Dear Shareholders, I am pleased to present before you the 2016-17 annual report. This year has indeed been both interesting and eventful. The unexpected result of the UK referendum in June 2016 triggered Brexit, followed by the US Presidential election, has changed the global geo-political equation. In India, the two headline events that dominated the year were the currency demonetisation and the expected passage of the one-nation, one-tax GST bill in FY18, both of which are expected to have a positive long-term impact.
The year had its fair share of operating challenges for the Company, which had a marked impact on demand across industries and markets. In our case, demand for agricultural and non-agricultural pipes was affected. And yet, in spite of these challenges, we persisted. Even though volumes did not grow, a combination of our agility, robust product portfolio and aggressive marketing activities enabled us to phenomenally increase our margins.
Performance in 2016-17
In 2016-17, the revenue from operations of the Company increased by 5.08% from ₹ 2,843.1 Cr in 2015-16 to ₹ 2,987.6 Cr. PAT in absolute terms grew by 38.44% to ₹ 352.2 Cr. This growth in margin was primarily driven by an increased EDC/ PVC price spread. During the year, we also worked assiduously in reducing debt, leading to a reduction of 65.77% in finance cost to ₹ 15.3 Cr from ₹ 44.7 Cr in the previous year. This, in turn, increased our margins.
Key developments in 2016-17
The key highlight of the year was undoubtedly the signing of the FlowGuard Processor agreement with Lubrizol Corporation, the world leaders in CPVC resin and compounds since 1959. It is a defining initiative that will benefit both Companies. Under the partnership, Lubrizol will provide us with their high quality CPVC compound for manufacture and sale of Finolex FlowGuard Plus pipes and fittings in India. CPVC pipes and fittings can withstand high temperature of water making them suitable for residential, commercial and industrial applications. While the CPVC market is still at a nascent stage in India, accounting for less than 10% of the overall pipes and fittings volume within the industry, it is the fastest growing segment and has significant opportunities for the future.
The Company continued winning prestigious awards during the year. These included The Supply Chain Icon of the Year 2017 by Global Logistics Excellence Awards and The Water Company of the Year Award by the National CSR Leadership Congress & Awards. We created a National Record for conducting the largest number of plumber meets simultaneously across 26 states and 58 cities with 3,000 plumbers, which was mentioned in the Limca Book of Records.
Banking on the Indian opportunityThe fundamentals of the country remain very strong with low inflation, declining interest rates, rising focus on agriculture and infrastructure, the expected implementation of the Goods and Services Tax (GST) in FY18, all of which could facilitate the economy to maintain a GDP growth upwards of 7%.
The Government is determined to boost agriculture, infrastructure and housing sectors as part of its long-term strategic focus. There is also a clear direction to double farmers' income in the next five years by improving their agriculture-credit and financing. These developments are expected to drive the future growth and expansion of the Company.
I am very optimistic of the great opportunity our country has to offer. I believe that with superior quality products and aggressive marketing across the right target market, we are at a vantage point to accelerate our growth momentum.
Corporate social responsibility
At FIL, we feel business prosperity is sustainable by sharing with the needy and giving hope to people who often feel they don’t have the right to be hopeful. As a responsible corporate, we conduct our CSR activities in healthcare, education, water conservation and community welfare with Mukul Madhav Foundation (MMF), our CSR partner. This year also we have increased our CSR spend substantially.
I am proud to inform you that your Director Mrs. Ritu Chhabria, Managing Trustee of MMF, was a part of the National Women's Parliament held at Amravati, Andhra Pradesh (AP), where she shared the dais with dignitaries like Mr. N. Chandrababu Naidu (Chief Minister, AP) and Mr. Kodela Siva Prasada Rao (Speaker of the Legislative Assembly, AP) among others.
I am also pleased to inform you that one of the key projects, the Mukul Madhav Vidyalaya (MMV) a state-of-the-art English medium school in Golap, Ratnagiri, has received tremendous appreciation for its unique approach to mould students into responsible citizens.
As a country, I believe we are at the cusp of the next phase of growth and expansion, one that will usher in the NEW INDIA that will rightfully occupy its place as a global leader. The future is exciting and promising. The future is an Opportunity called India.
On behalf of the Board, I would like to thank all our stakeholders including shareholders, investors, bankers, creditors and employees for their continued support. A special note of thanks to Mr. Saurabh S. Dhanorkar, the former Managing Director who retired during the current fiscal year, for his immense contributions towards the growth of the Company. Mr. Sanjay Math takes over the reins and responsibilities from Mr. Dhanorkar and I am sure he will do a splendid job in his new role as the Managing Director of the Company. I also welcome Mr. Anil Whabi, Chief Financial Officer to the Board.
I would like to express my sincere gratitude to all the members of our Board for their continued insights and invaluable guidance as we explore new opportunities and move ahead with confidence.
Yours Sincerely,Prakash P. Chhabria