Dear Shareholders,
We write to you amidst the pandemic, even as we celebrate internally to be amongst the
world's most competitive producers of Chlorophenols, products of Ammonolysis and
Acetylation, and hydrogenated products. Our cutting-edge technology and automated plants
are well capacitated to satiate the growing demand for speciality chemicals in India, and
makes us well positioned to leverage the changing market dynamics.
The year that passed by was one of hope amidst despair.
We share with pride that we managed to record a 15% increase in bottom line, even in an
otherwise challenging year as far as the operating environment was concerned. More so, we
have secured a place among the coveted BSE- 500 list. This is a testament to our business
resilience demonstrated by a robust operational and financial performance, even amidst the
challenging economic conditions, further accentuated by the outbreak of the novel
Coronavirus pandemic towards the end of the year. We made notable progress in our export
business, which balanced the decline in domestic revenue.
We faced these turbulent times with positivity and spent the year in fostering
resilience across our business
processes - capacities, capabilities, expertise, human capital, culture and
customer-centricity. In addition to strengthening our core fibre, we utilised the
opportunity to foray into newer industries and add more clients - even as we maintained a
stricter control on operational overheads.
HOW WE PERFORMED
We had a satisfactory year across all business parameters, generating outstanding
returns for our shareholders, despite having lost out on 10 full days of revenue during
the month of March 2020, on account of the nationwide COVID-induced lockdown. We achieved
a top line of Rs. 584 Crores as compared to Rs. 606 Crores in the previous year. Our Net
Profit stood at Rs. 139 Crores, compared to Rs. 121 Crores earlier, which is higher by
15%. EBITDA increased 5% at Rs. 193 Crores, compared to Rs. 184 Crores in the previous
year. Our Earnings Per Share stood as Rs. 114.02 as compared to Rs. 99.82 in the previous
year.
TACKLING THE COVID-19 CRISIS
As we are all aware, the already prevalent broad-based slowdown in the Indian economy
and the ongoing trade war snowballed further with the advent of COVID-19, and led to an
extended nationwide lockdown and disrupted economic activities. It led to a temporary
shutdown of our manufacturing facilities, and we also faced logistical constraints in
movement of goods and manpower. However, we swiftly resumed operations in mid-April post
regulatory approvals, and worked towards effective plant utilisation as well as complete
well-being of our employees.
To safeguard the health and well-being of our employees, we established standard
operating protocols and procedures as we commenced our manufacturing operations. This
included daily sanitisation of all our facilities, temperature scanning, wearing of safety
gear, and ensuring social distancing amongst the employees. Additionally, we also
proactively adopted the "Work- from-Home" culture by providing adequate
connectivity and deploying relevant data-security measures to our employees, ensuring
seamless continuity of our business operations.
LEVERAGING A DE-RISKED BUSINESS MODEL
In the current challenging times, it is our strong and de-risked business model that is
providing us with creative survival strategies. We cater to diverse sectors and end-user
industries through our broad product portfolio. Our extensive domain expertise in multiple
process chemistries has lowered our dependence on a single chemistry and further widened
our customer base. Not only this, we have also widened our global footprint by increasing
our exports. Today, we export our products to various geographies across the globe, which
contributes 15% to our revenues. This accords us with a superior ability to withstand
industry and country-wise specific shocks.
The synergistic acquisition of Amarjyot Chemical Limited during the previous year, has
made us one of the leading manufacturers
and suppliers of chemicals. It helped us attain increased manufacturing capacities and
also provided significant depth to our product offering with a wide spread of value-added
products. Today, we can command a niche and value-added product portfolio that find
applications in dye, pigments, pharma and agro-chemical intermediates industries. Backed
by a strong portfolio of high-quality and innovative products, coupled with our
competitive cost advantages, we are confident of maintaining stability and sustainability
in our operations and profitability, as we move forward.
BUILDING OUR CORE FIBRE
We support the government's "Make in India" initiative with the objective of
job creation and nation-building initiatives and to transform India into a global
manufacturing hub. To actively participate in this, we maintain a stringent focus on
expanding and augmenting our manufacturing strengths and capacities.
In light of the growing demand, we increased Chlorophenol capacity to 18,000 MT per
annum by completing the expansion at the Sarigam plant. We added Ortho Nitro Anisole and
Para Nitro Anisole to our portfolio. We also undertook expansion at the Jhagadia plant for
hydrogenation. Backward integration will enable us in manufacturing key raw materials
in-house and in providing significant cost savings and better profit margins.
We have increased the capacities of our hydrogenation products from the earlier 18,000
MT per annum to 26,000 MT per annum. Further, we are increasing the Ammonolysis capacity
at Tarapur and Vapi plants from ~13,000 MT per annum to 16,000 MT per annum. We are likely
to commence operations of Para Amino Phenol (PAP) and Ortho Amino Phenol (OAP), which are
import substitutes, in the second half of FY 2020-21. PAP has been identified as key
intermediates of pharma products by the government, which is to be incentivised under
recently announced PLI Scheme. The management is considering to set up a plant for
Paracetamol with other drug intermediates and APIs in future.
All these are expanding our capabilities and helping us cater to the growing
addressable market and heightened demand for our intermediates in end-user industries.
Improvement in capacities is leading us to become a significant player with robust
financials and a healthy bottom line, turning us into a reliable and long-term,
high-quality supply chain partner and improve our profitability.
Further, to improve operational yield, cost efficiencies, and safety, our constant
endeavour is to automate our operations and reduce human intervention. Today, our Tarapur,
Vapi and Jhagadia plants are in the process of being automated.
TOWARDS CONSOLIDATION
During the year, we continued our emphasis on consolidating our operations by
integrating the processes and moving up the value chain. Today, our multi-purpose plants
enable us service the diverse needs of our customers, while achieving economies of scale
and improving our cost efficiency. Our increased manufacturing capacities, coupled with
R&D strengths and integrated operations, are constantly enabling us to develop high
value and margin accretive downstream products and value-added import substitutes,
providing increased growth opportunities and superior revenue visibility. With all these
strategies, we are on the constant path of achieving sustainable growth as we deliver
enhanced value creation capabilities, and strengthen our resilience to face the
challenging times, yet come out unscathed.
BENEFITING FROM INDUSTRY DYNAMICS
China's competitive position in the global markets has been diminishing in the past few
years on account of stringent environmental and safety norms imposed and led to the
shutdown of several chemical plants. With a significant increase in compliance costs, many
chemical plant operations have become unviable. India, with its low-cost advantage, is
emerging as an alternative manufacturing and supply chain hub for major global economies.
Being among India's leading specialty chemical manufacturers, we, at Valiant
Organics Limited, are well positioned to capitalise on these emerging business
opportunities by significantly leveraging our operations, expanding capacities and
extensive domain knowledge. We remain confident of growing our market share in the
domestic and international markets by virtue of our strong and niche product portfolio,
enhanced capacities and R&D capabilities. Adding to this, our competent and highly-
qualified Board with deep domain expertise and vast cumulative experience, enables us well
to undertake the advantages posed by changing industry dynamics.
OUTLOOK
We are well prepared to take advantage of the growing opportunities in specialty
chemicals, as India's specialty chemicals market sets itself on the growth path for
the coming years, and with a rising need for specialty chemicals in the end-use domestic
markets. As we add specialty chemicals to our portfolio and continually update our product
mix, we remain well positioned to capture this growth and become a leading specialty
chemicals player in India, delivering sustainable stakeholder growth.
I would like to thank all our key stakeholders for their continued support and faith in
the Company. I would like to especially appreciate all our employees for their extended
efforts postlockdown, as we re-started our plants and resumed operations.
Moving forward, we will continue our commitment to achieve sustainable growth by
building a resilient business model and ensuring inclusive growth for all our
stakeholders.
With regards,
Arvind Kanji Chheda
Managing Director