Dear Fellow Shareholders
I am delighted to share my thoughts on the performance of your companyduring FY 2018-19. Amid external challenges we reported satisfactory outcome built onstrong fundamentals and optimised business operations.
The first half of the year witnessed a notable recovery of investmentand private consumption in the country. On the structural reforms front theimplementation of Goods and Services Tax (GST) and Insolvency & Bankruptcy Code (IBC)continued to evolve during the year. However the economic growth moderated in the secondhalf owing to fluctuating crude oil prices depreciating currency and liquidity concernsamid a global slowdown. With sluggish growth in the agriculture and manufacturing sectorsthe country grew at 6.8% in the FY 2018-19. Despite the headwinds India remained one ofthe fastest growing economies in the world. The country's long-term growth potentialstands undisputed backed by a host of reforms undertaken recently which have laid down astrong foundation for the economy. I am optimistic that the new Government will providefurther impetus to the growth story of the country.
The global PA market spans across five regions namely Asia PacificNorth America Europe Latin America and the Middle East & Africa. Asia Pacific regionis the major producer of PA followed by Europe and North America. The PA market isexpected to reach US$ 9.61 billion globally by the end of 2020. Asia Pacific is likely toemerge as the fastest growing as well as the largest PA market by the end of 2023. Theyear 2018 was marked by volatile crude oil prices which inflated the raw material pricesfor
PA as well. However with crude prices stabilising in 2019 the PAindustry is expected to recover margins. The market size of domestic PA industry standsstrongly at 375000 MTPA in 2018 and is expected to grow faster by 7-8% annually. Weexpect demand to get a thrust from the growing end-user industries like constructionautomobile electronics paints & coatings among others. The new Government'srising focus on structural reforms infrastructure and housing development will furtherfuel the demand for PA.
In terms of financial performance the Company delivered a healthyperformance in FY 2018-19 on the back of sustained efforts to improve operationalefficiencies. The Company's revenue increased by 14% during the year to 1311 crores.EBITDA and PAT stood at 234 crores and 116 crores respectively. Volatile crude oil pricesand geopolitical issues in global market led to a significant rise in the prices of rawmaterial. As a result the overall EBITDA Margins and profitability of the Company wereimpacted to some extent. However with recent stability in crude oil prices and a sharpdecline in PX prices (a co-product of OX) we expect the margins to improve going ahead.Our Directors have recommended a dividend of 40% i.e. 4 per equity share of 10 each.
Expanding and Evolving
Our sustainable growth in FY 2018-19 was supported by some keystrategic decisions taken two years back with continuous focus on innovation. Weinitiated capacity expansion anticipating rising PA demand in the industry. Thebrownfield expansion of PA4 is in final stage and is expected to come on stream by the endof 2019. Further we plan to introduce advance plasticizers by FY 2020 in order todiversify our existing product mix. The PA4 expansion will result in additional washwater which will be used to generate MA capacity for the Company. Higher MA capacity willfurther support our strong position in the industry. Overall our holistic strategies willlead to greater visibility across geographies and better value for the customers.
We made considerable progress in building a firm base to support ourfocus on achieving a sustainable growth. The year ahead will certainly be more excitingas we reach towards the completion of our expansion initiatives and derive the desiredbenefits.
Before I conclude I appreciate all our employees who have played agreat role in the Company's growth. I thank our Directors for their invaluable inputsand motivation which has been instrumental to our growth journey. I also extend mygratitude to our customers bankers suppliers Government authorities and the growingfraternity of shareholders for their continuous trust and support in our vision.
Yours sincerely Nikunj Dhanuka
Managing Director & CEO