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Avon Lifesciences Ltd.

BSE: 531541 Sector: Industrials
NSE: N.A. ISIN Code: INE881A01015
BSE LIVE 14:00 | 06 Dec 12.22 0
(0.00%)
OPEN

12.22

HIGH

12.22

LOW

12.22

NSE LIVE 05:30 | 01 Jan Stock Is Not Traded.
OPEN 12.22
PREVIOUS CLOSE 12.22
VOLUME 13410
52-Week high 48.00
52-Week low 6.40
P/E
Mkt Cap.(Rs cr) 29.12
Buy Price 12.22
Buy Qty 57470.00
Sell Price 0.00
Sell Qty 0.00
OPEN 12.22
CLOSE 12.22
VOLUME 13410
52-Week high 48.00
52-Week low 6.40
P/E
Mkt Cap.(Rs cr) 29.12
Buy Price 12.22
Buy Qty 57470.00
Sell Price 0.00
Sell Qty 0.00

Avon Lifesciences Ltd. (AVONLIFESCIENCE) - Chairman Speech

Company chairman speech

AVON ORGANICS LIMITED ANNUAL REPORT 2004-2005 CHAIRMAN'S REPORT Dear Shareholders, It gives me immense pleasure in welcoming you all to the 12th Annual General Meeting of your Company. ECONOMIC AND INDUSTRY SCENARIO India's macroeconomic performance in 2004-05 was very good with the real GDP growing at 6.9 percent over the previous year. The Rs.205 Billion Indian Pharmaceutical Market witnessed a 6.4% value growth for the year ending December, 2004. Much of this growth was driven by the contribution of new products launched in the last 24 months. The Indian Chemical Industry is multi-faceted and plays a vital role in the economic development of our country. The Industry is highly heterogeneous, encompassing many sectors like Organic Chemicals, Inorganic Chemicals, Specialty Chemicals, Fine Chemicals, Agro Chemicals, Bio-Chemicals, Pigments & Dyes. The Chemical industry in India is well established and has recorded a steady growth in the overall Indian Industrial scenario. The chemical and allied industries have been amongst the faster growing segments of the Indian Industry. PERFORMANCE & OPERATIONS OF THE COMPANY The year 2004-05 was extremely challenging from a business perspective. While operational income rose to Rs.89.10 crores (Rs.84.24 crores in the previous year) and export sales increased by 22.7 percent to Rs.34.81 crores, the company incurred a net loss of Rs.1.08 crores as against a profit of Rs.3.04 crores in the previous year. It was a year in which the operating profit margins were squeezed from both sides - sharp increase in the prices of key raw materials (acetic acid and molasses) and a decline in the selling prices of ephedrine derivatives. We undertook several cost control measures for reducing the cost of finance and other overheads to reduce the adverse impact on the overall profitability. Acetic acid prices have been on an uptrend due to poor sugar cane crop and increasing price of petroleum products. The Company partly passed on the increased cost of inputs to customers by increasing the selling prices of its diketene derivatives. To reduce the raw material costs, 25% of acetic acid requirements of the company are now being met from the company's acetic acid recovery plant, wherein dilute acetic acid is being used as input that is available locally at cheaper rates. Prices of molasses, one of the major raw materials for biotech division, have also gone up abnormally due to fall in sugar cane production. The rise in molasses price is expected to be temporary and is now in a declining trend. The company has increased the storage capacity of molasses from 2000 tons to 6000 tons, which will meet six months production requirements of the unit. Economies of large scale resulting from increase in capacity at Biotech plant will help the company to counter the decrease in selling price. Despite such adverse circumstances, the company has continued to make investments that will consolidate your company's competitive position in the market. The capacity at the Biotech division in Sholapur was increased and facilities to manufacture new high value added products were added at the Diketene Division in Sadasivpet with a total capital outlay of Rs.7.26 crores. BUSINESS OUTLOOK The increase in capacity in the Biotech Division and the addition of new high value added products in the Diketene Division are expected to increase the Company's turnover by around 30% during 2005-06 with a significant improvement in bottomline. FUTURE PLANS Our aim is to achieve a sales turnover of Rs.500 crores over the next five years. And I am happy to inform that your company has drawn up plans to make Avon a Rs.225 crore company over the next two years. Diketene offers immense business opportunities as the overall business environment improves. Your company has developed several high value added derivative products and has also identified opportunities in backward and forward integration to increase profitability. The Company also plans to modernize its diketene plant to achieve savings in fuel costs and improve yields. A 1 MW power plant is also planned to reduce power costs. The capex requirement for these plans is estimated to be around Rs.18 crores. The company is exploring various options for raising funds to meet this investment plan. The Biotech division has also identified new products that have high potential for growth and profitability. Manufacturing processes for these products are under development at the lab and pilot scale. CORPORATE GOVERNANCE Your company's management is committed to best practices in corporate governance and envisages the attainment of high levels of transparency, accountability and equity, in all facets of its activities and operations. CONCLUSION While concluding, I would like to thank you all for your ongoing valuable support to the company. I would also like to express my gratitude to all the stakeholders, including employees, suppliers, bankers and customers, who have all played an important role in the performance of Avon Organics Ltd. Source: Business Line Date : 3rd October, 2005

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