As I write my message to you this year, the economic environment seems
to be changing almost on a daily basis and the emerging markets seem to
be bearing the brunt of the volatility. Your company has however tried
to maintain a fine balance by lowering financial risks in such times of
economic turmoil, while maintaining the hi-tech quality products, which
has always been the hallmarkof your company.
Global and Domestic Scenario
The year under review has been difficult not only for private
enterprises but also for Nations at large in terms of controlling their
sovereign debt and fiscal deficits. The latter also contributed to the
very low growth of markets and opportunities. If the USA is showing
slight signs of improvement, Europe is yet to recover. Together these
two developed blocks, which account for the majority of Indian export,
have impacted India adversely. The exports for the year 2012-2013 have
dipped by US $ 6Bn from the previous year and it stood at US $ 301 Bn
due to decline in global export demand.
On the domestic front, the National GDP growth reached a decadal low of
5%. Even though the Government took certain reform measures in the last
one year, a large number of reforms and key legislation are still
awaited and these are now badly required to revive industry and improve
the nation''s outlook and sentiment. Strong measures to curtail the
Country''s Current Account Deficit are also urgently required as it is
weakening the INR significantly and the worst may be yet to come. The
adverse impact of the weakening Rupee on inflation is another serious
The Indian Auto Industry
The Auto Industry, one of India''s fastest growing sectors is now facing
negative growth, as in Q1 of FY 13-14 due to the current economic
conditions. The overall sales growth of the Indian automobile sector
was just 1.2% in 2012-13. The Two-wheeler industry sales grew at a
meager 1.9 % and the commercial vehicles segment registered a sales
decline of 27 % in 2012-13. As the sales of commercial vehicles is a
clear indicator of industrial and commercial activity, the significant
decline is a matter of serious concern.
The Indian Automobile Market and Our Future Outlook
India is now waiting for a second curve of growth. However, the
enablers of growth in the competitive market are varied and dependant
on different stakeholders. In addition to the global slowdown, India is
also facing inflationary pressures as mentioned earlier and a large
number of reforms are now overdue.
The GDP growth and private spending in the conventional export markets
for India are minimal. Over and above that some countries are adopting
''protectionist policies'', to safeguard theirdomestic interest.
The Indian automobile industry is therefore undergoing a very
challenging phase due to the abovementioned reasons. This is bound to
affect the auto-component industry also. The industry is contributing
substantially to Indian GDP and needs to be nurtured and supported to
return to its earlier growth levels.
The Industry exports to more than 100 countries. Exports have been
growing at 16% per annum over the past 5 years and currently account
for 20% of the industry. Exports to Europe and North America make up
60% of total exports, with Asia accounting for 28%. In spite of
declining exports your company stands out as a global manufacturer, and
hopes to regain its share as soon as the winds of change hit our
traditional markets while we are also making significant efforts to
diversify our customer base.
The financial year 2012-13 has ended on a challenging note. The
company suffered a decline in its turnover and profits. The turnover
was Rs. 373.38 crores compared to Rs. 497.48 crores in the previous
year. The company''s export turnover suffered a serious decline of
52.92% during the year.
As a result of the decline in sales turnover, the profit before tax was
down to Rs. 23.64 crores and profit after tax stood at Rs. 16.22
crores. Your company has taken and is taking various significant steps
to step up its customer base and increase sales but this process is
likely to take a year or two in view of the long qualification and
approval process in the auto sector. All efforts are being made to
revive export sales also and large orders are expected to be signed
during FY 13-14 for shipment in subsequent years. All possible steps
are also being taken within the organization to maintain and further
improve operating standards and achieve excellence at every step.
As part of our strategy, the company continues to give special
attention to maintaining a strong Balance Sheet and healthy Balance
Sheet ratios, as you will see in the attached audited statements.
We at Hi-Tech Gears have always followed the philosophy of sharing the
gains with our shareholders and we continue to do this even in these
difficult times. A final dividend of Rs. 1.50 per equity share is
recommended by the Board of Directors, in addition to the interim
dividend of Rs. 1.00 per equity shares for the year 2012-13.
Today HGL is a highly respected name in the industry for its
competitive and cutting-edge products. Hi-Tech family shares the credit
of this success story with all its employees for their relentless hard
workand contribution to make HGL a company with global reach and a
Before I conclude, I would like to thank all our business partners for
their continued support and belief in Hi-Tech''s endevours, and for
being an active part of Hi-Tech''s life. I offer my sincere gratitude to
my board colleagues for their wise guidance from time to time. I am
sure that we will pass through these challenging times with many
learnings and the journey will be more rewarding as we move ahead.
Deep Kapuria Chairman