GARWARE POLYESTER LIMITED
I welcome you to the 37th Annual General Meeting of the company. I am sure
by now you would have gone through the Annual Report for six months ending
Your company has come a long way since the days when we pioneered polyester
film in India in `76. Since then we have developed innovative technology
for various grades of polyester film and won the confidence of customers
not only in India but all over the world.
Today, we stand at the crossroads of the future. In the context of economic
liberalisation, the challenges we envisage ahead include galloping demand
for polyester film and increasing competition.
With increased capacity and a focussed product approach, your company is
poised to take on these challenges, and become a competitive global player
in the polyester film industry.
Gearing for the new business reality
The process of liberalisation has had a cascading effect on virtually every
facet of our operations.
Delicensing has allowed us to plan a substantial increase in polyester film
and polyester chips capacity. Devaluation and stabilisation of the Indian
Rupee at its natural and market driven value has allowed us to target the
large export markets, by encashing our cost advantages more effectively.
Further, the substantial reduction in import duties of film could affect
our realisation in domestic markets. However, if we maintain our cost
competitiveness not only in the international market but also in the
domestic market through large scale operations, high operating efficiency,
an innovative approach of high performance grades specially formulated for
each end use, we can actually maintain or even improve the profitability in
The highlights of our manufacturing initiatives this year were investment
in contemporary technologies, phased capacity expansion and maximising
production through debottlenecking and modernisation. These moves will
continue to make us more competitive at home and abroad.
The rallying call for Garware Polyester is now globalisation.
As you are aware, the fiscal year changed in tandem with the new income tax
year. The six-month period ending March 31, '94, saw the company achieve
For the 6 months ending March '94, our total income reached a level of Rs.
153.98 crores - an increase of 15% over the previous year on an annualised basis. Our Profit Before Tax grew on an annualised basis by 51% to touch
Rs. 10.6 crores. This led to an increase in Earning Per share from 12 to
19. As a result, we were able to step up our dividend from 20% for the 12
months ending Septemher '93 to 20% for the 6 months ending March '94.
In the current year, in spite of having reached capacity constraints we
were able to increase our sales to Rs. 84.53 crores in the first 5 months
ending August '94, representing an increase of 18% over the same period of
"The rallying call for Garware Polyester is now globalisation."
On the production front, despite steep increases in raw material costs, the
company's profitability was enhanced due to increased operational
efficiency and introduction of new grades. Besides this, a number of new
products have successfully been test marketed. These will be introduced
after the capacity expansion.
NEW INITIATIVES FOR THE FUTURE
The expanded film production capacity will become effective in the first
quarter of '95. By the second quarter of '95 the 30,000 TPA Continuous
Polymerisation facility will also become operational. Not only will this
meet increased demand, but it will also increase availability of polyester
chips for sale.
With the proposed addition of the fourth film line in '96, the company will
be able to further increase capacity and become a global player in
polyester film. With a predicted turnover of over Rs. 500 crores.
Your company will also join the few companies in the world to produce
polyester film on Continuous Polymerisation basis, giving us the benefit of
lower costs as compared to other polyester film producers.
The total investment for the phase currently under completion is over Rs.
105 crores. The second phase which also includes backward integration, film
and coating capacity, would cost over Rs. 100 crores. To finance this, the
company plans a GDR issue, as well as a medium term forex loan. Needless to
say, our capital cost for each tonne of capacity continues to be one of the
lowest and this will improve our competitive edge in the next few years,
Previewing the future
With capacity expected to double within the next few months and increase
fourfold within two years, the company envisages no difficulty in selling
the entire capacity in the domestic and export market.
Restructuring the working capital by making full use of export credit and
long term debts through a GDR issue and Euro Dollar financing will
significantly impact interest cost and substantially improve earnings.
Strategic alliances. New thrusts.
Your company has recently entered into a marketing agreement with 3M which
is one of the largest US corporations, with a diverse product range. Our
association with 3M for Polyester based X-ray film will allow the company
access to a large and profitable Medical Imaging segment which is one of
the important end uses for polyester film. We expect that your company's
association with 3M for the sale of X-ray film will open up a new market.
"Your company will also join the few companies in the world to produce
polyester film on Continuous Polymerisation basis... "
Enhancing shareholder value
As your company becomes glohal, we reiterate our commitment to enhancing
shareholder value and EPS hy laying a greater emphasis on value added
products, niche markets and renewed commitment to customer satisfaction.
Shashikant B. Garware
Chairman & Managing Director