MD's Desk

Indian industry is passing through challenging and exciting times. New products are replacing traditional ones. Multinational companies are setting up base, while small local entrepreneurs are challenging established players. Within the last decade, there has been a transformation in how business is done in India. Many companies that have failed to change have suffered, as products have disappeared from shop shelves, giving way to the demands of new lifestyles.

Fortunately, your company has overcome the challenges by adapting to changes over the years. It has not only survived declining markets in traditional lines such as caps and closures, it has today emerged as a significant player in value added metals. We have added fresh capacity each year with new and upgraded plants in India and Africa.

We have innovated to bring in new product such as colour coated aluminum sheets. As a result we are today truly confident of finding a place in the future.

Naturally, this process of adaptation has called for considerable investments, and will no doubt call for more from time to time. However I am convinced that your company stands at a moment of history, where it is poised to make a transition into the bigger league. Our focus areas in metals feed a variety of growth industries ranging from automobiles to white goods and housing. In emerging markets such as India and Africa, our growth is now inextricably linked with the growth of the economy. We are no longer dependent on the fortunes of niche products with individual life cycles.

Another reason for optimistic business outlook is the fact that our engineering skills are no longer limited to a single product category. Even five years ago we were known mainly for making crown caps, bottle tops and metal containers. Today we present a diversified profile, backed by multi-location production capability.

The results of the current year should be seen in the context of this process of change. Although some traditional lines have plateaued, the metals division has surged, raising its contribution substantially in the total turnover. The fact that net profit is reported to be lower than the previous year may cause some pain, but it is the pain of a caterpillar turning into a butterfly.

In a certain sense the pain is illusory. Investments have raised depreciation and interest charges by over 50%- a short term sacrifice for long term gains. The principal concern for the year under review was the sustained rise in the cost of raw materials. With base metal prices spiraling internationally, it was a difficult year for secondary producers and your company was no exception. However, prices have corrected since, substantially easing the concerns.

Numbers can tell only part of the story. I believe that the real story of your company this year is not in annual profit or dividend figures, but in added capacities, new technologies and fresh markets. It is in the growing reputation for engineering excellence and roster of prestigious clients. It is a story of the future uncoiling.

B.K. Agrawal
MD