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I have in this communication focused on

6 key initiatives, mentioning in brief the

logic behind them and the benefits

expected from them. These initiatives

may be seen as a continuation of the

endeavours mentioned in my letter in the

last Annual Report.

Firstly,

we are hoping to establish 3 more

100% overseas subsidiary companies to

reach out to new customers and serve

them better. This reflects our keenness to

work more closely with the customers

and also enhance our market presence.

Essentially, we are committed to improve

our customer service on the one hand

and on the other, we are endeavouring

to widen our customer reach. These

initiatives are somewhat long-term in

nature, but they will help boost sales as

well as derisk the business.

Secondly,

we are working to further

improve our manufacturing efficiencies

and also bring down other costs to

enhance our competitiveness. During the

year, we have improved yields, reduced

utilities, brought down time cycles and

cut down solvent losses.

We are reducing working capital and

reviewing capex proposals with much

more rigour. We are certain that this

rigour will go a long way not only in

optimising the resources used, but also

in improving the quality of the decision

making process.

Thirdly,

we are introducing more value

added products which comprise brands

and non-brand products by leveraging

our current product portfolio and

strengths. During the year under review,

for example, brand sales increased from

Rs47 crores to Rs82 crores.

This is only a beginning of what we wish

to do in brands. Our vision for the

coming 5 years is to serve the end users

by providing excellent products in a cost

effective way. Through this initiative, we

will seek sustainable growth.

Fourthly,

we are putting in place systems

and procedures across the Company to

ensure that we become more process

driven as we grow in terms of locations

and size. We are amongst the first Indian

companies to implement Oracle 12i and

the latest version of PeopleSoft.

This will improve the quality of MIS in

terms of accuracy and speed and thereby

decision making and customer service. It

will bring uniformity in practices and

standardisation of processes. The quality

of training and development will also get

aligned with our aspirations.

Fifthly,

we realise fully that our long-term

future will be secure only if we are

proactive and accord high priority to

environment protection. During the year,

we have taken major actions to reduce

waste load and several new actions are

underway.

This is an area where it is possible to strive

for the theoretical potential. What are

required are determination and a sense

of responsibility. Atul set up treatment

facilities long before the related laws

were enacted, and this proactive

approach continues.

Lastly and

sixthly,

we are in the process

of formally integrating our social works

projects under one umbrella. As a

company founded by Shri Kasturbhai

Lalbhai, Atul has the heritage and legacy

of quietly fulfilling its social obligations;

we remain committed to this cause.

A lot has been done, still much more

needs to be done. For every generation

and for every activity, there is scope to

improve, and given the commitment and

creativity of Atul people, there is every

chance that we will, barring unforeseen

circumstances, sustain the performance.

Established in 1947, Atul has survived the

test of time, and I do expect that with

every passing year, we will become

better, grow faster and work smarter for

all our stakeholders and thus give back

much more than what we may take. In

doing so, we will also fulfil the dreams of

our life.

With best wishes,

Sincerely,

Sunil S Lalbhai