It gives me great pleasure to reach you through this Annual Report.
During the last year the economy further improved and the GDP growth was 7.6%. TheGovernment has continued its emphasis on promoting manufacturing in India and has madeseveral policy decisions that are designed to increase the flow of foreign investments andtechnology and remove the difficulties in doing business in India. This process iscontinuing and will undoubtedly create conditions for manufacturing in India to becomemore competitive and thus grow at a faster rate. The entire nation will benefit. Therehas been fiscal stability inflation has been under control and the foreign exchangesituation has remained satisfactory. One of the disappointments for Industry was the factthat the GST bill was not passed due to problems in the Rajya Sabha. Industry has beenrepeatedly urging political parties to support all measures that will promote competitivemanufacturing leading to faster growth and more investments and thereby creating morejobs for our young unemployed. There is also a need for a wider understanding of the factthat the private sector has to play the predominant role in growing manufacturing andthat the Government has to be proactive in improving the business environment for industryto grow faster. Criticism of the Government for taking measures required to make thishappen is not only misplaced but will ultimately hurt all of us.
The last year has overall been good for your Company though the industry as a wholehas not done too well. We achieved our target of double digit growth increased our marketshare and profits aer tax went up by 23%. In line with our dividend policy yourBoard has recommended an increase of dividend from Rs. 25 per share to Rs. 35 per share.This performance has been possible because of the quality and capabilities of all ourcolleagues in MSIL. They keep making improvements in all aspects of the Company andovercoming any difficulties or hurdles that arise.
Two new products introduced during the year namely the Baleno and the Brezza haveexceeded our expectations of demand and both have a waiting period of 6-7 months. YourCompany recognises that this is not a happy situation and causes considerable customerunhappiness. While apologising to them I can assure them that both our vendors and weare making all efforts to remedy this situation as early as possible.
When Ayukawa San our Managing Director had taken over as the Managing Director of theCompany over 3 years ago I had posed a challenge to him - reach 2 million production by2020. I had also mentioned this ambition in my talk to you two years ago. I am happy totell you today that the many initiatives taken by your Company suggest that this targetshould be achievable. Expansion of production capacity is obviously a necessary condition.The Gujarat project is on track and we expect to sell cars made there during the currentfinancial year. Suzuki Japan is fully supporting us and this has become possible becauseyou all voted overwhelmingly in favour of their implementing the project and enteringinto a contract manufacturing agreement with us.
The sales and service network is being expanded in a manner that will provide stabilityand comfort to both our dealers and to us. A group of specialists have been employed bythe Company and they have started acquiring land at sites for future expansion of salesservice and spare parts facilities. I am happy to inform you that our network will remainunmatched in India. The NEXA channel in particular has been greatly appreciated bycustomers and will play an important role in our journey first to 2 million cars and thenbeyond.
We continue to strengthen our R&D capabilities and again Suzuki Japan is extendingunstinted cooperation in this task. The Brezza developed substantially in India hasestablished our position in the SUV segment where we were missing till now. We willcontinue to strengthen our position in this growing market. In the premium segment theCiaz has also met with great success and we can say that going forward MSIL will be a keyplayer in this area. Our design engineers along with SMC engineers deserve a great dealof credit for these successes.
The Baleno has not only been a huge success in India but has greatly increased ourability to sell cars in Europe and Japan. Exports have recently started and while it istoo early to speak about the degree of acceptance of the car in these markets I expectexports to play an important role in our growth.
Suzuki San while addressing an ACMA annual conference two years ago had said that Makein India should be Make in India with Quality. We have been emphasising this message toall our suppliers and associates because Quality has to be the key in everything we do.In particular we have launched several initiatives to help all our suppliers attain andmaintain total consistency in the quality of their supplies to MSIL.
During the year the industry has faced one major challenge. Environmentalists themedia and the judiciary are very rightly concerned with improving the air quality in theNCR area and in other parts of India. I can assure them and all of you that we areequally concerned about the dangers posed by our polluted air. However finding thecorrect solution to any problem requires that the root cause of the problem is correctlydiagnosed. This fundamental truth is oen forgotten. We know that in the NCR themajor cause of pollution is dust and PM 2.5 is the most dangerous. In the west dust hasnever been a pollutant of significance but NOX is the main concern. However we seem tobe applying the western remedies for pollution to our problem though the cause isentirely different. The IIT Kanpur has recently done a study of the sources of pollutionin the NCR and found that cars are not a significant contributor to PM 2.5 in the NCR.Yet going by what has been happening cars and especially diesel cars are being treatedas the main villain for our polluted air. Not only are the measures being enforcedunlikely to make any significant difference to the air quality but the growth of theindustry and creation of jobs are likely to be adversely impacted. Investors are losingconfidence and customers are unsure of what to do.
The positive factor is that the Government recognises the dangers of the situation andis taking a firm stand in favour of growth while dealing with the real pollution problem.I do believe that overtime we will do what is really required and the industry as wellas MSIL will lead manufacturing growth in India.
In concluding may I again thank all of you for your steadfast support to the managementof your Company.
R. C. Bhargava