Dear Ladies and Gentlemen
2019-20 might have ended on a sombre note and our today' isfilled with uncertainty; but let me assure you the future holds promise. I hope you andyour families are safe healthy and secure.
Ladies and Gentlemen these are unprecedented times. As I look back ithas only taken 25 weeks for the World to come to a standstill.
As Vladimir Lenin had once said "There are decades wherenothing happens; and there are weeks where decades happen."
Within 25 weeks we have experienced a pandemic which has combined theeffects of the 1918 Spanish Flu with the economic recession of 2008. The rhetoric hascompletely changed from optimism to caution to pessimism.
It has brought about a change that will not only impact our today; butwhich shall live on and shall also impact our future. Change that has not only brought theworld economy to a grinding halt; but which has also disrupted lives across the globe.Within weeks we have experienced what people had not experienced for decades.
Unprecedented Times call for Unprecedented Measures. The lockdownimposed by countries across the Globe as well as by our Government on March 23rdto protect lives impacted business operations adversely. But it also
gave rise to our new-age Warriors - Warriors on ground which compriseour Doctors Police Staff Administration and other authorities who have selflessly beenfighting for our lives and our country. We thank these warriors. They are our real heroes.
Daily lives though came to a standstill essential products andservices were still the need of the hour. It was time for our customers to stand up anddeliver the Essential' products required for one's lives. To enable andequip our customers Galaxy was ready. This was about our nation and our people. Our COVIDYodhas' as we internally call our members from the Plant Operations andLogistics not only fought through the various risks and lockdown restrictions but alsoensured we kept on delivering and fulfilling our customers' needs 24x7. This has notbeen easy. Right from restrictions imposed by local authorities on travelling to work torestrictions at ports and unavailability of transportation mediums operations wereseverely impacted but as they say there is always light at the end of the tunnel - thingshave not only improved since Lockdown 1.0; but we do see normalcy returning sooner thanlater. We thank our COVID Yodhas for braving through this storm valiantly.
In these grim times ladies and gentlemen I would like to share somepositive news with you. The year 2020 marks the 40th year since inception for yourCompany. The journey which began in 1980 has now completed 4 decades. 4 decades which hasseen our profitability compound at a CAGR of 28.5% from Rs 1 Lakh in 1980 to Rs 230 Croresas of 2019-20 and our Revenues multiplied by 21683 times. But more than the financialnumbers these 4 decades have been about the sustainable partnerships and relationshipswhich we have built and nurtured with all our stakeholders - relationships which have notonly stood the test of time; but also enabled our growth over the past 4 decades. We thankall our stakeholders for their continued support and cooperation.
Moving on from the last 4 decades to the last decade. The last decadehas seen your Company grow at a CAGR of 10.9% in volume terms 16.3% in EBITDA terms and19.8% in PAT terms maintaining our threshold ROCE of 22% for 7/10 years. Both oursegments i.e. Performance Surfactants and Specialty Care Products have seen volume growthin excess of 10% during this period.
As we enter the next decade the last year of this decade 2019-20 was arelatively mixed year for us. I say mixed while all our segments and regions registeredgrowth this growth was relatively subdued in the second half of the year. While ourPerformance Surfactants business grew at 6% in volumes Specialty grew at 1.7% after aspectacular 2018-19. Overall volumes grew at 4.4%. Egypt made a strong comebackregistering a 22.2% growth in volumes over the previous year which primarily drove thePerformance Surfactants volume growth. Specialty business though started off on a strongnote registering a 10% volume growth in H-1 the same on account of seasonality in Q-3 andoutbreak of COVID-19 in Q-4 registered a decline of 6% in H-2.
Lack of adequate credit for the distribution channels along withreduction in Inventory days impacted business in India which remained sluggish and flatfor the year. Rest of the World markets which had outperformed last year grew 2.8% involumes. This was mainly on account of the decline of 11.7% it experienced in H-2 FY201920 due to the lower offtake of Specialty Care Products in Q-3 on account ofseasonality and on account of the outbreak of COVID-19 in Q-4 which severely impacted thedeveloped nations initially.
Africa Middle East and Turkey (AMET) made a strong comeback this yearregistering a 9.4% volumes growth mainly driven by the robust performance registered byour local Egypt market.
While Business has been relatively mixed business operations too wereadversely impacted by the Lockdown imposed by the Government on March 23rd 2020which completely wiped out our last week's sales for Q4 2019-20. The major impactthough will be seen in Q-1 2020-21 where due to supply chain disruptions our ability toservice the underlying demand got severely constrained.
The blast which took place at our M-3 unit at Tarapur resulted in 3casualties. While this will have an adverse impact on the business in Q-1 FY 2020-21 morethan that this has left an indelible blot on our illustrious 40 years journey which tillApril 13th 2020 had not seen any serious incidents involving casualties. Whileas an organisation we have always given Safety the topmost priority and our safetystandards till date are commensurate to the best-in-class this incident has taken us backto the drawing board. Right from implementation of Behavioural-Based Safety for allemployees to refining and improving the Safety SOPs to framing new SOPs for operatingunder the COVID-19 scenario to conducting safety audits and evaluations by the SafetyTeams we are leaving no stone unturned to ensure such incidents do not happen in thefuture ever again. Basis the insights derived from the investigation we have launchedProject Abhayatam - A Fearless New Beginning. This project comprises an 8-step reviewmechanism by a Team of subject specialists within Galaxy. This will strengthen and enhancethe Design Operations Safety and Skill levels of all our plant personnel across theorganisation and enable us to identify the areas requiring improvement in Safety. Post theidentification course correction shall involve automation to monitor and control thecritical operations across the organisation. While loss of lives cannot be compensatedfor all necessary support - financial emotional and social have been extended to thefamilies of the deceased. The deceased Shamir Khoja Vijay Sawant and Runal Raut willalways remain part of the Galaxy family and we shall forever remain indebted to thecontributions made by them.
Looking ahead while demand for Performance Surfactants remains fairlystable cut-down on discretionary spending along with hoarding of cash may impact newlaunches and sales of existing premium products adversely impacting our Specialty Carebusiness. But we remain hopeful and I say that as the situation month-on-month has beenimproving - We hope this continues. Monsoons pickup in consumption globally andrelaxation of lockdowns
will be crucial for this momentum to sustain and rise going ahead. Apositive though has been our Egypt Plant which faced no disruption/shutdown on account ofthe pandemic. Therefore we believe the recovery and momentum seen in Egypt should sustain.
CAPEx planned for our Specialty Products remains on track thoughexecution and operationalisation will get delayed by 6-9 months. This year began with theoperationalisation of our performance surfactants plant at Jhagadia. While nobody couldforesee the rise in demand for performance surfactants on account of the pandemic it isour ahead of the curve CAPEx planning and execution that has held us and is holding usagain in good stead today as the demand for performance surfactants rises.
2019-20 also saw your Company winning several reputed awards in theareas of:
t Innovation - The Gold award at HPCI for our oil soluble surfactantGalSoft TILS (G)
? Human Resources - Certification as a Great Place to Work for the 2ndtime
? Intellectual Property - Excellent use of IP in Innovation Award atthe IP Summit to finally
? My own nomination as a finalist at the EY Entrepreneur of the YearAwards 2019
To conclude with an operating cash flow in excess of Rs 300 CroresROCE of 23.5% and PAT growth of 20.6% awards and recognitions for our performance inmultiple areas and growth across segments and regions this has been a good end to thelast decade.
Ladies and Gentlemen as responsible citizens of this nation webelieve it is critical that businesses give back to the society and the nation thatcreates them.
Our Corporate Social Responsibility Policy has been formulated with aview to ensure the holistic development of the community and the environment. Various CSRinitiatives in the field of healthcare education social upliftment women empowermentenvironmental protection conservation and restoration were undertaken during the currentyear. The pandemic saw your Company undertake multiple activities across the country inorder to support and enable the society gain access to hygiene through distribution of 1.2lakh handwash bottles and sanitisers. Food and essentials were also provided to the nearbyvillages through various distribution drives carried out by our CSR members.
Sustainability forms our Core. A journey which began in 2010-11 shallcomplete a decade in 2020-21. A decade marked by remarkable work done in the areas ofResponsible Care establishing ZLD (Zero Liquid Discharge) units across all our sites andpioneering Innovation that is sustainable green and incorporates our patented greentechnology for manufacturing - all in all a sustainable and environmentally consciousproposition.
Work done in the last decade has started bearing fruits. This yearyour Company won the NAMC Gold Award for its Jhagadia Unit has been shortlisted as afinalist for Asia's Best environmental reporting category for 2019 and has alsostarted the assessment of Risks and Opportunities of Climate Change using TCFDrecommendations well ahead of the regulatory norms. Sustainability shall be a keymonitorable going ahead and as an organisation we are fully conscious and geared up forit. At Galaxy sustainable and consistent value creation for all our stakeholders remainsour motto. We have consistently demonstrated it over the past 4 decades; and the nextdecade and decades to come shall be no different. We remain committed to growth and theinherent robustness of our business model sustainable relationships built over the yearsand our people give us the confidence to achieve lot more in the decades to come.
But to succeed tomorrow one needs to work today and work for the nextdecade has already begun. The next decade shall see the rise of Persistence' -Growth driven by: t Premiumisation
t Sustainability and Safety t Innovation
? Supplier Integration ^ Trade
? Emerging Opportunities
? New-age Technologies that shall power unmatched consumerexperience
? Customised Consumption
? Engagement with all Stakeholders
On that futuristic optimistic and positive note ladies and gentlementhank you once again for being part of this journey.
|Thank you |
|Yours sincerely |
|Managing Director |