LUMAX TECH Chairmans Speech

Dear Shareholders,


The year 2016 was an eventful year across the globe marked with several unpredictable developments. The political disturbances in the Middle East, the Presidential elections in the USA and Brexit phenomenon contributed to heightened volatility across the global markets driven by worries of rising inward-looking policies.


Back in India, the scenario was much better as we witnessed one of the most momentous events in years, i.e. demonetization that led to temporary disruptions in market and decline in consumption triggered by abrupt fund crunch. However, its impact in the long run is likely to be beneficial with massive amount of idle funds getting channelized into the system and the country maturing towards digitalization and cashless transactions. The robust macro-economic fundamentals and much-needed political stability in the country are apt to facilitate business growth and infrastructural development. The inflation is stable and repo rate is at multiple years low. On the whole, the country is attractively placed on the global maps and the likely implementation of the much-awaited Goods and Services Tax (GST) would further improve the scenario.


The automobile industry, which is in the middle of transformation, driven by new regulatory norms and evolving consumer requirement, witnessed a moderate performance. Though, the industry witnessed revival in rural demand, it was more or less negated by the setbacks from demonetization in the last two quarters. In spite of this, the outlook for the industry remains positive on the back of favourable demographics, low vehicle density, rising roads and highways network, and surge in affluent population.


Performance review 2016-17


In the midst of all this, the Company witnessed some jerks in its two-wheeler and aftermarket businesses that led to a decline in the performance of the standalone business. Nevertheless, the might brought to the organization through a combination of various subsidiaries and joint ventures is what protected us at consolidated levels. On a consolidated level, the Company''''s top line grew 11.84% to Rs. 10,123 mn, while EBITDA and PAT grew 14.52% and 12.49% respectively to Rs. 864 mn and Rs. 384.37 mn respectively. The fact, that we added several new customers and product lines during the year, makes this growth even more exciting. Relatively newer technologies of auto transmission gear and electric shift by wire, have found good traction among end users much to the satisfaction of the OEMs. During the year, we undertook a strategic decision of closing down a unit in Aurangabad, which was running on losses due to lack of significant order from the customer. The said plant was closed by the Company after completion of all applicable formalities including payment of all prescribed statutory dues and compensation as per the law. We have sold off a bulbs and wire manufacturing plant at Kala-Amb, Himachal Pradesh on slump-sale basis owing to its insignificant contribution to the growth of aftermarket division.


Going forward, the implementation of GST and BS-VI emission norms would turn the tables in the Company''''s favour. GST would enable us to compete with unorganized players in the aftermarket segment driven by cost reductions achieved from tax credit benefits. While the BS-VI emission norms that would require OEMs to undertake significant modifications in design, it will pose significant opportunity for us, owing to our JV with Cornaglia, to meet the changing emission norms.


Strategic initiatives


With the industry scenario getting more facilitative for us, we are leaving no stone unturned by undertaking a series of initiatives to enhance operational efficiencies, reduce costs, enhance quality control measures, and strengthen relations with customers and suppliers. Our key strategies for the coming years shall be:


- Focus on widening product lines and increasing customer base by identifying key areas of technology gaps where we can deliver requirements of the customers


- Explore opportunities in the areas of sensor technology, telemetric and fleet management, which shall be the key business drivers in the coming years


- Leverage the robustness of our business model that has enabled reduction in debt and maximization of cash flows to explore opportunities for technical collaboration and capacity enhancement


- Enhance proportion of automation at plants for higher operational efficiencies and cost reduction


- Take customer-centricity to higher levels through regular interaction and review mechanism with the senior level management to understand areas of improvement and requirements and make them aware of our product offerings


- Upgrading to tier I supplier in the seat frames and mechanism segment


Message to the stakeholders


On behalf of the Board, we take the opportunity to thank all our stakeholders, the bankers, suppliers, customers, shareholders and investor community for their continued support to us. We believe that as an organization we have lived up to your expectations during all these years, taking the Company to newer heights and making it a partner of choice for several leading OEMs.


In the last 10 years since our listing, the price of Company''''s shares have grown six times from Rs. 75 in 2007 to Rs. 450 as on March 31, 2017. In addition to this capital appreciation, we have even provided average annual returns of 44% in the form of dividends. We would like to assure you that your Company is continuously working towards betterment and expect that the coming years would be more rewarding. We would also like to thank our employees whose concerted efforts have brought us here. We are prepared, as an organization to take on challenges and build a greater organization.


Warm regards,


D. K. Jain Anmol Jain Deepak Jain


Chairman Managing Director Director




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