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Atul Ltd | Annual Report 2016-17
Letter to the Shareholders
Dear Shareholders,
2017 will mark the completion of
70 years
of Atul.
Though our inspiring Founder, Mr Kasturbhai Lalbhai,
is not in our midst, the Values he cherished and which
have in fact equipped our Company to withstand the test
of time – Integrity, Excellence, Humility, Hard work and
Larger purpose – continue to guide us as we endeavour
strengthening our people, processes and products,
keeping in focus what our Company can and ought to
be in the years to come.
The
world economy
at US$75 tn grew by 3.1% –
similar to that in 2016; the USA (US$18.6 tn, 1.6%),
China (US$11.2 tn, 6.7%) and Japan (US$4.9 tn, 1%)
remained at the top. India (US$2.3 tn, 6.8%) is fast
moving forward, but has a long way to go economically
and also environmentally – the dimensions of the work
to be done are vast, giving us an opportunity to grow
meaningfully – locally as well as globally – and thereby
contribute in our own small ways to nation building.
The
Chemical industry
at US$4.4 tn contributes 6% to
the world economy; it grew by 1.5% – not very differently
than it did in 2016. India (US$110 bn, 7%) remains
much behind the top 3 – China (US$1.6 tn, 5%), the
USA (US$630 bn, 2%) and Germany (US$190 bn, 1%).
This calls for industry participants and the Government to
work together as the Chemical industry was, is and will
remain an integral part of the economy. Our Company,
driven by science and technology, will continue touching
lives in a responsible way.
Our Company achieved volume growth of 16%,
but price and margin de-growth pulled down the
performance
; for the year, i) sales at
`
2,639 cr increased
by 10%, ii) EBITDA at
`
512 cr increased by 6% though
EBITDA at 19.4% decreased by 0.78 percentage point
and iii) PBT at
`
400 cr remained unchanged; however
PAT at
`
285 cr was higher by 4% on account of lower
tax liability. Our Company decreased its borrowing from
`
302 cr to
`
155 cr.
Barring Atul Brazil, the operating
subsidiary and
associate companies
improved their performance;
Atul Bioscience and Rudolf Atul Chemicals declared
dividend of 60% and 127.50% respectively.
AkzoNobel and our Company have formed a 50-50 joint
venture partnership, named ANAVEN, to manufacture
Monochloroacetic acid – the plant will not only be the
biggest in India, but also the best in the world in terms
of efficiency. The proposal to merge Amal with our
Company has been dropped.
We are not happy with our performance in 2016-17 as
our potential is much higher – we continued to perform
poorly in Colors; our performance deteriorated in Crop
Protection – Retail significantly and Polymers – Retail
marginally. We believe the investments we have made
and the path we are pursuing will deliver value, but I was
perhaps too optimistic in my last letter wherein I had
mentioned that we will try and achieve sales of
`
4,000 cr
in 2017-18 – this will take some more time.
Over the last 3 years, we have made investments in
projects (related to sales growth) totaling to
`
350 cr.
We are taking time to achieve the expected rise in sales
as some of the projects although completed are under
stabilisation; it is also because of the time being taken
to build more capabilities (in particular) for growing
retail sales. During 2016-17, we completed 3 expansion
projects with an investment of
`
117 cr. In light of these
facts, I believe higher sales will be realised in course
of time.
Atul Foundation
took up initiatives mainly in Gujarat
and also in Jharkhand, Rajasthan and Uttar Pradesh.
Atul Bioscience and Rudolf Atul Chemicals contributed
to Atul Foundation. The initiatives which covered programs
such as Education, Empowerment and Infrastructure were
in step with national priorities. DPD, a subsidiary company
in the UK, was recognised by the Community Council of
Somerset for supporting a play park. Our people are also
supporting the initiatives of Atul Foundation.
How well our Company will do in the times to come
will depend on the competence, perseverance and
teamwork of our
people
for it is they who institutionalise
efficient processes and introduce new products I services.
Our sustainability will depend also on how well we
develop our people, old and new. We are therefore
consistently focusing on enhancing 3 areas – performance
management, people development and recruitment.