Priyavrat Bhartia Chairman
Dear Fellow Shareholders
am happy to share my thoughts with you for the financial year 2019-20.Jubilant Industries Limited delivered good performance during the year and we have clocked38% growth in EBITDA.
The onset of CY 2020 coincided with the spread of COVID-19 pandemicwhich quickly engulfed the entire world spreading from one region to another. In order tocontain the disease governments across the world resorted to various degrees of lockdownsthat severely impacted overall economic growth performance and outlook of several sectorswith aviation hospitality tourism automobiles etc. being the worst affected.Agriculture sector in this backdrop has performed relatively well mainly due to itsability to continue to operate during the lockdowns given the status of essential goods.
As per IMF's June 2020 World Economic Outlook update the globaleconomy is expected to witness the worst recession since the Great Depression witheconomic output likely to contract by 4.9% YoY in 2020. This is attributed to the damagecaused by the lockdowns implemented by a number of nations that resulted in disruption insupply chains demand destruction and rapid increase in unemployment levels across severallarge economies. In 2020 IMF expects the Advanced Economies to contract by 8% YoY withthe US economy likely to shrink by 8% and the Euro region by 10.2%. The Emerging marketstoo are expected to be severely impacted and are expected to contract by 3% YoY in 2020with China's growth rate expected to decline to 1% and the Indian economy expected tocontract by 4.5% in FY 2021.
Government and Central banks across the world have resorted tounprecedented fiscal and monetary stimulus to mitigate the impact of COVID-19 and supporteconomic activity which is expected to lead to recovery in 2021. In 2021 IMF expects theglobal economy to grow by 5.4% with US and Euro region growing by 4.5% and 6%respectively and Chinese and Indian economies growing by 8.2% and 6% respectively.However given the evolving pandemic situation there is a considerable uncertainty aboutthe strength of the recovery and if the world witnesses a prolonged impact of COVID-19then economic output and short-term outlook may further get impacted.
The Government has set a target of doubling of farmers' income by theyear 2022. The Government had constituted an Inter-Ministerial Committee to examine issuesrelated to this target and recommend a strategy to achieve doubling of farmers' income inreal terms by the year 2022.
The Government of India has taken several steps for achieving theseobjectives in a sustainable manner. Some of the key steps are improving soil fertilitythrough the Soil Health Card Scheme; improving access to irrigation and enhanced waterefficiency through the Pradhan MantrKrishSinchaYojana (PMKSY); supporting organic farmingthrough Paramparagat KrishVikas Yojana (PKVY); and the creation of a unified nationalagriculture market to boost the income of farmers. Further to mitigate risk in theagriculture sector a scheme "Pradhan MantrFasal Bima Yojana" (PMFBY) was alsolaunched in 2016.
The Direct Benefit Transfer (DBT) in fertilisers has stabilised andpresently the Government is piloting a project to provide nutrient recommendations bylinking the soil health data with the individual farm records. Going forward it isexpected that the subsidy will be aligned with soil health and be directly delivered tothe farmer's account. Once the farming community forms the core of the DBT reform it willincentivize farmers to make informed purchase decisions and improve farm productivity.
The Indian Phosphatic fertilizers sales registered a growth in overlast year in the country and are showing signs towards balanced use of fertilization andsoil health to improve the productivity.
In SSP business Jubilant registered a volume growth of 2% as comparedto last year. Focus has been on primary zone (within 400 KM from Gajraula plant) toimprove profitability.
The company is planning to restart the Kapasan plant in FY21 we arefocusing on expanding business in newer markets in Rajasthan Madhya Pradesh Haryana andBihar states. We have also been able to concentrate on more profitable segments of thebusiness.
In Food polymers business the Chewing Gum industry continued itsstruggle in FY20 with a major decline in global demand in second half of the fiscal year.Most of impact on demand was seen in the last quarter due to the outbreak of Covid-19pandemic globally.
In VP Latex segment the global automobile sector faced troubles inmaintaining sales and profitability on quarterly and even on yearly basis in FY20. Q4 FY20has been the worst hit with automotive industry across the globe witnessing a slowdown dueto spread of pandemic COVID-19. The Indian automobile industry faced its worst year in2019 as it witnessed the worst- ever downturn of two decades with passenger vehicles salessliding sharply on the back of declining demand.
In Consumer Product Division the Adhesive industry in India had beenon a growth path for the year. Jubilant registered a growth in consumer business in FY20.Raw Material prices have shown a declining Trend with this the industry saw aggressiveconsumer promotions from both market leaders and other players to retain and grow marketshares. Our focus is on gaining market share in the premium category.
The Consolidated Revenue from operations Rs 5444 million in FY20against Rs 5589 million in FY19 resulting a de-growth of around 3%. The decrease inrevenue mainly on account of lower RM price (where selling price is a function of rawmaterial prices) and lower sales in March due to lockdown.
Earnings before interest taxes exceptional items depreciation andamortization (EBITDA) stood at Rs 505 million in FY20. After accounting for depreciationand amortization of Rs 115 million the Company's PBIT stood at Rs 390 million. Afteraccounting for financial charges of Rs 217 million and PBT stood at '173 million.
The Company in the near term is focused on sustaining its operationaland financial performance in the current uncertain scenario unleashed by the COVID-19pandemic with medium term focus at ensuring sustainable growth across our variousbusinesses. We continue to stay focused on our strategy of being closer to the customerand of further strengthening our position in the defined businesses.
We would like to thank all our valued stakeholders including ourcustomers vendors lenders and shareholders for continuing their support and upholdingtheir confidence and trust in us. We remain deeply grateful to all our employees globallyfor their contribution and commitment to our organization especially during the lockdownperiods. We wish for safety of all our stakeholders and their dear ones during thesetrying circumstances.