From the desk of the Chairman
Warm greetings to the Subros family and welcome to another edition of the AnnualGeneral Meeting of Subros Limited.
2016-2017 has proved to be a crucial year bringing with it milestones as well asnumerous challenges. However I am extremely happy to share with you that your company wasable to overcome the hurdles and deliver another record performance in FY 16-17.
The Indian automobile industry has emerged untouched by any adverse impact despite newpolicy and taxation; and prospects look good. All domestic segments with the exception ofpassenger vehicles reported double-digit growth. In fact the overall domestic auto salesis expected to grow by 13-14 percent is the first quarter of the fiscal year as comparedto last year.
The Government has undertaken several proactive steps to provide a fillip to theautomobile industry. Considering the changing environmental norms and greenhouse emissionstandards we have evolved from BS IV to B VI R134a to R 1234yf parameters. Under the"Make in India" initiative the Government allows 100% FDI for automatic cars.Many global and domestic automakers have evinced keen interest and are already exploringpossibilities of driverless self-driven cars. CNG-based vehicles electric cars andhybrid vehicles are solutions to urban mobility and set to make an appearance soon. Inaddition the growing consumer market increased purchasing power and pro-industrypolicies augur well for the industry in the coming years.
These are implications of a positive business environment. Many of the existing playersare also in expansion mode; and many new entrants are poised to tap into the growingIndian market. Our largest customer is growing multifold. MSIL plans to set up its secondassembly plant in India and an engine and transmission unit in Gujarat. MSIL expectsIndian passenger car market to reach four million units by 2020.Ford Motor Co. has plansto develop a global technology and business centre in Chennai. South Korea's Kia Motors isin the process of finalising the site for its first factory in India. Electric car makerTesla Inc. is likely to introduce its products in India soon. FIAT Chrysler Automobileswill introduce its locally manufactured Jeep Compass brand in the compact SUV segment.
In addition the advent of GST has redefined the rules and of course the pricing. Itreplaces as many as 17 indirect central and state tax levies. So there is likely to be aneffective cutback in logistics costs input output tax benefits which are likely to affectthe end product prices. One can expect price rationalization in most product categoriespost GST implementation. Price is a crucial factor in Indian markets and any improvementon account of better tax management is expected to fuel demand.
Comprehensive excellence at all levels is imperative to the success of any business.From design to quality on the shop floor and upto the last link of the supply chain wemust enhance the focus of control and excel in the quality of deliverables in every step.Only then can India thrive and gain a competitive edge on a global scale as a superiorauto-manufacturing hub and exporter.
As I mentioned the past year has been eventful at Subros. The operational EBITDA hasmoved significantly from last year's figure of Rs.154.51Cr to Rs 170.33Cr withoutexceptional expenses. Your company has done well on PBT at Rs 40.21Cr (before exceptionalitems) from Rs 26.44 Cr of last year which works out to a growth of 52%.
The Indian automobile market is estimated to grow at 10-15%. It has the potential togenerate an additional 64 million jobs and contribute to over 12% of the country's GDP by2021. Subros is geared up and ready take on a fresh onslaught of demand. Your company hasexpansion plans in Gujarat to take care of requirements of its customer Suzuki MotorsGujarat (SMG).
I take this opportunity to extend my heartfelt gratitude to all our customers for theirtrust and support. I thank the Subros team for their relentless efforts in resurrectingManesar in record time the able support and understanding of our partners Suzuki MotorCorpn. and Denso Corpn. and our customer MSIL in our most trying times. I also wouldlike to thank our supply partners Bankers and Insurance partners for their assistance atall times. I thank our board for their guidance. And I thank all shareholders for theircontinued interest and unremitting belief in the company.