It is always a privilege to share with you the performance of your Company as well asupdate you on our future growth strategy. FY 2017-18 has been an eventful year with the USeconomy continuing to improve on key macro-parameters like employment and consumerspending. In Europe too most economies showed a positive upturn except the UK whichcontinues to face the Brexit challenge. The Chinese economy demonstrated strongresilience.
In India the highlight of the year was without doubt the implementation of the Goodsand Services Tax (GST). GST is one of the largest indirect tax reforms aimed at creatingan unprecedented level playing tax approach ease of business. A second consecutive normalmonsoon added to positivity as GDP grew by 6.7% for the year.
Your Company has continued to excel across its business segments in the Financial Year(FY) 2017-18. The performance of your Company has been satisfactory on all fronts customer satisfaction profitability expansion
Research and Development (R&D) and HSE standards.
The global agrochemicals polymer pigments and pharmaceutical companies have beentransforming their procurement models. They are gradually moving away from costarbitrage-based vendor establishments to knowledge arbitrage-based strategic partnerships.Assured long-term supply and superior quality have become prerequisites of any supplycontract nowadays. That said the cost competitiveness continues to be important.
Amidst this operating with one-nation one- context your
Company has benefited and will continue to benefit tremendously from the trend ofrationalisation of vendor base.
In the Financial Year gone by we secured two multi-year contracts from marqueecustomers giving us the revenue visibility of Rs 14000 Crs over the contract tenure.This speaks volumes about our long-standing relationships with our clients and the trustthey have in us.
Securing multi-year contracts underlines our fundamental vision to emerge as aGlobal Partner of Choice for major customers through lasting relationships based on mutualtrust and a strong value proposition.
In FY 2017-18 the global crude oil prices rose by 33%. The pass-throughmechanism in our business model shields us from the raw material price fluctuations. Ourthrust on integrated product chain and consistent quality of products gives us anadditional edge over our competitors.
Globally the chemicals industry has been undergoing some tectonic shifts. Indiancompanies focussed on speciality chemicals with better compliance standards are expectedto be the major beneficiaries of the growing trend of easternisation and reductionof capacities in China on environmental concerns.
This will give us exciting growth opportunities and I am glad to tell you yourCompany is gearing up for the next phase of growth.
As you might be aware your Company holds the leadership position in the variousproduct ranges and chemistries. We are the preferred partners of over 300 internationalcorporations and that of about 700 Indian companies.
We are also exploring new growth opportunities beyond Benzene derivatives Chemistry. InSeptember 2017 the Nitrotoluene facility at Jhagadia (Gujarat) became operational and bythe end of FY 2017-18 it reached 40% utilisation. We expect this facility toachieve its peak utilisation over the next 3-4 years with an estimated revenue visibilityof Rs 350-400 Crs per annum.
The pharma segment is also gaining significant revenues have been growing at over 20%the EBIT has doubled in the last 3 years. Our optimism in this segment remainsstrong.
With various projects in hand we are looking at investing further in variousgreenfield as well as brownfield projects.
A way to responsible growth
Growth is never a zero-sum game and if it affects the environment then it defeats allthe primary objectives it's meant to achieve.
While we see the trend of easternisation in the chemical industry which is furtherextending to India as an exciting opportunity; sustainability and responsible growthremains a top priority.
At Aarti we define our purpose asRight Chemistry for a Brighter Tomorrow' whereBrighter Tomorrow' means products which are needed for society i.e. productswhich help the society make their future bright and Right Chemistry' meansthe way in which we manufacture these products. These include products such as foodsagrochemicals lifestyle drugs high performer polymers etc. Uncontrolled growth ofindustry without relative and adequate measures on environment protection and conservationalways possess a threat to the environment. Although environmental compliances in Indiaare more stringent as compared to those in China the harsh reality is that India toofaces the ecological challenges of equal magnitude. At Aarti we take a holisticapproach to growth. Throughout our journey over the last 34 years we have beencontinuously focussing on achieving higher standards of human and environmental safety andnever looked upon safety merely as a compliance practice. In your Company's transformationfrom a vendor to a preferred global partner human and environmental safety has alwaysbeen the priority area for us.
While we take immense pride in being the global partner of choice today we understandthe responsibilities that come along with this status. We continue with our commitment tohuman and environmental safety.
I thank all our stakeholders for their continued support and trust in the management.Also on a personal note I request you to take a small step every day to make this worldless polluted and a better place to live.
|Warm regards |
|Rajendra Gogri |
|Chairman and Managing Director |