BRAND GABRIELGABRIEL INDIA LIMITED ANNUAL REPORT 2014/15 A RESURGENT INDIA RIDES BRAND GABRIEL. A COMPANY THAT DEFINES ITS INDUSTRY SPACE. A COMPANY THAT MEANS ASSURANCES FULFILLED. A COMPANY THAT IS A ‘Great Place to WORK®’. A COMPANY THAT REPRESENTS A SAFE ASSET CLASS. CONTENTS 12 CORPORATE IDENTITY 14 THIS IS WHAT WE ACHIEVED IN A CHALLENGING 2014-15 16 chairPerson’s review 18 ManaGinG Director’s review 20 AN ICONIC BRAND 22 STRATEGIC BUSINESS UNITS 29 RISK MANAGEMENT 31 CORPORATE SOCIAL RESPONSIBILITY 35 BOARD OF DIRECTORS 36 FINANCIAL HIGHLIGHTS 37 WORKING RESULTS AT A GLANCE 38 NOTICE 48 REPORT OF BOARD OF DIRECTORS 79 REPORT ON CORPORATE GOVERNANCE 97 MANAGEMENT DISCUSSION AND ANALYSIS REPORT 102 auDitor’s rePort 106 BALANCE SHEET 107 STATEMENT OF PROFIT & LOSS 108 CASH FLOW STATEMENT 110 SCHEDULES TO BALANCE SHEET 136 ceo/cFo’S CERTIFICATE IN A CHALLENGING 2014-15, inDia’s AUTOMOTIVE SECTOR GREW 7.2%; GABRIEL REVENUES GREW 12.08% AND PROFIT AFTER TAX STRENGTHENED 40.90%. Industry outperformance improved capital efficiency 7.2% 12.08% 18% 25.5% Automotive sector Gabriel revenue ROCE, 2013-14 ROCE, 2014-15 growth in 2014-15 growth, 2014-15 THIS IS WHAT YOU SEE WHEN YOU APPRAISE... Better expense Rising margins control % % % % 7.1 8.3 13.7 12.3 EBITDA margin, EBITDA margin, Expenditure as a Expenditure as a 2013-14 2014-15 percentage of net percentage of net sales, 2013-14 sales, 2014-15 02 GABRIEL INDIA LIMITED BRAND GABRIEL ANNUAL REPORT 2014/15 CORPORATE MANAGEMENT FINANCIAL OVERVIEW 01 REPORTS 36 STATEMENTS 101 stronger organisational efficiency Better working capital management 10.9 12.7 Inventory turns (x), Inventory turns (x), 27 22 2013-14 2014-15 Net working Net working capital capital (days), (days), 2013-14 2014-15 Lower gearing Better shareholder returns 0.23 0.04 4,252 12,353 Debt-equity ratio, Debt-equity ratio, Market capitalisation Market capitalisation 2013-14 2014-15 (H/mn), March 31, 2014 (H/mn), March 31, 2015 03 BRAND GABRIEL An enduringly successful Gabriel is synonymous with At Gabriel, this enduring success transpired brand does not only stand shock absorbers. for a number of reasons. proxy for its company; it stands as a recall for its The result is that when OEMs need to Gabriel leveraged a rich multi-decade entire industry. select a shock absorber for their upcoming experience to design what ride control models, the first choice is Gabriel. When products needed across vehicles, uses, Gabriel is one such brand, a multinational automobile brand, with terrains and automobile structures. having progressively demanding quality standards, enters India, evolved from a specific Gabriel made proactive investments in the first company shortlisted for shock indication to a generic product development over the last five absorber design, development and delivery reference. years. is Gabriel. When an aftermarket customer ventures to seek a shock absorber Gabriel kept pushing the frontier; for replacement, the first request is ‘Please, instance, the Company pioneered the give me a Gabriel only.’ launch of multiple superior ride control products in India across the last decade. There is but one reason why Gabriel has reinforced its multi-decade industry Gabriel created the widest shock absorber leadership position. The Company has portfolio in India – a fit for every vehicle on navigated product development beyond the Indian roads – making it the first stop for immediate requirements of the day. any multinational automotive OEM intending to enter the country. The result is that Gabriel has always focused on providing tomorrow’s products Gabriel’s ability to stay ahead of the today. This has been reflected across some industry curve is reflected in its industry of the most decisive periods in the country’s outperformance. In 2014-15, the Indian automobile history – from the protected automobile industry grew 7.2%; Gabriel pre-liberalisation age to a post-liberalisation grew revenues 12.08%. multinational competition era. Automobile The message of the story: even as Gabriel brands changed; their requirements addressed the needs of today, it focused evolved; the ride control brand remained on the trends of tomorrow; Gabriel moved constant. faster even as it turned older. GABRIEL DEFINES THE VERY SECTOR OF ITS PRESEN04 CE. GABRIEL INDIA LIMITED BRAND GABRIEL ANNUAL REPORT 2014/15 CORPORATE MANAGEMENT FINANCIAL OVERVIEW 01 REPORTS 36 STATEMENTS 101 Even as Gabriel addressed the needs of today, it focused on the trends of tomorrow; Gabriel moved faster even as it turned older. 05 BRAND GABRIEL the number of Gabriel’s institutional customers has progressively increased, as have the shares of business from the customers. 06 GABRIEL INDIA LIMITED BRAND GABRIEL ANNUAL REPORT 2014/15 CORPORATE MANAGEMENT FINANCIAL OVERVIEW 01 REPORTS 36 STATEMENTS 101 The sign of a successful Gabriel means ‘assurances Gabriel took a decisive step through brand is not a logo or a fulfilled’. the creation of a Central Technical tagline; it is a customer’s Services team to design and assemble Over the years, Gabriel has consistently peace of mind. special purpose machines customised reinforced this commitment through the In a business where around global technologies and Indian following initiatives: industry needs keep requirements. evolving all the time Gabriel entered into business- Gabriel invested in best-in-class facilities – smoothness, safety, strengthening collaborations with global and automation, making it possible to lightness, robustness, giants like KYB Corporation (Japan), KYBSE manufacture one shock absorber every cost and environment- (Spain), Yamaha Motor Hydraulic Systems friendliness – success is second. (Japan) and KONI BV, the Netherlands, derived from the ability resulting in the most contemporary The result is that the number of Gabriel’s to address diverse technology standards. These collaborations institutional customers has progressively demanding customer increased, as have the shares of business requirements. have empowered Gabriel to provide futuristic products to global OEMs in India. from the customers. Over the decades, Gabriel strengthened its customer Gabriel offers superior products and value- This has not only helped Gabriel sustain a orientation with a singular added engineering services by working with six-year CAGR revenue growth at 16%; the focus. The Company made OEMs from the vehicle development stage, Company enjoys a sizeable market share proactive investments resulting in higher product acceptability in the commercial vehicles segment, one in agreements with and faster vehicle development. of the most challenging in the country’s technology majors. The automotive sector. The Company also provides value-added services result is that Gabriel’s Gabriel enjoys substantial market share in the products are benchmarked in the area of noise measurement, value passenger car, two and three-wheeler and not just with prevailing engineering, cost reduction through product aftermarket segments. Indian standards; they are localisation as well as a cutting-edge facility benchmarked with some of to conduct ride-tuning exercises through the highest in the world. custom-built mobile ride-tuning vans. Most automobile OEMs in india fit their vehicles with Gabriel’s ride control products, generating an overarching brand recall. GABRIEL MEANS ASSURANCES FULFILLED. 07 BRAND GABRIEL The appeal of a great brand lies Gabriel stands for rich Gabriel’s institutionalised growth plan in the ‘smell’ of the place where knowledge capital. (Engineer’s Pipeline) provides employees the product is made. The sign of with the opportunity to gain knowledge Over the years, Gabriel has strengthened a distinctive company is not as across critical domains (production, its people commitment through the much in its products as it is in its product and process engineering, passion. following initiatives: maintenance, quality, supply chain, IT, Gabriel is a company driven Gabriel enhanced people productivity human resource, administration and by passion. This passion has through strategic business units finance). been reflected in a newer way (addressing segments like commercial Gabriel recognised employees through the of doing things. In doing better vehicle, passenger cars, two and three- than one has done in the past. MD’s Flash Programme, motivating them to wheelers and aftermarket). In doing better than anyone has achieve above and beyond the call of duty. ever done. Gabriel invested in training in contemporary The result is that Gabriel India has been techniques (Lean, Kaizen, Six Sigma Gabriel’s passion epitomises a selected as a ‘Great Place to Work’, and 5S) strengthening technical and fundamental respect for people, respected for its ability to transform management capabilities. delegation, accountability-cum- employees of today into business drivers responsibility, career growth Gabriel strengthened Quality Circles, of tomorrow. and respect for merit. Over Kaizen, VSME and AIMA (young managers’ time, this culture has helped competition), enriching its intellectual attract professionals, enhance retention, enrich knowledge and ferment. aggregate intellectual capital. Gabriel implemented various programmes, a substantial portion of Gabriel’s namely Anand Leadership Development employee base has been with Programme (ALDP), Anand Talent the Company for 10 years Programme and Anand Mentor Programme, or more. The organisational strengthening its knowledge capital. average age depicts a blend of experience and enthusiasm. Revenues