Dear Fellow Shareholders
I am pleased to present to you the annual report of your company for the financial year2019-20. This has come at a time where the world is dealing with pandemic like COVID-19that has already spread across the globe. As the new COVID-19 is spreading around theworld and having a tragic impact on people communities and businesses around the worldat this point our number one priority is the health safety and well-being of ouremployees those we do business with around the globe and the communities where we liveand work.
The Indian economy started this financial year on a dull note due to the ongoingliquidity crisis. To achieve the government's vision of making India a USD 5 trillioneconomy by 2025 the finance ministry slashed domestic corporate tax rates to 25.17% inthe mid-year to spur the investments in the economy. As a result the domestic investmentscontributed intermittently to the India growth story.
The Financial Year 2019-20 witnessed marginal degrowth with your company's consolidatedtop-line which stands at INR 13054 Mn and EBITDA was clocked at INR 1861 Mn in FY20.Earnings After Tax (before share of profit of associates) has been at INR 1157 Mn duringFY20. The Topline of standalone business stands at INR 9690 Mn and has earned EBITDA ofINR 961 Mn in the current fiscal. The standalone Earnings After Tax stood at INR 502 Mn inFY20. Your company aimed at exporting more products gaining increasing global market shareand has tried to further improve its market share globally.
In our ongoing case at the Singapore International Supreme Court (SICC) the trial forValuation of KIL's 37.57% stake in DyStar was completed on April 06 2020 and therelevant hearings got completed which were held in two tranches during last quarter ofFY2019-20. Further the final hearing for oral closing and related arguments also gotcompleted on July 01 2020. The valuation of KIL's stake in DyStar shall be crystalizedbased on the financial position existing as on the effective date of July 03 2018 (SICCJudgment date) as per the order of Singapore International Supreme Court (SICC). Thefinancial performance of DyStar post July 03 2018 shall not be of relevance for thevaluation of KIL's stake in DyStar.
India imports merchandise worth around USD 70 billion from China annually. There is acrucial need to reduce the dependence on a single source for raw materials and tapalternative sources either through procurement from varied geographies or beingself-reliant for which our H'ble Prime Minister Shri Narendra Modi has coined a term
Atmanirbhar Bharat'. To move towards self-reliant India and to bring the economyback on track a special and comprehensive economic package of INR 20 Lakh crore thataccounts for 10% of India's GDP has been announced. To make the country selfreliant inall spheres- from manufacturing to supplying will also ensure that the country cansustain and tackle any black swan event that may emerge in the future. We have pledged todo our best to contribute to Atmanirbhar Bharat' by selecting future products asimport replacements for our expansions in near terms.
India and Global markets have been battling with this pandemic for months now. This hasled to stagnation in various economies across the globe. The entire value chain right fromthe small manufacturers to the larger ones had faced major disruption in their businesses.As a result many governments across the world have taken drastic steps to infuse stimuluspackage to fuel up the economy to get it running back on track. With all these capitalinfusions and taking necessary precautionary measures the manufacturing and global tradeis slowly returning to normalcy.
The domestic chemicals industry in China is witnessing a slowdown because of slowereconomic growth. The specialty chemicals market has seen a downturn in recent years due tovarious factors most prominent being the introduction of stringent environmental normswhich has led to the shutdown of several chemical plants. The Chinese government startedimplementing stricter environmental protection norms from January 2015. Also the Chinesegovernment has mandated the construction of adequate effluent treatment plants for highercompliances as a result of which the overall cost of production has been going up withcapital expenses incurred towards effluent treatment as well rise in compliance cost. Inaddition to this the labour cost in China was lower than that of India until 2007.However over the last five years this cost has more than doubled compared with Indiarendering Chinese manufacturers' uncompetitive vis-a-vis India in terms of labour cost.With the continuation of US-China trade war and a resultant increase in tariffs could havenegative implications for its trade and subsequently the domestic capacity and productionin China. All these factors are pushing the Capex and Opex costs upwards making Chinesechemical companies less competitive in the export market. Such situation in China isexpected to favor Indian producers to become competitive and to export Indian manufacturedproducts to serve increasing global requirements.
The global colorant market is witnessing a CAGR growth of around 9% from 2020 - 2025.The market is driven by the rising inclination of consumers towards innovative andappealing shades of packaged products and items. Moreover increasing the need fordyestuff in numerous end-use segments such as textile industry leather industry plasticsindustry food industry among others is positively impacting the market growth. Alsogrowing awareness of the advantages of ecofriendly colorants in terms of providing healthbenefits coupled with favorable government policies is further expected to augment marketgrowth over the next few years.
The global dye market (which is a part of overall colorant market) is expected towitness a growth of USD 8.75 billion by 2023 with a CAGR of 8.13%. The dyes and dyestuffindustries play a major role in the growth of the chemical industry. Dyes intermediatesare the products that are transformed into finished dyes and pigments. The dyeintermediates serve various industries like plastics paint textiles printing inksleather and paper. I am happy to mention that Indian dyestuff industry meets about 95% ofthe domestic requirements out of which about 60% is consumed by the textile industry andthe remaining by other industries. The global market for dyes has been witnessingsignificant growth due to the expansion of various industries. India and China have beentaking the lead in manufacturing dyes due to the availability of the raw materials andorganic intermediate chemicals. Developing economies like India Bangladesh TurkeyBrazil and Indonesia are expected to play a significant role in the growth and developmentof the dyes industry.
I would like to extend my sincere gratitude to our customers shareholders suppliersemployees lending institutions and the government of India for their continuous trust andsupport throughout our journey.
Mr. Manish Kiri