Chairman's Message

Dear Shareholders,

As Indian economy navigated the headwinds of sluggish domestic demand, tepid exports, and food inflation in 2015-16, the automotive sector weathered its own evolutionary turbulence characterized primarily by the upscaling versus customization dilemma. As a result a dull discomfort has been hovering around the upstream automotive components sub-sector.

However, tough times call for tough measures. UNO MINDA looked at these challenges in the eye and took them head-on, combining conventional and innovative approaches. Our comprehensive preparedness helped ride the wave, as the economy picked up in the last quarter of the financial year gone by. We delivered a strong financial performance, increasing shareholder wealth and improving returns for them.

World-class products with innovative designs were propelled by a nationwide multi-layered distribution network to reach new buyers and markets in addition to fulfilling demand from existing customers. The outcome was a 13% year-on-year growth in sales, on consolidated basis.

We did not point our thrust vectors of growth merely at achieving operational excellence but endeavoured to couple it with strategic thinking for financial excellence too.

Increased production capacity, acquisition of Rinder Group, Spain and consolidation of group companies under one umbrella were our prominent initiatives. Gains from these measures served as the icing on the cake for UNO MINDA. Minda Industries Limited (MIL) had a stronger balance sheet at the end of financial year 2015-16, posting a 64% year-on-year bottom-line growth, on consolidated basis.

Our performance review

UNO MINDA believes in enhancing shareholder wealth as a top priority, as we owe our existence to our customers and shareholders. By launching innovative new products at attractive price points, we not only fulfilled the needs and aspirations of customers but also exceeded their expectations.

During the year we reviewed our manufacturing processes and practices, benchmarking them against the best. By doing so, our production teams were able to create shorter production cycles while enhancing product quality. Our proactive sales and distribution team successfully leveraged these manufacturing initiatives to generate quicker cash flows, in the process optimising daily overheads. A strong marketing and distribution push also ensured good price realisation. These synchronized actions strengthened our operational performance, making it possible for us to outperform the market.

Strategic joint ventures, acquisitions and consolidation of sister concerns under the banner of MIL helped build a more sustainable balance sheet. These initiatives positively impacted our financials, accruing value to our shareholders. At the final count, we achieved an EBIDTA margin of 9.4% at the back of our robust sales growth during the year.

Our growth strategy

In our view, the character of a company is defined in two ways- the way it responds to the biggest threats and challenges and the choices it makes when the company is doing well. At UNO MINDA, we shun complacency. We focus on the present and the future, while learning from our past. We continuously strengthen the business drivers at our disposal to maximize profits and be sustainable.

To enhance MIL’s competitiveness in the future, we have ventured into manufacturing many new auto components like alloy wheels, LED lights, Brake/Fuel hoses and blow-moulded parts. At the same time, we shall continue to innovate and improve our current lines of products. This twin focus powers our existing business strategy to move up the value chain by offering differentiated products.

After acquiring Clarton Horn, S.A.U. (Spain) in 2014, we continue to invest in strategic assets abroad. In June 2016, we invested Euro 20~million to acquire Rinder Group of Spain-a pioneer in LED lighting technology for automotive lamps. In addition to the 100% equity in Light Systems and Technical Centre, Spain and Rinder, India, UNO MINDA holds a 50% equity in Rinder Riducu, Colombia. The Rinder acquisition will establish MIL as a technology leader and increase its market share in automotive lighting solutions. The technology centre in Spain will help build global competitive capabilities through R&D. You will be glad to know that this deal is being funded from internal accruals and debt.

UNO MINDA continued capacity expansion of its existing facilities and consolidation and restructuring of the group companies to align with the long-term goals. In the ensuing years, we expect to share with you benefits accruing from this expansion within the Indian auto components sector.

Any growth strategy is incomplete without a people plan. Minda Industries Limited is committed to nurturing leaders of tomorrow, by hand-picking the most promising from its existing talent pool and coaching them to create a succession roadmap. The unique leadership programme in partnership with the HAY group has extensive training modules to groom our next generation leaders.

Outlook

The trust reposed in the UNO MINDA brand of products by our discerning customers has converted the efforts made by our various teams into a great performance for the company in financial year 2015-16. We believe that we need to leverage our capabilities and competitive advantages to maximise returns for our shareholders, as business environment continues to improve in the coming years.

A business friendly government in a stable socio-political and socio-economic environment is an ideal enabler for the economy to move into a higher gear. There is also an all-round realization that industrial growth will catalyse economic progress for the masses. The ‘Make in India’ initiative is extremely relevant for manufacturing companies like ours.

Specific initiatives like Automotive Mission Plan (AMP) 2016- 26 are expected to give a boost to automotive and automotive components industries. The National Electric Mobility Mission Plan (NEMMP) 2020 encourages all stakeholders to move to an environment-friendly mode of mobility. This new paradigm will also open new doors of opportunity for UNO MINDA that we are watching out for.

Macroeconomic factors such as an expanding and growing middle class, increasing capacities of OEMs and entry and expansion of global automobile players are expected to drive up demand leading to sustainable growth for the automotive components industry in the coming years. At UNO MINDA we are striving to be distinct-revving up to deliver greater torque to the drivers of our business growth, as the external roadblocks clear away. We wish to achieve growth upholding our values that have stood MIL in good stead over the years. We shall continue to experiment with new ideas, improve continuously and take calculated risks to add value to the business, in the process ensuring optimum outcomes for all our stakeholders. We shall continue to bravely face challenges and prioritise growth opportunities. At MIL, we expect that our attitude and approach will enable the company to sustain its revenue momentum, enhance margins and create value for all stakeholders.

For us 2015-16 was not ordinary, but a year in which UNO MINDA shifted gears towards consolidation and transformation. We thank our shareholders for their continued faith in our ability to deliver.

Regards
Nirmal K. Minda
Chairman and Managing Director