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Supreme Petrochem Ltd.

BSE: 500405 Sector: Industrials
NSE: SUPPETRO ISIN Code: INE663A01017
BSE LIVE 15:40 | 22 Sep 371.60 -11.30
(-2.95%)
OPEN

380.10

HIGH

383.90

LOW

362.25

NSE 15:40 | 22 Sep 374.45 -7.85
(-2.05%)
OPEN

385.00

HIGH

385.00

LOW

360.20

OPEN 380.10
PREVIOUS CLOSE 382.90
VOLUME 13645
52-Week high 447.20
52-Week low 180.10
P/E 24.86
Mkt Cap.(Rs cr) 3,586
Buy Price 372.20
Buy Qty 25.00
Sell Price 0.00
Sell Qty 0.00
OPEN 380.10
CLOSE 382.90
VOLUME 13645
52-Week high 447.20
52-Week low 180.10
P/E 24.86
Mkt Cap.(Rs cr) 3,586
Buy Price 372.20
Buy Qty 25.00
Sell Price 0.00
Sell Qty 0.00

Supreme Petrochem Ltd. (SUPPETRO) - Chairman Speech

Company chairman speech

ANNUAL REPORT 2000-2001 SUPREME PETROCHEM LIMITED CHAIRMAN'S STATEMENT Dear Members, meeting as read. I welcome you to the Annual General Meeting of your Company. The Annual Accounts and the Directors' Report have been with you for some time now and with your permission I take the notice convening the meeting as read. At the outset on behalf of the Board of Directors I would like to convey heartfelt sympathies and condolences to the people of Gujarat who have faced with great fortitude the havoc wrought by the earthquake on January 26, 2001. Before commenting on the performance and the outlook for your Company, let me put in perspective the prevailing business environment in the Country. The Indian economy has shown commendable resilience in the face of both natural and man made crises during he last two years and has in fact the distinction of being one of the fastest growing economies in the world. The deceleration of the growth rate for the second consecutive year is however cause of concern for and unless decisive and swift actions in the long term interest of the nation are taken the hard earned gains of liberalisation would be lost. Abolition of the remaining Quantitative Restrictions w.e.f. April 1,2001 has made, the cocooned Indian industry vulnerable to increased competition in most items in the market place. The signs of slowing down in the U.S. economy and some Far East/North East economies are a matter of concern for this not only affects the exports to these countries but also leads to possible increase in imports from these economies. It is in such an uncertain fast changing business environment in a rapidly globalising India that your Company started taking its first step five years ago. Your Company has therefore been exposed to international competition and buffeted by an uncertain business environment since its inception. Your Company's business has an exposure to the global petrochemicals cycle and volatility in prices of its products and raw materials. These challenges I believe has made us stronger and equipped us to meet the era of low margins and increasing competition. The Financial Year 2000-01 has not been a good one for the domestic Polystyrene industry. Against predictions of 15% growth the domestic Polystyrene market actually shrunk by 4.5% during the year. The two main reasons for the negative growth have been: i. high Styrene Monomer prices and ii. general recession in the country. The expensive Styrene Monomer forced some end users to drop out of the market and also lead to a lower growth in mass consumer applications, whereas the general recession has led to lower off, take from the consumer durable industry like TV and Refrigerator manufacturers. Alongwith these, the slow down in some of the developed developing economies of the world brought the margins under pressure in the export markets. Any upturn in the petrochemicals cycle, as and when the same occurs, shall improve significantly your Company's margins based on its capacity and competitive cost position. Recent Government action has led to some softening of interest rates, however there is a case for lower rate. The high interest regime in India continued to be a stumbling block in the path of faster growth. his is also proving a deterrent in the investment plans of processors to launch newer products based on Polystyrene. With the margins for exports being under pressure, your Company curtailed production meant for exports in the first quarter. This has adversely affected your Company's profitability during the current quarter. Your Company now being an international player is experiencing the impact of global slow down. At the beginning of current financial year there were four producers of Polystyrene in the country with a combined capacity of 348,000 TPA. Since the beginning of this month, one Company with a capacity of 14,000 PA has mothballed its plant. The installed capacity now stands reduced to 334,000 TPA. In the current year, we expect the domestic demand to grow from 145,000 tons in the year 00-01 to 166,000 tons. This demand is likely to further increase during the year on implementation, by a large convertor a facility to manufacture Polystyrene formulated products for export market with capacity of 33,000 TPA by September 2001. This will enable the domestic producers to utilize 55% of their capacity for domestic requirements. All Polystyrene producers are now working hard to develop the market for various applications to boost the consumption of Polystyrene. Your Company is also promoting several entrepreneurs to put up facility for export of varieties of Polystyrene product. The raw material prices have also fallen from the average cost of US$ 700 in the previous year to around US$ 490 now. This will give big support to boost the Polystyrene consumption. We therefore are of the opinion that your Company may be able to utilize 90% of its capacity in domestic market in next three years time frame. Inspite of the difficult short term industry outlook, I would like to assure the members that your Company has been built on strong fundamentals and has today the following inherent strengths: 1. a world class, world size facility employing state of the art technology 2. the lowest capital cost per ton of polystyrene in the industry 3. internationally accepted quality 4. leading domestic market share 5. well established marketing network with strong customer relationships 6. continuous improvement in logistics to handle both raw material and finished goods 7. dedicated, experienced and qualified employees who are committed to provide optimum quality and service to the customers. Your Company has during the year consolidated its operations and completed its expansion projects, thereby emerging as one of the largest single unit polystyrene manufacturers with an established internationally accepted quality. The completion of speciality polystyrene facility will enable your Company to offer value added products. Your Company is now concentrating on increasing volumes and controlling costs improve margins with emphasis on seeking cheaper sources of funds to reduce interest cost. Increased volumes are sought to be achieved by focusing on production of speciality grades, substitution of alternate materials and new product applications. Exports continue to be another thrust area where your Company has been continuously achieving almost 100% growth in quantitative terms. To strengthen the competitive position further, the Company is keenly pursuing its Minor port project to handle the import of its raw materials. In the first phase this project will require an investment outlay of Rs.25 crores. We are indeed grateful to the members for their patience and unstinting support, which inspires us to remain steadfast in our efforts to achieve profitable growth. We would like to place on record our appreciation of employees' performance and also take this opportunity to express our thanks to the Banks, Financial Institutions and Associates of the Company for their whole hearted co-operation and support to your Company. Thank you. M. P. TAPARIA Date: June,6, 2001 Chairman