We live in a time of extraordinary change a change that is reshaping the way welive the way we work. It is a change that is promising amazing breakthroughs but alsoeconomic disruptions. It is a change that is broadening opportunities but also wideninginequalities. The constants which help us face the change are the eternal Values.The legendary Founder of our Company Mr Kasturbhai Lalbhai lived his life founded onintegrity discipline perseverance respect simplicity and larger purpose and we willnurture and promote these time-tested Values which also help businesses sustain and createvalue over time.
In 2015 the world GDP (size US$73.2 tn) increased by 3.1%: GDP of theUSA (size US$17.9 tn) increased by 2.4% European Union (size US$16.2 tn) increased by1.6% China (size US$10.9 tn) increased by 6.9% Japan (size US$4.1 tn) increased by 0.5%and India (size US$2.1 tn) increased by 7.3%. These numbers ultimately reflect thecombined will of the respective
Governments and people to perform. With forward looking policies of its Government andthe aspirations of its people India has the potential to sustain and increase its GDPand we in our small way will work to make the Made in India label proud. WorldChemical industry (size US$4.4 tn) grew by 2% in 2015: Indian Chemical industry (sizeUS$103 bn) grew by 3% but is still ranked 7 after China (size US$1.5 tn) the USA(size US$630 bn) Germany (size US$198 bn) Japan (size US$190 bn) South Korea (sizeUS$165 bn) and France (size US$107 bn).
According to a leading consulting firm India has the potential to grow its SpecialityChemicals industry at 9%. Our Company has an advantage that its Businesses have goodpotential to grow (as the industries they serve are growing) and its manufacturingblueprint is reasonably complex (not complicated) and integrated therefore not easilyreplicable. Our Company maintained improvement trend in its performance EBITDA margin increased to 20% (16%) and sales volume increased by 3% though sales valuedecreased to Rs. 2407 cr (Rs. 2510 cr) mainly on account of poor performance ofColors Sub-segment and decrease in selling prices arising from lower prices of rawmaterials
PBT from operations increased to Rs. 390 cr (Rs. 312 cr)
RoCEincreased to 31% (27%)
Debt equity ratio improved to 0.24 (0.28)
interest coverage ratio improved to 18.1 (16.3)
Earning per share increasedto Rs. 90 (Rs. 73). The Board has recommended dividend of 100% the highest so far.
During 2015-16 our Company completed 5 expansion projects with an investment ofRs.213 cr and invested Rs.27 cr in the areas of environment and safety; itundertook 3 expansion projects with an investment of Rs.98 cr which will be commissionedin 2016-17. We will take up new expansion projects for implementation in 2016-17mainly to grow in existing downstream and related products - we will make theseinvestments mainly through internal accruals. As I had mentioned in my letter last yearwe will aim for achieving sales of Rs.4000 cr in 2017-18; it is a stretched number nonetheless sin is not to fail but to aim low! The subsidiary and associate companiesalso maintained improvement trend in their performance Atul Bioscience DPD RudolfAtul Chemicals and Amal have all increased their sales and PBT from operations. AtulRajasthan Date Palms commenced sales in the last quarter by selling about 300 tissueculture raised date palms. The subsidiary companies in Brazil China the UAE the UK andthe USA established over a span of last 20 years will be strengthened by way ofadditional HR support as required. A professional was appointed in the Netherlands forgrowing a set of new products introduced by the Company.
In 2015-16 Atul Foundation (Trust) took up projects in Gujarat Rajasthan andTamil Nadu. In times to come the number of states where Atul will serve the society willonly increase. DPD a subsidiary company based in the UK also spent 1% of its profitbefore tax for the local community (though not called for by any guidance or law) keepingin step with the tradition of conducting business with a larger purpose. Atul Bioscienceand Rudolf Atul Chemicals also contributed to Atul Foundation for serving the society.During the year Atul Foundation built and handed over 624 toilets to those families whohad no such facility ever.
As our Company grows it is becoming more diverse particularly in terms ofnationalities it already has people of different origins AmericanBrazilian Chinese Dutch English French and of course Indian all working for acommon purpose. The companies based outside of India have 15 women of the total 34. As thepeople of Atul we embrace such diversities and recognise that our success will largelydepend upon our ability to work together and without any bias. Atul HR is enhancingprocesses of i) recruitment ii) performance management and iii) development for buildingcapability.
My colleagues and I deeply value the involvement critical analysis andencouragement of the distinguished Non-executive Directors I am privileged to havethem on the Board of our Company. I appreciate the efforts of every member of Atul family we may be growing in numbers but our Purpose is common and shared. I am gratefulto our customers for giving us an opportunity to serve and helping us evolve our visionand articulate growth related strategies. I recognise the positive approach of thecommunities which surround our production sites in India and the UK. I thank you for yourfaith; it brings out the best in us.
We the people of Atul will make our Company a learning organisation as we turnyet another page of our lives. We will learn from an example of a leaf wewill work efficiently collectively and silently and with the realisation thatInterdependence is a higher order than Independence. On behalf of the team Atul I willlike to assure you that we will work together summon what is best in us with our feetplanted firmly in today but our eyes cast towards tomorrow. In this journey into thefuture may God give us the courage strength and wisdom so that we may go as far as our dreamsand toil will take us.
(Sunil Siddharth Lalbhai)
Chairman and Managing Director