The financial year 2013-14 was a favourable one for Rossell India from a numerical andstrategic perspective an achievement in what was a challenging time for most businesses.
Rossell India reported a 35.81% growth in revenues and 36.07% growth in EBIDTA. Thesenumbers indicate that the Company reported profitable growth wherein the increase inprofits was higher than the increase in revenues.
However the highlight of our working was that we continued to invest in businesses ofthe future with the objective of broad-basing our revenues addressing largeropportunities and de-risking our business model from an excessive dependence on any onesegment.
At Rossell India we are strengthening our presence in tea plantations aerospace anddefense products as well as quick service restaurant chain businesses. We entered twobusinesses with attractive prospects in a country marked by growing investments ininfrastructure at one end and rising consumer spending on the other. Each of thesebusinesses plays a specific role in the Rossell India business model. The aerospace anddefense business represents an opportunity to participate in a sector which is beginningto take off. The quick service restaurant business is expected to address niche consumerswithin a large sectoral space.
At Rossell India we are optimistic that the complement of these businesses is likelyto generate an attractive topline margins and surplus over time leading to enhancedvalue in the hands of those who own shares in our Company.
Business-wise performance 2013-14
Tea: We are pleased to report that we enhanced our saleable production to a record5.56 million kgs 27.67% higher than in the previous year. This improved performance wasall the more creditable as it came in the face of climatic aberrations which affectedplantation productivity in the last three months of 2013-14. Our teas (orthodox and CTC)continued to set a sectoral benchmark a fact reflected in qualitative consistencyworld-class field and manufacturing standards marquee customers and higher realisations.For instance our tea fetched realisations worth Rs. 220.70 per kg (5% higher than in theprevious year) and more than 47% higher than the Assam average of Rs. 149.67. Besides ourorthodox teas fetched an average Rs. 247.07 per kg (5.20% higher than the previous year)against the corresponding Assam average of Rs. 200.61 per kg. I am pleased to state thatacross a period of eight years the Company more than doubled average realisations per kg.
Aerospace and Defense: Indias aerospace and defense budget are expected toincrease substantially over the foreseeable future. Not only can this result in directorders from the government but also from vendors through offset clauses. These clauseswarrant that foreign defense vendors source 30% of their contract value (for contractsexceeding Rs. 300 crore) from Indian companies. It is expected to create an offsetdomestic sector marked by several billion dollars in contract value. India is at aninflection point as global OEMs have shown a preference for local companies to provide keyservices leading to quicker turnaround and cost-effective solutions. Rossellsearly-mover advantage translated into a strengthening of credentials as a result of whichthe Company achieved its first overseas export order for wire harness and looms fromBoeing USA the worlds largest OEM aerospace company. The Company was recognised asa key industry partner by a major European avionics company as well. Your Company is at anadvanced stage of discussion for orders from various OEMs.
The Company plugged the gap related to North Indian cuisine in the Indian QSR spacethrough the Kebab Xpress brand a first-of-its-kind Indian food chain providing hygienicquality delicious and affordable North Indian cuisine. The Company added four outlets toits chain in 2013-14 and intends to take the total to 20 outlets by end-FY2015.
We are optimistic of our prospects as each of our new businesses are perched at thebottom-end of a long industry curve while our mature tea business continues to reportprofitable growth.
As a growth-driven corporate we will continue focusing on enhancing our profitabilityin our existing businesses with the objective to accelerate momentum and enhancestakeholder value.
Going ahead I am confident that our performance will validate our business strategy toenter relatively unconnected businesses in response to overarching national and sectoralopportunities.
With best regards