Atul Ltd 2010-11

Dear Shareholders, The world economy the size of which is of the order of US$ 63 tn in 2010 showed signs of recovery and, according to IMF, grew by about 5.1% (-0.5% in 2009). GDP of India at US$ 1.2 tn grew by 9%; agriculture, industrial and service sectors contributed 14%, 31% and 55% respectively. Emerging economies are likely to fuel growth in the foreseeable future. During the same period, the world Chemical Industry with revenue of US$ 3.4 tn grew by 5% driven mainly by China, Brazil and Korea. Indian Chemical Industry at US$ 56 bn is at number 11, but this merely reflects the potential that still lies hidden to be realized rather than its rank. Chemical Industry in China for example is 11 times bigger than India! The performance of our Company for the year in terms of sales and profit witnessed further improvement over the preceding year. Working capital in terms of number of days (NoDs) was better though in a small way. Our Company acquired for the first time in its history 50% shareholding in a foreign manufacturing company and established a marketing company in Brazil. Our Company built new foundations to improve performance of its subsidiary and associate companies. To be specific, despite difficulties and uncertainties, our Company  improved sales by 29% to ` 1508 crores  improved profit before tax from ` 80 crores to ` 139 crores  reduced gross working capital by 19 days to 179 days  acquired and integrated Polygrip brand  established Atul Brasil Quimicos  took steps to implement projects in subsidiary and associate companies Furthermore, our Company undertook more than 250 Key Initiatives (KIs) in the areas of HR Development, Systems, Operations, SH&E, Customer Satisfaction, New Business, Sales, Working Capital and Profitability. The KIs, some of which have been mentioned on pages 10 and 11, taken during the year will help us to strengthen the long-term performance and make our Company more resilient and robust. During the year , our Company completed capex of ` 22 crores; of these, ` 12 crores were for debottlenecking and expansion, ` 7 crores to enhance SH&E and ` 3 crores for others. Capex of ` 36 crores are still under implementation which will be capitalized during 2011-12 . We are endeavouring to unfold the potential of our Company with relatively small capex, and the more we look within, the larger we see the possibilities to create value; this will help us to grow the business disproportionately higher when compared with the capex | capital employed. During 2011-12 , we are taking up multifarious KIs to boost the long-term performance of our Company. The nature of these initiatives may be similar, but they are not the same. Our focus to improve the short-term performance without losing sight of the long-term growth will remain the basis of our working. Our three key challenges are to improve the contribution margins so as to improve the quality of profit, cut down working capital in terms of NoDs and make the manufacturing operations even more compatible with environment. We are endeavouring to pursue several KIs during 2011-12:  51 to enhance efficiencies  18 to add new customers and enter new geographies  28 to introduce new products Overview by the Chairman Atul Ltd I Annual Report 2010-11