On behalf of the Board of Directors and the Company it is my pleasure to present theAnnual Report along with the Audited Financial Statements for the year ended March 312019and also extend a warm welcome to you to the 58th Annual General Meeting of your Company.
The Indian economy grew at a slower pace in the Financial Year 2018 - 19. GDP growthmomentum slowed to 6.8% lower than previous year ( 7.2% ). This slow down has affectedthe auto industry consumer goods and overall consumption. Industrial productioncontracted in March 2019. The first signs of rural distress have been handled well by thenew Government and we expect that the other sectors of the economy would also be receivingattention soon.
The demand for coal has been increasing YoY. Simultaneously the imported components ofthe demand has also been rising. Coal India production target of 607 mn tonnes was met andrevised target of 655 mn tonnes ( 8% ) for FY 20 has been set. In order to activatefurther we understand that the Government is planning to divest a part of its holding in3 subsidiaries of Coal India Limited namely Northern Coalfields Southern EasternCoalfields and Mahanadi Coalfields. The decentralization is expected to increase furtherefficiencies and increase in production. As compared to this optimistic situation in coalproduction the metal firms are awaiting a major change in MMRD Act to make iron orebauxite lime stone and manganese ore available for the metal industry.
Globally the tensions over trade issues Brexit and Middle East issues are hotting upcrude oil prices to higher level. This is expected to pose problems in the Indian economyunless some de-escalation takes place.
The details of the operating businesses i.e. Energetics and Explosives businessRealty business and investments are fully detailed in the Directors Report.
The Board is currently evaluating ways of enhancing shareholder value. As you areaware your Company holds large parcels of land. Due to the slowdown in the realty sectorover the past several years the monetization of the realty estates has been delayed.However the construction of a 100 ft. road through the land parcel in Hyderabad hasenhanced the Reckoner / market value well beyond the stated book value. This will bringrich rewards in the years to come.
As you are aware on the August 1 2019 this year the merger of Houghton Internationalwith Quaker Chemical Corporation in the US is completed. Your Company had through itswholly owned subsidiary in UK HGHL Limited invested GBP 100000 in the Group'acquisition project of Houghton. I am pleased to inform you that this investment hasturned out well for the Company as - the loan of USD 300 mn for the project supported bymortgage of the Company's land at Hyderabad has been totally repaid. The merger ofHoughton International with Quaker Chemical Corporation in the US will lead to acombination holding global leadership in the process fluids chemical specialities andtechnical expertise to the global primary metal and metal working industries.
Following closing the Company is a beneficial holder of 427395 shares of Common Stockin Quaker Houghton Ltd a New York listed entity and an adjusted cash consideration of USD12.2 million / INR 84.20 crores ( before deduction of the escrow amount ). Currentattributable market value of the aforesaid Quaker shares is approximately USD 80.3 million/ INR 554 crores as on August 1 2019. The Board is actively looking into appropriatetiming for exiting the shares at the highest value. Also the Board is looking at theopportunities for investments that will be value enhancing for your Company in theinternational market.
The net worth of the Company has increased to Rs. 1080 crores on consolidated basisand continues to be debt free.
I am confident of our continued success due to the strength of our teams which strivestowards out comes with great energy and efforts. Our drive to deliver innovation-led valuemakes us distinctive. I take this opportunity to thank our team and express our gratitudeto all our stakeholders for their support over the years.
| ||Ajay P Hinduja |
|August 10 2019 ||CHAIRMAN |