It is my privilege to present the Thirty Eighth Annual Report of your
Company. Fiscal year 2011-2012 was one of the most challenging years in
the automobile industry. When every- one is expecting a turnaround in
the global econ- omy and financial crisis, the unexpected devel-
opments in the Eurozone once again dashes the hope of the recovery in
the world economy. The economic situation could get worsen in Euorpe in
the days to come and US recovery is also not too encouraging. But,
before blaming all on the Europe and to the external markets & environ-
ment, it would make sense to see that there is a lot that can be done
After continuously growing in high growth tra- jectory in the past many
years, the Indian econ- omy too has run into rough weather. The contin-
uous high inflation in Indian economy compelled the Reserve Bank of
India to choose the path of continuous higher interest rate regime
primarily due to lack of innovation in managing the sup- ply side
inflationary pressures. The Global eco- nomic uncertainty coupled with
our Government''s exclusive focus on tightening monetary policy by
continuously interest rate hike throughout the years along with the
lack of policy consensus for all the critical economic reforms and so
on, have resulted in a decline of the country''s eco- nomic growth
from 8.5% in 2010-2011 to 6.5% in 2011-2012 & 5.3% in the last guarter
of the fiscal year 2011-2012. It is unfortunate that we missed the
opportunity to reap significant gains for our country even as we were
comparatively insulated from the global slowdown. We have failed to
make policy and structural reforms over the past two years to propel
Indian economy towards its growth targets. As policy initiatives
continue to flounder, we have been witnessing an alarming slowdown in
industry as reflected in a weakening IIP growth for the year.
This has adversely impacted capital intensive initiatives by India Inc.
Besides, the surfacing of various high-level improprieties, forced the
active involvement of the Indian judiciary, which diverted the policy
makers'' attention on man- aging tough situations and compulsions of
coa- lition politics, have further resulted in a freeze on growth
oriented policies. The other roadblock that severely challenged
economic progress was the sharp rupee depreciation and increasing fuel
prices. The depreciating rupee as compared to USD is good news for the
exporters but it is not beneficial for the country like India, where we
are the net Importer. The prevailing overall uncer- tainty and lack of
optimism, bulging fiscal deficit, rising cost of funds and increased
cost of living forced India Inc, and the average Indian to post- pone
investment and consumption respectively.
There is sheer pessimism in India Inc, which will have to be reversed;
either the Reserve Bank of India or the Government of India will have
to take some calibrated bold step to put the econ- omy back on the
growth track. The Inflationary pressures can be there but with the
reduction in the rate of interest by the Reserve Bank of India along
with some policy initiatives on key reform areas by the Government of
India, there can be some confidence booster, which in turn will provide
investment opportunity to the India inc, which will further leads to
revival in the domes- tic demand, in other senses, the Indian''s can
feel comfortable to bear the inflationary pres- sures, with more
disposable income in their hand.
I am confident that if the government is able to take the initiatives
in certain key areas and kick- start economic reforms, the economy will
turn around in this fiscal to grow at about 6.5-7%. This would provide
a platform to return to 8-9% growth in the medium term. Implementation
of reforms coupled with removal of bottlenecks that have stifled
economic growth would restore investor confidence and revive the
momentum for sustained high economic growth.
Demographically and economically, India''s auto- motive industry is well
positioned for growth, servicing both domestic and export opportu-
nities. According to Automotives Components Manufacturers Association
(ACMA) estimates in the Automotives Mission plan 2016, the total
turnover of the automotive industry in India would be in the order of
USD 122-159 billion in 2016, accounting for more than 10% of India''s
GDP. As per the Society of Indian Manufacturer Association (SIAM)
estimates, the Indian pas- senger vehicle production is expected to
grow three times to 9.7 million by 2020 from the cur- rent level of 3.3
million. The longer term growth story of the Indian economy is quite
strong but we will have to take some key policy decisions on some
economic reforms area at the earliest.
The key highlights of your Company''s perfor- mance during the year are:
Your company has generated revenue from oper- ations (Net) of Rs.
13078.66 lacs as compared to previous year of Rs. 11961.86 lacs,
register- ing a growth of 9.34% over previous year.
Total revenue increased by 9.50% to Rs. 13125.46 lacs, (other income
increased to Rs. 46.80 lacs, as com-pared to previous year of Rs, 24.93
lacs, an increase of 87.73%, primarily due to exchange rate
fluctuations due to depreciation of rupees vis-a-vis to USD), as
compared to previous year''s total revenue of Rs. 11986.79 lacs.
Earnings before interest, taxes, depreciations and amortizations
(EBIDTA) grew by 15.76% to Rs. 1053.32 lacs as compared to previous
year of Rs. 909.89 lacs. The EBIDTA margin was 8.03% as compared to
7.59% for the previous year.
However, profit after tax (PAT) during the year, almost remains flat at
Rs. 461.23 lacs as com- pared to previous year of Rs. 457.34 lacs,
mainly due to increase in financial cost (increase of 68.10% as
compared to previous year), increase in commodity prices and increase
in taxes (increase by 11.08% as compared to previous year) to some
extent, clearly shows that there was margin pressure during the year.
It was a tough & challenging year particular for the manufacturing
sector in the backdrop of ris- ing interest rate & increase in the
commodity prices. However, we have registered marginal growth during
the current year in terms of our total revenue but due to increase in
the inter- est cost, the profit after tax was almost remain the same.
As I had already discussed with you, some of the issues with regards to
lower profit- ability margins, in my previous year address to you. We
are working on all the different aspects so to overcome all the issues,
with regards to improvement in the overall margins. The contin- uous
rise in the interest cost as well as increase in the commodity prices
will remain the major issues, which will continue to create a margin
pressures in the days to come.
I would like to take this opportunity to thank our Managing Director,
Mr. Surinder Singh Ryait and his team for maintaining the company''s
perfor- mance in such a volatile cum challenging envi- ronment; and all
our employees who have worked very hard to protect our top and bottom
I am grateful to our Directors who, as always, have been a source of
guidance and incredible support for your company.
We are already working towards creating new capacity in different
regions of the country apart from Jamshedpur, along with the
diversification in other segment of the automotive industry by
increasing its product portfolio. I am hopeful, once we commence the
commercial production at Jamshedpur, it will not only give a big boost
to our top line but will improve the overall profitabil- ity margins of
the Company. We will continue to focus on strengthening our presence in
the after- market segment and will fill the reguired neces- sary gaps
in our product offering, widened our
distribution network and will continue to invest in enhancing brand
visibility resulting in increased market share.
It gives me immense pleasure to welcome Mr. Jasbir Sing Bir (IAS
(Retd.)) on board as an Independent Director. Mr. Bir is a 1989 batch
Indian Administrative Service (IAS) Cadre Officer. He has served the
Punjab Government as an IAS Officer from 1989 to 2010 on difference
positions including Divisional Commissioner of Patiala District,
Secretary to the Government of Punjab, Department of Personnel and
General Administration, Director cum Secretary Cultural Affairs,
Archeology and Museum and Secretary General Administration and
Commissioner MC Amritsar. I also invited Mr. Bir, to be a member of the
Shareholders & Investors Grievance and Audit Committee of your Company.
With the joining of Mr. Bir, on the Board of your Company, your Company
will enrich with their valuable experienced guidance, in the years to
come and will further strengthen the Board of your Company.
The overall market have been very competitive, one has to be extremely
efficient with men, mate- rial, capital deployment, prefect execution
to generate a reasonable long term profit growth. In the days to come,
our main focus will remain to enhance our competitiveness along with
the overall improvement in the profitability margins by all-round cost
reduction, improving guality of the products, cost effective &
improving our in house research & development activities. In the
current fiscal, the challenges posed by an adverse external environment
are expected to continue. India''s economy is expected to grow at
6.5-7%. Inflation will remain high at 7.5%-plus levels.
The political instability continues to withhold the passage of
important growth-oriented poli- cies. The rupee value continues to
hover around Rs. 55 against the US$, making imports dearer, in the near
term. As a result, the performance of India Inc. will largely remain
subdued during the current fiscal. This is already reflected in low IIP
growth and significant underperformance by the automobile industry.
However, in spite of all the above said issues, I am quite hopeful for
the long term Indian growth story and particularly for the Indian
automotive industry along with the auto component indus- try and am
cautiously optimistic in the near term.
Let me conclude by thanking all our sharehold- ers, business partners,
our Investors, Customers, Vendors, Suppliers, all our Stakeholders,
finan- cial partners specially our new financial part- ners Export
Import Bank of India & Axis Bank Limited & all the well wishers.
I am expressing my sincere appreciations to all my colleagues and all
the employees of the Company across all the ranks, for their continued
dedication, sup- port & commitment to their work; my congratu- lations
to all of them & my heartiest thanks to yours for your continued
support & faith. With your support, we are confident to sail through
all the difficulties & challenging environments in the days to come.
With best Wishes and Warm Regards
Jasbir Singh Ryait