I hope that you all along with your family members and your near & dear ones arein good health in the current pandemic atmosphere.
I welcome you all to the 27th Annual General Meeting of Shree PushkarChemicals & Fertilisers Limited. I would like to thank you all for sparing yourvaluable time to be with us today and for your continued faith in the Company. I amgreatly honored and feel obliged by the trust and confidence reposed by you all in ourcompany and the Board of Directors.
Before I start with the performance of your company I would like to briefly dwell uponthe current situation caused by the Pandemic as a result of the corona virus (COVID-19)that has drastically affected not only our Country but the entire world at large. As youall know that though the precautionary measures most aptly initiated by the government interms of Lockdowns social distancing and like measures as of paramount necessity forthe occasion has put the entire economy into a most challenging situation. As you wouldrecall the first lockdown in the country was enforced by our Government on 20thMarch 2020. But even prior to this around mid-December 2019 the first attack of coronavirus was felt in China. China as we all know in general is not only one of the majorplayers globally in the chemicals Industry but is also the largest player in our specificsegment of Dyes & Intermediates.
Since the announcement of the first lockdown within these last 5 to 6 months thelockdowns went on being extended as per need of the situation resulting in an atmosphereof fear and uncertainty. All economic activities in terms of manufacture services as alsotrade and commerce right up to the grass root levels have been severely affected mainlyon account of the abrupt shutdowns that have been clamped including the commuting andtransport systems. This precarious situation has also resulted in a panic more severelyfelt by the migrant workers who fled away from their work places mostly Industrial cities& towns to their hometowns. We all know the economy is taking a hard hit the worstof the century and this is affecting each one of us. Within this gloom the Farming andAgriculture sector which was declared as essential service was the only activity thatcontinued operations and served as the main life-line for the entire population. And nowover the last 2 months the government has been most cautiously relaxing the severity ofthe precautionary measures enforced however with the corona virus attacks continuing torelapse wave by wave have continued to keep the general public under fear and greatuncertainty.
During this period your Board of Directors met on video conference twice when variousaspects of the working of your Company has been discussed to plan out the most optimumapproach suited for the Company to face this situation. Considering the limited meansavailable we have to the extent possible brought in strict austerity measures as alsoadopted to the extent possible the concept of "work from home" to keepthings moving to the maximum extent. I am glad to say that in this situation ourfertiliser and cattle feed divisions have proved as a silver lining and have beencontinuously in operation barring a few weeks in the initial period of April 2020.
Now since mid-June we have slowly started our other divisions namely Dyes &intermediates and we hope to come back to normalcy at the earliest possible time. I liketo assure you that we are constantly monitoring and reviewing the situation as it unfoldsby keeping in mind our top priority to continue our pursuit at improvement in the workingof your company to serve our shareholders employees customers and last but not theleast the community members with compassion and support. I wish to assure you allthat we would leave no stones unturned to meet this goal.
Coming down to the performance of your company during FY2020 the same has beendetailed in a comprehensive manner in the Annual Report that is already with you. As youwill observe that there has been a decline in the sales during the year by about28.5%which includes a decline in our exports by 23% as compared to last year. Thisdecline has been mainly on 3 counts.
i. Firstly you may recall that as I had announced last year we had taken up repairs& renovation of our dye-intermediate plants at unit No.1 since these plants werequite old and needed major repairs & makeovers. For this purpose we had alreadyestimated a decline in our top line by about Rs.65 Crs. We have However made good use ofthis opportunity to carry out some modernization in these plants as also built in acertain degree of fungibility within the plants to have better flexibility in operationsbetween the product-lines to ensure optimum capacity utilization based on the individualproduct demands arising at different points of time.
ii. The second reason has been the slowdown in the economy during the year startingfrom the beginning of the 2nd quarter and extending throughout the year. Thishas resulted not only in a slowdown of demand in the dyes and intermediates segments butalso a compression in the price realizations.
iii. And lastly the effect of the COVID-19 pandemic during the last quarter whichwitnessed a slowdown beginning from early January 2020 resulting in total closedown ofoperations by mid March2020.
The performance in our fertiliser Division has however witnessed better operations onaccount of a fairly good monsoon during the year resulting in improved performance ascompared to the preceding year. Likewise improvement in the performance of our subsidiarycompany M/s Kisan Phosphates Private Limited (hereinafter the "KPPL") which hasclocked a gross utilisation of 65% of the installed capacity has added to the overallperformance taking the consolidated Sales of your company to Rs.349.65 Crs &Profit-after-tax to Rs.35.64 Crs. for the year.
Inspite of the odds the cash accrual during the year has been at Rs.40.02 Crs asagainst Rs.44.68 Crs last year. Thus inspite of lower sales we have been in a positionto mitigate the impact to a great extent by way of lower raw material cost vis-a-vis lowercost of manufacture.
Coming to the current stage of the expansion projects in hand I wish to bring to yourknowledge the following:
1. The revamping of our unit-1 at the estimated cost of Rs.5.0 Crs. has been completedand the plants are currently operating satisfactorily.
2. As regards the implementation of our 5th unit of the estimated cost ofRs.75 Crs at Plot No.D-10 in MIDC Lote we have already received the clearance from MPCBfor the inorganic products and with regard to the organic products we have received afreshTOR for the new location and we have also put up the final application for EC to the SEIAand expect the clearance very shortly. In the meanwhile we have already placed orders forall major machinery &equipments and which are now in the final stages of completion.We therefore propose to commission these plants beginning from January 2021 onwards.
3. In M/s. Kisan Phosphates Private Limited our associate company the installation ofa 200TPD granulation plant has been carried out. The existing granulation capacity at KPPLwas only of 100 TPD with this addition the capacity output of granulated SSP thus standsbalanced.
4. I am also happy to announce that our proposal for acquiring one more SSPmanufacturing company namely Madhya Bharat Phosphates Private Limited (hereinafter"MBPL") in the state of Madhya Pradesh through NCLT under the IBC code hasbeen successful and the final orders of NCLT in this behalf has been received in ourfavor. We have already taken over possession of the Company. I may mention that the mainplant of 150000 MTA capacity at dist. Jhabua has already been repaired overhauled andhas been commissioned in mid-June 2020 and is currently in production. Further I may statethat at MBPL one more plant of a smaller capacity of 50000 MTA exists at Bhopal which wehad originally proposed to dispose of. On a second thought however we have now proposedto repair the same for which all necessary steps have been initiated and the said plant isslated to be commissioned by the beginning of the next season.
Thus with this acquisition we have an overall installed capacity of 400000 MTA ofSSP and added with our auxiliary products of "Dharti-Ratan" & "PashuAhar" we are poised to cover up a major portion of the western belt of the countrystarting from Western UP in the north through Himachal Pradesh Haryana Rajasthan MPChhattisgarh Gujrat Maharashtra and reaching right up to Goa and Karnataka in the south.This would make our presence quite significant in the Fertiliser market of the country.
The total investment in MBPL which was originally estimated at Rs.28.20 Crs and was tobe met through internal accruals has now been pruned down to Rs.17.10 Crs the balancebeing met by way of term loan of Rs10.00 crs from the bank. Thus with our original entryin the fertiliser division in a small way in 2012 the division has become a full-fledgedProduct vertical which is expected to contribute over 25% of our consolidated top line.
Finally I would like to submit that considering the current position of the effects ofthe COVID pandemic on the current economy our proposed project of getting intoNon-Conventional Energy by installing a 2.5 MWp solar power plant to meet our captiveneeds through "Open Access scheme" of the government has currently beenstalled. We propose to take up the same at an appropriate time in the near future whenthe economy normalizes.
I also wish to submit that considering the current economic position of the countrywith a view to conserve on the available resources your Board of Directors has decidednot to consider payment of any further dividend during the current year.
I once again thank you for your support and I sincerely look forward to your continuedsupport in the future as well. I also express my heartfelt thanks to my colleagues andteam at Shree Pushkar without whose active support; it would not have been possible toreach the current stage.
Wishing all of you a very good health! Stay safe! Stay fit!
Chairman & Managing Director