Dear Fellow Shareholders
I write to you in relatively gloomy times but I am again reminded of Henry Ford'sstatement that I quoted last year: "When everything seems to be going against youremember that the airplane takes off against the wind not with it."
It was a difficult year for global economy with developed markets growing at a slowtrajectory and emerging markets decelerating as commodity prices stayed weak. India was astand-out performer with reported GDP growth of 7.6%. Despite low benchmark interest ratesin leading economies financial conditions stayed stretched especially for mid-market andsmaller corporates. The adverse conditions percolated down to our own business.
Over the last 25 years we have grown to become India's leading aluminium foil -basedprimary packaging solutions provider to Pharmaceutical and FMCG Industries. Our businesshas been driven by a history of consistently exceeding expectations leading tolong-standing trust with a marquee client base impeccable track record of regulatorycompliance and leading IPR position in the packaging space. About 3 years back weembarked on a new path - a new-technology led transformational project (in technologytie-up with Chemnitz University Germany) which would take us to the global league ofprimary packaging suppliers in addition to more than doubling our capacities
But during FY2016 after many years of growth oriented rock solid performance ourbusiness was hindered. Our consolidated turnover witnessed a steep decline to Rs. 457crand we made a net loss of Rs. 87cr. Our manufacturing units have witnessed very restrictedproduction since the third quarter of the year. Our new transformational project staysun-finished due to shortage of last-mile funding. Our working capital cycles prolonged.The immediate cause of this interruption has been severe financial stress driven byliquidity constraints. The early signs of this liquidity stress were also visible in thelater half of the last financial year at which stage we had approached our BankingConsortium for support. This though sanctioned in March 2015 was finally disbursed a tadtoo late. A credit rating downgrade in early January and severe restrictions of a trust-and-retention a/c banking structure further hampered production. The enabled managementteam of the day entrusted with the job of running the enterprise did not properlyinterpret the trends raise the necessary alarms or adequately address the issues and putin place an activity plan to arrest the decline and steady the ship. That leadership teamhas since been held to account and most members have exited the organisation. We arecurrently putting in place a professional and experienced Management Team along withconcurrent and latest information systems and review processes so that a similarphenomenon does not recur. Quoting from Michael Jordan.... If you're trying to achievethere will be roadblocks. I've had them; everybody has had them. But obstacles don't haveto stop you. If you run into a wall don't turn around and give up. Figure out how toclimb it go through it or work around it.
The financial situation is likely to worsen in FY2017 as our manufacturing units arestill not in production. On a positive note we continue to see interest from our esteemedcustomer base-who we have kept in touch with on a regular basis even during these tryingtimes. We are looking at various options for revival and are in advanced discussions withexisting / prospective lenders / strategic investors. We hope to bring to your noticeconcrete revival proposals by the end of CY2016 with a target to start production andstart work on finishing the stalled transformational project in early calendar 2017. Thewill to win the desire to succeed the urge to reach your full potential... these are thekeys that will unlock the door to personal excellence Confucius
As I end on that positive note it will be amiss if I do not thank our dedicated staffmembers and numerous stakeholders including esteemed customers & bankers and allfellow shareholders for help counsel and support during these difficult times. Quotingfrom Nobel laurate Bob Dylan I do look forward to continuously expand horizons byexceeding expectations "For the times they are a-changing".
Sudip Dutta Chairman