AARTI INDUSTRIES LIMITED
28th ANNUAL GENERAL MEETING
CHAIRMAN SPEECH
Dear Shareholders,
I welcome you all to the 28th Annual General Meeting of your Company. The Annual
Report for the year 2010-2011 has already been with you and, with your permission,
I take the same as read.
Your company is a leading manufacturer of Speciality Chemicals with diversified
end-uses into Agrochemicals, Pharmaceuticals, High Performance Polymers, Paints,
Pigments, Printing Inks, Rubber Chemicals, Additives, Surfactants, Dyes, Flavours &
Fragrances, Home & Personal care applications, etc. This diversified end-user
applications along with a wide spectrum of customers across all industries provides
your company an effective insulation to protect itself from the potential global
slowdown trend as well as from various global macro-economic events. Further with
the increase in volumes of various hydrogenated compounds and with
commissioning of the new Specialised Super heated boiler and 2MW power plant,
the company expects an increase in its operating profits going forward.
During the first quarter of current financial year 2011-12, the Company’s Net Sales &
Related Income was at Rs 397.4 crs (Previous year Rs 358.5 crs). Likewise, EBIDTA
for Q1 2011-12 was at Rs 53.9 crs (Previous year Rs 53.7 crs). However due to
steep increase in the interest rates, the interest cost had increased to Rs 17.5 crs for
Q1 2011-12 (Previous Year Rs 13.5 crs). As a result the PBT was at Rs 25.2 crs for
Q1 2011-12 (Previous year Rs 28.8 crs) and PAT for Q1 2011-12 was Rs 18.0 crs
(Previous year Rs 20.0 crs).
During the quarter ended June 2011, your company had reclassified its business
segments and adopted the end uses as a base to better understand its business
mix.
The new business segments and its Profile/composition are;
Name of Segment
Consisting of
Performance
Chemicals with applications into High Performance
Chemicals
Polymers, Paints, Pigments, Printing Inks, Rubber
Chemicals, Additives, Dyes, Flavours & Fragrances, etc.
Agri-intermediates & Chemicals with applications into Crop Protection &
Fertilizers
Nutrients.
Pharmaceuticals
Active Pharmaceutical Ingredients (APIs).
Home & Personal Chemicals with applications into Home, Personal & Oral
Care Chemicals
care range of products such as Shampoo, Detergents,
Toothpaste, etc.
On account of the diversity in the product mix, the demand for performance
chemicals is not expected to be significantly impacted by the global slowdown. The
multiple process capabilities helps your company to switch the product mix
adequately and thus expects any reduction in demand for any end-user industry to
be suitably compensated by the growth in other end-user industry. Further on the
long term basis, the company expects a steady growth in volumes for these
chemicals due to overall growth in the global consumption demand.
Over the years, we had seen a constant global growth in the usage of various agriintermediates and fertilizers to maximise the output of agri-products. Considering
this, the company had been focusing on increase in capacities for these products.
The company is now better placed to capitalise on these capacities and expects a
significant growth in the volumes of agri-intermediates & fertilizers in coming
quarters.
The company had been investing in manufacturing of lifestyle APIs and with lots of
efforts from the company’s R&D & marketing team, the company has reached the
breakeven level in case of its pharma operations. During the quarter ended June
2011, the pharma operations had posted an segmental profit of Rs 84 lakhs as
against the loss of Rs 117 lakhs for the same period last year (and against the loss
of Rs 631 lakhs for the financial year 2010-11). The company thus expects a
turnaround in its pharma operations and expects to end the year with positive
segmental numbers.
In case of Home & Personal Care range of chemicals, the performance for the first
quarter of this financial year was impacted due to high volatility in the raw-material
prices. With the commissioning of new Energy effective Spray Dryer and Fuel
efficient Boiler in the third quarter of this financial year, we expect the operating
margins to improve for these products.
Thus on account of above factors, we expect the company to register an increase in
sales as well as operating profits in current financial year 2011-12
Further in context of the macroeconomic situations, we have been witnessing
unexpected developments on global economies. As a result we had been noticing
steep depreciation in Indian Rupee. While your company is net exporter with net
foreign exchange earnings of approx Rs 335 crs, the depreciation in Indian Rupee
shall be benefiting your company; however we are also closely monitoring the
situations and would like to take suitable hedges to protect itself from any adverse
movement.
Also in relation to the same, your company has been experiencing a steep increase
in the borrowing costs which has resulted due to strong increase in domestic interest
rates and scarcity of availability of cheaper export credits. Your company expects the
interest cost for the company to increase by around 25% as compared to that of last
year.
However, the increase in operating profits shall off-set this increase in interest costs
and the company expects to be able to post higher profits in current financial year
2011-12 and further years going forward.
2. ACKNOWLEDGEMENT
Finally, I sincerely thank all our stakeholders including customers, suppliers and
bankers for their continued support. I sincerely thank all our Independent Directors
for their constructive and active support to continuously improve performance and
efficiencies and strive for better corporate governance. Last but not the least, on
behalf of all the shareholders and the Board of Directors, I convey our sincere
appreciation to our employees at all levels for their dedicated efforts which has
helped the Company to sustain its profitability and growth year after year.
Thank you.
PLACE: VAPI
DATE: 27TH SEPTEMBER, 2011.
CHAIRMAN
------------------------------------------------------------------------------------------------------Note: This does not purport to be part of the proceedings of the Annual General
Meeting.
-------------------------------------------------------------------------------------------------------