunexplored territories among many other benefits. During this transitional phase yourCompany has got an opportunity to optimise and improve its existing procedures policiesand control environment by benchmarking it with the global practices followed by JTEKT.
The institutionalisation of this transformed culture will thus enhance the focus onsafety and quality. Furthermore it will help to inculcate JTEKT Group's vision i.e.Shaping a better future through the spirit of "No. 1 & Only 1" in yourCompany. We have established the concept of JTEKT WAY in your Company. This includes focuson:
Teamwork & Self-discipline
Aspiration for innovation and for techniques
Last year saw introduction of many reforms in India. The increase in promote Makein India' & Ease of doing business' with a view to promote foreign investmentinflow. In addition progress on the Goods and Services Tax (GST) Act the biggest taxreform in the country is expected to simplify the existing complex structure and couldresult in revenue boost and cost reduction. Interestingly the Financial Year 2017 sawdomestic sales of passenger vehicles (PVs) cross the 3-mn mark for the first time ever.The overall PV segment showed strong Year-on-Year (YoY) growth of 10.55% to reach 3.8 mnunits. The high growth was driven by improved consumer sentiments post the Seventh PayCommission payouts normal monsoon following two successive years of deficit rainfalllower financing costs lower fuel prices and healthy replacement demand due to ban ondiesel cars. Sona Koyo on a consolidated basis reported net sales of Rs 15646 mn inFY'17 compared to Rs 15090 mn in FY'16 registering a YoY growth of 3.7%.
The Society of Indian Automobile Manufacturers (SIAM) forecast has estimated 7% to 9%growth in domestic passenger vehicle sales during Financial Year 2018 buoyed by the 7thPay Commission payout and better Rabi output. Moreover the 7th Pay Commissionannouncement of wage hikes would provide a boost to consumer spending which in turn isexpected to positively impact PV sales. Sona Koyo is well-positioned to make the most ofthe upcoming industry growth with the introduction of new products and realising thestrong potential of its product in the domestic market.
I sincerely believe that your Company is destined to reach new heights with the rightstructure and integration of these two companies. There are multiple opportunitiesavailable in the current economy. The Indian economy is growing at a rapid pace and wesincerely believe in the potential it possesses. According to the research studies Indiais expected to produce approximately 5 mn passenger vehicles in the year 2020. OutsideIndia JTEKT has presence in 23 countries through its 133 plants. Your Company iswell-positioned to capitalise on opportunities arising from these unexplored geographies.
During the year your Company participated in three International Automechanikas heldat Frankfurt Dubai and New Delhi. The designs and technologies exhibited at theseexhibitions were well accepted by global OEMs. Thus helping us to garner internationalrecognition and establish a strong global foothold.
Your Company has a structured framework for corporate governance. The independentdirectors of the Company are celebrated professionals in their respective fields. Withstrong focus on compliance in line with laws and regulations they have guided themanagement in decision-making for ensuring efficiency of operations.
I take this opportunity to show my gratitude to our customers! At Sona Koyo we aregrateful to be of service to them: Maruti Suzuki Mahindra & Mahindra Tata MotorsHonda Fiat India Toyota Kirloskar General Motors John Deere Club Car Ezgo ISUZU andRenault-Nissan India. I would also like to express thanks to our bankers State Bank ofIndia Corporation Bank Standard Chartered Bank YES Bank Kotak Mahindra Bank AllahabadBank IDFC and IndusInd Bank for putting their confidence in us.
I thank the strength of Sona Koyo all its employees for continued support to themanagement. Finally I would like to thank our shareholders for their firm belief in ourcapabilities and their continued patronage; they have always motivated us to deliverbetter results year after year.
The new Journey begins now!