Dear Shareholders,
Economic State of Affairs of India
The last financial year has been eventful and challenging. It marked a
turnaround in performance and sentiments as we witnessed an all round
deceleration in the pace of growth across all sectors. This has been a
global phenomenon triggered by the fairly widespread sub prime crises
of the USA. Oil and commodity prices continue to soar and economies are
in the grip of a cost push inflation inevitably leading to a slow down
and near recessionary conditions. This spiraling trend is likely to
shift and change the geo- political equations significantly. The
scenario is quite grim and calls for hasty introspection, recasting of
plans and innovative thinking to preempt and counter negative impacts
to stay unscathed.
The Indian economy being well integrated with the global markets could
not be insulated from the same and experienced a slow down in its
growth rates and expects further moderation going forward. The
turbulence and high volatility in the currency and financial markets
coupled with tight liquidity have only exacerbated the crisis and
arrested the high growth rates seen in the early part of the last five
years. The stock markets are now in the grip of the bears and in a
short span the market cap of companies have eroded by over 50 percent.
Indian industry continues to grapple with the new reality and ventures
ahead with cautiously bold plans with marginal scale down. In my view,
cost and availability of capital will be a major challenge to
sustainable growth in the coming year. The high inflationary trends in
the domestic economy also do not augur well and will lead to firmer
measures from the regulatory agencies.
The silver lining in all of this is the reversal in trend of the
appreciating Indian Rupee which was adversely affecting exports and
rendering many businesses uncompetitive while squeezing margins already
under pressure from increasing commodity and oil prices. The export
sector should boost its output and encash on this opportunity. The
small relaxation of ECB norms by the RBI is a step in the right
direction and needs to be eased further to improve accessibility of
funds for continuing growth investments.
Industry in India and Hi-Tech strategy for the future
The automobile industry in India is the tenth largest in the world with
an annual production of over 2 million units and shall keep up the
growth levels in mid & long term. The automotive industry is the
undisputed engine of growth for the industrial sector in India. The
country continues to be a major hub attracting additional major
investments from all leading automakers who have set up or in the
process of setting up manufacturing units to exploit the cost and
engineering skill advantages. The automotive industry directly and
indirectly employs 13 million individuals in India. The industry is
valued at about US$ 35 billion contributing a little over 3 % of our
GDP. Indias cost- competitive auto components industry is the second
largest in the world. In addition, Indias motorcycle market is also
the second largest in the world with annual sales of about 6.5 million
units.
The first wave of growth was fuelled by the major urban centres and
this is now likely to be reinforced with the burgeoning small towns and
rural centres being linked through the rapidly developing transport
network of the golden quadrilateral and the north- south , east-west
corridors, making us the 2nd largest two wheeler market, the fourth
largest commercial vehicle market and the 11th largest passenger car
market of the world.
During the financial year under review the passenger car segment had a
healthy growth rate of 14% while the overall four wheeler segment
registered a growth of nearly 12% with the MCV / HCV segment going
negative by 1%. The two wheeler segment of vehicles also registered a
negative growth of 5% with the motorcycle segment being the bigger
loser at 8.5%. It is unclear as to how the things will shape up in the
coming year at the industry level, but we remain hopeful that despite
such decelerations your Company will be able to grow by penetrating
into new markets and acquiring new customers.
You would have noticed that our Hi-Tech Group has evolved a new design
and a graphical look. The three words Passion, Innovation and
Technology reflect our avowed beliefs and these are bonded by the
disciplined approach that we adopt in our work culture. The seven icons
are symbolic representations of our deep seated philosophies and value
drivers viz. technology, people, management, commitment , partnership,
global perspective and products.
In keeping with our commitment to being a good and proactive corporate
citizen, your Company has embarked on a program towards a healthy clean
and green environment which entails reducing energy consumption by over
five percent, water conservation through recycling and effluent
treatment, stricter norms for pollution control over and above the
statutory prescription and all round waste reduction of resources
through efficient processes and recycling. These initiatives would not
only contribute to social engineering but also help improve our
bottomlines.
Company Performance
Despite all the adverse built up during the financial year 2007-2008,
your Company has been able to buck the trend and register a positive
growth. Your Company achieved a turnover of Rs. 31622 Lac (Previous
year 29,987 Lac), recording a marginal increase of 6%. Exports too
registered an increase despite the INR appreciation confirming our
global competitiveness, which is quite encouraging. The many
operational efficiency initiatives enabled the Company to improve its
EBITDA margins by 1 %. The Net Profit (After tax) of the Company
correspondingly increased from Rs. 833.08 Lac to Rs. 980.65 Lac, an
increase of 18 % as compared to the previous year. It is indeed
heartening to see that with focused efforts and unflagging spirits, we
are moving in the right direction and now only need to gather momentum.
In keeping with our philosophy of sharing the gains with our
stakeholders, I am quite pleased to report that the Directors have
enhanced the recommendation for final dividend to 30% i.e. Rs.3.00 per
equity share as compared to 25% paid last year i.e. Rs.2.50 per equity
share.
We at HGL have demonstrated a Passion to Succeed, and is being
reflected in the leadership position that we continue to enjoy as an
independent and reputed transmission manufacturing company of the
country, this is largely due to the unstinting and relentless
dedication of all members of the Hi-Tech family and am confident that
this will only be surpassed in the years to come.
Before I conclude, I would like to thank all our business partners,
associates and employees for their continuing belief and faith in
Hi-Techs principles, philosophy and endeavors, and being a part of Hi-
Techs growth story. I would like to assure you all that the journey
will continue to be equally exciting and rewarding as we move ahead.
Deep Kapuria
Chairman & Managing Director
