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Corporate Identity Serving Diverse Industries Purpose and Values Overview by the Chairman Operational Highlights Financial Analysis Research and Technology
Safety, HealthandEnvironment Serving the Society
Directors’ Report
Management Discussion andAnalysis Report on Corporate Governance Financial Statements
Dividend
The Board of Directors of the Company recommend
payment of dividend of Rs 4 per share on 2,96,61,733
equity shares of Rs 10 each fully paid up. The dividend
will entail an outflow of Rs 13.84 crores on the paid-up
equity share capital of Rs 29,66,17,330.
Profitability
Sales in terms of volume on an average increased by 18%;
however due to steep reduction in prices of raw materials
and the consequent fall in selling prices, sales at Rs 1168
crores (including exports of Rs 513 crores) registered only
a negligible growth of less than 1%. Mainly because of
a lower loss on account of exchange rate differences,
the PBT grew by 75%, from Rs 46 crores to Rs 80 crores.
The business Divisions mainly consolidated the spurt
in profitability achieved during the previous year with
the exception of Polymers which experienced a strong
rebound and Colors which grew by about 10% and cut
losses. Though lower than the previous year, the Company
achieved reasonable cash flow from operations and
reduced its borrowings by Rs 73 crores to Rs 295 crores
which has substantially improved its leverage ratios and its
capacity to raise finance for expansion and acquisitions.
The Company improved its efficiencies through yields
and de-bottlenecking, and focused on obtaining better
realizations for its products.
Finance
The interest and finance charges for the year was
Rs 26 crores compared to Rs 41 crores during the previous
year - a decrease of 38% as compared to stagnant
sales growth. The net interest to sales ratio, as a result
decreased to 2.13% from 3.44% last year. In the current
year, the benchmark PLR and LIBOR interest rates showed
downward bias for most part of the year. LIBOR rates
were at historical low levels during the year. The Company
took benefit of lower LIBOR rates by increasing utilisation
of Buyers’ credit to reduce the interest cost. Efforts are on
to reduce the interest cost as a % of sales through better
working capital norms and utilization of assets.
The Company follows a prudent financial policy and aims
to maintain optimum financial gearing at all times. The
Company has repaid loans of Rs 66 crores during the year
and the Debt to Equity ratio was 0.56 as on March 31,
2010. During the year CARE reaffirmed the rating of PR1
for short term debt and A- for long term debts of the
Company.
The Company takes forward contracts and uses other
basic derivative products from time to time as permitted
by the RBI to cover its net exports. These are purely based
on the actual exposure or likely future anticipated export
receivables, but never in the nature of speculation. The
Company does not hold or issue derivative financial
instruments for trading or speculative purposes and all
the derivative transactions entered into by the Company
are to mitigate or offset the risks that arise from its normal
business activities only.
Loans taken were used for the purpose that they were
sanctioned for by the respective banks or financial
institutions.
Projects
During 2010-11 the Company acquired Rubber and
Polyurethane Adhesives business and brand ‘Polygrip’.
The acquired business recorded a sale of Rs 28 crores
in 2009-10 prior to acquisition. The Company is in the
process of integrating the acquired business with that of
Polymers Division. It will also commission
p
-Cresol project
of 8000 mt, which on full capacity basis will generate
revenue of Rs 120 crores.
Insurance
The Company has taken adequate insurance to cover the
risks to its people, plant and machineries, buildings and
other assets, profits and third parties.
Directors
Mr N N Wadia resigned from the Board with effect from
June 1, 2009 due to preoccupation. The Board places on
record its appreciation for his invaluable contribution as a
Director for more than three decades.
According to Article 134 of the Articles of Association
of the Company, Mr B S Mehta and Mr S M Datta
retire by rotation and being eligible offer themselves
for reappointment at the forthcoming Annual General
Meeting (AGM) scheduled on August 31, 2010.