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Enkei Wheels (India)

BSE: 533477|ISIN: INE130L01014|SECTOR: Auto Ancillaries
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Mar 16
Chairman's Speech (Enkei Wheels (India)) Year : Mar '17

Dear Shareholders,

It gives me an immense pleasure to share with you an update on the overall performance of the Company. I feel grateful for your continuous support towards Enkei Wheels (India) Limited.

Performance

In the financial year, 2016-17 Enkei India made significant way towards the goal. The Indian government''s move to ban high value notes (demonetization) on November 8, 2016 slowed down the market. Consequently orders for 2W segment took hit to some extent in 3Q however were recovered immediately. On the other hand, 4W segment was blessed with the favorable Indian market situation and thus Enkei India went for maximum orders & production numbers. Overall we landed with the 2.27 million wheels including 2W & 4W during the year. As against last year, Enkei India posted 6% growth in terms of sales volume as well as sales value - and delivered profit of AP 2.2 (Profit before tax Achieve Profit 2.2%).

External Scenario

In case of 4W there are many new models being launched by our customers. It was a favorable market for the sale of sedan car & SUV car than ever. Since there was diversified car sale in domestic market, mounting rate of alloy wheel also went up which is the reason to boost the sales of 4W. For the first time in history, the automobile sale of Indian domestic market went beyond estimated number and achieved the sale of 3 million passenger cars (incl. UV & Van) which was up by 9.2% (3,046,727 Cars) and 2W segment witnessed the growth of 6.9% (17,589,511 Cars) in FY 2016-17.

Internal Controllers

Internally, we continue to adopt & inculcate Enkei DNA, Enkei Ownership & 7 Efforts and try to Level & Label up of employees with the help of fundamentals like 5S activities & improve the loyalty of employees towards the company.

We also have been continuously practicing the BEP (Break Even Point) Management and Daily Income Statement (DIS), that is:

1. Increase Value Added Ratio (Implementation of 3B)

2. Reduce Fixed Cost (FCR Activity: Fixed Cost Reduction activity)

3. Increase Sales Amount (Adoption of Product Mix strategy)

Enkei India also makes use of CFT Activity (Cross Functional Team activity) for better problem solving, Enhancement of communication and motivational activities, Compliance of world standards (Certification of ISO/TS16949, ISO14001 & OHSAS18001) for environmental compliance and with the diversity in cars, Enkei India will have diversity in wheels as well, and in order to adjust to different designs of different models, Enkei India will undertake the process change, initiatives for new paint shades, thorough control over the process from development to final product stage including quality maintenance of large diameter wheels.

Parent Support & Policy

It is our accomplishment that we have strengthened 66 years of vast experience of Enkei Group in the field of research & development and manufacturing of aluminum alloy wheels. The technical assistance & cultural exchange from Japan and other ASEAN group companies of

Enkei, help us to successfully uphold the No.1 position for OEM supplier in the hybrid industry producing 2W & 4W aluminum alloy wheels of India and we remain committed to continue the same growth.

Looking Forward

Since 1st April 2017 there is a change in environmental standard (BS3 to BS4, BS=Bharat Stage) however it is expected that Enkei India''s orders will not be much affected. Enkei India is looking forward for new orders & has set production target as 10% Higher Output in the year to come. Enkei India, with orders & production along with maximum efforts, has set target over & above last year i.e profit of AP5. (Achieve Profit ) In order to align with our Enkei Group 2017 Company Policy INOBESHON DE SUUJI WO TSUKURU: Maximize numbers using innovations, Enkei India will set clear targets in numbers. We believe in the Enkei India 2017 slogan: Standardization and Optimization. In order to align with our group standards, Enkei India will undertake Enkei standardization of production processes (smart factory, automation, robotization and installation of new technology),

- set up of testing lab for better quality control,

- improvement in DIS & BEP management for management control and

- implementation of the concept Build strong operations without labor cost impacts, to reduce fixed cost.

In order to embrace opportunities of favorable Indian automobile market and implement Diversity & Sustainability, Enkei India will enhance capacity of plant facility in the coming year and plan to increase production capacity.

Challenges

Currently India''s growth rate is very high in the world however it is also addressing many issues like environmental challenges, introduction of GST, further compliances and huge transformations.

Each of them has different challenges and thus we will overcome them with the fundamental approach of proactive action (Be positive, Positive thinking), and also adhere to those policies and promote good production & exercise healthy management.

To adhere to the same, we will

- Follow upcoming GST laws & IND-AS (IFRS Converged Standards)

- Comply with health & safety standards, environmental management system

ANZEN DAIICHI: Safety First,

KENKOU DAIICHI: Health First,

KHANKYOU DAIICHI: Green First.

With further preparation for the future and more contribution to the society we, Enkei India & Enkei group evolving to be a reliable company will ensure to prove its reason for existence in the society.

At the end of this communication, I would like to thank to all our stakeholders, shareholders, customers, suppliers, vendors, employees, union, our group companies, the Governments and regulatory agencies around the world for taking keen interest in the company and extending continuous support to us and we hope to receive the same in future as well.

Kazuhiko Shimamura

Managing Director

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