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1131.95
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Updated:23 Aug, 2019, 15:59 PM IST

BSE
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Updated:23 Aug, 2019, 16:01 PM IST

Chairmans Statement

Ladies and Gentlemen

It gives me great pleasure to welcome you all to the 67th Annual General Meeting of the Company. The Annual Report together with the Audited Accounts and the Director's Report for the year ended 30th June, 2009 have been with you for quite sometime and with your permission, I take them as read. I hope it gives you a clear idea of the working of the Company during the year under review.

The Company achieved Net Revenues for the year 2008–09 at Rs. 1,660.97 Crores (including Rs. 94.33 Crores by way of trading in other related products) as against Rs. 1319.16 Crores (including Rs. 97.15 Crores by way of trading in other related products) in the previous year, a growth of about 26%.

The Profits before interest, Depreciation, Exceptional Income and Tax grew over 61% from Rs.152.72 Crores in 2007–08 to Rs. 246.99 Crores in the year under review. Net Profit after setting aside Tax provisions of Rs. 48.74 Crores (previous year Rs. 24.29 Crores) and including exceptional income of Rs. 6.23 Crores (previous year Rs. 0.05 Crores) grew over 90% from Rs. 51.11 crores in 2007–08 to Rs. 97.39 Crores in 2008–09.

The Directors have recommended dividend at 120% i.e. Rs. 121– per share against 80% i.e. Rs. 8/– per share of the previous year. Total Dividend payout including Corporate Dividend Tax would be Rs. 35.67 Crores, as compared to Rs. 25.85 Crores of the previous year. After making necessary provisions, a sum of Rs. 61.72 Crores has been transferred to General Reserve.

In the first two months of the current year, the Company processed 26,888 tons of Polymers as compared to 17,999 tons of Polymers in the corresponding period of previous year showing a growth of 49%.

The net sales and other income during first two months of the current year are Rs. 235.30 Crores (including Rs. 11.03 Crores by way of trading in other related products) as against Rs. 179.95 Crores (including Rs. 3.87 Crores by way of trading in other related products) in the corresponding period of previous year achieving a growth of over 30%.

Business Outlook

The year 2008–09 has seen tremendous volatility in raw material prices unparalleled in recent petrochemical pricing history. The prices of different Polymers had nosedived between 45% to 60% in the first five months. Thereafter they continuously went on rising and as on 30th June, 2009, the prices have gone up between 40% to 60% from the lowest level reached during the year.

In such a volatile situation, your Company has moved along with the cycle i.e. to reduce operations during down cycle and increase production substantially during the up cycle.

The Country's economy has gone through lower GDP growth during this volatile period with substantial degrowth in international trade. The Govt, of India thereafter took quick initiatives to boost the economy. The Government announced several stimulating measures including reduction in excise duties from 14% to 8% in two steps.

With the Govt, lowering indirect taxes to a moderate level and boost to the rural economy due to higher agricultural production and procurement prices, better demand for manufactured goods emerged from Tier II and Tier III towns. This has enabled the company to attain a volume growth of 29% in the previous year which was never attained in the Company's history.

The Company's working was adversely impacted during the first half of the previous year. However, with the improved business environment in the second half, the company improved its performance substantially. Thus the overall performance of last year was the best in the Company's history, inspite of the weak first half.

This good performance was due to restructuring of the Company's product segments by divesting/closing loss making business segments and making substantial investments, in the last three years in the segments which have higher growth impulse. The operating margins also have improved due to focus on increasing percentage sale of value added products and keeping the cost increase in check.

The business conditions continue to remain positive in the current year. The growth in processing of plastics by the Company in the first two months of the current year are quite high compared to the same period of the previous year. The business situation during that period of last year warranted lower production as the polymer prices were on downward trend and demand for the products across the spectrum was poor. Thus the growth in the first two months of this year vis–a–vis previous year period is strictly not comparable.

This year the Company expects a volume growth of well above 20%. The total net turnover of the Company may reach to Rs. 2,100 Crores.

The Company expects its operating profit margin to be in the range of 13% to 13.5% in the current year.

The company has changed its basis of categorizing value added products' turnover. Now only those turnover qualify to be value added products which generates an Operating Profit Margin (OPM) in excess of 17% of its turnover. The company expects the sale of such products in the current year to be around 22% of total turnover. The company's aim is to improve this percentage to a higher percentage level year after year.

The supply situation of raw materials remains comfortable. The prices of Crude and building blocks of Polymers have stabilized within an affordable range. With anticipated introduction of GST from 1st April, 2010, the business of the Company will get further growth impulse.

Considering this growth impulse, the Company has plans to invest around Rs. 70 Crores in the current year, primarily in the following segments.

(i) To increase the capacity of injection moulded machines and ancillary equipments for industrial components based on demand/projections received from our OEM customers.

This investment will also facilitate the company to replace some of the old machines with the new energy efficient and latest technology machines.

(ii) To increase the range and capacities in the material handling division. In the current year, the company expects better demand for material handing system as there is a revival of demand from industrial segment.

(iii) Reality sector demand which was under pressure last year has shown signs of revival across the country. Hence, during the year, the Company requires to increase the volume and varieties of products in the piping systems division to meet increasing demand from its customers.

The Company is thus investing monies in Jalgaon, Gadegaon and Kanpur to increase the volume and varieties of plastics piping products. Monies will also be invested to build a Training centre, Product display centre, auditorium and Innovation centre at Gadegaon.

Initial investment planned at Gadegaon is now completed. This unit has become eligible for mega project incentives from the current year.

(iv) In moulded furniture products, the Company has achieved a volume growth of 15% in the year 2008–09 which was preceded by several years of negative or lower growth. The Company is introducing several new models of furniture to augment the current range.

(v) The Company has got environmental clearance for its newly established protective packaging unit at Urse. The Company will make additional investments to make this unit fully operational. This unit will go into commercial operation by Sep./Oct. 09.

Construction of Commercial Complex at Company's site at Andheri (Mumbai) is nearing completion. The entire complex consisting of 10 floors comprised of 2,50,000 sq. ft. area, with all modern facilities, ample parking space, energy saving and eco–friendly features would be ready for occupation by October this year. Total cost of this project is envisaged at about Rs. 115 Crores out of which a sum of Rs. 81.27 Crores have already been spent till August, 2009.

Supreme Petrochem Ltd.

The said Company closed its Financial Year ended on 30.06.2009 with a pre–tax profit of Rs. 35 Crores against a loss of Rs. 45 Crores during first half of 2008–09.

The domestic market for Polystyrene witnessed great fluctuations during the year ended June 30.06.2009. The first six months upto December 2008 saw the market shrinking by 16.5% whereas the remaining six months grew by almost 22%.

The price of Styrene Monomer the main raw material also witnessed fluctuations resulting in inventory loss during the first six months. Curtailed production by several Styrene Monomer producers kept Styrene Monomer availability tight during the year.

Foreign exchange rate volatility also had an adverse effect on that Company's performance during the year. However, the Company's emphasis on domestic sales, cost rationalization efforts and prudent financial management resulted in the Company turning around the mid–year losses into profits at the year end.

Expansion/New Projects

Speciality Polystyrene: Two new lines, one designed for producing reinforced PP compound aimed at the growing automobile industry and the other for producing highly loaded Master Batches were commissioned and stabilised during the year.

Extruded Polystyrene Sheet: Construction of the plant and erection of machinery for Extruded Polystyrene Sheet (XPS) are complete. That plant is commissioned in the current month.

Cup Grade EPS Beads: The technology tie–up for 20400 TPA cup grade EPS was concluded in March 2009 with NOVA Chemical Corporation, USA who are the world leaders in EPS cup grade technology. The construction activities will start in October 2009 and the plant is expected to be in commercial operation by January 2011. A significant aspect of the project is the product buy–back of about 25% of the capacity by NOVA for a period of 5 years.

I am extremely grateful to my fellow members of the Board for their valuable guidance.

I convey my appreciation to Executives, Staff and Workmen for the unstinted support extended by them.

I, on behalf of the Board of Directors, sincerely appreciate the encouragement and co–operation received by the Company from customers, Bankers, Shareholders and suppliers during the entire period.

Ladies and Gentlemen, now I move the following Resolution :

"RESOLVED THAT the Directors' Report together with the Audited Statement of Accounts for the Financial Year ended 30th June, 2009 be and are hereby approved and adopted."

Thank you,

B. L Taparia

Chairman

Mumbai

10th September, 2009

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