28 Jul 2017 :Chairmans Speech at the 26th AGM
CHAIRMAN’S ADDRESS TO THE MEMBERS OF
ASTRA MICROWAVE PRODUCTS LIMITED
At The Twenty Sixth Annual General Meeting Held
Swagath-De-Royal Hotel, 2-36, Kothaguda X Roads, Kondapur, Hyderabad on Friday, the 28th July, 2017 at 11.00 A.M
Ladies and Gentlemen,
On behalf of all of us here, it gives me great pleasure to extend a warm and hearty welcome to you all to the 26th Annual General Meeting of your Company. I also take this opportunity to thank you on my behalf and on behalf of Board of Directors of your Company for your interest and your presence here today.
Results of Operations:
Your Company performed credibly during the year despite challenges. Substitution of high volume low margin export business with domestic business which is largely project driven and hence prone to unevenness is a major challenge which the company is presently facing. This is the major reason for flatness in performance over the last two years. However, we are confident to come over this in the coming years and start recording growth again.
India has the third largest military in the world. It is also the world’s largest importer of weapons. India’s defense budget is nearly $40 billion for the fiscal year ending March 2016. Over the next decade, it is projected that India will spend $100 billion on military modernization.
Between 2006 and 2010, India surpassed China as the world’s largest importer of weapons systems, reflecting the nation’s intent to modernise its armed forces and replace obsolete equipment.
Defence procurement is governed by the Defence Procurement Procedure (DPP). The new DPP is expected to push ‘Make in India’ initiative. To provide a greater thrust to the ‘Make in India’ initiative in defence production, DPP-2016 has introduced a new procurement category, Buy (Indian–Indigenously Designed, Developed and Manufactured), or ‘Buy (Indian – IDDM)’. Under the new category, indigenously designed equipment with 40 per cent indigenous content (IC), or equipment not necessarily designed in-house but having a 60 per cent IC, is intended for procurement from the local industry. The intent is clearly to promote in-house design capacity and higher localisation, two critical aspects, which, if implemented in the right spirit, could deepen the role of domestic industry, especially the private sector, in defence production. However, indigenization is going to be slow and incremental process.
Your Company which is in the industry for the last 26 years has established credibility and track record of reliable supplier for Key Defence and Space Programmes. These programmes include Battle Field Surveillance Radar, Medium Power Radar, Central Acquisition Radar, Aslesha Radar, Akash Missile, Radar Imaging Satellite etc., As the Government emphasizes on indigenous defense capabilities and gives impetus to the Make in India initiative, companies with a strong technology background and proven track record are bound to have a strong case for further growth.
Your company is poised to leverage growth in the sub-system and component market as an important supplier of critical products to DRDO and DPSU’s. Your company is also well positioned to move up the value chain as its development efforts to build small systems like Precision Approach Radar, Bird Detection Radar, Weapon Location Radar etc., have reached critical phase.
On a cumulative basis Your company has a potential to book close to Rs.2,000 cr of orders in the next three years with a good mix of domestic and export business. However, as indicated elsewhere in the annual report, the market is project driven and hence unevenness in order and business flow is something with which we have to live with.
The company has no major expansion plans for the year other than completion of existing capital works at Bangalore R&D center which was estimated to cost Rs.62 cr overall. The Company has already spent close to Rs.37 cr on the project and is expected to complete by Sept’17. The Funds required for the same are being used from the funds raised under QIP during FY 15-16.
To augment existing operations, the company is expected to spend about Rs.5 cr during the year and the same will be funded by internal accruals.
I would like to conclude by saying we had a good year, and the coming years are going to be more promising.
Before I conclude, would like to place on record commendable service and professionalism extended by M/s. Amar and Raju, statutory auditors of your Company for the last 26 years who will retire permanently at the conclusion of this AGM.
If you have any questions, we will be glad to answer them after Presentation of Statutory Auditors report.
(Dr. Shiban K Koul)