It gives me great pleasure to share with you an update on the overall performance ofthe Company.
I truly believe that a Company's long term success is attributable towards its focusedvision and execution by staying true to its core values.
The year gone by was marked by tumultuous changes and challenging business environmenton several fronts. It was yet another difficult year for the global economy characterizedby low growth and geopolitical uncertainties.
The decelerating growth in China kept everyone guessing about the future. Developmentsin the US relating to interest rates dollar movement across currencies and of course thePresidential elections of the United States of America had varied effects on globaleconomy and business sentiments. Escalation of tensions in the Middle East and Brexit alsoadded to regional uncertainties affecting capital flows and demand patterns acrossdeveloping countries like India. Growth in the emerging economies maintained a mutedmomentum.
Amidst a subdued global backdrop India continued its robust performance driven bystrong domestic demand. There has been a positive momentum across the key growth sectorsof the Indian economy combined with moderate inflation lower oil prices and reducedfiscal deficit. Demonetization did have a temporary slowdown and dented in growthsentiments but India has managed to sharply recover from that shock. With the recent GSTimplementation a complete increased transparency in the taxation system can be expectedleading to a better business environment.
A key concern for the country is the health of the banking system which continues tobattle with rising bad loans and heightened corporate vulnerabilities in certain keysectors of the economy. Besides the firming up of crude oil prices in the end of 2016 atabout US$ 55/barrel against about US$ 45/barrel an year earlier reduced commodity exportsand almost stagnant non commodity exports in 2016-17 may result in an increase in tradeand current account deficits.
Overall Business Performance
As a Snapshot of your Company's performance last year
Net Sales grew by 18%.
EBITDA margin expanded by 18 bps.
Profit before tax (PBT) grew by 44% to Rs.28.40 crore.
Profit after tax (PAT) grew by 50% to Rs.18.34 crore.
The strong track record of cash generation was sustained.
For its expansion projects Company had raised loans from banks which resultedin an increased debt/equity was at level of 2.46:1. To improve the debt/equity positionthe Company has planned to raise fresh equity under Preferential Allotment later in themonth of March 2017. Accordingly
The Company has raised Rs.51.08 crores by issuing 850000 No. of Equity sharesof Face Value of Rs.10/- each at premium of Rs.591/- per share in the month of May 2017.
Forward Looking Statement
The future for the industry looks bright because:
The demand for laminates has increased from its end-use applications such as cabinetsready-to- assemble furniture and flooring. The future of the laminates industry looksbright on account of end- use applications such as cabinets ready-to-assemble furnitureand flooring. The Laminates industry will also get benefits from continuous improvementsin textures and printing techniques.
The Global Market of Decorative Laminates is growing rapidly due to its easyinstallation nature flexibility and durability a stand for long period of time are someof the factors driving the market of decorative laminates. Apart from this a shiftingtowards better lifestyle and increasing interest in home interior and remodeling are someof the other factors which drive the demand for the market.
The market size is estimated to surpass 12 billion square meters by 2023 growing atmore than 5.5% CAGR from 2016 to 2023 and is estimated to reach USD 7.97 billion by 2021.The Asia Pacific decorative laminates market size was the largest and accounted for over46% of the global revenue in 2015. Rapid industrialization and increasing trend forcustomized and attractive interior in homes and offices is anticipated to fuel the NorthAmerican decorative laminates demand. Middle East & Africa (MEA) is likely to be anattractive region owing to expansion in hotels and real estate industry in South Africaand UAE.
India's economic growth is expected to improve in 2017-18. This optimism is based ontwo critical realities. The adoption of the Goods and Service Tax (GST) promises to createa single national market which will enhance efficiency of the movement of goods andservices. This critical fiscal policy could make an important contribution to raiseIndia's medium-term GDP growth to over 8% (Source: IMF).
Emerging as future ready
The laminate market can be segmented on the basis of distribution channels where theunorganized market accounts for the a major share. However with changing consumerpreferences the market has seen a shift towards the organized segment due to increaseddemand for good quality and branded products. The share of organized players in theindustry is expected is to rise further in the coming years to come. This shift is takingplace primarily due to urbanization and more increased disposable income. In addition theimplementation of Goods and services Tax (GST) in the near future will is also likely toprovide an impetus to the industry.
Going Forward - Our Strategy
The Company strategy will be plans to consolidate all 'business verticals related withBuilding Material' under Stylam and to promote Stylam brand.
On Business front your Company anticipates many developments in the economic andbusiness environment some of which are local phenomena and some triggered by globaltrends. The Indian Economy is on the threshold of the next phase of growth throughgovernment sponsored "Make-ln- India" programmers and other investment-ledstrategies.
IT/ BPO Project
The Company going through the economies of the IT/BPO sector had planned to diversifyinto IT/BPO Sector in the year 2012-13 and purchased land of 5520 sq mtr in PanchkulaTechnology Park in Haryana (India) the conceptual design of the building named as'Stylam Tower' was designed by well- known architect RSP Designs. The eight storeybuilding with two basements having built-up areas of 20697.200 sq. mtrs is fully complete.All the basic amenities are provided in the tower.
However with the expansion in the laminate business and the strategy going forward toconcentrate on its core business related with 'Building Materials' the Company endeavorsto sell-off the tower.
All things considered I believe your Company has delivered another year of recordoperational and financial performance despite the odds. The bar is now set high but I amconfident that with the growth strategies and plans in place and ably supported by adetermined and passionate team your Company will continue to excel in the coming years. Ithank you all for the confidence you have reposed in the Company. I would like toacknowledge the valuable support and contribution of our extended family of customersdealers suppliers financial institutions and partners.
Jagdish Gupta (DIN:00115113)