DEAR STAKEHOLDERS,
I am pleased to present the integrated annual report for FY 2023-24 of your Company,
Advanced Enzyme Technologies Limited and offer insight into the latest developments and
performance highlights.
Remarkable Performance Despite Global Headwinds
On the macroeconomic front, the global economy faced significant challenges during the
year, marked by widespread slowdown and inflation. Major conflicts such as the war in the
Eastern Europe and the escalating crisis in the Middle East, as well as higher interest
rates dampened the outlook for both individuals and businesses worldwide. The consumer
price index and soaring food prices are affecting vulnerable populations across the globe.
Against this backdrop, many economies started exhibiting recessionary trends, further
spelling gloom for the global economy. Additionally, disruptions in global shipping, such
as those resulting from the Red Sea crisis, led to heightened shipment costs and delays,
impacting logistics and pricing dynamics within our industry.
The Indian economy, however, remains a bright spot amid global uncertainties,
delivering robust performance and solid growth, buoyed by heightened investment activity
and surging private consumption. This favourable business environment provided a strong
impetus for the top-line growth of the Company in domestic markets. We overcame challenges
in the initial months, including higher input and operating costs, which lead to margin
pressure and inventory build-up. In the second half of the year, our international sales
revved up, improving our performance and successfully mitigating the impact of lower
margin expansion.
The Company's human nutrition business and food business experienced a significant
uptick and gained momentum. Higher margins and an increased volume of large- value orders
led to a commendable Return On Capital Employed (ROCE). Our continued focus on investing
in research and development of new products paid dividends, with several of our recent
innovations garnering significant attention. Moreover, our manufacturing plants responded
well to the challenges of meeting customer demands, achieving significant improvements in
productivity and cost savings.
Changing Consumer Demand
With a growing focus on healthier lifestyles, consumer demand for healthy, clean-label
products is high in recent years. We have innovated and enhanced our quality systems to
stay ahead of this trend and cater to changing needs, leading to growth in the
nutraceuticals market.
Furthermore, we continue to gain traction in the probiotics market.
While the overall probiotics business may currently appear relatively flat, we remain
optimistic about its future trajectory. We anticipate sustained growth in this segment,
buoyed by heightened interest and favourable reception from our customers.
Financial Performance
The Company's robust financial performance during the year was driven by strategic
decisions around product mix optimisation and upsurge in other income streams. Buoyed by
these factors, we recorded a significant surge in revenue and overall profitability. Our
robust financial health also reflects our commitment to prudent management practices and
operational efficiency.
The Company registered consolidated revenue of Rs.6,239 million for the year ended
March 31, 2024, an increase of 15% over the previous year. Consolidated operating Earnings
Before Interest, Taxes, Depreciation and Amortisation (EBITDA) registered an uptick of 31%
to reach Rs.2,045 million. Consolidated profit after tax (PAT) touched Rs.1,370 million,
recording a growth of 32% over the previous year. Moreover, the consolidated Return on
Capital Employed (ROCE) was 13.03%. Your
Corporate Overview
Board of Directors declared an interim dividend FY25 of 200% amounting to Rs.4 per
share and recommended a final dividend FY24 of 55% amounting to Rs.1.1 per share.
Characterised by strong cash flow, a diversified portfolio of value-added products,
proven expertise in customer-focused innovation and a high weightage in the human
nutrition sector (which has a relatively inelastic demand profile), the Company remains a
financially robust organisation. These attributes equip the Company with the strength and
resilience to stay on the path of continuous growth and profitability even in adverse
conditions.
Key Developments
Key developments in our FY 2023-24 journey demonstrate our strategic focus on growth
through investments, innovation and diversification of our product portfolio:
Regulatory Approvals
We have received the approval for two food enzyme dossiers from European Food Safety
Association (EFSA). In addition, we also received No Question Letters for two GRAS filings
with the United States Food & Drug Association (FDA). The approved enzymes can be
utilised as food processing aids for food products.
Acquisition of an Additional Stake in JC Biotech
We successfully concluded the acquisition of an additional stake in JC Biotech,
involving total cash consideration of Rs.56.07 million. This increase in stake propelled
your Company's shareholding in JC Biotech to 95.72%, further solidifying our commitment to
strategic investments in synergistic businesses.
Continued Investment in Research and Development (R&D)
We continued to prioritise our investment in R&D, spending approximately Rs.274
million on a standalone basis, representing 7.5% of our topline revenue. On a consolidated
basis, we dedicated 3-4% of our revenues to R&D activities. This persistent allocation
highlights our resolve to innovate and develop products across our portfolio.
Product Range Expansion
We expanded our enzyme libraries for applications in all business streams. In human
nutrition, we developed enzymes for sugar management, weight management and protein
digestion. In our ramp up to introducing new solutions for bio-catalysis, we developed new
enzyme formulas and reaction processes for production of anticholesterol, anti-depressant,
partial-onset seizures API (Active Pharmaceutical Ingredient) intermediates, which showed
promising results in clinical trials. In the food business, we developed new bakery
enzymes for reducing sugar in baked products such as breads, biscuits and cakes for the
global food industry.
Furthermore, these launches represent our ongoing efforts to expand our product
portfolio and cater to evolving market demands, particularly in the field of enzyme
solutions.
We are resolutely firm on advancing our capabilities, amplifying our market presence
and extending tangible value to our stakeholders through sustained progress and meaningful
contributions to the industry.
ESG Initiative
We have initiated a step towards clean energy as one of our ESG initiatives. We have
installed and made operational a 160KW solar power plant in FY24. Another 350KW solar
plant installation is under progress and will be operational.
We stay committed to prioritising sustainability in every aspect of our operations,
guiding our business practices and influencing our interactions with stakeholders and the
environment alike. Our dedication is evident both internally within our manufacturing
operations and externally through our product offerings, signifying a proactive approach
as we navigate the path forward.
Closing Note
Your Company is primed to elevate its standing in the burgeoning global market,
building on our manufacturing prowess and reputation as a leading enzyme and probiotics
manufacturer. This growth is further driven by significant trends in bio-catalysis, animal
nutrition and baking; the increasing emphasis on proactive and preventive healthcare; the
rising importance of enzymes and probiotics in nutraceuticals; and the demand for cleaner
nutrition alternatives. Ongoing research, focus on customer experience and a culture of
innovation converge to create a conducive environment for continued success.
Our commitment to innovation, sustainability and a dynamic product portfolio are
complemented by our leadership position and significant investments in R&D. We are
well-poised to continuously create value for our stakeholders and hone our competitive
edge in the industry. On behalf of our leadership team, I extend heartfelt gratitude to
everyone associated with AETL - our esteemed Board members, dedicated employees,
supportive shareholders, reliable suppliers and all other stakeholders. Your belief in us
motivates us to pursue excellence with vigour and perseverance. We eagerly look forward to
deepening our collaboration with you to achieve our shared aspirations and pave the way
for a brighter future for all.
Warm regards,
V.L. Rathi
Chairperson.