30TH SEPTEMBER, 2005
Good morning dear Members.
Let me extend you a very warm welcome to this 21 st Annual General Meeting of the Company. This AGM is of particular significance. As you would have read from the Directors Report, during the last 4 months, a major change in the shareholding structure of the Company has taken place. Sumitomo Corporation, a joint venture partner since October, 1984 with Mazda Motor Corporation and Punjab Tractors Ltd. in the Swaraj Mazda Light Commercial Vehicle project, has become the single largest shareholder of the Company with an equity holding of 41.03% following its acquisition of nearly 15% of equity from Punjab Tractors and the entire 15.6% holding of Mazda Motor Corporation. To my mind, this structural realignment in ownership pattern, particularly after exit of the Punjab Government from Punjab Tractors, is a development with huge positives in its wings in terms of corporate stability that has already unfolded a new phase, offering vast opportunities for business growth. I am sure, Members would join me in welcoming Sumitomo Corporation in the new avtar.
I further take this opportunity to extend a personal welcome to the four distinguished executives from Sumitomo Corporation, Japan who have taken the trouble of travelling all the way for being with us today and are adorning the dais.
Members would forgive me for being somewhat sentimental at this occasion for yet another reason. Mazda’s withdrawal from the Company because of their discontinuation of the commercial vehicle business does make us sad, not for commercial reasons but for the quality of relationship that we have enjoyed for two decades and which has now got snapped in the conventional sense. In this connection, I like to draw Members’ kind attention to Mazda’s letter dated 11 th August, 2005 substantially reproduced in the Directors Report, which adequately captures the depth of the bond between the three partners. On behalf of the Members, the Company’s Board of Directors and on my own, I wish to place on record our profound thanks to Mazda Motor Corporation who have stood by the Company over the long stretch of 20 years, a phase that includes several agonizing years. We also appreciate Mazda’s assurance on supporting the Company through supply of CKD parts.
On a personal note too, this AGM is of significance to me as I am privileged to address Members today in my new capacity as the Non-executive Chairman of the Company, an honour that the Board of Directors placed on me in June. Members have my assurance that I will put in my best endeavours for the progress and prosperity of the Company.
PERFORMANCE REVIEW
The Notice convening the Meeting, the Report of the Directors and the Audited Accounts for the year ended 31 st March, 2005 have been with you for some time. With your permission, I shall take them as read.
As Members would have seen, during financial 2004-05 the Company registered growth in volumes, revenue and profit :
In the comparable 5-10 Ton GVW range, a market size of 103,000 vehicles, SML share was 12%. However, SML’s market share in the related passenger segment was higher at 19% which reflects the distinct customer preference for Swaraj Mazda Buses.
Members would be happy to learn that while 55% of vehicle sales has come through models / variants introduced during the last 4-5 years, some 37% has come from dealers appointed during the same period.
Fiscal 2004-05 also saw the introduction of 9.8 Ton GVW ‘Samrat’ model developed in-house to an encouraging customer response.
Another development of import was the achievement of Bharat Stage III compliance (equal to Euro III), raising in the process the power of the engine from 80 to 100 bhp.
Increase in the earning per share to Rs.23.1 (Last Year Rs.20.0) stands reflected in the stepped up dividend rate of 75%, which I am sure is welcome to all Members. It is pertinent to add that since year 2000 which ushered in a phase of giving returns to equity stakeholders with a maiden dividend at the rate of 10%, subsequent payouts have grown at an average compound annual rate of 50%.
CURRENT YEAR
I wish to inform that April-August, 2005 volumes at 4889 vehicles (comparable range market share 12.3%) have shown marginal improvement over corresponding previous year level. Run away diesel price situation, new emission regulation as also introduction of VAT has affected production and sale of commercial vehicles during the first half. However, with continuing strength in industrial and service sectors and envisaged improvement in agri-output, second half of fiscal 2005-06 is likely to post stronger growth.
OUTLOOK
Placing confidence in the expected upsurge in Indian Economy generally, in Transport segment in particular which will raise demand for commercial vehicles in a significant manner in coming years, many initiatives taken by the Company towards widening of product range have already started assuming healthy shape and contours. Action plans have also been drawn for capacity expansion, in-house manufacture of bus and cargo bodies and strengthening of R&D resources to address both product and regulatory needs like Euro IV. Alongside, expansion of dealer network and augmentation of service outreach is being handled on top priority. In short, the calendar for the operating team is full of activities directed towards aforesaid priorities.
It is my belief that the above steps which reflect Company’s commitment to offer quality products with distinctive features at reasonable prices will go a long way in further enlarging SML’s capabilities to address an ever-widening range of customer needs.
ACKNOWLEDGEMENTS
On behalf of the Board of Directors and on my own behalf, I take this opportunity to convey our sincere thanks to the authorities in the Central and State Government, Bankers, Financial Institutions and Finance Companies who have supported SML operations.
To those we are privileged to serve – our customers, investors and the society – I wish to convey our gratitude for their continued support. A word of appreciation is also due to our responsive business associates. I am sure all of you will join me in recognising the contributions of the dedicated cadre of SML employees.
May I now commend for your consideration and adoption, the Directors’ Report and Accounts for the year ended 31 st March, 2005.
(S.K. TUTEJA)
Note : This does not purport to be a record of the proceedings of the Annual
General Meeting.