Atul Annual report 2017-18

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Atul Ltd | Annual Report 2017-18
Letter to the Shareholders
Dear Shareholders,
On September 15, 2017, our Company completed
70 years of incorporation – we reflect, with a
sense of respect, upon how our predecessors built
its foundations and with humility, upon how it
has withstood the test of time. We do realise the
responsibility we have to secure its future. The life
of our illustrious Founder, Mr Kasturbhai Lalbhai,
who perceived and perfected potential of the body
to become an outward expression of the mind
within, has left an enduring legacy of Values –
integrity, humility, perseverance, excellence and
larger purpose. The onus on the team Atul is to
grow the business while nurturing this legacy.
The world economy at US$ 79.8 tn grew by 3.8%,
the fastest since 2011 – the USA, China and Japan
remained at the top. Indian economy – ranked
number six in the world – at US$ 2.6 tn – grew by
6.7%, faster than it did in 2016. The world economy
is likely to grow by 3.9% in 2018 as per estimate
by IMF in April 2018. Favourable conditions are
not likely to last beyond 2019, and now may be
the moment for countries to get ready for leaner
times as per IMF – investing in people, committing
to clean environment and cooperating in trade so
that the fruits of growth are widely shared. These,
in a small way, are also efforts by our Company.
The world Chemical industry at US$ 4.3 tn grew by
7%. The world Pharmaceutical industry at US$ 1.75 tn
grew by 6%. The two industries combined are
ranked number 3 in the world economy. The Indian
Chemical industry at US$ 123 bn, grew by 11% and
the Indian Pharmaceutical industry at US$ 16 bn,
grew by 8%. Chemical reactions occur when we
breathe, exercise, eat, sleep and think. Almost all
products we use in our daily life are enabled by
chemistry! With depth in science and technology,
our Company is well placed to expand its existing
portfolio safely in an environment-friendly way and
responsibly integrate in the journey of India.
Our Company achieved i) sales of ` 3,050 cr, higher
by 16%, ii) volume growth of ` 318 cr or 12%,
iii) EBITDA margin of 17%, lower by 2.7% points
(mainly because of a stronger Rupee against the US$)
and iv) profit before tax of ` 397 cr, lower by 1%,
as compared with 2016-17. I obviously cannot justify
stagnant results given the potential, but you may
like to see them against the abysmal performance
in the 1st quarter. Our Company repaid its entire
debt – it became debt-free, for the first time since
1950. The Board has recommended dividend of
120%, the highest so far.
Subsidiary and associate companies are doing
well – Atul Bioscience Ltd (100% Atul) and DPD
(98% Atul) achieved PBT of ` 14 cr and ` 5 cr
respectively, Amal Ltd (53% Atul) achieved PBT of
` 10 cr. Rudolf Atul Chemicals Ltd (50 – 50 joint
venture company with Rudolf GmbH) achieved
PBT of ` 14 cr. Atul Rajasthan Date Palms Ltd
(74% Atul) is absorbing new technology and will
take time to reach anticipated capacity utilisation.
Anaven LLP (50 – 50 joint venture partnership
with Akzo Nobel Chemicals International BV)
is expected to commission its project in the last
quarter of 2018-19.
The true measure of a company is determined by how
it impacts others. Atul Foundation Trust continued
in its own small way to work in the areas of national
priorities – education (building and managing
schools upto class 12), empowerment (building
and managing institutions for skill development),
health (organising medical camps), infrastructure
(building toilets for the rural poor, installing street
lights, repairing roads), conservation (greening
through plantation) and relief (supporting cancer
patients, other NGOs, etc) – our Company is
continuing the legacy of its founding fathers of
serving the society.
For near-term, the team Atul is working with
rigour in three ways: firstly, it is improving
existing processes (including their adherence)
and institutionalising new ones to achieve higher
levels of discipline, ownership and empowerment;
secondly, (as I have stated earlier) it is possible
to achieve sales of ` 4,000 cr without significant
investments so the team Atul is working to make
this happen soon and thirdly, it is debottlenecking
and (or) expanding capacities of existing products
of which it is unable to meet the current demand.
Our Company is striving to achieve zero liquid
discharge for all its key products.