From the desk of the Chairman
It's my privilege to present the 35th Annual Report for the year 2019-20. Yourunflinching faith and continuous support is a source of great motivation to allofus atSubros. 2019-20 turned out to be a historic year at Subros. J. This year we have not onlyfaced numerous ups and downs but have experienced the unexpected I extreme. Thelast quarter of the fiscal year was marked with escalating global trade tension andpandemic effect which resulted in a decline in * sentiment. It rippled a weakeningeconomy not only in India but all over the world. This coupled with already prevailingBS-VI changeover norms affected the automobile industry too; automobile industry growthin the last quarter was significantly hampered.
The waves of these rapid changes were also felt at Subros. The Company registerednegative growth during this year. Subros is working closely with all our esteemedcustomers to chalk out a path for recovery and we expect reclamation to pre-COVID-19levels in the latter part of FY 2020-21.
The short-term growth prospects in automobile sector were not very conducive forSubros. The automobile industry once considered a luxury is now a necessity; people wantto have independent conveyance whether it is a small car or a two wheeler. Looking atIncreasing demand and customer projections we had invested in capacity expansion andinaugurated our new plant in Karsanpura Gujarat this year.
The Company had already put in place comprehensive risk management strategies. COVID-19has gripped economies putting a dent on global growth. While the effects are still hardto predict at this juncture the Influence of the virus outbreak is widely felt. While weexpect some impact arising from the outbreak on the Company we remain confident in ourbusiness model and proven track record that will weather us through these uncertain times.Built on strong foundations Subros has remained profitable since inception and haswithstood some crisis in the past.
We are working on newer technologies to provide solutions for next-generation vehiclesbe it Electric or BS-VI vehicles. We are also investing in skill development to equip theCompany with trained manpower to meet requirements of the future. management employeesand the enthusiastic support of our customers and partners. I would like to acknowledgeevery member of the Subros team and hope they will continue to excel undeterred in theirend favours.
I would like to acknowledge the resolute faith and support of our customers partners(Suzuki Motor Corporation Japan & DENSO Corporation Japan) shareholders dealerssuppliers and financial institutions who have been with us on this journey.
I would extend my deepest gratitude and hope to see our Company grow stronger bondswith all our stakeholders.
Before I conclude I would say a few words In Urdu and express my feelings-
(These earthquakes can knockdown high walls I am the foundation stone I have nofear.)
Let us stay united and fight with the challenges together.
In conclusion 2019-20 raised the performance baron all fronts at Subros. Our successwithout doubt is owed to the committed
From the desk of the Managing Director
It is an honour to present you an update on Subros and our performance in 2019-20.
The year gone by has been extremely challenging yet transformational. We started theyear with a lot of uncertainty as the sector was due to implement a major regulatorychange. We were migratingfrom BSIV to BS VI in a record time of 18 months. To the creditof industry the entire value chain prepared Itself and was ready to transition eventhough it would Impact the sectors sales in the short run.
The last fortnight of the financial year saw us along with the entire country hit bythe Global Pandemic (COVID-19). We are still reeling under the unprecedented Impact anddevastation that It has caused in terms of both human life as well as economic activity.
Due to the Pandemic and the subsequent lockdown the sales of Q4 were hit as the lastquarter Is usually the best one in terms of sales for our sector. The Industry de-grew by18% in 2019-20 and Subros also showed negative growth of 6.20 %. We have faired betterthan the industry due to our diversification into the residential and commercial thermalapplication (RCCP) from Nalagarh. We have also started our operations and commencedsupplies from our Karsanpura plant in Gujarat for our customers in the region. The Companysaw an extraordinary gain in income due to the final insurance proceeds that came inagainst our claim in reference to the fire incident at our Manesar Plant in 2016.
The financial results of the Company have been better than market average andexpectation the Company was able to sustain it operational profits at 4.14% despite thedrop in sales. This was largely possible due to improved operational efficiencies andmaterial cost reduction done due to an aggressive value engineering drive andlocalisation. The Company has declared a profit (PBT) of 6.21%. Subros is also on trackwith its long-term plan to minimize debt and we were able to reduce debt substantially inthe year. Conserving cash and being prudent about investment has enabled us to sustainthrough tough times including the adverse circumstances we are facing at the moment.
The pandemic and its aftermath have taught us that technology is a pivotal ally tobusiness and we have been very quickly able to use this ally to become leaner and moreeffective. Due to the use of technology we were able to successfully and smoothly move onto a work from home platform with no impact on operations or people efficiency. We are nowusing this to improve our effectiveness and also re-engineer and restructure costs.Needless to say the health safety and well being of our people is of highest priorityand we have taken every measure to ensure that they are safe and secure.
We continued our CSR program in line with our Vision and Core Values. Our teams workedtirelessly with the schools that we have adopted for underprivileged children we areproud to say that we were able to get a high and consistent attendance of childrenthroughout the year. We worked on their academic curriculum as well as their physical andmental wellness. We also engaged the vocational school that we were running for women andwere able to make masks and PPE that were then supplied not only for our internalconsumption but also given to the local administration the police and healthdepartments. Our teams were working closely with the customer in production of basicventilator machines needed by the government.
The year ahead (2020-21) is one of the most challenging in the history of Subros theGlobal Pandemic's impact on the country the sector and the Company is unprecedented.Economic activity in the country was at a complete halt for all of Q1 and the impactcontinues in Q2. The silver lining is that we are expecting a bounce back based on globaltrends and also the streaks of hope that we are seeing at the moment. We aim to come outof this in a stable and steady manner whilst trying to minimize the impact.
In this current environment of economic apprehension and fear Subros stands by itsVision of 'Ckroling the Planet'. We strive to provide technology products for comfort ofusers and create value for all stake holders. Our investments our empathy and our pledgeare to make our customers and employees feel valued. This is aptly reciprocated withunparalleled levels of energy and commitment to our organizational objectives. We are alsodoing work on reducing carbon footprint and have started to migrate to alternate forms ofenergy like solarfor power generation across all our plants.
Before I conclude I extend heartfelt gratitude to all our customers for their trustand support. I am grateful to our partners Suzuki Motors Corporation and DENSOCorporation Japan. A special thank you to Maruti Suzuki India Limited and Suzuki MotorGujarat for believing in us and standing by us in very trying times. I would also like tothankour supply partners bankers and insurance partners for their assistance andunwavering cooperation. I thank our Board for their valuable guidance. And thank all ourshareholders for their continued interest and unremitting belief in this Company. Mostimportantly my heartfelt gratitude to every member of Team Subros for their unprecedentedbelief in the Company and selflessly working to bring the Company back to normalcy
We at Subros do believe that it will get better and together our nation will emergestronger.
Stay safe and healthy Warm Regards