The year 2018-19 has seen several important developments happeningwithin the Company. apart from seeing a good traction in the new camshafts and machinedcamshafts business our three acquired companies have successfully integrated within ourbusiness ecosystem. our annual report's theme this year revolves around thistransformation and the synergic benefits that the Company stands to achieve. thus makingit distinct and diverse' in its space.
The External Scenario
The 6.8% gdp in 2018-19 was almost flat as compared to last year owingto an overall slowdown in the business sentiments across the globe. The global tradetensions combined with a slowdown across economies amidst uncertainties coupled withhigher oil prices and rupee depreciation decelerated the overall momentum. despite thatindia continues to be recognised among the fastest growing economies' today.The indian automotive industry also had its own set of challenges in the form of risingprices and regulatory changes. While the vehicle production grew around 6% there was asignificant decline in overall sales volume. The Government is aggressively promoting theadoption of electric mobility. Apart from providing tax incentives to the electric vehiclebuyers the centre has announced an outlay of 10000 Crores for phase II of the FasterAdoption and Manufacturing of Hybrid and Electric Vehicles (FAME 2) scheme with anobjective of increasing the number of electric vehicles in the commercial fleet.
Even since our inception we have always focussed on strengthening ourcapabilities and building on our capacities. Our global leadership in the camshaftindustry reflects our dedication and commitment towards our vision. Today we are one ofthe few companies to manufacture all types of Camshafts cast iron ductile ironhybrid and assembled. We supply over 150 variants of camshaft to cater to wide range ofcustomers across passenger vehicle light heavy commercial vehicle tractors andlocomotive engine application. Post expansions our foundries have the capacities toproduce up to 9 million camshafts castings annually while the machine shops have thecapacities to produce up to 3 million camshafts annually. We enjoy ~ 70% domestic marketshare and ~ 9% global market share in the passenger vehicle segment.
Growing with Distinct and Diverse' Opportunities
The three strategic acquisitions have given us a distinct edge ofdiversifying our product offerings leveraging synergies of cross selling expanding ourreach and building a strong client base. Consider the strengths of these threeacquisitions:
MEMCO produces fuel injection components for conventional &CRDi diesel engines and high precision instrumentation components. It has long standingrelationships with marquee global customers like Bosch Delphi Endress+Hauser and Giro.
MFT produces several machined components like balancer shaftscamshafts bearing caps engine brackets and several non-engine prismatic components. Itis one of the leading suppliers to Global OEMs like Audi VW BMW etc.
EMOSS is into electric mobility for commercial vehicles. Itsbusiness model includes converting diesel trucks into ready- to-use electric trucks andalso providing ready to assemble kits to OEMs.
In a short period we have added Bosch as a customer at MFT which hasbeen the largest customer of MEMCO. We are continuously exploring opportunities to crosssell products to the group customers.
The collaboration and consolidation of the newly acquired entities in2018-19 have strengthened PCL's long-term prospects to leverage the industry rebound.
At PCL we have on-boarded several international experts that work atour engineering centres to create transformational outcomes. Our 300+ engineersdedicatedly deliver product lines as per the shifting automobile landscape and generatethe most efficient solution. We use the best software at our workstation and manufacturingsystem to meet customer requirements thus making us a partner by choice. Our consistentfocus on quality delivery and cost further strengthens our readiness for the future.
Financial Performance Snapshot
Our financial performance in FY 2018-19 showed a remarkable growth inperformance. The following are the key highlights of the year:
Total revenue from operations increased 5.78% to र 424 Crores inFY 2018-19 from र 401 Crores in the previous year
The Export business contributed 55.5% towards the total revenuewhile the domestic business contributed for the rest
The share of Revenue from machined camshaft increased from 22.8%in FY 2017-18 to 28% in FY 2018-19 an intended shift to strengthen margins
EBITDA increased 14% from र 101 Crores in FY 2017-18 as comparedto र 116 Crores in FY 2018-19. EBITDA margin also increased by 240 bps to 26.2% from 23.8%in FY 2017-18
Profit after tax (PAT) grew 23.46% to र 43 Crores in FY 2018-19from र 35 Crores in FY 2017-18
Return on capital employed (ROCE) increased by 1.05% from 9.95%in FY 2017-18 to 11% in FY 2018-19
The growth of the acquired companies was also encouraging.MEMCO's revenues increased by 38.23% to र 47 Crores in FY 2018-19 from र 34 Crores inFY 2017-18. The contribution of Emoss Revenue was र 72 Crores in FY 2018-19. The revenueof MFT was flattish which stood at र 158 Crores
PCL's support for investment in the Group Companies hasallowed them to grow in the very first year of acquisition
We believe turnarounds are not only carried forward by strategiesfinancial restructuring or value propositions. They are delivered by people. At PCL ourpeople drive our success and form the DNA of the Company. I want to thank them for theirdedication commitment and hard work. Together we will achieve more and aim for largerstrides ahead.
Key Priorities for the Coming Years
We have created a niche identity for ourselves today by broad-basingour product offerings enhancing reach and investing in our competencies. Our keypriorities going ahead include:
Increasing focus on the sale of machined camshafts to enjoy higherrealisations
Ramping up production volumes from the newly commissionedMachine Shop at Solapur
Strengthening returns on capital employed through efficientlydeploying resources
Deriving maximum benefits from the Group synergy
Ramping up volumes at group companies.
Possible introduction of EMOSS technology in India
This will lead to delivering a positive change and further making usfuture-ready for a sustainable growth.
On behalf of PCL Management and employees I thank you ourshareholders for your continued support. Thank you for the confidence you have placed inus with your investments. We being a shareholder-oriented company are never satisfiedwith our result and we always yearn for more. I would also like to extend myacknowledgement to all our stakeholders including suppliers business partners and localcommunities as we seek to enhance our corporate value through sound ethical andresponsible business practices. I am confident that we are on the right path to drivegrowth and create corporate value as well as realise our vision of being a global leaderin the camshaft industry.
Yatin S. Shah
Chairman & Managing Director