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Chairman's Speech 2015

Monday, June 29, 2015

Dear Shareholders,
I have great  pleasure  in  welcoming  you  all  to the Sixty Sixth Annual General Meeting of Your Company. In the Annual Report and the audited financial statements for the year 2014-15, you would have noted  the  progressive improvements in the performance of Your Company. I would like to take this opportunity to highlight some of the developments last year and the plans in the journey towards our Vision.

The Indian economy posted  7.4%  growth  last year up from 6.9% in the previous year. Positive business sentiment, lower oil prices and select policy measures had contributed to an improved outlook for the economy. The domestic Commercial Vehicle industry, while contracting by 2.8% posted growth in select segments. After  dropping by nearly 50% in the preceding two years, the Total Industry Volume of Medium & Heavy Commercial Vehicles (M&HCVs) segment grew by 16% last year. However, the Light Commercial Vehicle (LCV) segment has been volatile and contracted by 11.6% in 2014-15.
Experts believe that the Indian economy is set for sustained growth in the coming years. Lower oil prices, contained inflation, stable financial sector and expected policy actions complemented by a pickup in iron ore and coal mining are predicted to support growth in 2015-16. Taking into account these trends, The Society of Indian Automobile Manufacturers (SIAM) has projected growth rates of 13%-15% for M&HCVs and 3%-5% for LCVs in the current year.
Due to its continued investments in product and network, Your Company increased the market share in the domestic market last year. Your Company sold 66,442 Medium & Heavy Commercial Vehicles in the domestic market posting a 28% year over year growth. The export volumes grew by 31.8% to 11,218 units last year compared to 8,511 units in the previous year. You will be happy to note that Your Company maintained the leadership in the bus segments of Middle East and Sri Lanka and grew in Africa.
Last year, Your Company completed its third year of presence in the LCV segment also extending the range of products by launching DOST Strong, four tyre version of PARTNER model and an improved MiTR bus.  Nearly  100,000  DOST  vehicles  are on road as of now. In a contracting market and facing tough competition, DOST maintained its market share and sold over 25,000 nos. The new PARTNER range of products in the 6-7.5T category has clocked reasonable market share in its first year after launch.
The Power Solutions Business continued to have demand contraction last year. Revenue from the Spare Parts business improved by 14.9 % on better demand and improved operations. The Defence business gained momentum winning major tenders, increasing domestic kits dispatches as well as substantial export volumes.
As regards financial performance, Your Company’s revenue  improved  by  37%  over  previous year to reach Rs. 14,485.93 Cr. through improvement in M&HCV sale volumes and optimal pricing strategies, Profit after tax stood at Rs. 334.81 Cr. compared to Rs. 29.38 Cr. in the previous year and correspondingly the earning per share increased to Rs. 1.20 up by nearly ten times.
As you are aware, Your Company has always accorded highest priority to product initiatives addressing   evolving   customer   expectations. The  BOSS  range  has  achieved   leadership in the premium Intermediate Commercial Vehicles segment. The CAPTAIN series of next generation Heavy Commercial Vehicles (HCV) has been launched in select markets establishing new benchmarks in reliability, performance and ride comfort. With activity anticipated  to  pick  up  in iron ore and coal mining, the CAPTAIN range is strategically positioned to exploit growth in these sectors. In the 10x2 Multi Axle Vehicle segment, model 3718 has maintained its dominant leadership position for the 2nd consecutive year since launch, with the customers gaining from higher operating efficiency.
Your Company continued to extend the marketing network smartly. 58 new outlets in various innovative formats were dedicated to customer service during the year, totaling 545 outlets for the medium & heavy duty segment and around 50 touch points were added to the LCV network reaching 350 touch points.
All things considered, I would like to extend our warm appreciation to the management team for the exemplary performance last year and wish them well for a winning streak year after year in the future.
I am also pleased that the Board has recommended for your approval a dividend of 45% for the financial year ended March 2015 restoring the legacy of Your Company in this regard.
There will be further thrust in the current year to the business transformation exercises in progress and we can expect to see quantum jump in performance. I am of the view that continuous effort with determination is the key to unlock our potential and gallop towards our Vision, which Your Company has amply demonstrated in the recent years. Performing well during the most challenging market conditions, Your Company has efficiently insulated its structure against vagaries of economic downturns. Your Company is therefore well positioned in my view to do even better when the economy improves in the short to medium terms.
An added dimension in Your Company’s Mission in 2015-16 will be the Green Initiative. As we are all aware, much has been said and written about the air pollution in Indian cities and the dangers it poses to the people at large. As a responsible corporate citizen, Your Company has decided to pursue its alternate propulsion system agenda shifting to top gear. A range of products in hybrid and electric versions will be launched progressively.
I am happy to note that as part of the CSR programme Your Company will be focusing in a major way on the much needed Education for the Underprivileged. This would encompass education and health and we can expect some visible results on this front shortly.
I would like to gratefully acknowledge  the  trust and confidence reposed by you in the Board and the Management and  for  your  patience  during the recent difficult period. The Management is conscious of your increasing expectations from them and is gearing to fulfill the same. I am thankful to the immense support of all  our  shareholders and our loyal family circle of customers, dealers, suppliers, financial institutions and partners, which has contributed enormously to Your Company’s performance.
Thank You!