Chairperson View

“Adversities knock us, but they are great teachers. The ability to learn from difficulties to become stronger, wiser and more mature is a virtue unparalleled. It is a result of this sustained learnings from past experiences that despite all external challenges, we remained resilient. Our clients stayed with us and the demand for our products was stronger.

During FY18, there was significant headwinds that hold back our performance. Our revenue just grew by 6%. However, looking at our volume growth which stood at ~20%, we feel demand for our product remained robust, despite weakness in the business environment which impacted realisations. Moreover; Environmental clampdown in China led to disruptions in raw material availability. A surge in input costs led by high volatility of crude prices along with appreciation of Indian rupee impacted our margins. Even in such conditions, we continued to build our business and reported an 8.41% growth in production
None the less FY18 ended on the good note as we were able to increase our wallet share from the existing customers and started 3 new relationships. Historically, we have had Strong Relationship with the customers for more than 2 decades
This reinforces the fact that AksharChem has become a brand of choice. Our performance in exports won us prestigious awards from ECGC, Dun & Bradstreet and CHEMEXCIL, which exhibits that we have outperformed the industry
Some would say that our performance in FY2017-18 could have been better, I would rather say this year’s performance was satisfactory. It manifests the strength of our foundation and the business model. To better underlay the depth of this performance it is important to move beyond the realm of financial performance.
Coming to our financial performance, I would say that the performance was satisfactory, though not at par with that of the previous year’s. Again, it is important to understand that in FY2016-17, we had recorded an exceptional performance on the backs of an environmental clampdown in China, which created a global shortage in the availability of dye intermediates and hence led to a surge in their prices. We benefited from the situation and recorded strong growth in realizations. But this year as input prices rose considerably our realization declined. Irrespective of this, our net revenues grew by 6% to H26,425.87 lakhs. EBITDA and PAT declined by 46.22% and 42.14% respectively to H4,167.34 lakhs and H3,061.69 lakhs respectively. However, our profitability could have been lower had it not been for our continuous efforts to keep overheads under control. Continuous efforts to improve shop floor performance and hard work put in by the team resulted in a higher capacity utilization, enabling us to better cover overheads.
Our overseas business continues to show strong momentum. In North America and South East Asia, we reported double-digit growth in sales and in the regions across Europe and the Far East we recorded steady growth.

Our endeavor and focus is always towards building a sustainable future. In order to achieve this, our R&D efforts focus on continuous improvement in products and processes. Our products comply with all international quality standards and environment protection norms. Recently, we made choices and investments in few of the project which will shape the future and ensure our Company’s continuing success. Our major focus is to create value added and sustainable products like CPC green and precipitated silica. Currently our CPC Green capacity is 1,920 tonnes and post our expansion our capacity will be 2,400 tonnes which we expect to start utilizing from this year. Another diversified line of expansion

of speciality chemical grade precipitated silica is expected to be completed by the end of this year. This product would be used in the tyre industry. We maintained steady focus to ensure all our expansion projects i.e, 480 MTPA CPC Green, 1200 MTPA H Acid and 10,000 MTPA precipitated silica were largely on track.We focused on strengthening brand goodwill and applied for trademark registration of AksharChem logo and Pigment Green 7 product, which we acquired during the year. This will result in enhanced visibility of our brand and more inquiries from newer companies. We intend to capitalise on this and add more clients.

H Acid project has already been completed and is getting ready for trial production. I am happy to state that the entire funding for this project was done from equity and internal resources, enabling us to remain debt free and retain the health of our balance sheet. With this, we have managed to achieve one of the lowest working capital cycles at 14 days. The Company has also raised funds from Qualified Institutional Buyers by issue of Equity Shares through QIP Issue. We are confident

of completing the rest of the projects with internal funding as well.

Our major strength lies in holding the quality certifications of ISO 14001:2015 and ISO 9001:2015 and the process automation technologies which we possess, enables us to utilize our expertise in providing best quality reliable products. We stand at zero product return in the history of the Company.

We continue to undertake sustained efforts to reduce costs. And towards this, our focus on energy efficiency system will be a key. We have undertaken initiatives to enhance processes with less consumption of water and smarter use of effluent treatment to reduce expenses. We have been spending consistently for the pollution treatment expenses and we spent around H12 crores in FY18. We have internationally recognized processes that ensure minimum waste generated per unit. With adhering to the stringent environmental norms we would not be affected in case of consolidation which may happen in future in the industry. We would be at an advantage in that case.

We have focused on wider market section and expanding product portfolio to scale-up business and continue with double digit growth in regions like America, Asia and India.

There would not be a better way than to say that the future belongs to us. There are significant opportunities. Increased demand from the end-user industries and tightened global supply due to stringent environmental norms in China will open up growth opportunities for domestic specialty chemicals companies.

With our quality and service reliability, competitive pricing, strong relations and adherence to environmental norms we would stand advantaged to make the most of this opportunity. Further, the completion and stabilization of all our expansion plans would kickstart a new cycle of growth for the Company.

I thank all our stakeholders for their trust and support. It would be unwise if I do not complement the efforts put in by our employees. They have rightly been the performance driver of our organization. We would continue to provide them with an engaging and facilitative workplace and help them build a better career. As we move forward, I seek the support of all our stakeholders to make this organization even greater. Together, we can do wonders.

Warm wishes,

Mrs. Paru M. Jaykrishna