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Chemplast Sanmar Ltd.

BSE: 543336 Sector: Industrials
NSE: CHEMPLASTS ISIN Code: INE488A01050
BSE 00:00 | 24 Sep 609.10 4.15
(0.69%)
OPEN

595.15

HIGH

612.00

LOW

584.85

NSE 00:00 | 24 Sep 607.90 5.70
(0.95%)
OPEN

596.10

HIGH

611.85

LOW

585.10

OPEN 595.15
PREVIOUS CLOSE 604.95
VOLUME 229631
52-Week high 622.00
52-Week low 510.30
P/E 97.46
Mkt Cap.(Rs cr) 9,630
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 595.15
CLOSE 604.95
VOLUME 229631
52-Week high 622.00
52-Week low 510.30
P/E 97.46
Mkt Cap.(Rs cr) 9,630
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Chemplast Sanmar Ltd. (CHEMPLASTS) - Chairman Speech

Company chairman speech

1996 CHEMPLAST SANMAR LIMITED CHAIRMAN'S STATEMENT It gives me great pleasure to extend a warm welcome to you this morning. With your permission, I will take the report of the Board of Directors and the attached accounts for the year ended 31st March 1996 as read. MACRO ECONOMIC OVERVIEW The macro-economic developments in recent times reflect robust growth in real GDP, and a perceptible reduction in the rate of inflation. Overall economic growth during 1995-96 accelerated to.7%, despite slow agricultural growth. While industrial production grew by 12.4%, surprisingly, despite a normal monsoon, agricultural production growth was only 0.9% and is a cause for concern. After two consecutive years of double digit increases, inflation has dropped from a high of 12.5% in January 1995 to a low of 4.2% in June 1996. The Indian economy today reflects fundamental strength with sustained export growth, substantial reduction in the current account deficit as a proportion of GDP, and spectacular growth in foreign direct investment since 1991-92. But the year 1995-96 also witnessed slower monetary growth accompanied by a deceleration in growth of bank credit for the commercial sector, largely due to a huge increase in net RBI credit to the Central Government. This situation has led to banks leading at interest rates in the range of 17% to 20%, despite a drop in inflation below 5%. Such high real interest rates could hamper the growth of production. The recent reduction in the CRR by one percentage point announced by the RBI has eased the situation a little bit. The pace of reforms in banking and capital markets has been maintained with the autonomous regulators - RBI and SEBI, ushering in significant policy changes. In spite of strong export growth at 21% in dollar terms in 1995-96, the balance of payment came under some pressure due to consistent import growth, high debt service commitments and a decline of inflows from external sources. However, due to the RBI's unrelenting efforts, the foreign exchange market stabilised at around Rs.35 per Dollar in June 1996. May 1996 saw tumultuous events when the multi-party alliance, "United Front" formed the Government at the Centre. The first budget of the new Government aims at continuation of reforms and achieving sustained industrial growth. The effort is to contain the revenue deficit at 5% of the GDP. At the same time, there is a conscious effort to present a `human face' for the reforms, with significant emphasis on development of the social and infrastructure sectors. The Government's initiative in encouraging foreign direct investment by streamlining FIPB procedures and also the relaxed guidelines for issue of GDRs and external commercial borrowings should result in increased inflow of funds from abroad. In retrospect, the events of recent times have sown the seeds for transforming the Indian economy into a globally competitive strong economy. YOUR COMPANY'S PERFORMANCE The year 1995-96 was yet another year of excellent results with an all-time high in Sales and Profits. Turnover at Rs. 474 crores was higher by 27% over the previous year. The Profit after tax at Rs. 68 crores recorded an increase of 106%. The Earnings per share has also gone up substantially by 60% to Rs. 33.79 per share despite increase in the Equity capital from Rs. 17.50 crores to Rs. 21.11 crores. The Board of Directors have recommended a dividend of 40% on the enhanced capital, besides issue of bonus shares in the ratio of two shares for every three held. The record performance was possible due to not only improved realisations but also consistent reduction in input costs by judicious timing of purchase of imported feedstocks. The company could also source molasses at lower prices. There was an all-round improvement in production efficiencies. As informed earlier, the increased capacities in PVC and Chloromethanes will be in operation shortly. The first full year of operation of the Shipping Division turned out to be profitable. During the current year, the company is acquiring two Product Carriers, taking the company's fleet to a total of seven. Despite the recent increase in the administered prices of petroleum products and reduction in import duties announced in the Union Budget for the year 1996-97, the performance of the company for the current year 1996- 97 is expected to be good. RESTRUCTURING The Thermoplastic Polyurethane division of the company has been spun off into a joint venture with Bayer AG of Germany. This venture with Bayer's technology and marketing support should do very well. The company has also entered into a joint venture with Cabot Corporation, Boston, USA for manufacture of fumed silica on the basis of a technology developed in- house. This venture, being set up at Mettur Dam, is expected to have good prospects in the rapidly growing domestic market. In line with the recommendations of McKinsey & Co., the first stage of diversification into shipping has been profitably completed. The company has identified the textiles industry for the second phase of diversification, keeping in mind the prospects for international business and India's competitiveness in this sector. The company is entering into a techno-commercial alliance with a world major for this project which is being set up near Madras. With the diversified operations in chemicals and shipping, and the addition of textiles, the firm foundations of the company are being further strengthened to enhance shareholder value. ACKNOWLEDGEMENT I am sure all of you will join me in recording my sincere appreciation of the support and continuous co-operation by the employees, company's bankers, financial institutions and agencies of the Government, both at the Centre and in Tamil Nadu. Thank you. K.S. NARAYANAN CHAIRMAN Place : Madras Dated : 7th August, 1996
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