The Company provides complete seating solutions for driver and cabin seating for
commercial vehicles, tractors and construction equipment, as well as passenger seats for
buses across all segments and has established itself as a leader in these segments in the
country for seating systems.
INDUSTRY STRUCTURE AND DEVELOPMENTS
In 2015-16, the economy is expected to grow at 7.4% (revised series) as against 7.3%
(revised series) previous year.
The following table highlights the segment wise industry sales figures in vehicle units
for the year 2015-16.
| Category |
2015-16 |
2014-15 |
Growth / (decline) % |
|
Nos. |
Nos. |
|
| Medium and |
|
|
|
| Heavy Commercial |
|
|
|
| Vehicles (M & H CV) |
3,37,565 |
2,63,407 |
28.2 |
| Light Commercial |
|
|
|
| Vehicles (LCV) |
4,49,828 |
4,38,480 |
2.6 |
| Buses - M & H CV |
56,176 |
48,817 |
15.1 |
| Tractors |
5,70,791 |
6,12,876 |
(6.9) |
[ Source: SIAM, CRISIL ]
The Company registered sales at Rs.30,781.08 lakhs in 2015-16 as against Rs.27,375.54
lakhs in 2014-15. During the year, efficiency in supply chain was improved through
inter-plant coordination; horizontal deployment of lean and other improvement initiatives
was done across all plants. These initiatives, along with the implementation of various
other cost reduction projects across functions have enabled the Company to post a profit
before tax before exceptional income of Rs.2,398.18 lakhs in 2015-16.
OPPORTUNITIES AND THREATS
The Company has initiated product development activities to maintain the leadership
position in the tractor segment in the domestic market. The Company continues to
strengthen its position in export markets and has won significant new orders from overseas
customer. The supplies are scheduled in 2016-17. As a leader in the bus passenger seats
with a wide range of seats, the Company has further strengthened its position with new
product launches in North India. The market has well responded to these new launches and
the Company is gaining market share in this region.
A significant competitive threat is the entry of overseas competition and the Indian
bus body builders getting into seat manufacturing. The Company continues to invest in
strengthening the design and testing capabilities to retain the market leadership status.
The declining Tractor industry is a concern to the Company owing to the large share of
domestic sales. The Company is taking steps to retain the sales growth by expanding
customer base.
PRODUCT-WISE PERFORMANCE
The Company posted a growth of 12% in the overall sales. The Companys sales in the
exports, commercial vehicle segment and bus passenger seats grew by 53%, 17% and 24%
respectively.
BUSINESS OUTLOOK AND OVERVIEW
Indian economy is expected to grow at 7.7%-8% in 2016-17. The M&HCV segment is
expected to grow at 15% and LCV segment is expected to remain flat. Bus segment is also
expected to grow at 12% in 2016-17. The tractor segment is expected to further decline in
the year 2016-17.
RISKS AND CONCERNS
The low recovery in rural economy was due to poor monsoon, nominal growth in crop
prices, and declined Rabi output. The Indian commercial vehicle industry has strong
correlation with the agricultural growth, infrastructure development and the mining
industry and is cyclical. The Companys presence in all the segments of auto industry will
largely mitigate the segment specific risks.
The Company plans to develop additional products to maintain its growth plans. The
Company has also put in place initiatives to improve product quality to support the growth
plans.
The Rupee depreciated significantly in the last year as against the US dollar. There
may not be a major recovery in 2016-17 nor a further substantial depreciation. The Company
is taking suitable forex cover to mitigate the risk in foreign exchange fluctuations.
RISK MANAGEMENT POLICY
The Board has established a Risk Management Policy which formalizes the Companys
approach to overview and manage material business risks. The policy is implemented through
a top down and bottom up approach identifying, assessing, monitoring and managing key
risks across the Companys business units.
Risks and effectiveness of their management are internally reviewed and reported
regularly to the Board. The management has reported to the board that the Companys risk
management and internal compliance and control system are operating efficiently and
effectively in all material respects.
The board is satisfied that there are adequate systems and procedures in place to
identify, assess, monitor and manage risks. The Companys Audit Committee also reviews
reports by members of the management team and recommends suitable action. Risk
Minimisation Policy has been approved by the board.
OPERATIONS REVIEW
a. Manufacturing:
The Company has continued its focus on having best manufacturing processes and
facilities, it has also imparted training to key employees in an effort to reskill people
and upgrade the manufacturing processes, apart from improvements in the facility by means
of automation.
Further improvements of Lean Manufacturing/ Flow Management initiatives will help the
Company in containing manufacturing costs.
The transfer of Nalagarh unit of the Company at Himachal Pradesh has been completed on
30th September 2015 as agreed. Profit on sale of this 2 Wheeler business is Rs.
447.44 lakhs which is shown as an exceptional profit.
For the half year ended 30th September 2015 (i.e., till date of business
transfer), the Nalagarh unit generated a revenue of Rs. 7.49 Cr which is less than 3% of
the total revenue of the Company for the period under review.
A new assembly facility was created in Chennai for manufacture of Commercial Vehicle
driver seats and bus passenger seats for catering to the requirements of major customers
of the Company located in and around Chennai and commenced its activities on 1st
September 2015.
b. Quality:
The Company has taken steps to improve further, the quality of its products. The Final
Product Audit (FPA) initiative taken by the Company has brought appreciation from
customers. The quality system at the factories aims at achieving total customer
satisfaction through its focus on improving product quality. Consistently, the Company has
been achieving improved Quality levels at the customer-end, both in their line and
warranty quality.
The Companys plants are certified for TS 16949. In addition, the Quality laboratory at
the Company is certified by National Accreditation Board for Testing and Calibration
Laboratories (NABL) for conformance to ISO/IEC 17025.
100% employee participation in the Companys improvement programmes like suggestion
schemes, quality control circle projects, supervisory improvement team projects, cross
functional team projects and task force team projects continued successfully for the 15th
year in succession.
c. Focus on Vendor Development:
The Company continued its vendor development initiative through Visionary Small and
Medium Enterprise programme.
d. Financial performance:
The financial and operational performance of the Company for the year 2015-16, as
compared to the previous year 2014-15, is as follows:
| Particulars |
Year ended 31st March 2016 |
Year ended 31st March 2015 |
|
Rs. in lakhs |
% |
Rs. in lakhs |
% |
| Income: |
|
|
|
|
| Sales |
30,781.08 |
96.93 |
27,375.54 |
97.70 |
| Other Income |
973.75 |
3.07 |
643.71 |
2.30 |
| Total Income |
31,754.83 |
100.00 |
28,019.25 |
100.00 |
| Less: Expenditure |
|
|
|
|
| Raw materials and components consumed |
22,040.22 |
69.41 |
20,824.24 |
74.32 |
| Changes in inventories of finished goods and work-in-process |
(4.44) |
(0.01) |
(119.92) |
(0.43) |
| Staff cost |
3,577.01 |
11.26 |
2,997.85 |
10.70 |
| Stores and tools consumed |
75.03 |
0.24 |
32.40 |
0.12 |
| Power and fuel |
233.83 |
0.74 |
257.21 |
0.92 |
| Repairs and maintenance |
494.50 |
1.56 |
441.13 |
1.57 |
| Carriage outward & Packing expenses |
647.58 |
2.04 |
589.02 |
2.10 |
| Other expenses |
1,706.21 |
5.37 |
1,304.72 |
4.66 |
| Finance costs |
147.95 |
0.47 |
470.99 |
1.68 |
| Depreciation and amortization expenses |
438.76 |
1.38 |
407.78 |
1.46 |
| Total expenditure |
29,356.65 |
92.45 |
27,205.42 |
97.10 |
| Profit before exceptional items and tax |
2,398.18 |
7.55 |
813.83 |
2.90 |
| Add: Exceptional Item (2W business transfer profit) |
447.44 |
1.41 |
– |
– |
| Profit before tax |
2,845.62 |
8.96 |
813.83 |
2.90 |
| Less: Provision for taxation |
|
|
|
|
| - Current tax |
420.00 |
1.32 |
100.00 |
0.36 |
| - Deferred tax |
(292.52) |
(0.92) |
(4.80) |
(0.02) |
| - Tax relating to earlier years |
186.43 |
0.59 |
9.36 |
0.03 |
| Profit after tax |
2,531.71 |
7.97 |
709.27 |
2.53 |
| EBITDA / Turnover % |
|
10.81 |
|
6.04 |
| Profit before tax / Turnover % |
|
8.96 |
|
2.90 |
| Return on capital employed % |
|
47.03 |
|
15.71 |
| Return on net worth % |
|
43.18 |
|
15.39 |
| Earnings per share in Rs. |
|
32.59 |
|
9.13 |
INTERNAL CONTROLS AND THEIR ADEQUACY
The Company has a proper and adequate internal control system to ensure that all the
assets of the Company are safeguarded and protected against any loss and that all the
transactions are properly authorized and recorded. Information provided to management is
reliable and timely and statutory obligations are adhered to.
INTERNAL FINANCIAL CONTROL
The Company has an established internal financial control framework including internal
controls over financial reporting, operating controls and anti-fraud framework. The
framework is reviewed regularly by the management and tested by internal audit team and
presented to the audit committee. Based on the periodical testing, the framework is
strengthened, from time to time, to ensure adequacy and effectiveness of Internal
Financial Controls.
HUMAN RESOURCE DEVELOPMENT
The Company has achieved a good financial performance, through the concerted and
goal-aligned efforts by employees across the hierarchy. The Company places on record its
deep appreciation for the exemplary contribution of the employees at all levels.
The Company continued to induct fresh talent. The Company has upgraded the training
needs identification based on the role requirements and gaps in this identification are
closed by providing training to improve employee competencies. The Companys industrial
relations continue to be cordial.
As of 31st March 2016, the Company had 336 employees on its rolls.
CAUTIONARY STATEMENT
Statements in the management discussion and analysis report describing the Companys
objectives, projections, estimates, expectations may be forward looking statements within
the meaning of applicable Securities Laws and Regulations. Actual results could differ
materially from those expressed and implied. Important factors that could make a
difference to the Companys operations include, among other things, economic conditions
affecting the demand, supply and price conditions in the markets in which the Company
operates, changes in government regulations, tax laws and other statutes and incidental
factors.
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