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Kansai Nerolac Paints Ltd.

BSE: 500165 Sector: Consumer
NSE: KANSAINER ISIN Code: INE531A01024
BSE LIVE 12:30 | 20 Nov 487.50 -5.85
(-1.19%)
OPEN

495.00

HIGH

495.00

LOW

487.00

NSE 12:28 | 20 Nov 488.60 -7.95
(-1.60%)
OPEN

498.30

HIGH

498.30

LOW

486.35

OPEN 495.00
PREVIOUS CLOSE 493.35
VOLUME 4671
52-Week high 528.90
52-Week low 302.60
P/E 50.00
Mkt Cap.(Rs cr) 26,271
Buy Price 487.50
Buy Qty 4.00
Sell Price 489.40
Sell Qty 44.00
OPEN 495.00
CLOSE 493.35
VOLUME 4671
52-Week high 528.90
52-Week low 302.60
P/E 50.00
Mkt Cap.(Rs cr) 26,271
Buy Price 487.50
Buy Qty 4.00
Sell Price 489.40
Sell Qty 44.00

Kansai Nerolac Paints Ltd. (KANSAINER) - Chairman Speech

Company chairman speech

ANNUAL REPORT 2001-2002 GOODLASS NEROLAC PAINTS LIMITED CHAIRMAN'S SPEECH Chairman's Statement at the 82nd Annual General Meeting of the Shareholders of Goodlass Nerolac Paints Ltd. on 14th June 2002 Dear Shareholders, 1. May I, on behalf of myself and my colleagues on the Board, extend to you a warm welcome to this, the 82nd Annual General Meeting of your Company. 2. The year under consideration, namely, 2001-02, showed a relatively better performance in GDP at 5.4% compared to the 4% of the previous year. But this was not because of but inspite of the sharp decline In the industrial production. Clearly then the major gains in Agriculture and in the Service sector, which helped to shore up the GDP, did not help industry. Put simply, the additional incomes generated in the area of Agriculture and Service, failed to create the additional demand for the products of the industrial sector The result has been that the rate of industrial growth in 2001-02 at 3.3% was virtually half of that of the previous year significantly and perhaps reflectively, the growth of the organised Paint sector during this year was only 5% as against 10% over the last 5 years. Like most sectors of the industrial production, the Paint industry did no benefit from the increased incomes from Agriculture and Services. 3. If anything, the major area to which your Company's fortunes are linked, namely the Automobile sector, continued to be the worst hit until the first half of the financial year 2001-02 There were revival in the automobile sector in the second half of the financial year 2001-02, but it was not adequate to offset the decline in sales growth in the first half of the year. The industrial sales of your Company thus continued to show a decline for the second year in succession. 4. It is estimated that the organised sector in the Paints industry would have grown by about 5% as against 8% in the previous year. For the year ended 31st March, 2002, the paint sales volume of your Company increased from 73448 MT to 76765 MT, reflecting an increase of over 4%. In value terms, the paint sales recorded a growth of 3%. For the second year in succession, this growth has come about from the decorative paints business due to the continued decline in growth of the industrial paints business, consequent to the recession in the auto sector. Besides this, volume and value sales were also affected by price reduction which became necessary due to the competitive conditions in the market. 5. Faced with this situation of fierce competitions, together with severe recession, the Top Management of the Company came forward with a number of initiatives designed not only to meet the present challenges but also to restructure the Company's organisation and operations. Indeed, this has been a year which has been conspicuous not only for the improvement in financial results but also for the qualitative managerial and technological improvements The central principles of restructuring were implemented with great earnestness. There was also cost cutting at various levels, there was continuous improvement In the final products, there was a greater liaison with the customers and not least, new managerial systems were inducted. 6. Your Company targeted the manufacturing and operational processes as the main thrust areas to improve bottomline on a sustained basis. Several cost reduction measures were initiated. The various cost saving measures undertaken by the Company translated into a saving in operating expenses by Rs.6 crores. Efficient working capital management facilitated by improved supply chain management consequent to the successful implementation of Enterprise Resource Planning(ERP) system by your Company and also increased usage of cash management services resulted in a reduction in the interest cost by 41% compared to the previous year. Apart from these measures, your Company has continuously remained focussed in creating value addition to customers by way of continuous upgradation of technology resulting in reduction in paint consumption per unit, increasing the utility and life span of paints, reducing energy consumption and in manufacturing of environmental friendly paints. Your Company has been committed to offering the latest technology, application knowledge and excellent technical sales service to its industrial customers, which has helped the Company successfully meet the challenges of a competitive and recessionary Auto Paint market. Your Company also gave due importance to the installation of Computerised Colour Dispensers at retail outlets to give customers a greater choice in shades. Notwithstanding the higher incidence of depreciation by Rs.4.6 crores, mainly on account of increased capitalisation of Colour Dispenser machines made in the last two years, your Company thus could not only arrest the drop in profitability but also post an increase of 22% in Profit after Tax from Rs.22.56 crores to Rs.27.35 crores. 7. Enthused by your Company's improved performance, your Directors have been emboldened to recommend a higher dividend of 75 per cent as compared to the 65 per cent declared last year. This dividend would of course be subject to deduction of tax at source in accordance with the provisions of the Finance Act, 2002. 8. I am happy to be able to say that the performance of our Associate Companies has also been satisfactory. 9. As for the current year, your Company is gearing itself to meet the challenges of increased competition resulting in reduced profit margins and an impact on the volumes. Your Company recognizes that challenges such as these can be met only by continuous improvisation of technology and giving the customers top class products at the most competitive prices. With collaboration from leading paint companies across the globe, your Company is well equipped to maintain and consolidate its position of strength. We are proud to be able to say that your Company is the fist Company to introduce late environmental friendly Lead Free Cathodic Electrodeposition Primer. Your Company has also introduced elastomeric wall coatings. 10. While it is too early to make predictions for the current year, we tend to take a moderately optimistic view for both the Economy in general, and For Industry in particular. We are aware that there are a number of negatives which can easily be listed, but the time seems to have come when we can say that a mild recovery is on its way. The core industries have begun to show remarkably better performance ; erstwhile languishing industries like paper, polyester, commercial vehicles have shown a commendable pick up; housing finance continues to be at an all time high; and not least, excess capacity in a number of industries is beginning to decrease with demand (at long last)catching up with supply. It is true that this mild recovery will be sustained Only with another favourable monsoon and, of course, under no war situations But presuming these favourable factors, the pick-up on now begins to see gives ground for hope at long last. There will be time-lag problems; fierce competition will not disappear in most industries, but even so we can legitimately hope that the second half of this year will see the sustenance and stimulation of our economy in general and industry In particular. Indeed, we believe that the rate of growth in industrial production will pick up from last year's 3.3% to anything between 5.5 to 6% in this year. 11.The transmission of this mild recovery to our Paint industry will not be an easy one and certainly excess capacity and fierce competition will prevent us from securing prices due to us, but at least large volumes can hopefully be secured. It is expected that the Paint industry would grow at 7 to 8 per cent in the current year. Your Company's management would endeavour to post a growth rate significantly higher than this expected rate of growth of the Paint industry. Cost reduction measures will be continued with the same spirit and vigour. The successful implementation by the Company of Enterprise Resource Planning(ERP) and Supply Chain Management and other IT initiatives will sharpen the edge in cutting costs. 12. May I take this opportunity of recording our gratitude to Kansai Paints for the sustained support they have given us a all stages, particularly in the area of technological upgradation and operational improvements. We should make it a point to mention here the contribution of Mr Arai in maintaining our most useful and intimate relations with Kansai Paints. We are also thankful to our other technical collaborations, namely Dupont and Oshima Kogyo for the consistency, quality and cordiality of their assistance. My thanks also go to you, our Shareholders, for the confidence reposed by you in the Company and also all the employees of our Company, its subsidiaries and its associates who have made it possible to achieve this performance under challenging conditions. 13. I am quite sure shareholders will join me in complimenting the Top Management team led by Mr Bharuka in securing the results in a year filled with National and International problems. It needs to be repeated that more than the financial results obtained is the managerial depth that has been given to our Company, which will surely stand the Company in good stead in the years to come. Restructuring is a continuous process and we are sure that the Company will continue to give a good account of itself as it has done this year, and with it I hope that the Company will continue to reward its shareholders in the way ,it has done so far. 14. I now have the pleasure in proposing the first Resolution relating to Accounts and if someone could second it thereafter, I would attempt to answer any questions and clarifications that the shareholders might seek before the Resolution could be put to vote.