and economic crisis looming around with the COVID-19
This has been an extraordinary year. The fears of social pandemic onlyheightened as the year progressed with
multiple waves across countries. Yet amidst all the chaos there have been excellentinstances of governments medical community individuals and businesses uniting to helpeach other ward off the crisis. The rapid pace of vaccine developments and inoculationsprovide optimism of better days ahead.
I am happy to share that at Akshar Chem we prioritised the interests of allstakeholders in these challenging times rather than just focusing on the business aspect.We immediately moved all people to work from home to minimise risk. On reopeningadditional safety measures in line with the government regulations were implemented forthose having to come to office or plants. We ensured no lay-offs timely payments ofsalaries and also extended COVID-19 insurance to all employees and labours. Official worktravel was stopped to minimise contacts outside. Our teams too responded with agility andhelped us maintain high operational efficiency which ensured that we were able to meet allour order commitments to the customers thus reinforcing their trust on us. Consideringthe deep impact the pandemic had on lives and livelihood we distributed 200 free foodkits to villages in vicinity to plant along with masks and sanitisers.
A positive macro outlook
FY 2020-21 saw all major global economies on the downward slide. The Indian economy ledby a stringent lockdown saw the GDP declining to multiple decades low in H1 FY 2020-21.Though with activities resuming in the second half along with supportive measures from theGovernment and the RBI there was a sharp rebound until the second wave hit harder. Forthe full year FY 2020-21 the Indian economy declined by 7.3%. The outlook thoughremains strong for FY 2021-22 with the Indian economy projected to grow by 9.5% given thehuge pent-up domestic demand along with increased vaccinations and better preparation forany upcoming pandemic wave.
India an attractive chemical destination
The Indian chemical industry especially the dyes and pigments in which we operate wasadversely affected. Lockdowns restrictions on international trade and disruption insupply chain impacted demand in the first half of CY 2020. Though beginning the secondhalf the industry rebounded as evident in growing Index of Industrial Production (IIP)for Chemical Manufacturing. The demand recovery is expected to continue going into FY2021-22 with IIP likely to achieve pre-Covid levels.
In the longer run India is well-positioned to be the global chemical hub. Withstructural and locational advantage the countrys Chemical Industry is all set torapidly grow from its current size of US$ 178 billion to an expected US$ 300 billion overnext 5 to 7 years. This is further supported by the fact that India has the lowest percapita consumption of chemicals. The exports market is expected to grow faster as Indiaconsolidates its position in the specialty chemicals business which are dominated byagrochemicals dyes and pigments. Consumer trend towards good health to drive demand forhome and personal care items.
The recent initiatives by the government in the form of production-linked incentive(PLI) scheme and Atmanirbhar Bharat (self-reliant India) are expected to strengthen theindustrys competitiveness and position it to capture share in global manufacturing.
Focused on making India Atmanirbhar
Post the outbreak of COVID-19 along with Indias vaccine diplomacy thecountrys manufacturing capabilities and credibility as an alternate supply chaindestination has strengthened in the international arena. Its effect was evident inaccelerated shift of manufacturing from China to India which is likely to continue in theforeseeable future. Also in the domestic markets there is a growing sentiment ofcompanies beginning to prefer Indian made products over Chinese ones. We expect thesedevelopments to boost demand for Indian chemicals. For AksharChem this will be anopportunity to grow both domestic and exports business. Being a key domestic dyes andpigments manufacturers with established competencies robust product quality and mixmanufacturing capacities and strong relationships we will be well-placed to capitalisethem. We will be on a look out to prudently invest funds to expand CPC Green andPrecipitated Silica capacities on the basis of demand scenario.
Sustainability has always been an important agenda for us. We understand theresponsibility for safety of environment and nature. And hence we do not just focus onmeeting the regulatory norms but go beyond them with continuous investments in bettertechnologies to reduce resource consumption and ensure effective discharge. I am proud tostate that we have been a zero discharge company for a few years now. We have also plantedand maintain a greenbelt at our factory premises to keep the environment clean and safe.
Message to shareholders
On behalf of the Board I thank all our stakeholders for their continuous encouragementand unflinching support. I take this opportunity to express my gratitude to our agile andproductive workforce for their dedication and commitment to the Company which has helpedus to deliver value consistently to customers. I also thank our shareholders who haveshown confidence in our business model and resilience. In conclusion while this year hasbeen an aberration the overall long-term fundamentals of the chemical industry as well asthe Company remains strong. We are optimistic of making good of opportunities and embarkon a path of long-term growth and value creation.
Paru M. Jaykrishna