It is my pleasure to present to you the Annual Report 2018-19 and share the Company'sperformance journey and future strategy of the Company.
The last fiscal year marked 90th year of IVP Limited. Over the past threeyears the Company has consciously invested and upgraded its plant and infrastructure toupscale its production facilities and made them contemporary and ensured that theycontinue to adhere to all current safety and environmental norms for chemical companies.The Company has also invested for diversification of its finished goods portfolio toensure that it stays relevant in the years ahead. These small but important steps werenecessary for the future growth and sustainability of the Company.
The Financial Year 2018-19 experienced lot of headwinds in the form of crude pricevolatility and depreciation of rupee which affected the margin. Political uncertainty inview of elections also weighed on consumer confidence during last quarter. The slowdown inmanufacturing intensified in last quarter severely affecting automotive industry. Besidesrural stress and NBFC stress also amplified in later part of the year affecting themarket. Your Company has shown resilience in the face of above challenges by growing therevenue substantially so that your Company could maintain its market share in the foundryindustry and made some inroads in the footwear industry. However with much higherrevenues and long working capital cycles the interest cost of the Company hasconsequently risen sharply.
The foundry industry which is the key industry we operate in recorded good growth inthe first half of Financial Year 201819 however the slowdown in second half negated theearlier gains and overall foundry casting production remained stable. With lower demandand consequent competition among suppliers led to margin erosion in the foundry chemicalindustry. However despite lower margins your Company witnessed 11% growth in the volumein foundry chemicals.
The footwear industry where the Company supplies PU systems the market was stagnant.This was affected by an unprecedented situation with many challenges posed by highvolatility in imported raw material prices a depreciating rupee severe liquidity crunchwith customers all resulting in subdued demand. This was further accentuated by somedisruptive tactics of low-price dumping by China suppliers on an opportunistic basis thatfurther led to a significant squeezing of the margins in footwear industry.
Despite such challenging times the Company remained focused on its long-term visionand thus continued to invest in capacity expansion and sustainability initiatives at itsmanufacturing sites. Your Company has now identified Adhesives and Insulation as the newgrowth application areas for our PU resins to provide the additional momentum for thegrowth of the Company.
Gross Revenues from Operations grew to R 31988 lakhs in the current year from R 27554lakhs in the previous year. EBIDTA this year however was lower at R 1154 lakhs ascompared to R 2230 lakhs in the previous year. PBT dropped substantially to R 28 lakhs inthe current year from R 1641 lakhs in the previous year while PAT was R 338 lakhs in thecurrent year as compared to R 1039 lakhs in the previous year.
Near-term growth dynamics are unlikely to change dramatically. Factors like (1)continued tighter financial conditions (2) sluggish private capex in near term (3)possible slower public capex amid fiscal constraints etc. will weigh on the growth outlookahead. The estimate of GDP growth is lowered to 6.8% approx. for the FY 2019-20 amiddomestic structural overhang and global slowdown concerns constraining significant pick-upin growth. However fresh private investment may happen in latter part of FY 2019-20 withpolicy and political certainty along with easier monetary stance. Besides there couldalso be increased policy focus ahead to correct food anomalies to favor agriculture termsof trade and address the rural distress. These are good growth indicator of momentum fordomestic consumption.
As you may be aware that India is 6th largest economy at USD 2.6 Trillionand aspires to become a USD 5 trillion economy in next 5 years and a USD 10 Trillioneconomy in next 8 years. All these will be fueled by focus on Make in India PrivatePublic Partnership Digitization more thrust on Defense Infrastructure Agriculture andAutomobile sectors to increase the consumption. In the longer run GST simplification withe-invoicing should create a single market with more transparency and manufacturing sectorshould get a boost in the form of corporate investment which will increase theproductivity and growth.
It is with this optimism and future growth prospects I would like to assure you thatyour Company with its enhanced portfolio of product offerings will continue to grow andwe shall continue to make all efforts for maximizing Shareholders' value and return.
29th May 2019.