FY2018-19 was probably one of the most challenging years for the whole industry and wewere no exception to it. Though the global economy started off on a strong note in 2018imminent challenge slowed down the momentum considerably and eventually the marketsentiments turned bearish. Escalating trade tension between the US and China furtherimpacted growth. The impact of this was evident in the chemical industry as well. Therewere consolidations and price wars. The prices of raw materials and exchange ratesfluctuated.
This was just the kind of year when everyone gets an excuse of taking a cautiousapproach and an alibi for not performing well. Not us. We instead used the weak year toimprove our fundamentals and consolidate operation. We successfully worked towardsoptimising energy costs and enhancing manpower productivity enhancing our quality andintroducing new products improving our environmental performance and getting futureready.
I am happy to state that these initiatives helped us navigate the challenges unscathed.We continued to nurture and grow existing relations along with adding a new prestigiousclient. Our strong focus on production planning has enabled us to enhance plant uptimewhich in turn improved capacity utilisation and led to higher production. This improvedour operating performance enabling us to grow EBITDA by 3.36% to Rs. 39.53 Crore and a 44basis points increase in EBITDA margins to 13.46%. This was despite revenues remainingflat at Rs. 293.66 Crore and increase in prices of key raw materials. Net profit howeverwas under pressure declining by 20.72% to Rs. 18.30 Crore.
Despite these challenges our balance sheet remains one of the strongest in the sectorwith low leverage. Now that the markets have bottomed out and the scenario steadilyimproving our enhanced profile provides us a solid platform to deliver strongerperformance.
Unwavering focus on a better future
During the year we intensified our focus on driving a culture of continuousimprovement by planning tracking and measuring performance of each employee leading tosignificant enhancement in manpower productivity. We strengthened our relationships withcustomers on the back of our quality supply reliability and costs. Customers are centralour business. We believe that we can only be sustainable by serving the growing needs ofglobal customers in the long-term. By listening to them understanding their needs anddelivering on them with best products and services we ensure superior experiences. Wegive them comfort in the form of predictable pricing in exchange of predictable volumes.This is fundamental to deepening our engagement and forging enduring relationships withthem. And this enabled us to maintain our robust and enviable track record of zero productreturn. This is important in our industry and endorses our strong market reputation.
Environment sustainability is another where we have been making a differentiation. Itis important in our industry where environmental performance has become a key decidingfactor to do business. In line with this we have made sustained efforts to ensure alldischarge from our plants are effectively treated. Our focus now is to significantlyreduce our greenhouse emissions and water consumption over the next decade and make ourprocesses and portfolio more sustainable.
Message to the shareholders
As we move forward we are strategically transforming our organisation and becomingfuture-ready to sustain the growing size and complexity in our business. We are makingcontinuous investments in productive assets and in areas where we see growthopportunities. We have devised strategies keeping in mind our in-depth risk mitigatedapproach towards incurring capital expansion. With our constant efforts to bottleneck wehave emerged as the largest and most preferred producers of pigments and pigmentintermediates in the world with massive capacities under one roof which gives us costadvantage.
We also intend to reduce our dependence on the ink segment by exploring businessopportunities in paints and plastics segments to minimise the risk of segmentconcentration.
We are optimistic of the opportunities that lie ahead. The Indian economy supported bystructural reforms and continued recovery in investments and consumption is projectedgrowth upwards of 7% in the coming years. The country also remains an attractive globaldestination with stable Government having strong focus on reforms and robust fundamentals.Factors like ease of doing business infrastructure creation and digital outreach willonly boost its growth trajectory.
China factor will also be an important growth driver. They are the global leaders inchemical sector. However the recent issues of trade wars with the US along with theenvironmental-related clampdown on chemical companies have led to global companies lookingfor better and reliable global partners. India as an attractive low-cost destination andAsahi as a quality cost and environment conscious company fit well in this scenario.
We are well-equipped to cater to the increasing growth opportunities. We are targetingto become a global player with a presence across more countries and grow client base. Weare continually striving for new product development and innovative methods to enhance ourmanufacturing capabilities and cater to the stringent quality requirements of ourcustomers.
On a closing note I thank all our stakeholders for their unstinted support and trust.I thank our shareholders for staying with us through challenges. Your Company appreciatesthis and has decided to reward you proposing a final dividend of Rs. 3 per share for theFY2018-19 which shall ensue a capital outlay of Rs. 368 lacs. With this we stand true toour ambitious dividend policy. I also thank our engaged employees who are our strengthfor the passion and enthusiasm they bring into the organisation. They have rightly beenthe harbingers of our success. We remain motivated to build a sustainable and long-termfuture and maximise value creation for all our stakeholders while upholding the values ofthe Company.
Paru M. Jaykrishna