Excerpts from the speech delivered by Mr. M. Lakshminarayan, Chairman, at the 9th AGM of WABCO India Ltd.
India’s GDP growth in real terms for 2012-13 stood at 5% as against 6.2% in 2011-12. This was the lowest growth in GDP witnessed in the last one decade. There was an all-round decline in the growth of all the sectors. Agriculture declined from 3.6% to 1.7%, industry from 3.5% to 2.4% and services declined from 8.2% to 6.9%. The index of industrial production (IIP) registered a cumulative growth of 1% in 2012-13 as compared to 2.9% growth during the corresponding period of the previous year.
The commercial vehicle industry declined by 3% in 2012-13 compared to the previous year with the sales volume in the Medium and Heavy Commercial Vehicle (MHCV) dropping by 24%.
Performance
In this background, Wabco India’s turnover for the year under review was Rs. 978 crores as against Rs. 1,057 crores in 2011-12, a decrease of 7.5%. As you are aware, the company had four plants (viz., Chennai (Ambattur), Jamshedpur, Pantnagar and Plant – 1 at Mahindra World City SEZ near Chennai) during 2011-12. I am glad to share with you that two new plants, viz., Plant-2 at Mahindra World City SEZ near Chennai and Barabanki near Lucknow, were added during the year. Sales in the OE segment were lower by 23.6% compared to 2011-12. The company outperformed M&HCV market growth in OE through increased content per vehicle and increased market share. The company also benefited by the good increase in sales of spares and significantly higher exports sales to the parent company WABCO.
In the spares segment, sales increased from Rs. 145 crores to Rs. 169 crores, an increase of 16.6%, and in the export segment, sales grew from Rs. 148 crores to Rs. 199 crores, an increase of 34.4%.
Profit after tax stood at Rs. 130 crores in 2012-13 as against Rs. 153 crores in 2011-12, registering a fall of 15%. The earnings per share declined to Rs. 68.95 in 2012-13 from Rs. 80.87 in 2011-12.
At the global level WABCO continued to make a significant contribution to technology and business operations. During 2012, it outperformed the global market, achieving sales of $2.5 billion. It also continued to successfully implement its core strategies of technology leadership, globalisation and excellence in execution.
Despite fall in profits, the Board of Directors has recommended maintaining the dividend of Rs. 5 per share (100%) for the year ended March 31, 2013.
New product development
The company continued its focus on introduction of new products to Indian OEMs during the year 2012-13. Some of them are adjusting valve, exhaust brake assembly (EBA) for a different vehicle platform, new clutch servo variants, automated manual transmission (AMT), different series of brake chambers and variants in compressors.
The company continues to strengthen its product development to design and develop products for global markets.
As regards employee involvement, the company has maintained 100% participation in Total Employee Involvement (TEI) activities since its inception. Employees have completed more than 222 projects by applying statistical tools through QC circles in 2012-13. During 2012-13, the average number of suggestions implemented per employee stood at 61, which is close to the international benchmark.
Needless to say, the company continued its thrust on Total Quality Management (TQM) for enhancing customer satisfaction. Total Productive Maintenance (TPM) and Lean Manufacturing Concepts are being implemented to improve productivity leading to better business results.
Awards
I am happy to say that during the year the company has won the following awards:
* “Best kaizen” Award and “Outstanding support through Co-location” from Ashok Leyland Ltd.
* “Safety Appreciation Award” from the National Safety Council, Tamilnadu Chapter
* “Best efforts in value engineering and cost reduction” Award from MAN
* “Outstanding contribution to new product development award” from VECV
* “Best Poke Yoke” – Certificate of Appreciation from Mahindra & Mahindra
* EHS Excellence Award from CII
Outlook for current year
The economic outlook in terms of GDP for 2013-14 is expected to be in the range of 5.7-6.9% as estimated by various rating agencies and government bodies. CMIE has estimated the real GDP growth at 6.3% in 2013-14; the recovery in 2013-14 would be mainly driven by the industrial sector which is expected to grow by 4.2% compared to 2.1% in 2012-13. The agriculture sector is expected to grow at 2.3% as compared to 1.9% in 2012-13 and the growth in the services sector is expected to be at 8% compared to 7.1% in 2012-13.
Production of commercial vehicles with air brakes fell steeply by 34% during the last quarter of 2012-13 compared to the corresponding quarter in the previous year. Further, there is a drop of 10% in air brake vehicle production in the first quarter of 2013-14. This is due to continuing adverse economic conditions and inflation. The demand for commercial vehicles is expected to continue at the same level.
For the quarter ended June 30, 2013, the company reported a sales and other operating income of Rs. 262.81 crores as against Rs. 249.29 crores for the corresponding quarter in the previous financial year. Profit after tax stood at Rs. 35.38 crores for the quarter ended June 30, 2013, compared to Rs. 41.83 crores for the corresponding quarter in the previous financial year.
Change in holding company
Pursuant to an internal re-structuring, Clayton Dewandre Holdings Ltd., Rotterdam, Netherlands, transferred its entire shareholding in the company to its wholly-owned subsidiary, WABCO Asia Private Ltd., Singapore, on June 27, 2013. Consequently, WABCO India Ltd. became a subsidiary of WABCO Asia Private Ltd. with effect from June 27. I would like to thank the erstwhile promoter Clayton Dewandre Holdings Ltd. for its continued support to the business.
The employees merit special appreciation for their continued commitment to the company by maintaining a good performance in the challenging environment during the year. I would like to thank the Governments of Tamil Nadu, Jharkhand, Uttarakhand and Uttar Pradesh for all the support extended by them to our operations.