10 / 172
Atul Ltd | Annual Report 2015-16
Dear Shareholders,
We live in a time of extraordinary change – a change
that is reshaping the way we live, the way we work. It
is a change that is promising amazing breakthroughs,
but also economic disruptions. It is a change that
is broadening opportunities, but also widening
inequalities. The constants which help us face the
change are the eternal
Values.
The legendary Founder
of our Company, Mr Kasturbhai Lalbhai, lived his life
founded on integrity, discipline, perseverance, respect,
simplicity and larger purpose, and we will nurture and
promote these time-tested Values which also help
businesses sustain and create value over time.
In 2015, the
world GDP
(size US$73.2 tn) increased
by 3.1%: GDP of – the USA (size US$17.9 tn) increased
by 2.4%, European Union (size US$16.2 tn) increased
by 1.6%, China (size US$10.9 tn) increased by 6.9%,
Japan (size US$4.1 tn) increased by 0.5% and India
(size US$2.1 tn) increased by 7.3%. These numbers
ultimately reflect the combined will of the respective
Governments and people to perform. With forward
looking policies of its Government and the aspirations
of its people, India has the potential to sustain and
increase its GDP, and we in our small way will work to
make the ‘Made in India’ label proud.
World Chemical industry
(size US$4.4 tn) grew by
2% in 2015: Indian Chemical industry (size US$103
bn) grew by 3%, but is still ranked 7 after China
(size US$1.5 tn), the USA (size US$630 bn), Germany
(size US$198 bn), Japan (size US$190 bn), South
Korea (size US$165 bn) and France (size US$107 bn).
According to a leading consulting firm, India has the
potential to grow its Speciality Chemicals industry at
9%. Our Company has an advantage that its Businesses
have good potential to grow (as the industries they
serve are growing) and its manufacturing blueprint is
reasonably complex (not complicated) and integrated,
therefore not easily replicable.
Our Company maintained improvement trend
in its
performance
– EBITDA margin increased
to 20% (16%) and sales volume increased by 3%
though sales value decreased to
`
2,407 cr (
`
2,510 cr)
mainly on account of poor performance of Colors
Sub-segment and decrease in selling prices arising from
lower prices of raw materials … PBT from operations
increased to
`
390 cr (
`
312 cr) … RoCE increased
to 31% (27%) … Debt equity ratio improved to
0.24 (0.28) … interest coverage ratio improved to
18.1 (16.3) … Earning per share increased to
`
90
(
`
73). The Board has recommended dividend of 100%,
the highest so far.
During 2015-16, our Company completed
5 expansion
projects
with an investment of
`
213 cr and invested
`
27 cr in the areas of environment and safety;
it undertook 3 expansion projects with an investment
of
`
98 cr which will be commissioned in 2016-17.
We will take up new expansion projects for
implementation in 2016-17 mainly to grow in existing,
downstream and related products - we will make these
investments mainly through internal accruals. As I
had mentioned in my letter last year, we will aim for
achieving sales of
`
4,000 cr in 2017-18; it is a stretched
number – nonetheless, sin is not to fail, but to aim low!
The
subsidiary and associate companies
also
maintained improvement trend in their performance –
Atul Bioscience, DPD, Rudolf Atul Chemicals and Amal
have all increased their sales and PBT from operations.
Atul Rajasthan Date Palms commenced sales in the last
quarter by selling about 300 tissue culture raised date
palms. The subsidiary companies in Brazil, China, the
UAE, the UK and the USA, established over a span of
last 20 years, will be strengthened by way of additional
HR support, as required. A professional was appointed
in the Netherlands for growing a set of new products
introduced by the Company.
In 2015-16,
Atul Foundation
(Trust) took up projects
in Gujarat, Rajasthan and Tamil Nadu. In times to
come, the number of states where Atul will serve the
society will only increase. DPD, a subsidiary company
based in the UK, also spent 1% of its profit before tax
for the local community (though not called for by any
guidance or law) keeping in step with the tradition
of conducting business with a larger purpose. Atul
Bioscience and Rudolf Atul Chemicals also contributed
to Atul Foundation for serving the society. During the
year, Atul Foundation built and handed over 624 toilets
to those families who had no such facility ever.
As our Company grows, it is becoming more diverse,
particularly in terms of nationalities – it already has
people
of different origins – American, Brazilian,
Chinese, Dutch, English, French and of course
Indian – all working for a common purpose. The
Letter to the Shareholders