I am privileged to present the 73rd Annual Report of yourCompany for FY 2020-21 and sincerely hope that all of you are safe and in good health. Theoutbreak of Covid-19 has been an immense threat to human life and has also adverselyaffected the global economy. But India has coped up well and is showing signs of recovery.
It is an honour and give me immense satisfaction to appraise you aboutthe financial performance and achievements of your Company during the FY 2020-21 and itsfuture outlook. Despite the initial contraction our business had a V-shaped recovery andrecorded expected growth in FY 2020-21.
Highlights and achievements of the Company
You will be happy to know that your Company has performed consistentlyand improved its fundamentals despite growing complexities in the industry and thecontinued uncertainty surrounding global economies. Profit before Tax (PBT) during thefinancial year 2020-21 stood at Rs.14.70 crore [Rs.(-)21.25 crore in 2019-20] and TotalComprehensive Income (TCI) stood at Rs. 21.86 crore [Rs.(-)15.68 crore in 2019-20] aftermaking necessary Income Tax provisions and other adjustment of losses under the categoryof other comprehensive income.
Your Company puts its focus on the present but always has its eyes onthe future.
Despite the challenging times the market capitalization of the Companyhas grown from Rs.376.98 crore as on 31st March 2020 to Rs.965.68 crore as on31st March 2021 reflecting steady investor confidence in your Company.
However there was a negative impact on the cash position of theCompany due to increase in capital expenditure and wage hike of tea workers along with theadditional liability of your Company towards payment of salary and wages of employeesabsorbed from Hooghly Printing Co. Ltd. (HPCL) as also the liability for payment ofunsecured creditors of HPCL pursuant to NCLT's approval for merger of HPCL with yourCompany consequent upon Government order.
Due to insufficient free cash surplus position the Board was unable torecommend any dividend for the financial year 2020-21.
Your company always strives to attain the highest level of CorporateGovernance practices. Implementation of Integrity Pact adoption of code of conduct and awell-defined Internal Control Framework add to the transparency of the Company'sbusiness practices. AYCL is complying with the Government Guidelines and listingregulations on Corporate Governance. A report on Corporate Governance compliance forms apart of the Board's Report. Your Company has been getting "Excellent"rating from Department of Public Enterprises (DPE) for complying with various norms ofCorporate Governance. I am sure that this trend will continue.
Outlook Tea Division:
The tea division of AYCL puts emphasis on "Quality" and isrecognized as one of the top-quality tea producers in the Tea Industry. Production andmanufacture of crop is also showing an uptrend with its planned uprooting re-planting andrejuvenation programme projecting a long-term sustainability and viability.
With various certifications reputation in bulk tea business nichepositioning in green and speciality teas (both domestic and international) enhancedretail and e-commerce efforts outlook for the division is very positive.
Electrical - Chennai Operations:
Despite decline in last year Transformer industry is anticipated togrow at a Compounded Annual Growth Rate (CAGR) of over 6.89% in the next six years.
AYCL- Chennai Operation's market share with respect to itsexisting product range (i.e Transformer of 8 MVA to 63 MVA132 kV Class) is 2% (approx).
Outlook for the business is positive considering sector growth statedabove. This unit's product has a good range brand image and decent infrastructure.It's turn-around looks feasible next year from the present minor loss-makingscenario.
The unit has high efficiency product range as per industry requirementand competes well in the market. Production processes and infrastructure match the best inthe industry. Labour and other operations cost will come down in terms of percentage ofrevenue with increasing sale and market share in near future.
Considering these factors the outlook for the business is positive inspite of the losses being incurred by the unit. This unit's business has a good brandimage product range decent infrastructure and a turn-around is possible by FY23.
Forward Looking Statement
In Tea your company will embark on modernization and modification ofexisting plant and machinery with a CAPEX spread of INR 3.70 crore (approx.) in four Dual(CTC + Orthodox) gardens over the next 2 years. This along with better capacityutilisation in other factories is expected to add one million kg capacity. Acquisition ofTea gardens is also being considered to add one million kg capacity in next 2 years'time. Tea business of the Company is thereby expected to grow with a CAGR of 9.1 % andreach a top line of INR 300 crore by FY24. Profit is also expected to grow accordinglyprovided that the wage and other costs remain stable along with market price of tea.Uprooting and replanting in-filling of vacant patches improvement in Fine Leaf Count(FLC) use of bio-fertilizer and bio-insecticides will be pursued vigorously to improvetea bush health and tea quality to command better price.
Engineering and Electrical-Chennai Operations are now expected to domuch better as their order book position is very good in the current year.
All these will make it possible for Andrew Yule to grow with a CAGR of11.6% to become INR 500 crore Company by FY24.
Before I conclude on behalf of the Board of Directors I wish toconvey our sincere regards and deep gratitude to our valued stakeholders for theircontinued support and trust. You always have been the motivational force that hasfacilitated us to move ahead. I also put my heartfelt appreciation for all AYCL employeeswho took on a courageous responsibility to achieve the goals even during the worstCOVID-19 situation.
At the same time I wish to acknowledge the valuable guidance given bythe Board of Directors of the company without which it would have not been possible tolead the Company with energy and enthusiasm. I look forward to continued support andcommitment from all stakeholders of the Company to reach new heights and enhancingstakeholders' value.
|Place: Kolkata ||Sanjoy Bhattacharya |
|Date: 29th September 2021 ||Chairman & Managing Director |