I am pleased to present our annual report for the fiscal 2018-19.
This year the Global Economy has gone through some tough timesimpacting the agrochemical market conditions. However we remain positive and have endeda financial year of sustained growth and resilience. Our unique asset-light business modelcontinues to aid our agility and responsiveness to changes in our geographic presence andproduct portfolio. This along with prudent financial management will help see us throughmost challenges.
OUR FINANCIAL PERFORMANCE
This year the total revenue of Sharda Cropchem for FY 2019 increasedby 17.26% yoy from र 1706.59 crores to र 2001.14 crores. This was driven by growth of20.5% in the NAFTA region 14.0% in Europe -18.8% in LATAM and 64.2% in the Rest of theWorld. Gross profits increased by 9.0% yoy from र 562.84 crores to र 613.55 crores.However because of pressures from the industry gross margins declined from 33.0% to30.7%. EBITDA excluding foreign exchange impact and onetime write-off of intangibleasset/intangible asset underdevelopment increased by 7.6% yoy from र 345.43 crores to र371.59 crores. EBITDA margins declined from 20.2% to 18.6% due to lower gross margins.Profits after tax declined by 7.6% from र 190.77 crores to र 176.34 crores. This decreasein PAT was caused by the onetime write-off of intangible asset/intangible assetunderdevelopment. We also saw an increase in depreciation driven by the highercapitalisation of our intangible assets. The revenue of the business was driven primarilyby the contribution of NAFTA and European Union regions which constitutes 44.2% and 36.6%of the agrochemical business revenues respectively. The revenues from the non-agrodivision which constitutes 15.8% of total revenue grew by 40.08% from र 225.29 crores inthe previous year to र 315.56 crores in FY2019.
During the year we improved our balance sheet position significantlyby improving our working capital cycle which in turn improved our cash reserves. Thestrategies in place are aimed towards maintaining double-digit growth throughout the nextfinancial year.
Obtaining the right registrations with efficiency and experience isat the core of our expertise as a company. The NAFTA and European regions have been thekey revenue contributors for the Company this year. A majority of our registrations comefrom this region as they yield the better margins. As of March 31 2019 we have 1028registrations in the pipeline.
MARKET DYNAMICS AND CHALLENGES
During FY2019 we strategically decreased our dependence on businessfrom the LATAM region due to prevailing economic and political uncertainties and longworking capital cycles.
However this enabled us to increase our focus on sales from the NAFTAregion and the European region. This shift has significantly improved our balance sheetposition for the year and has shortened our working capital cycles. Additionally thetrade war between US and China and its resultant uncertainty has caused industry widecost pressures. As most of our suppliers are from China we too experienced increasedpressures on our gross margins. However our supplier base within China is highlydiversified minimising our dependence on any one supplier which allows us to procure ourraw material with added cost efficiency.
THE WAY FORWARD
Over the next few years we will continue to focus on identifying andprocuring highly demanded registrations efficiently from across the world. Our expertisein identifying the right molecules and formulations will remain a key growth driver forSharda Cropchem. Apart from this we also see the value in continuing to increase thepercentage of our sales from the European Union and NAFTA regions as they offer the bestmargins and shortest working capital cycles.
I would like to thank all our employees for working together to achieveour goals. It is the coming together of all our diverse capabilities that makes us awell-rounded player and enhances our ability to deliver a sustained performance. I lookforward to the next year with optimism and have a strong conviction in our abilities towithstand challenging market conditions with agility while taking on any newopportunities that may come our way.
R. V. BUBNA
Chairman & Managing Director