2017 will mark the completion of 70 years of Atul. Though our inspiring FounderMr Kasturbhai Lalbhai is not in our midst the Values he cherished and which have in factequipped our Company to withstand the test of time Integrity Excellence HumilityHard work and Larger purpose continue to guide us as we endeavour strengthening ourpeople processes and products keeping in focus what our Company can and ought to be inthe years to come.
The world economy at US$75 tn grew by 3.1% similar to that in 2016; theUSA (US$18.6 tn 1.6%) China (US$11.2 tn 6.7%) and Japan (US$4.9 tn 1%) remained at thetop. India (US$2.3 tn 6.8%) is fast moving forward but has a long way to go economicallyand also environmentally the dimensions of the work to be done are vast giving usan opportunity to grow meaningfully locally as well as globally and therebycontribute in our own small ways to nation building. The Chemical industry atUS$4.4 tn contributes 6% to the world economy; it grew by 1.5% not very differentlythan it did in 2016. India (US$1.20 bn 7%) remains much behind the top 3 China(US$1.6 tn 5%) the USA (US$630 bn 2%) and Germany (US$120 bn 1%). This calls forindustry participants and the Government to work together as the Chemical industry was isand will remain an integral part of the economy. Our Company driven by science andtechnology will continue touching lives in a responsible way.
Our Company achieved volume growth of 16% but price and margin de-growth pulleddown the performance; for the year i) sales at Rs. 2639 cr increased by 10% ii)EBITDA at Rs. 512 cr increased by 6% though EBITDA at 19.4% decreased by 0.78 percentagepoint and iii) PBT at Rs. 400 cr remained unchanged; however PAT at Rs. 285 cr was higherby 4% on account of lower tax liability. Our Company decreased its borrowing from Rs. 302cr to Rs. 155 cr.
Barring Atul Brazil the operating subsidiary and associate companies improvedtheir performance; Atul Bioscience and Rudolf Atul Chemicals declared dividend of60% and 127.50% respectively.
Akzo Nobel and our Company have formed a 50-50 joint venture partnership named ANAVENto manufacture Monochloroacetic acid the plant will not only be the biggest inIndia but also the best in the world in terms of efficiency. The proposal to merge Amalwith our Company has been dropped.
We are not happy with our performance in 2016-17 as our potential is much higher we continued to perform poorly in Colors; our performance deteriorated in Crop
Protection Retail significantly and Polymers Retail marginally. We believe theinvestments we have made and the path we are pursuing will deliver value but I was perhapstoo optimistic in my last letter wherein I had mentioned that we will try and achievesales of Rs. 4000 cr in 2017-18 this will take some more time.
Over the last 3 years we have made investments in projects (related to sales growth)totaling to Rs. 350 cr. We are taking time to achieve the expected rise in sales as someof the projects although completed are under stabilisation; it is also because of the timebeing taken to build more capabilities (in particular) for growing retail sales. During2016-17 we have completed 3 expansion projects with an investment of Rs. 117 cr. In lightof these facts I believe higher sales will be realised in course of time.
Atul Foundation took up initiatives mainly in Gujarat and also in JharkhandRajasthan and Uttar Pradesh. Atul Bioscience and Rudolf Atul Chemicals contributedto Atul Foundation. The initiatives which covered programs such as EducationEmpowerment and Infrastructure were in step with national priorities. DPD a subsidiarycompany in the UK was recognised by the Community Council of Somerset for supporting aplay park. Our people are also supporting the initiatives of Atul Foundation.
How well our Company will do in the times to come will depend on the competenceperseverance and teamwork of our people for it is they who institutionaliseefficient processes and introduce new products I services.
Our sustainability will depend also on how well we develop our people old andnew. We are therefore consistently focusing on enhancing 3 areas performancemanagement people development and recruitment.
This is a key task for the HR function and leadership at different levels.
What we are doing is not meant to be easy some time anywhere (for examplebecoming the for the first best in the world in efficiencies) and some for the first timein our Company (for example building a retail business) I convey my appreciationto every team member who is working long and hard with an eye for detail and depth inthinking and thereby making a difference to our Company. I value the criticalanalysis constructive questioning and encouragement from our Non-executive Directors.
Even in 2017 we will like to remind ourselves of 1947 the birth year of ourCompany and the independence year of our country so that we work with the same newnessoptimism and purpose. I wish to assure you that team Atul will focus not on what ourCompany has been but on what it can be. Once our recent investments deliver value wewill like to see more bold moves ahead of us than behind us there maybe struggle but we know that where there is life there is struggle and we are preparedfor it. Sincerely (Sunil Siddharth Lalbhai)
Chairman and Managing Director