I believe that knowledge is the single-most important element in any business. Thequest for knowledge is interminable. The moment you stop seeking knowledge you stopgrowing. it is this hunger for knowledge that has brought us here and it is the desire togain more knowledge that shall take us beyond.
I am pleased to present to you the 2015-16 annual report of the Company. The year hasbeen a challenging one for the industry as slowing global economy led to sluggish demandfrom the global textiles and paints industry. geopolitical tensions slowdown in globaltrade weakening oil prices and instability in financial markets continue to weigh downthe global economic sentiments.
This turbulence led to a decline in the prices of our products. As a result despite a5.31% growth in sales volumes our revenues declined 6% from Rs. 19982 lakhs in 2014-15 toRs. 18771 lakhs in 2015-16. however initiatives to enhance shop floor managementoperational efficiencies supply chain efficiencies and optimum utilisation of resourcesenabled us to reduce overheads and achieve higher margins. Our eBiTdA and PAT marginsincreased 228 and 86 basis points respectively to 17.38% and 8.86% respectively in2015-16.
The key challenges faced by the industry in the international market are the escalatingmanufacturing costs driven by high finance and electricity costs. Though your Company isin a comfortable position with an interest cover of 11.61x in 2015-16 compared to 9.56x in2014-15 and a debt:equity of 0.37 as on March 31 2016; a decline in such costs would makeour product more competitive in the international markets and enhance overseas revenuesthat account for nearly 81.76% of the total sales.
The knowledge edge
The chemical business space is all about knowledge cycle acquiring exploringreaching depths widening scope innovating and then again acquiring new one. I am gladthat through years of hard work and perseverance we developed core competencies (in thefield of dyes and pigments manufacturing) and an ability to constantly improve processesand quality. This puts us amongst the unique league of low-cost quality-conscious andenvironment-friendly companies. Our reputation in the industry has enabled us to expandgeographically even to countries that have strict quality and environment compliancenorms. Moreover most of our customers are leading and internationally renowned downstreamchemical companies. some of the initiatives undertaken by us to sharpen our knowledge edgeinclude:
Employing the best R&d experts and providing them a conducive work andlearning environment to enable them nurture their skills and focus on product and processimprovements. These experts are also motivated to participate in various internationalseminars to gain and share knowledge.
Providing regular training to employees from internal as well as externalsources for advancement and upgradation of the technology and work culture.
Being proactive and setting-up a world-class environment management systems andeffluent treatment plant to reduce carbon footprint. Placing us amongst the few companiesmeeting the stringent international environment compliances. Though such investments ledto increase in debt cost in short-term in the long-run it shall provide significantrevenue growth visibility by providing us the necessary environment clearance to easilyenter new region and market our products.
As per the iMF the global economy is expected to witness slower growth in 2016 growing3.1% and then pick up momentum by growing 3.4% in 2017. The Us market is expected toimprove backed by reviving housing industry strengthening balance sheet and no fiscaldrag. Euro area would remain sluggish driven by ageing population low demand andimplications of Brexit. While the emerging and developing nations are expected to sustainits growth momentum and drive the overall global economy growth. The economic growth inthese nations is expected to drive the global textiles and paints industry in the nearfuture.
The global textile market is expected to grow from 76 million tonnes (worth Usd 1500bn) in 2012 to 95 million tonnes (Usd 1800 bn) in 2020 driven by strong apparel demandfrom the Asia Pacific Middle east & Africa and latin America. While the global paintsand coatings market is expected to grow at a compounded rate of 5.5% during 2014-20 fromUsd 121.9 bn in 2013 to Usd 176.5 bn in 2020. (source: World economic Outlook: I MFGherzi Textil Organisation Persistence Market Research)
Message to shareholders
We strongly focus on augmenting our research and development activities with theobjective of widening our product line and customer base. Further the Company plans todebottleneck existing capacities to enhance production capacity with relatively lowercapital investment.
With the expected near-term revival of the global textiles and paints market theCompany through its knowledge experience scale and strong product portfolio is ready tocapitalise on the opportunity and grow strongly in the coming years while reinforcing ourpositions the most profitable dyes and pigments manufacturer in the world.
Mrs. Paru M. Jaykrishna