AUTOMOBILE PRODUCTS OF INDIA, LTD.
OBJECTS & ACTIVITIES
Manufacture and sales of Lambretta scooters and light trucks, Borg & Beck and
other clutch assemblies, Lockheed, Fiat and Ate hydra
...
ulic brakes and API
brake lining.
OPERATIONS
In 1982, total sales at Rs 31.60 crores continued to show an upward trend.
Operating margins were under severe pressure due to recession in demand and
substantial increase in costs. Plant were in hand for increasing the
production of 3-wheelers to 1,000 nos. per month to achieve economies of
sclae and for re-styling the scooters (with a low gestation period). At
Aurangabad, the Company developed the manufacture of diaphragm spring clutch
with the assistance of its collaborators. In 1983, the turnover decreased by
9.19% to Rs 28.70 crores due to recession in scooters, automobile components
and disturbed industrial relations both at Bhandup and Aurangabad plant
during August and September 1983. In Aurangabad, the development of tandam
master cylinders and circlip wheel cylinders was completed and commercial
production was expected in the second half of 1984. During 1984, the turnover
increased to Rs 31 crores but the operations resulted in losses. This was
mainly on account of go-slow by workmen from January to May 1984 and
substantial rise in input and transportation costs. The Company changed the
product-mix at Bhandup, by increasing the production of 3 wheelers. During
1985, the working improved and sales increased by 20% to Rs 39.29 crores. A
new model scooter 'Lamby Polo 150' was launched in the latter half of the
year. The Company proposed to introduce a new model 3 wheeler. In 1986,
turnover declined to Rs 28.34 crores due to competition and recession in the
automobile industry. Further, suspension of work in the Aurangabad factory
followed by a lock-out from 12th November, 1986, aggravated the situation. To
sustain the growth in the 3-wheeler market, the Company made all efforts to
increases its exports and also improve upon the availability of 3-wheelers
particularrly of load carriers. The Company proposed to launch rear engine
version of 3-wheelers in the latter half of 1988. Also, strategies were
formulated to stabilise sales of Lamby Polo 150 both at home as well as in
the exports' markets. Dies for Maruti clutch were developed and the Company
commenced its supplies to Maruti Udyog Ltd. During 1987, turnover declined
only marginally to Rs. 27.11 crores despite a 11 months lock-out in the
Aurangabad plant. The unit recommenced the operations from 10th December,
1987. Exports improved substantially to Rs 0.80 crores. An additional unit
was set up at Madras for the manufacture of clutch and brake parts. The
Aurangabad division developed a diaphragm type clutch and complete brake and
clutch hydraulic system for Bajaj Tempo Ltd. The Company's R&D division
undertook both modifications of 3-wheelers to suit specific conditions of
export markets, and development of special load carriers.
During 1988-89 (15 months), turnover at Rs 41.67 crores registered an
increase of 23% when compared on an annualised basis with the previous year.
Exports amounted to Rs 0.33 crores and the Company registered satisfactory
profits. The performance of the units started at Madras in January 1988 was
also reported to be good. During the period the Company received from the
collaborators, complete technical information and designs for their recently developed high-tech fuel efficient engines. During the year, the Company's
R&D unit developed different versions of load carriers and also tandam master
cylinder for Bajaj Tempo Ltd., and for Ambassador cars. In addition,
productionised clutch driven plate for Maruti van and diaphragm clutch for
Matador of Bajaj Tempo Ltd., were also developed. During 1989-90, turnover
declined to Rs 31.17 crores and the overall working resulted in losses. This
was attributed to decline in sales of 3-wheelers and paucity of
workingcapital. The Company's R&D unit developed hydraulic braking system for
its 3-wheelers. Further, hand starters were introduced in the place of pedal
starter. In addition, the unit also developed 7 seater 3-wheeler and
prototype of clutchbrake for 118 NE of Premier Automobiles. In 1990-91,
though turnover rose to Rs 33.45 crores, the operations resulted in increased
losses. The reserach and develpment wing of the Company developed Maruti Van
diaphragm clutch cover assembly, Nissan Hydraulic clutch actuation system,
Shaktiman Draglink and Escorts crane hydraulic brake system.During 1991-92,
turnover declined to Rs 29.12 crores due to various operational constraints
and severe financial crunch. Both vehicle and ancillairies divisions operated
very much below the breakeven level. The Company's R&D unit developed a rear
engine version of its 3-wheeler front diesel engine version, six seater
version for its 3-wheeler for passengers application. Also a diesel version
for load carrier application was being developed.
FOREIGN COLLABORATION
During 1987, the Company entered into a technical collaboration with Yamaha
Motor Co. Ltd., Japan for technological upgradation of 3-wheeler engines.
LAMBRETTA DIVISION
The Company produces Lambretta Scooters under a licence from M/s. Innocenti
S.G. Milano. Italy. The technical collaboration agreement between the Company
and M/s Innocent S.G., expired on 22nd November, 1985. Afresh agreement
extending the period upto 1970 and incorporating additional reduction in the
rates of royalty was entered into. In 1969-70, the Company made arrangements
to retain the collaboration on the basis of a fixed retainer fee and greater
export rights. As a result of an in-depth study for the proposal of re-
styling of scooters, the Company indigenously developed an improved version
of the exisiting scooters with fuel efficiency.
CLUTCH DIVISION
The Company regularly supplies clutches as original equipment for Standard
Herald cars. Hindustan Ambassador, Tata-mercedees-Benz trucks, Fiat cars and
Comet trucks of Ashok Leyland (driven plate only).
AURANGABAD UNIT
The collaboration agreement with Automotive Products Co. Ltd., England, for
clutches and brakes expired on 21st September, 1970. The Company entered into
a fresh collaboration agreement for 5 yearswith them for the manufacture of
Borg & back clutches and Lockheed hydraulic brakes on revised terms and
conditions, viz., payment of an annual lumpsum fee of Rs 90,000 each for
clutches and brakes which was approved by Government. A similar agreement
was executed with Fichtel & Sachs A.G., of West Germany in November 1972 for
the manufacture of F & S clutches for a period of 5 years from 1st January, 1972, the annual lumpsum fee in this respect being Rs 45,000 gross.
The Company also produces brake linings under a licence from Firestone Tire &
Rubber Company Akron, U.S.A. The royalty payable to Firestone was reduced
during 1961-62. In 1965-66, Government permitted further renewal of the
agreement for a period of 5 years upto 1971. In 1966-67, the fresh
collaboration agreement with Firestone Tirs & Rubber Company, Akron, U.S.A.
was finalised. The fresh agreement provided for reduced royalty rates and
export rights.
NEW PROJECT
The Company applied for an industrial licence for the manufacture of mopeda
in a backward area in Tamil Nadu.
AMALGAMATION
Hind Auto Industries Ltd. (HAIL), which was manufacturing automobile
components like tie rod ends in collaboration with a German firm, was
amalgamated with the Company with effect from 1st April, 1968.
RESEARCH & DEVELOPMENT
During 1988-89 (15 months), the unit developed different versions of load
carriers and these were well received in the market. Also, tandem master
cylinder for Bajaj Tempo Ltd., and for Ambassador cars were developed. In
addition productionised clutch driven plate for Maruti van and diaphragm
clutch for Matador of Bajaj Tempo Ltd., were also developed.
FINANCE
In 1977-78, a total soft loan of Rs. 165 lakhs was approved on a consortium
basis by ICICI, IDBI and State Bank of India. The loan comprised of Rs. 60
lakhs for replacement of old machinery, Rs 80 lakhs for rehabilitation and Rs
25 lakhs as additional cash credit facilities. The Company proposed a
modernisation scheme for replacement of equipment and machinery in 1983.
During 1984, SBI gave a term loan of Rs. 50 lakhs. During 1985, IDBI
sanctioned a term loan of Rs 4.80 crores of which Rs 3.20 crores was for
modernisation and Rs 1.60 crores for rehabilitation. SBI also sanctioned a
term loan of Rs 2 crores for rehabilitation.
APPLICABILITY OF SICK INDUSTRIES ACT
With the orosion of net worth, the Sick Industrial Companies (Sp. Provisions)
Act, 1985 became applicable to the Company and came into force from 10th May,
1987. During 1988-89 (15 months), the Company made a referance to the Board
for Industrial and Financial Reconstruction. IDBI was appointed as the lead
financial institution for processing the revival package submitted by the
Company. During 1989-90, the action plan developed by IDBI provided for
improving the segment for load carriers in the domestic market, launching RE
- 3-wheelers and taking production and sales beyond break-even level.
NEW EQUITY ISSUE
The Company proposed to issue 7,00,000 equity shares of Rs. 10 each to 48 existing shareholders who had responded to the offer and to its business
associates.
GENERAL
As on 31st March, 1992, a total amount of Rs 732.29 lakhs was outstanding
against loans from financial institution.
REDEMPTION OF PREFERENCE SHARES
First preference shares are redeemable at any time after 31st July, 1979, on
giving six months' notice Second preference shares are redeemable at any time
at six months notice. The Company was contemplating conversion of the 1st and
2nd preference shares into 15% secured non-convertible debentures.
The 3rd preference shares amounting to Rs 7 lakhs, held by New India
Assurance Co. Ltd., were due for redemption on 31st December, 1978. Due to
the losses incurred by the Company, with the consent of the New India
Assurance Co. Ltd., the redemption date was extended and the rate of dividend
was enhanced from 9.3% to 11% per annum. These preference shares were then
redeemable in three equal instalments from 31st December, 1981. Subsequently,
the rate of dividend on these 7,000 - 11% preference shares was increased
from 11% to 13.5% with effect from 1st January, 1982 and the date of
redemption extended. These preference shares are now redeemable along with
the arrears of preference dividends in three equal instalments on 31st
December, 1984, 31st December, 1985 and 31st December, 1986, respectively.
The 4th prefence shares amounting to Rs 5 lakhs were due for redemption on
31st August, 1979. Due to losses incurred by the Company in the previous
years and the need to retain the capital, the Company postponed the
redemption by 5 years with the consent of the concerned shareholders and the
rate of dividend was increased from 9.3% to 11%. These preference shares were
then redeemable in three equal instalments from 31st August, 1982 together
with the arrears of dividend. With effect from 1st September, 1982, the rate
of preference dividend was raised to 13.5% and the redemption date extended.
These preference shares are now redeemable including the arrears of
preference dividend in three instalments on 31st August, 1985, 31st August,
1986 and 31st August, 1987, respectively.
Because of the inadequacy of profits, the Company proposed to extend the due
dates of redemption of the 3rd and 4th preference shares for a further periof
of three years and to raise their rate of dividend to 15% per annum. Due to
objections raised by the State Bank of India and the Company's bankers, the
implementation of these proposals was deferred till the objections were
resolved.
During the year ended 31st March, 1992 the Company's preference share capital
comprising first, second, third and fourth series could not be redeemed due
to inadequacy of profits.
Preference dividend amounting to Rs 42,67,950 were in arrears for the period
from 1st January, 1983 to 31st March, 1992.
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