Your Company reported profitable growth in FY 2019-20 which is a creditableperformance at a time when the Indian economy slowed from a peak of 10.06% growth in FY2006-07 to 4.2% in FY 2019-20 the slowest quarterly growth in 11 quarters. Against thislandscape your Company performed creditably: revenues finished around the level of theprevious year despite nearly seven days of productive revenues being lost on account thelockdown in March 2020. Your company reported profitable growth: even as revenues stayedflat at the level of the previous year EBIDTA increased by 4.34% and profit after taxstrengthened 0.65%. I am pleased to report that the increase in profits was not the resultof a fleeting increase in realisations or a cost arbitrage; the increase was derived fromhigher production and offtake superior coverage of fixed and variable costs as well asvalue-addition.
During the last annual report the management of your Company had indicated that thetime had come to extend its presence in existing geographies and emerge as a pan-Indianplayer in view of a ground shift arising out of GST introduction and the narrowing pricedifferential between products offered by organised companies like ours and unorganisedcompetition.
During the year under review the Company extended its footprint. The Company embarkedon extending its footprint in Maharashtra during the year under review. We believe thatthe broad-basing of this geographic footprint holds the key to our prospective growth inrevenues margins and overall valuation. On the construction chemicals front the Companygrew its B2C business 62% during the year under review owing to the increasing demandfrom residential spaces. Further with the COVID-19 pandemic the demand for a dedicatedworkspace at residential properties will only drive the B2C business segment. The Companyalso grew its job work segment 2x following the addition of new clients and a substantialincrease in orders.
Even as India is passing through a slowdown there are good reasons to be optimisticabout the country's prospects across the medium-term. The Indian government intends toinvest deeper in national infrastructure building. What provides me hope extends beyondthe quantum of infrastructure; there is a corresponding premium on infrastructure qualityas well manifested in asset health protection and low maintenance costs. Besides thereis a greater public accountability related to the employment of credible vendorsmaterials and practices. This indicates that public infrastructure does not just need tobe built well; it needs to be built to last. This endurance is derived not just fromcredible construction practices but also from a forward-looking protective mindset. Thisprotective approach has created a compelling case construction chemicals.
What makes your Company's role visible is that it is organised research-led andlisted enhancing the confidence of large construction institutions. Besides we do notjust provide a product; we are engaged in providing a solution that enhances assurednessand a customer's peace of mind.
Right company right time
Hindcon Chemicals is the right company at the right time in the right country in theright sector. Your Company possesses the competence to manufacture resin and cementcapsules; the Hind Bolt R resin brand is established and growing. Your company's portfolioof around 95 products are customised around customer needs. These products have beentrusted in large infrastructure projects by prominent construction companies. Your Companyhas responded with speed to the evolving scenario. The enhanced awareness related toconstruction chemicals has extended from large construction companies to private homebuilders as well. In line with this transition your Company extended its focus to retailcustomers. During the year under review the proportion of revenues from institutionalcustomers stood at 96%. Your Company is poised to re-balance its sales mix with theobjective to generate revenues from retail customers (B2C) 10-fold across the next fiveyears.
During the current financial year your Company will focus on cost rationalisationleverage existing institutional relationships and protect the integrity of the BalanceSheet with the objective to widen its geographic footprint across the foreseeable futurethrough stronger brand promotion on the one hand and deeper distribution presence on theother. When demand accelerates as we are confident it will the Company willbe attractively placed to commence production in a second shift that doubles this capacitywith no increase in assets.
Hindcon has focused on leveraging post-pandemic opportunities. Your Company intends toextend into the sanitiser business marked by a nominal investment funded through accrualsand commissioned by the third quarter of 2020-21. The capacity of 7 kilolitres per day isexpected to break even within a year validating our optimism.
I assure our shareholders that we address a multi-year growth journey which shouldtranslate into superior value in the hands of those who own shares in our Company.
|Sanjay Goenka |
|Chairman & Managing Director |