Dear Valued Owners
The stated vision of your Company is to "enhance the lives of consumers byoffering innovative health care products". A industry person once opined that it maybe over reaching by a corporate to envision a vision of enhancing the lives of consume Rs.I think it is not so. Companies that offer products that improve the health life style oreven mitigate discomfort have a credible claim in stating that they have played a part inimproving their customers' lives. Business can improve lives!
This vision is what drives our strategy and new product/business focus. In the recentpast we entered fruit juices sanitary napkin electrolyte replacement and rehydrationcategories to name a few. Our brand Amrutanjan has been treating pain for more than acentury and thereby improving consumers' quality life. Studies have shown that corporatesthat build business around a holistic vision and not just with a profit motive havegenerated sustained returns over long periods of time and have grown into globalbusinesses There are many smaller companies (including yours) that can make the case. Wewish to grow by focusing on the long-term delivery of consumers' needs and not just onquarterly profit and loss.
I am pleased to report a strong performance for your Company in the year 2016-17 inspite of unprecedented macro headwinds. Your Company saw its top line grow 20% from 192 crthe previous year to 230 cr this year. The revenue increase was aided by volume as well asgrowth in products launched in the prior yea Rs. This performance is a testament to theconsumer centric product delivery approach chosen and executed by your management team.
This is a strong performance considering the adverse impact from note ban(demonetization) and political volatility in Tamil Nadu remained throughout the secondhalf of the year which are large selling months for the OTC business.
The salient features of the year in review are as follows
OTC business revenue growth of 16% from 170 to 198cr
Beverage business revenue growth of 30% from 22 to 29 cr.
Our pain business continues to deliver strong volume growth on the back of thesegmentation strategy rolled out in 2012.
The roll on formats generated sales of 20 cr or 10% of the OTC revenue.
Your sanitary napkin brand Comfy generated sales of 8.3 cr as compared to 3.0 crthe previous year.
Introduction of Electrolyte health beverage in the ready to drink format
Rs. This marks the beginning of our stated goals to deliver health care throughbeverages.
We had a gross margin drop for the first time in 3 years but that was largelydue to product improvement costs that were needed.
There was also no growth in operating and net profits due to increased spend inbrand investments and cost of sales.
Our focus is to scale up the brands that were recently launched. To do this we need toimprove distribution and continuously increase brand investments. We are also increasinginvestments in Information Technology deployment in the Company to increase dataavailability for better managerial decision-making. Sales is a big area for IT functiondeployment. In the coming months we will see our entire AHCL work force move away frompaper based order taking seamlessly be connected with the Company's ERP system andprovide insights to managers at various supply chain touch points that were previously notavailable. This should increase distribution efficiency and overall throughput per outlet.
As a 124-year Company founded by a freedom fighter philanthropist and a visionarygiving is something that is built into our ethos. When our founder DessodarakaNageswararao Pantulugaru donated his personal land (Nageswararao Park next to corporateoffice) for 1 rupee so that citizens of Chennai can enjoy the green space with theirfamilies he was making a strong statement for future managers to uphold and follow. YourCompany's CSR activities also continue to build on these values.
We are confident about the outlook of the Company and are exited in working towardsgrowing our brands and launching many new health care products in the future.
S. Sambhu Prasad