Ladies and Gentlemen,
I welcome you all to the 17th Annual General Meeting of the company and
express my thanks for having spared your valuable time to attend the
meeting.
The Annual Report of the company for the period ended 30th June, 2003
must have apprised you of the achievements of your company during the
year. However, I take this opportunity to personally share with you the
strategies and future growth prospects of the company.
Overview
The Indian economy is one of the fastest growing economies of the
world. During the current year, the country has been blessed with good
monsoons which had a positive effect on the country’s economy. The
Indian Economy is witnessing a mood of buoyancy with feel good factor.
Both the manufacturing and service sector are performing well. Economy
is expected to achieve GDP of 8%. Indian Companies have started
acquiring overseas companies to become truly global players. The forex
reserves are at an all time high. The Indian Companies have proved that
if provided with opportunity and infrastructural facilities, they are
comparable to the best of the world.
The Indian automotive components manufacturing industry is consistently
growing due to a sharp growth in the exports in the last 2 - 3 years.
The next big opportunity emerging for the Indian companies is the
automotive component exports as the global automotive OEMs are focusing
on third world countries especially India for their global sourcing
programs. The total worth of components procured by global OEMs from
India last fiscal was US$ 375 Million and the same is estimated to
increase to a whopping US$ 1.5 Billion in the current fiscal. This has
been a result of a silent revolution in the Indian automotive component
industry which has boosted productivity and quality of the Indian
component manufacturers and placed them ideally to emerge as big
another success story of our times.
Automotive components industry experts have pegged the worth of the
global automotive components industry at US$ 750 Billion of which the
current exports from India are a mere $ 375 Million or 0.5% only.
However, the future of the Indian component industry looks very
exciting. The Indian component industry is likely to see a consistent
growth rate of 35 – 40 %.
The Indian automotive component manufacturers are estimated to export
components worth a whopping US$ 15 Billion by the year 2010. The global
sourcing will not remain confined to the global OEMs only. Leading
automotive component assembly & systems suppliers who have
multi-national operations are likely to focus on outsourcing rather
than manufacturing in Europe and the Americas due to constant cost
reduction pressures from their customers.
The domestic automobile industry has had a good run in the last year
which, as per the industry experts, is likely to continue for some
time. The development of road networks and national highways has
infused a new lease of life to the commercial vehicle manufacturing
industry in India with the last year recording a year on year growth of
43.20 % for the M&HCV category and an overall growth of 34.60 %. The
passenger car industry has also seen a handsome growth during the last
year in view of an ever increasing market demand fuelled by the
increase in the disposable income of the middle-class of India. The
two-wheeler industry, which has considerable volumes in India, is on
the verge of another boom. The growth rate of motorcycles over the last
few years has also fuelled the overall growth of the industry. This
translates into direct benefits to the local automotive component
industry.
Amtek Auto Limited is a leading manufacturer of automotive components
and assemblies serving the global automotive industry as an Original
Equipment supplier. The company has created an indelible mark on the
Indian Automotive Industry and is set to consolidate its position in
the global automotive scene.
SALES AND PROFITS
During the period, your Company performed exceedingly well with sales
recording a increase of 85.89 % and net profit after tax recording
increase of 84.38% over the previous year.
I take pleasure to inform you that for the past eight years your
Company has maintained dividend of consistently at 20%. The current
year’s dividend is free of tax in your hands.
BONUS ISSUE
During the period under review, the company rewarded its shareholders
by way of bonus shares in the ratio of 1:1. The shareholders have been
benefited not only by way of additional shares but also by dividend on
existing as well as bonus shares taking the effective dividend on the
pre bonus issue to 40%.
GROWTH THROUGH ACQUISITION
Your Company is moving in line with the strategies drawn by the board
for growth. I am delighted to inform you that during the period under
review, your Company acquired two companies engaged in the auto
components sector viz. Ahmednagar Forgings Ltd., Pune and Smith Jones
Inc., USA.
Ahmednagar Forgings Limited has four units in Pune including one
fastener unit. The company has turnover of more than Rs.100 Crores. It
has an impressive clientele like Bajaj Auto, Tata Motors and Honda
Scooters & Motorcycles India to name a few. With this acquisition Amtek
Auto Limited has become the second largest manufacturer of forgings in
the country with combined installed forging capacity of 72500 tons per
annum. The forging facilities of Amtek Auto Ltd. And Ahmednagar
Forgings Limited are located in different regions of the country which
enables it to meet the customers’ demand locally.
Another subsidiary, Smith Jones Inc. is based in State of Iowa in the
United States of America. This is the largest manufacturer of Flywheel
Ring Gears and Flex Plate Assemblies in U.S.A. The Company has two
manufacturing units which are accredited with QS-9000 certification.
The acquisition of Smith Jones Inc. will help Amtek to penetrate the
U.S and European markets. Smith Jones has turnover of US$ 19.45 Million
and has most of the U.S. and European auto giants as its clients.
CONSOLIDATION OF BUSINESS
Presently, Amtek Group is the leading player of various auto components
with over 300 varieties being manufactured by various Subsidiaries and
Associated companies in India and abroad. The company expects to
benefit substantially in form of outsourcing orders from its
subsidiaries and associated companies abroad. Amtek Group, in order to
become a truly global player with strong base and single identity, is
planning to consolidate the entire business of the group within a span
of next two to three years under the leadership of Amtek Auto Limited.
In order to accomplish this goal the Company has already appointed
Ernst & Young as advisor for chalking out the strategy for
consolidation process. The management believes that the consolidation
of these businesses shall lead to enhanced stakeholders value.
FUTURE BUSINESS STRATEGY
In order to enter overseas markets with full strength, your company has
undertaken various initiatives that will help it face the challenges in
the global market.
In today's world of changing technologies, it is very important for
every organization to keep abreast with new technologies. Towards this
end, your company is now investing heavily in new technologies and R &
D facilities especially in the form of latest software oriented designs
and in-house product development. This has not only improved product
quality but has also accelerated production. The company is also making
capital investments in the form of latest machines with higher
capacities to meet the growing demand. The company is also taking all
steps towards cost cutting to improve the profitability. With increased
capacities, wider acceptability and expanding markets, the future
outlook of your company appears very promising.
CAPITAL MARKET RECOGINITION
The improved performance of your company has attracted investment from
various quarters including FIIs. The Board of Directors of the company
met yesterday to consider enhancement of investment limit by FIIs from
24% to 49% of the paid up Equity Share Capital of the company and
approved the proposal subject to the approval of shareholders. The
Board has also convened the Extra Ordinary General Meeting of the
company which is scheduled to be held on 27th January, 2004 for
shareholders approval. Your Company’s share has recorded reasonable
growth in recent years. A large number of analysts, who follow the
progress of the Group, have almost without exception been positive
about the company and we have had a good reputation in the market.
The most important parameter of our company’s progress is how our
customers and investors perceive Amtek and I am sure in recent times
the image of your company has sharpened to a great extent.
ACKNOWLEDGEMENT
I wish to place on record the sincere and dedicated efforts of all the
members of the company’s team who have displayed their unstinted
devotion, Co- operation and commitment towards the pursuit of
excellence. I also take this opportunity to offer sincere thanks to the
financial Institutions, Banks, Government Agencies, our valued
customers for their continued support and assistance.
I also express my profound thanks to the shareholders for their faith
and continued support to the endeavors of the company.
Finally, I express my personal gratitude for the unstinted faith
reposed by you in the company’s management and sincerely hope that we
will continue to receive the same kind of support and guidance towards
achievement of higher goals.
Thanks,
Arvind Dham
(Chairman)
