My D6or Valued Stakeholders
Warm Greetings to All of you!
It gives me immense pleasure to welcome you in the Celebrations on having completed ourSilver Jubilee and sharing the same sense of exhilaration of having achieved a majormilestone in our growth trajectory towards achieving a blissful future. Looking back withpride and contentment while there is a feeling of triumph at the performance of theCompany it's captivating to have tractioned ourselves envisaging the colossal potentialin Speciality Chemicals.Your Company continues to deliver a resilient operationalperformance with steady improvement in profitability nudged by Speciality Chemicalssegment against the tides of amplified volatility in economic landscape yet deliveringstrong double-digit growth in performance. We are delighted to share yet another crowningachievement that your Company share price in BSE recorded more than centurion growth onreinstatement of trading during 2015-16 complementing our Silver Jubilee celebrations.
Global economic growth is expected to traverse optimistically upwards in the imminentfuture though gradually especially in emerging market and developing economies. Inadvanced economies a modest and uneven recovery is expected to continue with a gradualfurther narrowing of output gaps. The picture for emerging market and developing economiesis diverse but in many cases challenging. The slowdown and rebalancing of the Chineseeconomy lower commodity prices and strains in some large emerging market economies willcontinue to weigh on economy growth prospects for countries currently in economic distresswhere partial recovery could be frustrated by new economic or political shocks.
Global Chemical Industry
The $5 trillion Global Chemicals Industry's recovery remains on track amid a stillfragile macro environment recording a growth of 3.2% in 2016. But the Industry is notwithout its challenges such as soft agriculture market fundamentals depressed demand inenergy markets sluggishness in China and headwinds from a stronger dollar which shallweigh on the performance of Chemical manufacturers during 2016 though low oil prices andfavourable financing conditions are supporting consumer spending and investment. Howeverhigh public and private sector debt elevated unemployment and structural rigidities willcontinue to weigh on the outlook.
Winning Environment: Indian Economic Environment
India has emerged as the fastest growing major economy in the world amidst unclassifiedglobal scenario and is currently at the brightest spot among global economies to deliverimproving growth as economic fundamentals remain stronger than in other emerging marketeconomies with the combined impact of strong structural government reforms RBI'sinflation focus supported by higher disposable income and improvement in economicactivity. Government initiatives like Make in India and Digital India have beeninstrumental in enticing numerous foreign companies to set up their facilities in India onaccount of various benefits with an aim to boost the manufacturing sector of Indianeconomy increase purchasing power of an average Indian consumer boost demand and spurdevelopment in addition to benefiting investors thereby bringing global recognition tothe potential of India as a cost effective manufacturing hub.The competitive advantageenjoyed by India due to its location demographics and availability of requisite resourcesis being leveraged by several global manufacturing giants to set-up Regional manufacturingunits in India.
Winning Industry: Indian Chemical Industry
The chemical sector has witnessed growth of 13-14% in the last 5 years. The growth ispropelled by structural advantage with a growing market and purchasing power due togrowing disposable incomes and increasing urbanization. Demand for paints textilesadhesives and construction have led to substantial growth opportunity for chemicalscompanies complimented by proposed set up of integrated PCPIR (Petroleum Chemicals andPetrochemicals Investment Regions) for domestic and export-related Petroleum Chemicalsand Petrochemicals related products. India has all the requisite ingredients for a RobustHigh-growth Chemical Industry - the same ingredients that throttled Chemical Industrygrowth in China which include a large and growing population Mass urbanization and arapidly expanding middle class supporting numerous consumer markets.
Winning Sector: Speciality Chemicals
India's Specialty Chemicals industry which is valued at $25 billion could well be thenext big theme on the Indian bourses. The industry delivered 13 per cent growth over thepast five years led by domestic consumption. The Speciality chemical segment having asignificant market size and growth in end-user industries has supported demand for highvalue Speciality and Pharma chemicals. Your company continues to focus on consistentcompetitive profitable and responsible growth with its forward integration products inthe Fine and Speciality Chemicals segment which witnessed Revenue from the segmentcontributing to almost 95% of the total revenue and those from the new products comprising86% of Net Sales.
Winning Performance: Silver Jubilee Achievement
SEYA exhibited exhilarating performance and endorsed its Silver Jubilee Celebrationsby yet another year of excitement and achievements. Our actions are bearing fruit and I amdelighted to announce that in FY 2015-16 Revenue from Operation grew by almost 11% toRs.27528 Lakhs while EBIDTA margin was 18.20% (Rs.5009 Lakhs) underscoring anextra-ordinary growth of 47% (PY Rs.3417 Lakhs) even amidst extremely challengingbackdrop of sharp decline in the global crude oil prices considerably reducingrealisations.
The Profit After Tax(PAT) stood at Rs.2678 Lakhs up by a whopping 106% as compared toRs.1303 Lakhs in previous year. The loftier numbers also abridged the Net Debt to EBIDTAto 1.92 (PY 2.61). It feels great to see your offspring grow up and achieve more thanwhat you ever thought was possible and SEYA is one such offspring who is making all of usfeel proud. While top-line growth was fringed due to aligning product prices with thatlinked to crude oil the positive momentum better represented by the growth in volumesmargins and overall profitability. We continue to plough back our surplus in enhancing ourcapabilities which we are confident will enable and ensure future growth and long termvalue creation for our shareholders on the spine of good performance the Board ofDirectors has recommended a dividend of Rs.1.00 per share of a face value of Rs.10.
Our Company has an advantage that its Businesses have good potential to grow (as theindustries they serve are growing) and its manufacturing blueprint is reasonably complex(not complicated) and integrated therefore not easily replicable. Your Company willcontinue to create a large base to outpace the industry and deliver persistent growthyear-on-year on the vertebrae of its strengths combined with cost leadership andvalue-added product offerings gaining momentum from stability in the global crude oilprices and related petrochemical. Your Company has already initiated work for its upcomingprojects integral to our existing business operations by embarking on a backward &forward integration project and capacity expansion of captive products in addition toreducing cost of energy diversification in new high value added products. Onceimplemented it will further strengthen your Company's sustainability and resilience andcreate value for its esteemed shareholders.
A mountain has the height but not the depth; an ocean has the depth but not theheight. Let our thinking encompass the height of a mountain and the depth of an ocean.With a Pioneering Past Persistent Present and Purposeful Future Your Company continuesto expand its footprint in Speciality Chem icals. The world's epicentre has shifted toIndian manufacturers to fill the void created by the deficit in supply owing to shutdownof Leading companies in China due to environmental concerns crafting highly lucrativeopportunity for SEYA which is well known as one of the lowest cost producers in its classof products globally owing to the level of integration in our manufacturing processes andwide international market presence through merchant exports. With a sense of excitementand anticipation we welcome this next level of growth.
We live in a time of extraordinary change - a change that is reshaping the way we livethe way we work. It is a change that is promising amazing breakthroughs but also economicdisruptions. It is a change that is broadening opportunities but also wideninginequalities. The constants which help us face the change are the eternal Values. Rootedin Values is our Integrity Understanding Unity Responsibility and Excellence I musttake this opportunity to congratulate and express my appreciation to the human assets ofSeya. I am proud that they have proved that a plausible impossibility is better than aconvincing possibility. SEYA has a professional management team in place which is wellembedded across all functions and levels and this team will continue to lead and driveSEYA.
My dear shareholders your support gave SEYA Incredible strength which can't beexplained in words. Your belief and confidence in the company and its management helpedSEYA to achieve what it has achieved today. We resolute to remain committed tosignificantly keep enhancing value of our stakeholders. I would also like to thank ourbankers who have continued to repose their faith in the company and we are encouraged bytheir unstinting support. My fellow board members customers vendors and otherstakeholders without their support and encouragement SEYA's growth story is incomplete. Iwill complete with words of exhortation by a Chinese Proverb "When the root is deepthere is no need to fear the wind". That is the clarion call for Team SEYA To raisethe bar and expand our horizons to win the goals that we have set for ourselves in termsof Performance Excellence Quality and Innovation.
ASHOK G RAJANI
Chairman & Managing Director