PARAMOUNT COMMUNICATIONS LIMITED
ANNUAL REPORT 2008-2009
LETTER FROM THE CHAIRMAN AND CEO:
The years of Paramount's existence have created an organization culture of
continual change and radical progression. It's a change that has been
steered as much and as often by the transforming economic environment, as
the evolving demands of our customers. The year 2008-09 was unique
however, in the Company's odyssey. It was a year when both, the demands of
our customers and the global economic environment, underwent a stark
change - a change that almost threatened to derail our growth trajectory
and would have done so, but for our inherent strengths and intrinsic
ability to find opportunity in adversity.
And that is precisely how we steered ourselves through the complexities of
this difficult year- looking for new opportunities and making the most of
them; leveraging our strong capabilities in the cables space to find new
segments for growth and successfully foraying into them and driving our
innovative skills to deliver exceptional value to all our stakeholders.
In this year of unprecedented global economic turmoil, when our business
model was tested as much as that of other companies within and outside
India, it is indeed remarkable that not only did we firmly stand our
ground, but in fact moved cautiously, but steadily ahead to expand our
operational excellence into new segments of growth. Responding
distinctively to the changing environment, we surged ahead to expand our
portfolio into the building wires segment.
What I feel is truly remarkable about this expansion, is that we surged
ahead despite the overall negative financial situation gripping the
Company during the year.
Hit by the overall recessionary trends within and outside the country,
with dwindled demand and plummeting input prices, the Company's top-line
and particularly the bottom-line, suffered a severe blow. In the year
under review, your Company's turnover stood at Rs. 4,923.88 Million,
marking a marginal decline from the previous fiscal and reported a net
loss of Rs. 293.61 Million as compared to a net profit of Rs. 327.70
Million during the previous year 2007-08. As mentioned earlier, the huge
erosion in profitability was primarily due to inventory loss on account of
steep fall in raw material prices coupled with intense volatility in
To give you a clearer perspective, our key raw materials, Copper and
Aluminium, saw prices shooting up to new levels till about the third
quarter of the financial year under review, only to come crashing down
thereafter. As a result of these wide and frequent fluctuations in major
input prices, the value of our inventories declined drastically and
together with severe dollar appreciation, our profitability was affected
TACKLING THE CHALLENGES:
The challenges, quite obviously, were unprecedented. But as mentioned
earlier, with our focused planning and far-sighted policies, we
strategised a business model that could effectively address these
challenges. Let me now take you through our strategy to tackle this
For your Company, like with the industry at large, it was indeed a
difficult period. While this was not the first time your Company found
itself in such a difficult situation (the glut in the JFTC market around
2002 had also severely affected your Company's growth), it was a more
difficult and complex situation than ever before.
Our approach and strategy towards tackling this challenge, however, was as
focused and well thought-out as it had been around 2002, when we had moved
towards the diversification of our business model in order to insulate it
from the downturn in the JFTC market. This time too, our strategy to
overcome the challenges of this difficult period centred around
diversification and further de-risking of our business. And as in the
past, we succeeded in capitalizing on the prevailing situation as another
inflection point in our growth trajectory and in finding new solutions and
new product portfolios.
As a concerted move, we decided to focus our strategy around the domestic
market, which was riding the recessionary storm better than the exports
market and which, on the back of the government impetus of stimulating
domestic demand, was unfolding huge opportunities for companies like ours,
MAKING THE MOST OF THE DOMESTIC OPPORTUNITY:
With an enviably diversified and de-risked presence across all fast
growing sectors, your Company embarked on strengthening it further through
a prudent foray into the building wires segment in the domestic market.
Backed with the technical expertise and support of AEI Cables Limited -
probably the oldest cables manufacturer in the world - and powered with
its in-house capabilities in manufacturing specialised cables, the Company
intends to revolutionise the Indian market with a range of superior
quality, unmatched building wires. The Company is confident that its
differentiated offering in this segment will act as a natural hedge
against dwindling profitability emanating from intense price wars in the
power cable space and will also insulate it from sector cyclicality in the
future. In addition, this prudent move will further enhance the Company's
ability to leverage opportunities unfolding across sectors on account of
its unique one-stop cabling solutions provider status.
This foray is in fact, an endorsement of our philosophy to constantly look
at the bigger picture and redefine our strategies to align them with the
changing and future needs of all our customers.
As we move forward to expand and develop this segment, we seek to
capitalize on our cable manufacturing experience of over half a century in
India and the expertise of our UK subsidiary AEI Cables Ltd., with its
long and rich history dating back to 1837 and its leadership position in
the building wires business in Europe.
Let me take you through the uniqueness and technological superiority of
our building wires product range: Offering a top-of-the-range,
environment- friendly 'lead-free, zero-halogen, low-smoke' option that
shall match international standards in safety and protection, they have
been the first lead-free building wires range for construction needs in
India. They are being manufactured at our ISO 9001 and ISO 14001
certified Khushkhera plant. With world-class longevity and safety
features intrinsic to every cable and wire manufactured by your
Company, I am confident that our building wires range, initially being
launched in Delhi and the NCR, will soon emerge the market leader in
this space, just as our power, railway and industrial cables have done
This timely and path-breaking foray into the retail building wires segment
has, in fact, placed us among the few companies which are catering to the
growing needs in this niche segment. As we move ahead, with plans to
extend our building wires to all the key North Indian markets within three
months of launch, I am positive it will contribute significantly to your
Company's revenues and profitability.
Personally, I see the building wires business as among the important
drivers of the top-line and bottom-line growth of the Company. We expect
to capture over 5% of the building wires market in North India within a
year of launch with an initial target of Rs. 800 Million of sales and for
this, we are in the process of expanding our dealer and distributor
network in the region in a big way.
Though to some extent, this foray marks a shift of sorts in our focus from
the industrial sector to the growing building wires segment, let me assure
you that it is but an extension of our diversified and de-risked business
model, which we have earlier utilized to establish a niche for the Company
in specialized cables segments such as optical fibres and rural
The Company's growth strategy is not confined to the building wires
segment, our thrust on the core infrastructure sectors of Power, Railways
and Telecom continues, with our wide bouquet of product offerings catering
to diverse demands across each of these segments and fulfilling complete
cabling needs of these sectors.
Our longstanding associations with industry stalwarts and prestigious
government and private institutions, coupled with prestigious approvals
and accreditations, powered with exhaustive capabilities in manufacturing
specialty cables, equipped with multi-purpose swing manufacturing
capacities and a leadership position in many segments, positions us
favourably. With core infrastructure sectors witnessing significant growth
and investment, the opportunity window for Paramount is huge indeed.
Paramount's core strength lies in its innate ability to accept all
adversities as challenges, to be tackled with the best of our
capabilities, in order to emerge even stronger. These, I truly believe,
are the essential qualities of a leader, which your Company definitely and
decidedly is today.
Today, I feel that with our timely move towards diversification and the
realignment of our business model, we are strategically placed to make use
of the opportunities that unravel as the economy prepares itself for a
fresh phase of growth and development after a period of slowdown.
That this fresh phase of growth and development has already started is
evident from the revival in our established business segments - power,
industrial expansion and railways. With government initiatives once again
driving infrastructural growth, industrial expansion is back on track.
Quite evidently, the fiscal and monetary measures undertaken by the
Government and the Reserve Bank of India are showing positive results.
This revival of industrial and economic growth is, in turn, opening new
windows of opportunity for your Company which, as a quality manufacturer
of cables catering to diverse needs of a wide clientele, is uniquely
positioned and primed to deliver exceptional value to all its stakeholders
in all the segments of its presence.
In conclusion, I take this opportunity to thank all members of the
organization, and each of its stakeholders, for the exemplary support
extended by them in this extraordinary year. It was their unwavering faith
in the Company's inherent strengths that enabled us to tackle the
adversities of this difficult period to march confidently ahead towards a
Chairman & CEO