Once again I begin this letter with a sense of pride about Talbros. As I look back atthe last year it is remarkable how well your company has performed. And I'm not onlytalking about our milestone in financial performance but also about how we remainedlaser-focussed on our commitment towards collaborative growth innovation and deliveringbest automotive solutions to our customers.
Favourable macro-economic and industrial environment
The year went by was quite exciting. The Indian economy posted a 6.7% GDP growthdespite temporary slowdown during the first half of the year owing to Goods and ServiceTax (GST) implementation. The m a cro-eco n om i c cond i t i o n s were q u i tefavourable during the later half of the year with investments and private consumptionshowing a turnaround.
As regards the Indian automotive industry is concerned a record-breaking 3.2 Mn carswere manufactured during the year. India achieved the distinction of becoming the world'sfourth largest auto maker overtaking Germany in the process. Besides demand from thecommercial vehicle segment is likely to see a sustained growth owing to strong tractionfrom the road construction and mining activity space. Besides good monsoons pro- farmerpolicies aid by the Central Government and the new tracking policy of the commercialvehicles will continue to aid the positive growth. The industry is further expected tomaintain its growth acceleration and is expected to bring positive sentiments back in themarket and rev up overall vehicle sales in financial year 2018-19. The automotive industryis slated to grow at about 8% to 10%. The two wheeler industry is slated to deliver abetter performance at 11% - 13% and Commercial Vehicles are pitted to continue theirgrowth momentum in double digits at 10% to 12%. With a strong cyclical recovery theglobal economy is projected to grow around 3.4% going ahead.
The Government has decided to skip BS V and directly implement BS VI by 2020. The BS VInorms are also well- established in the industry and auto makers are positively movingforward towards its implementation by 2020. New policies are expected to support thedevelopment of electric and hybrid vehicles.
The Indian Automotive Industry would also be benefited as it is going to be the engineof the Make in India programme and is expected to contribute 12% of thecountry's GDP.
On the operational front we are ready to respond to the BS-VI challenge. We havesuccessfully launched the BS-IV product line effective from 1st April 2017 and arewell-placed to supply them to all the car makers commercial vehicles and twowheelermanufacturers in the country.
Besides our relentless focus on new customer addition helped us turn around ourforgings business and our joint venture company Magneti Marelli Talbros Chassis SystemsPrivate Limited. Healthy order books within each business segment further helped usachieve great set of numbers during the year.
We adopted the Ind-AS for our financial reporting in 2017-18. Our consolidated totalincome from operations increased 21% from ' 324.88 crores in 2016-17 to ' 392.98 crores in2017-18 largely on account of new order inflows and large offtake. Profit beforeexceptional items improved 80% from ' 14.36 crores in 2016-17 to ' 25.90 crores in2017-18. Profit after tax improved 87% from ' 12.22 crores in 2016-17 to ' 22.90 crores in2017-18.
Our business is broadly divided into a standalone business of gaskets forgings andthree joint ventures.
Our gasket business continued to hold 40% of the Indian gasket market share. Thebusiness witnessed 10.40% growth owing to strong demand from the two-wheeler commercialvehicle and tractor segment. The demand across these segments are expected to broadlyremain healthy over the next two years and will drive steady revenues. We are furtherexploring the possibilities of venturing into the passenger vehicles segment. During theyear we received order from Maruti Suzuki to supply gaskets. Our post-coated technologywill provide similar efficiency and quality (as available in the pre-coated technology)with reduced cost from import substitution and lower wastage. This will give us anopportunity to compete strongly in the passenger vehicle segment.
The forging business performed exceedingly well witnessing 59.63% growth during theyear. We started focussing beyond agri off-road and commercial vehicles and havesuccessfully started supplying to OEM passenger car segment in the domestic as well asglobal markets. We secured orders from a very large domestic OEM player. We also startedsupplying to a big German car maker and are further hopeful of receiving an order fromanother very large European car maker. We are also exploring further similar businessopportunities. The healthy order book is the testimony to our efforts. Going ahead wewill focus on higher weightage parts and are planning installation of a higher tonnageplant that will give us a good growth boost going ahead. We continued to explore OEMexport opportunities and successfully secured orders from overseas OEMs.
Our JV Company Nippon Leakless Talbros Private Limited (LTL) also witnessed a strongvolume growth on account of sales to HMSI and Hero Motor Corp. The revenues grew 8.24%during the year.
Our second JV company Magneti Marelli Talbros Chassis Systems Private Limited (MMT)witnessed 28.25% growth during the year largely owing to strong volume offtake andimproved margins. We secured a large order from Maruti Suzuki for the front suspension oftheir car. Besides we also delivered larger volumes for their two flagship models -Brezza and Baleno - where we are a single source supplier. On the export front we startedsupplying to large European car maker for a suspension component. Besides we are alsoquite optimistic about achieving strong off-take in the front suspension systems that wemade for Bajaj recently.
Our third JV company Talbros Marugo Rubber Private Limited (TMR) grew 33.11% duringthe year and turned profitable. We continued to witness stable demand for anti-vibrationproducts rubber components and hoses. Hoses particularly witnessed improved volumes fromMaruti Suzuki. We have also started supplying hoses to Marugo Rubber Industries LimitedJapan from our JV company and continue to look forward towards exploring neweropportunities.
Our gasket business continued to hold 40% of the Indian gasket market share. Thebusiness witnessed 10.40% growth owing to strong demand from the two-wheeler commercialvehicle and tractor segment. The demand across these segments are expected to broadlyremain healthy over the next two years and will drive steady revenues.
During the year we continued to focus on cost rationalization and improvingefficiencies. We installed post coating line which has commenced production from February2018 to rationalize raw material costs. Besides we also undertook strategic raw materialsourcing agreement to further reduce our operational costs raw material inventory andworking capital investments. The resultant benefits will be seen in the 2018-19 fiscal.
Coming off a record-breaking year we are excited and optimistic about the growthtrajectory of Talbros the foundation we have built and the opportunities that lie ahead.
We are devoted to earning the trust and respect of our shareholders customersemployees and the communities we serve every single day. A special mention to ouroutstanding Management Team that has led the Company's growth with exceptionalcapabilities character experience and wisdom. We look forward towards propelling agreater success in the coming year.