I am privileged to report yet another successful year that saw us outperformingindustry across all parameters while we continued to deliver more value to our customersand shareholders. In a matter of just few years we have significantly matured as anorganisation; growing multi-fold in capacities and financials spreading to newergeographies adding more products and developing strong brand goodwill. With the kind oftraction we are witnessing improved industry scenario and capacity expansion programmesthat we have planned out we believe that our future is more sustainable than ever.
2016 manifested by several unpredictable outcomes has been yet anotherchallenging year for economies across the globe. While crude prices strengthened andnearly doubled from its lowest levels at the beginning of the year the UK's referendum toexit European Union and Mr. Donald Trump's election as the
President of the USA added to investor anxiety. Despite various issues the year endedon a positive note giving way to revitalizing manufacturing improving trade and marketscenario among various economies and stabilizing interest rates. Driven by these factorsthe global economy is expected to rebound strongly and grow by 3.5% in 2017.
Closer home the scenario was much different. Indian economy continued to remainbuoyant amidst global despair. Though the growth rate declined from 7.9% in 2015-16 to7.1% in 2016-17 led by slowdown from demonetization the country continued to be thefastest growing major economy. The fundamentals of the country amidst stable politicalclimate reducing repo rates strengthening foreign exchange reserves healthy inflationlevels and likely implementation of Goods and Services Tax (GST) remain strong. India'sGDP growth for the years 2017-18 and 2018-19 is projected at 7.2% and 7.7% respectively.
INDUSTRY OPTI MISM
Globally the pigment industry is estimated to witness a robust compounded growthof 5.4% during 2016-2023 driven by stringent growths in the textiles and food &beverages industry. In India the dyes and pigments is at an important inflection point.While domestic demand is showing positive trend with textiles industry projected to growat a CAGR of 10% over the next five years the vital development of reducing governmentsupport to the manufacturers and tighter pollution control norms in China have impactedtheir competitiveness even leading to several shutdowns. China being the largest dyes andpigments manufacturer in the world the trickle-down effect of this development is likelyto favour Indian manufacturers who are more environmentally compliant and costcompetitive. It is estimated that the production of dyes and pigments in India would growat a CAGR of 11.4% during the five years leading to 2019. Export during the same period islikely to grow at an estimated CAGR of ~15%.
During the year under review the performance of your Company has been outstandingwith sales volumes rising 6% to 7760 MT. Besides with supply constraints in the marketand rising crude prices the average prices of dye intermediates during the year increasedby nearly 55% enabling us to earn better margins. Total revenues increased by 38% from Rs.18770.61 lakhs in 2015-16 to Rs. 25965.21 lakhs in 2016-17 while share of exportsincreased from 82% to 90%.
Profitability during the year grew even stronger as expansion of capacitiesundertaken in the past along with effective cost management initiatives facilitated inbetter overhead coverage. In absolute terms the EBITDA and PAT increased 147% and 212%respectively to Rs. 7948.40 lakhs and Rs. 5191.88 lakhs respectively. In marginterms the EBITDA and PAT margins increased 1344 and 1113 basis points respectively to30.61% and 20%.
FOCUSED ON A SUSTAINABLE FUTURE
With massive growth opportunities lying ahead of us we have embarked on severalstrategic capacity expansion and backward integration program expected to be materializedover next 15 months at an estimated investment of Rs. 175 cr. The expansion plan includesadding 2280 TPA of CPC Green 1800 TPA CPC Blue 1200 TPA H-Acid and 10000 TPA ofprecipitated silica capacity. This shall allow us to meet demand of existing as well asnew customers.
We have also undertaken the strategic decision of entering the Specialty Chemicalbusiness by commencing with the manufacture of Precipitated Silica which is widely used inrubber and tyre industry. This shall diversify our business offerings while enabling us toearn better margins. In our existing dye intermediate business we have addedH-Acid which shall facilitate us to increase offerings to existing customer for furtherstrengthening customer relation.
In the past five years we have also made investments amounting to Rs. 10 cr towardsprocess upgradation and environment management that has enhanced our competitiveness inthe industry. One such investment in the past year was towards acquiring Brine Systemwhich has enabled us to enhance control of process steps resulting in better pollutioncontrol and capacity utilisation by reducing load of ETP.
We have also filed for trademarking of our Company's (AKSHARCHEM) and product's(ASAFLOW) name to safeguard and promote our brand.
AksharChem with its world-class business standards and scale of operations is wellpositioned in the chemical industry which offers significant long-term growth. As thechemical industry in India is going through a phase of opportunity a key challenge willbe to upgrade technology of manufacturing process and environmental management.
Our initiative towards expansion and focus on adding more value-added product thefull effect of which will be reflected in 2019-20 shall enable us to strengthencompetencies and enhance our long-term business sustainability. Before signing offI on behalf of the Board would like to thank all our stakeholders for their constantcontribution and support. I am deeply grateful to our employees who through their skillsand relentless efforts have enabled us to reach here.
Paru M. Jaykrishna