Letter to the shareholders Even though our Company put up a sub-optimal performance in 2023-24 – standalone sales at ` 4,301 cr decreased by 14% from the hitherto highest of ` 5,002 cr achieved in 2022-23, standalone PBT at ` 510 cr decreased from ` 730 cr in 2022-23 and from ` 828 cr, the highest achieved in 2020-21, consolidated PBT at ` 451 cr was lower mainly because of loss of ` 32 cr incurred in Atul Products, a 100% subsidiary, consolidated PBT was also lower due to 50% impact of loss of ` 51 cr in Anaven, 50-50 joint venture (JV) with Nouryon and consolidated RoCE at 12% came down from 20% in 2022-23 and from 36%, the highest achieved in 2019-20 – I am confident that the above numbers and percentages will change for the better. In the midst of this slowdown in sales, I wish to share some of the positive developments: There was a growth in volume both at standalone level and consolidated level. Gross working capital tie-up decreased both at standalone and consolidated levels. Manufacturing related problems in two businesses which adversely impacted PBT have been overcome. Phosgene downstream products plant that was destroyed by fire in 2022-23, was rebuilt and commissioned. Crop Protection retail (CPR) generated PBT after eight years. CPR launched Sindica, a patented formulation. Polymers retail generated PBT after two years. The business introduced 10 new products. Atul Products that commissioned the facility to manufacture caustic chlorine stabilised its operations in June 2024. Atul Bioscience that incurred a loss in 2022-23 became PBT positive. Rudolf Atul Chemicals, 50-50 JV with Rudolf Group, achieved its highest sales and PBT. Amal that incurred a consolidated loss (after starting a new plant in its 100% subsidiary) in 2022-23 became PBT positive. Our defining goals are to enhance the financial and non-financial performance of our Company. In the short-term, we will like to realise sales of ` 800 cr from the investment of ` 600 cr in 10 projects made between 2021-22 and 2023-24, realise sales of ` 840 cr from the investment of ` 200 cr in a project starting in the 2nd quarter (Q) of 2024-25, Dear Shareholders, enhance combined sales of the subsidiary, JV and associate entities to their current potential of ` 1,100 cr, open hospital of Valsad Institute of Medical Sciences, a 50-50 JV with local medical practitioners, in the 3rd Q of 2024-25. It will take some time for the projects to reach high capacity utilisation. In addition, team Atul is working to institutionalise new ways of working across other functions. For example, the team in Commercial function has implemented five applications (iSourcing, iSupplier, Transport, Vehicle, Warehouse), Finance function has implemented Oracle Single Instance across all entities, HR function has articulated five world-class processes related to recruitment and learning and development, Research function has commissioned two pilot plants and a process engineering laboratory and Manufacturing and other functions have commenced a more structured approach to document the progress on ESG. The external environment continues to be uncertain, but certain trends short-term and long-term are clear. The two wars (Russia – Ukraine and Israel – Palestine) are having an adverse impact on input prices and freight cost. Many countries are levying anti-dumping duties on certain chemicals to protect local manufacturers. Where local demand is higher than local supply, such an action may only result in higher prices for the user industries. Shortage of hard currency in some countries of Africa and South America is impacting smooth business transactions. Chemical industry (US$ 6.1 t) and pharmaceutical industry (US$ 1.6 t) together are 7% of the world GDP (US$ 105 t). The share of India in world chemical industry and world pharmaceutical industry is just 3% and 6% respectively. ESG is becoming more relevant than ever before; solar and wind are becoming key sources of electricity. Our internal enduring mandates remain the same so as to face the ever-changing external environment: Achieve excellence in technology and manufacturing reflected through world-class, sustainable manufacturing. Pervade technology (digitalisation) in every function (not just manufacturing). Engage with consumers to understand future trends and ideas. Atul Ltd 16 Integrated Report 2023-24
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