Navin Fluorine achieved three important milestones in FY '20
The Company crossed revenues of Rs. 1000 crores The Company clockedrecord operating margins from core operations The Company signed a US$410 MM materialsupply agreement Each of these milestones is as much a validation of our rich past as itis a vote of confidence in the prospects of our Company.
Governance: People over profit
At Navin Fluorine governance not only means complying with the laws ofthe land but also honest stakeholder communication.
Even as the Dewas plant was not required to stop manufacturingfollowing the pandemic outbreak the Company selected to temporarily shut operations tomaximise employee safety.
It empowered the EHS team to review and validate plant re-opening withno room for compromise. The Company apprised local authorities on the comprehensive safetyprotocols taken. The proactive shut down and programmed resumption underlined theCompany's commitment to governance - putting people above profit.
In 2019-20 the Company's revenues reported 7% growth from Rs. 955crore in 2018-19 to H 1022 crore while EBITDA grew 15% from Rs. 253 crore in 2018-19 toRs. 292 crore in 2019-20. PBT strengthened 13% from Rs. 227 crore in 2018-19 to Rs. 257crore in 2019-20. Prudent cost and product management helped improve our EBITDA margin by217 bps to 28% in 201920. Navin Fluorine stands strong to face any unforeseen andunexpected realities on the one hand while being equipped to capture new upsideopportunities on the other.
Partnerships our true test
At Navin Fluorine true partnerships mean a lot more than a mere sourceof revenue streams. These partnerships with like- minded companies generate direct andindirect benefits. Prior to the formation of formal relationships these companiestypically conduct exhaustive due diligence of our ESG (Environment Social and Governance)capabilities. A similar detailed study is conducted of our technical operational andfinancial strengths. When these partnerships materialise they are a true testament of ourcapabilities and values.
While providing visibility into future earnings and growth thesepartnerships also help us gain access to advanced technologies which in turn help usdevelop innovative products and platforms. These products and platforms drive morepartnerships creating a strong snowball effect.
One example of such a partnership was our signing of a $410MMmulti-year contract with one of our global partners to manufacture and supply a new HighPerformance Product (HPP). Our Board of Directors approved the investment of approximatelyRs. 500 crores to set up a new greenfield plant in Dahej Gujarat India. The strength ofour Balance Sheet and strong cash flows provides us the confidence to manage thisinvestment primarily out of our internal accruals.
Strengthening organizational capabilities
To be able to deliver on these partnership opportunities it iscritical that we continue to strengthen our organizational capabilities. During the pastyear we significantly strengthened certain critical functions like Technology &Design R&D and Projects. A good team driven by strong sense of purpose is thehallmark of a great organization. We believe we are now getting ready to build a robustfoundation which will help us realize new opportunities and propel us into the next orbitof profitable growth.
Facing the challenges; preparing for Covid-19
We started 2019-20 with a few business challenges. We had limitedheadroom
for capacity expansion at our existing site in Surat Gujarat. One ofour most profitable products R22 was facing a significant demand downturn due to anupcoming regulatory phase-out schedule. Despite these challenges we focused on productrationalization cost management initiatives and new product development. We developed newproducts to utilize our assets more profitably and build a strong new product pipelinewhich could form basis of our expansion at a new site in Dahej Gujarat.
As we moved into Q4FY'20 we faced a major Black Swan event - theCovid-19 pandemic. This event had the potential to create significant disruptions in ouroperations and supply chain. However we worked diligently to quickly develop a riskmitigation plan to address a potential supply chain disruption. We prepared the deliveryof some critical raw materials proactively increased our inventory levels and developedalternative local vendors.
As the nation went into a protracted lockdown we decided to shut ourplants in March 2020. With an assumption that this was going to be a new normal for theforeseeable future we developed detailed protocols for the health and safety of ourworkforce and for safe operations at our plants. Our plants are based in Surat Gujaratand Dewas Madhya Pradesh two of the most affected cities. Despite the severity of thepandemic in these cities our team worked hard to ensure that we soon restartedoperations while putting a priority on safety of our work force. I would like to thankall the members of the Navin Fluorine family for their dedication hard work and teamspirit something that has continued to differentiate our Company for more than 50 years.
We also remain in deep gratitude of all our external partners likecustomers suppliers contractors transporters truck drivers etc. who despite severalchallenges continue to support us through these challenging times. This has once againvalidated the true spirit of partnerships.
Outlook for the future
Despite the current challenging times we believe our businesses willbenefit from strong tailwinds in the coming years. We remain engaged with our partners aswe navigate through this new normal and we will continue to develop a strong pipeline ofnew exciting opportunities for the Company especially in our Specialty and CRAMSbusinesses.
In conclusion I would like to thank our shareholders for continuing toplace their trust in Navin Fluorine. At the Company we remain excited about ourprospects.
Radhesh R. Welling
Date : June 16 2020