As I write my annual address to you all a year like never before haspassed. Marked by a once-in-a-lifetime event such as the pandemic of COVID-19 we all havehad our fair share of trials and tribulations. Soaring number of cases during the firstand second waves intermittent lockdowns and the state of besieged medical facilitieshave presented challenges of monumental scale to the humanity.
However there is a proverbial silver line in every dark cloud. Earlylockdown starting from 25th March 2020 imposed by the Government of India contained thespread of the virus to some extent during the first wave. Though the entire nation frozein its tracks precious human lives could be saved. However the severity of the secondwave having commenced in around March 2021 took the entire country by surprise andpushed many families into the throes of deepest sorrows. We are also grieving for some ofour employees who succumbed to COVID-19. At JHS Svendgaard Laboratories Limited weexpress our condolences for all the lives as well as the livelihoods lost at the hands ofthe global pandemic and stand committed to come out stronger progressing on the journeyof growth and prosperity for all our stakeholders.
INDIAN ECONOMY BRIGHTENING UP
The Indian economy has shown its resilient streak despite thepandemic's debilitating impacts. This can be attributed to the strong supply sidebuttress extended by the Government of India in the form of disbursal of massive economicstimulus package worth Rs. 20 Lacs Crore that aims to make India a global manufacturinghub through its Vocal for Local' initiative. The growth rates in the lastcouple of quarters of FY 2020-21 have fuelled the hopes for quicker revival in theeconomy. The GDP registered a growth of 0.4% in Q3 and 1.6% in Q4 in FY 2020- 21 despitean overall contraction of 73% for the fiscal 2020-21. As per the International MonetaryFund (IMF) estimates India is poised to become the fastest growing major economy in thecoming couple of years. The Reserve Bank of India (RBI) projects the rate of GDP growthfor FY 2021-22 at 9.5%. A buoyant outlook on the consumption and demand side furtherstrengthens the growth sentiments. According to the Economic Survey 2020-21 released bythe Ministry of Finance the nationwide vaccination drive and sustained renewal inconsumption and demand have contributed to the V' shaped recovery in theeconomy.
consumption boom on the cards
These growth trends bode well for the manufacturing sector especiallyfor the sub-sectors which are linked to direct consumption such as consumer durableselectronics and FMCG. The implementation of GST regime has resulted in adoption ofunified tax system across all the states of India. This has led to lowering the cost ofproduction for manufacturing operations facilitating setting up of decentralizedproduction facilities across the nation which is also one of our reasons to increase thegeographical footprints. On the demand side given an enormous population base in Indiaand entailing consumption growth the FMCG sector is also likely to get a fillip.
The huge boost in demand for FMCG goods traces its roots to theconsumption pattern of the Indian masses that is expected to undergo a sweeping change asa result of increasing levels of disposable income aspirations for higher standards ofliving increasing demand for wholesome and hygienic products due to increasing literacyand growing reach of internet even in the remotest corners of the country.
In light of these projections the FMCG sector especially the subsetof manufacturing is poised for an unprecedented growth. Identifying this as our growthpotential we are prepared to expand our horizons by strategically choosing to diversifyand gain a larger pie of the FMCG space by utilizing our existing production capabilitiesand calibrating our position as one of the most preferred contract and private labelmanufacturers.
DIVERSIFY. EXPAND. PROGRESS.
JHS Svendgaard Laboratories Limited will now be a diversified ContractManufacturing Company in the FMCG sector by using its present niche productioncapabilities to partner with global players across the value chain - from design anddevelopment to manufacturing and even just-in-time supply of FMCG goods of our clientcompanies to the shopping shelves. Our state-of-the- art fully automatic manufacturingcapabilities ensure no human intervention during production processes and with theexisting capacities is eguipped to produce twice the present production guantity withoutincurring any further capital expenditure. Constant product innovation through sustainedResearch & Development (R&D) would enable us to stay ahead of the rapidly changingtrends in the FMCG space. With our robust production facility at their disposal ourclient FMCG companies can easily outsource their manufacturing reguirements to us andinstead only concentrate their efforts on brand-building and other marketing initiativesonly. Further our strong balance sheet in terms of near-zero levels of debt and robustreserves also enable the enhancement of our competitive advantage in the field.
On the one hand the current size of oral care market in India wherewe are the largest contract manufacturer stands at about US$ 2058 Million. It isestimated to expand at CAGR of 8.69% between the period of FY 2021-22 to FY 2025-26.Besides as mentioned above the personal hygiene products which is the umbrella sectorfor the oral care is estimated to reach US$ 8969 Million by FY 2024-25. The personalhygiene space being an organic extension of our present manufacturing capabilities asour preferred choice of expansion. It further opens up a huge demand potential for us toflex our production muscle and establish ourselves as the market leaders in the contractmanufacturing space at a pan-India level.
READY TO TRANSFORM
I have a very strong reason to believe that we will continue to sustainour leading position in the oral care manufacturing while simultaneously diversifying ourpresence in the contract manufacturing space of the larger FMCG market because of ourdeep-rooted highly structured and streamlined contract manufacturing experience of over25 years in oral care segment. We will be able to develop innovative formulations throughour R&D facilities and offer new products to our client companies. In addition tothis our diversification strategy will comprise multi-dimensional andmulti-locational' manufacturing facilities which will enable us to generate massiveeconomies of scale by leveraging our capabilities and size of production. Thus I can saythat we are truly ready to transform not only smiles but also the lives of Indian massesthrough the products of our client companies.
In view of the nationwide lockdown due to the outbreak of COVID-19pandemic the Company's operations at all its manufacturing units and officelocations were temporarily halted in line with the Government's directives.Operations have since resumed in a staggered manner after seven days with adeguateprecautions being taken in accordance with the set guidelines. Despite the challengingexternal environment lockdown logistical and supply chain issues-induced slowdown theCompany clocked a revenue of at Rs. 9696.15 Lacs while the operating profit was recordedat Rs. 3013.69 Lacs during the year. The Earnings before Interest Tax and Depreciation(EBITDA) stood at Rs. 921.39 Lacs whereas the net earnings or Profit After Tax (PAT)during the year stood at Rs. 276.61 Lacs.
During the lockdowns our primary focus was on supporting allstakeholders and employees to the best of our abilities. Employee mobility shutdown ofoperations regulatory restrictions logistical and supply chain issues were the majorconstraints faced by us. During the pandemic the management team kept an eye on thesituation and took steps to ensure plant supply chain stakeholder updates implementingCOVID-19 guidelines employee health stay safety and vaccination to eligible employees.The Company has also implemented a policy to support the family of deceased employees dueto COVID-19 including financial support for a term along with taking care of educationalexpenses of the children till their graduation.
ENVIRONMENT SUSTAINABILITY j
As a responsible corporate we take due cognizance of the environmentin which we conduct our operations. In line with this thought we already have installedan Effluent Treatment Plant (ETP) at our premises. Besides 92% of the wastewater isrecycled and reused in toilets gardening among other stuff. The Company is alsograduating towards recyclable packaging. There are many other granular initiatives that wehave also undertaken and at the same time we are finding new ways to reduce ourenvironmental footprint to the extent possible.
On a concluding note I would like to take this opportunity to expressmy gratitude to you our shareholders and other stakeholders foryour continued trust andconfidence in us. Also I would like to express my gratitude to senior management and allstaff who have worked diligently to help the Company meet its objectives and their supportin taking us into the next leg of our journey-the journey which shall be embodied byDiversification Expansion and Progression.
|Warm regards |
|Nikhil Nanda |
|Managing Director |