From The Desk of Managing Director
Greetings.I am pleased to write to you after yet another good year of performance byyour company. Our revenue remained flattish but EBIDTA increased by 27% (after accountingfor some losses in the US plant which is still in investment phase).While thestabilization of plant in the US remains a challenge we have started reaping benefits ofa direct presence and investment in the US. Some of our key clients in the US have startedto recognize our effort to be in their vicinity and have placed regular orders on us inIndia while we ramp up and stabilize the production in the US.
Our EBIDTA increase vs previous year despite continued investments is a result of costsavings in the US plant implementation of measures to increase productivity andautomation at both India and US facility and a healthy product mix in our performance andindustrial yarn business.
We are confident of sustaining and improving margins as we ramp up approvals from newcustomers and gain volume in the US plant reduce cost of power and fuel wastage in ourplants in India and raise productivity. Towards this objective we have implemented ISO9001: 2008 in June 2014 Kaizen 5S and other quality programs at the shop floor level.Another driver of profitability for us will be debottlenecking of our Vapi facilityenabling us to produce 30% more than earlier. Several other programs are underway to raiseefficiency and improved utilization levels.
We are cognizant of becoming more a more alert corporate citizen and enhance ourcontribution to the society at large while focusing on our profitability. This year oneof our identified theme is Green growth whereby we will generate almost the same powerfrom non-conventional energy vs use of grid power diesel and other polluting fuelsources. In the year under review we already produced 7.25 MW of power through windenergy vs our total requirement of 5.375 MW. In FY 17 our generation capacity will double.
Our 2nd theme for this year is Cash flow enhancement . For the year under review ourcash accruals increased to INR 604.99 m a jump of 42.60% YoY. We will maintain a bigfocus on sustaining increase in cash generation from operation and use it judiciously. Asolid free cash generation will help us make use of attractive opportunities in our corebusiness and enhance value for our shareholders.
Last year we took the decision of splitting the stock into Re.1 /- Per Share from Rs.10/- Per Share to support the increase in liquidity in the market place. Our marketcapitalization has increased to INR 527.32 Cr (+23.58%) since then.
In conclusion I remain an eternal optimist and believe that the best for your companyis yet to come.
KRISHNAKUMAR JHUNJHUNWALA - MD & CEO
In manufacturing in india it's a common scenario to get caught up in the day to dayproduction and the ideas and thoughts of "continuous improvement" remains avague and far fetched terminology. At SPFL however "continuous improvement" beit large or small has been seeped into our culture. Talking about the smaller improvementswe have been making a conscious effort to do...
We started with the ISO 9001 certification 2 years ago and since then improvised andimproved it as we grew. It has been a step in helping us move towards becoming a systemdriven company. The new standard of ISO for the year 2015 has newly released and we arealready working towards incorporating the new elements of the standard into our existingsystems.
Besides ISO with an aim of becoming A "lean production" facility inFebruary 2016 we started with the implementation of 2 Japanese tools which will propel usin this direction namely "5S" and "Kaizen
Even though we would call them small because it cannot be directly correlated with amonetary impact we believe it has a large impact indirectly. It creates an efficiencyoriented culture which starts right from the operator on Sarla's shopfloor to the planthead rightly ensuring that efficiency is achieved through team work and is not only a topmanagement priority.
Efficiency would be in the form of reduced wastages faster movement of materialpossible reduction in production lead time resulting in higher productivity reducedchances of error and rejections and overall a smoother flow of processes. With regularaudits and quarterly reviewing of these tools it ensures sustainability which eventuallycontributes to cost reduction efforts and increased revenue.
A few practical examples of improvements done at the plants which will go a long way insaving costs are:
a) Reduction in average age of of machines at Silvassa to five years from twenty yearsearlier
b) replacement of old and inefficient electrical motors at Silvassa and Vapi
c) purchase of power through open access in Silvassa
d) de bottle necking in Vapi plant to increase the yearly production by almost 40%mainly done by aligning the processes and operations more efficiently and increasing theutilization levels of the existing machinery
e) Debonding of the Vapi dye house from a 100% EOU to a local DTA unit will enable usto get drawbacks and export incentives previously un available to an EOU .