Dear Shareholders,
Economic State of Affairs of India
The last financial year has been a remarkable year for the countrys
economy. The nation crossed the trillion dollar mark, at the rate of a
steady 9.4%. Foreign Exchange reserves also saw tremendous growth, from
$142 billion in 2005-06; it closed at $173.1 billion in 2006-07. The
FDI flow has also witnessed a quantum jump closing at $19 billion. The
Manufacturing sector has continued to experience growth at 12.3%.
However.year 2007 started with on a challenging note. The shifting of
the rupee dollar conversion has affected Business in more than one
ways. It goes without saying that this sudden shift affects Exports
across the cross section directly. Added to this the measures for
controlling inflation through restriction of Money supply by the RBI
has also become an impediment in the ever changing market scenario,
which includes the rising CRR and putting newer restrictions on ECBs
and FCCB routes.
Industry in India and Hi Tech strategy for the future
One of the most imminent reasons for the shift of the Auto market to
Asia has been the Outsourcing of production by the OEMs and Large 1 st
Tier Suppliers to focus on Low Cost Country (LCC) suppliers.
Dismantling trade barriers, which in return leads to access of global
capacities, also gave an opportunity for the OEMs to access more
production bases in Asia for their global sourcing. India as one such
LCC is still coming to terms with the requirements that are demanded by
OEMs and Large Tier 1 companies.
As I had the honor of chairing the Working Group on International
Business (Exports) for the Automotive Mission Plan 2016 of the
Government of India I had the unique opportunity of having a look at
these challenges from up close.. Among other issues that have been
addressed in this mission statement one of the foremost aspects is to
achieve export revenue of $35 billion in 2016 from $4.1 billion at
present. This is an ambitious target and the road ahead is fraught with
many variables, some of them fraught with volatility.
Principle among these are volatility in the international market along
with stricter commercial terms. The hardening of commodity prices is
not an Indian phenomenon, but is happening globally. The major
challenges that the auto industry is presently facing is with respect
to its capability to innovate and upgrade. This might look difficult
to achieve but is a crucial aspiration for the Auto components
industry.
OEMs and large Tier I companies have gathered huge momentums to look
at opportunities in India. Today not only have they begun to understand
what it means to operate from India but also have an upper hand in
deciding how one should operate in India, because of deep pockets and a
vast data base of experience derived from operations set up in similar
emerging economies. This exposure has not only help them to set up JVs
with Indian companies but also many are setting up shop here.
The confluence of all this is has seen the cost paradigm of operating
in Indian Industry transform. On one hand with globalization and
imports are threatening to drive business out and on the other hand the
liquidity flow in the country is driving up the cost of the already
inadequate infrastructure available. The Free Trade Agreements have
opened the Indian markets without putting domestic reforms in place:
thus creating a mismatch in the speed to assimilate the global economy.
As a resultant it is tempting to put the notion of India as an LCC
destination under the scanner.
The need for being quick is now here as never before. In spite the
steep challenges, and the hardening of the rupee along with reduced
rates, two things remain constant:
a) Faith in the Indian Economy
The countries economy is growing at a stable rate of 9% annually. The
growth drivers are intact with factors such as a higher GDP growth, the
ongoing endeavors of the Public Private partnership for improving
infrastructure, greater liquidity, and last but not the least the
advantage of having a safe democratic system of governance.
b) Indian Business Environment would emerge into the global volatility
Gradually but surely the Indian Business environment is becoming more
global and competitive. With higher international operations comes
higher product liability/ greater sensitivity to the customers/ shorter
business cycles and cost pressures on account of international
movements - the business of manufacturing in India would have to
contend with questions of international technology/ cost
competitiveness and Brand recall.
There is still value for a technology embedded manufacturer who is
alive to the realities of the shop floor, with a sharp eye to the cost
structures. With this 1aith we at Hi-Tech Gears have chosen an
aggressive stance in exports even in the face of a hardening rupee and
higher risks. We aspire to :
1) Build Hi-Tech as a Global Brand.
2) Update and achieve Global standards of Technology to keep in pace
with Global Requirements.
3) Validate Cost Structures in the International market place.
Company Performance
The financial year 2006-2007 has ended on a upswing for the company.
Your company surpassed the budgeted turnover and has achieved a
turnover of Rs.29,987.34 Lacs (Previous year 22,535.07 Lacs), recording
an increase of 33.07%. The Net Profit (After tax) of the company has
been increased from Rs. 553.36 Lacs to Rs. 833.08 Lacs, recording an
increase of 50.55 % as compared to the previous year. As is evident the
companys effort on war against waste is gathering momentum.
The final dividend of Rs: 1/- per equity share has been recommended in
addition to interim dividend of Rs. 1.5/- per equity share for the
year 2006-2007.
We at HGL have a Passion to Succeed, and being the largest independent
transmission manufacturing company of the country, I would like to
compliment the entire Hi-Tech family for their dedicated and relentless
hard work in achieving the success of the year that has gone by.
As, I conclude I would like to thank our business partners for their
continued belief and faith in Hi-Techs endeavors, and being part of
Hi-Techs growth story. .
Deep Kapuria
Chairman& Managing Director
