Poised to grow attractively
Dear Shareholders,
The story of Stylam for close to three decades has been that of
continuously raising the bar and building the foundation to expedite future growth. Five
years ago, we had kickstarted a two-phased business transformation process, and I am happy
to inform that FY20 saw the completion of the first phase. Before I share the key
highlights of the reporting year and the strategic roadmap going forward, it is important
to emphasise how we have evolved over the years.
In the preceding five years, we have steadily upgraded our
manufacturing capacities, enriched our product mix, improved our sales and marketing
networks and built a strong team. Our focus continues to be on expanding our product mix
to substantially expand the share of value-added products in
our offerings, which reflects in our improving margins. We conduct
extensive research and development to bring technologically advanced, innovative products
to delight our discerning patrons in India and the overseas markets.
We have deleveraged our balance sheet by attracting institutional
investment and divesting our non-core real estate assets. These strategic decisions have
helped us perform profitably and sustainably, even in a tough operating scenario in FY20.
FY20 was largely challenging for businesses with trade uncertainties,
geopolitical tensions, liquidity crunch and macroeconomic strain in several emerging
economies.
The COVID-19-induced lockdown further worsened the scenario globally.
In March, the nationwide lockdown to flatten the COVID-19 curve
adversely impacted lives, livelihoods, supply chains and the overall economic activity in
India.
Performance and strategy
Notwithstanding overwhelming headwinds, FY20 saw us grow our revenue to
' 462.15 crore from ' 460.62 crore in FY19. Our EBIDTA margin and PAT (without considering
exceptional items) stood at 17.23% and ' 34.12 crore, respectively, compared to 17.34% and
' 38.82 crore in the previous year. The marginal decline was due to the fact that our
business was impacted due to lockdowns across India and the overseas markets in the last
fortnight of March.
Stylam's liquidity position remains steady, despite disruptions in
operations on account of the lockdown. Our strategy now revolves around
reviving and growing sales, while simultaneously focusing on cost-effective measures. The
result of these efforts will be visible in the near future following the gradual
resumption of economic activities at normal levels across global markets.
We have worked hard to maintain our position among the prominent
laminate manufacturers in the country and other geographies. Our aim is to be recognised
globally as a trendsetter with a repertoire of some of the most advanced interior and
exterior products. We analyse broad market trends and customer aspirations and fine-tune
our range accordingly. Our diverse product basket, talented team and zeal to make a
difference for our customers give us the confidence to remain competitive and profitable
for the long term.
Innovation has always been a key differentiator for us. It is
worthwhile to mention here that we came up with the world's first hot coating process
machine to make a wide range of premium laminate surfaces on thin laminates. We are
expanding our business to include new and innovative market-leading products that are more
aligned with customer needs.
To consolidate our business engaged in building materials products, we
decided to amalgamate the business of Golden-Chem-Tech Limited (GCL) with the Company. GCL
is into the manufacture of solid acrylic surfaces. The resolution for amalgamation was
passed by our Board on December 21st, 2017. The Hon'ble NCLT has approved the scheme on
February 11th, 2020. This amalgamation will lead to sound economies of scale and business
growth. Solid acrylic surfaces were imported in India in large volumes. The amalgamation
empowers us with the combined synergies to develop the product within the country and
facilitate import substitution.
This enables us to support the Government of India's vision of
Atmanirbhar Bharat.
To focus on our core business, we sold, during the year, a property
located at Panchkula at ' 33.77 crore; the loss on our books totalling ' 15.21 crore
(reflects as an exceptional item in the Profit & Loss account). We have thus saved the
maintenance cost of the property, and the proceeds from the sale were used to reduce our
debt exposure. The finance cost will also decline in the coming quarters and positively
impact our bottom-line.
Having incurred significant investments over the last 3-4 years, we are
now optimising our capital expenditure. We will continue to pursue the consolidation of
capex and modernisation of existing capacities, with a strategic focus on cost controls
and increasing margins.
COVID-19 and the aftermath
Although the short-term outlook continues to be uncertain, the
government's stimulus package of ' 20 lakh crore and other support measures and gradual
resumption of economic activities are expected to revive consumer sentiment. Additionally,
the government's sustained focus on infrastructure spend and thrust on indigenous
manufacturing will also lead to a rise in business activity. We envisage that demand for
our products will gather momentum from the second quarter of FY21. We expect more demand
from secondary markets and from tier 2 and tier 3 cities, as the impact of the pandemic in
these areas is comparatively less severe.
In the post-COVID world, customers have become extremely particular
about hygiene and safety. We are committed to providing them the best and safest solutions
in the prevailing scenario. Our anti-bacterial laminate is effective in retarding
bacterial attack and keeps the surface hygienic and
germ-free. Our solid acrylic surface can resist moisture, pollutants
and bacterial impact for every space, making it hygienic and safe. To contribute our bit
to the war against the pandemic, we installed 12 cubicles of Novo Series in Sanjeevani
Hospital, Chennai. These anti-bacterial cubicles will be used as changing rooms for the
affected patients. Our team completed the installation of the cubicles within 24 hours.
Way forward
As we prepare ourselves for the next phase of growth, our priorities
will comprise leveraging advanced technologies, maximising operational efficiencies and
developing innovative products for global markets.
Our objective is to expand presence, rationalise costs and enhance
efficiency to achieve economies of scale. We are anticipating the needs of tomorrow, while
gearing up for it today. In all that we do, our teams play a pivotal role and we are
committed to steadily upskill our people and empower them.
I thank our go-getters, customers, partners, business associates,
investors, communities and other stakeholders for their enduring faith and support. We are
undeterred by short-term challenges and invite all to an exciting and enriching journey
forward.
Here is hoping for a brighter and stronger future together.
Warm regards,
Jagdish Gupta
Managing Director