Enhancing efficiencies, bolstering growth
Dear Shareholders,
I am happy to present to your Company's Annual Report for FY 2023.
FY 2022 saw India battling strong economic headwinds with synchronised
fiscal policy measures, and a series of counter mechanisms to mitigate financial stress.
Following the COVID 19 led economic disruptions, businesses have slowly started to bounce
back to normalcy in FY 2023. In the face of a testing global economy, we at APAR have
managed to grow with agility, from innovative new product introductions, focused
execution, improved operational efficiencies and market share gains. All our business
divisions have been proactive in developing products and services which are relevant in
today's markets guided by solutions to problems that our clients face. We continue to
build at APAR responsible products and services that makes for a better world – as we
live up to our motto of ‘Tomorrow's solutions today.'
Poised for robust growth
FY 2023 has been particularly transformative, given the success we have
had in premiumising our product portfolio and growing globally. In the year under review,
the company recorded an all-time high revenue of Rs. 14,352 crore, up 54% YoY and driven
by strong growth from the export of conductors and cables. All three major business
verticals recorded their highest year in sales. EBITDA increased 130% YoY to reach Rs.
1,320 crore due to higher margins in conventional and premium conductors and an increase
in cable volume. The conductor business witnessed robust performance in FY 2023 with
volumes at 1,60,131 MT, driving 67% revenue growth to Rs. 7,013 crore. The EBITDA per MT
post forex adjustments came in at Rs. 44,114 which is over 2.5 times compared to last
year. The total order book for conductors stood at Rs. 5,124 crore as of March 31, 2023,
with a new order inflow of Rs. 7,779 crore, recording a surge of 44% YoY. The export
revenue of the conductor division grew by 126% YoY, contributing to 51% of the
division's overall revenues. The conductor division has seen a transformational
journey over the past decade, premiumising its product offerings and reaping the fruits of
investments made in R&D and product development. We are optimistic that committed
investment in the T&D sector, coupled with increased renewable energy projects in the
pipeline will become key demand drivers for the company's conductor business over the
coming years. During FY 2023, the cable business became the number one exporter in cables
and wires segment from India, with export contributing to 52% to overall division revenue.
The cables division saw some of the strategic initiatives yielding results, with 64% YoY
growth in revenue to Rs. 3,263 crore, led by a significant increase in elastomeric
products and exports. EBITDA post forex adjustment is at Rs. 344 crore, up 225% YoY with a
margin of 10.5%. The macro environment in terms of push towards renewables, spendings on
infrastructure in power and mobility and the current geo-political situation opens
opportunities for our cable business which is expected to see strong demand in coming
years. The oil business also had its highest revenue with a growth of 31% YoY driven by
base oil prices and volume growth. The EBITDA per KL post forex adjustment came in at Rs.
4,781 in line with our threshold margin. One-third of the oil division revenue comes from
transformer oil which is expected to benefit due to increase in infra-related spends and
transmission lines globally. We export to 100+ countries and the focus will be on per unit
profitability versus total volumes.
Focused Growth
Our growth story is a consequence of several strategic factors
including a diversified revenue base, appropriate Capital investments, strong cost
controls, continuous investment in R&D activities and our proximity to customers. Our
philosophy of delivering tomorrow's solutions today has been manifested in the launch
of the right mix of innovative products that help our customers grow their businesses more
effectively. The company's strategy of designing and manufacturing products for the
global markets also paid rich dividends as we were able to expand our presence
internationally and become the largest exporter from India of conductors, cables, and
transformer oils.
Embedding ESG in our DNA
At APAR, we are tackling climate change with company-wide action in all
our manufacturing processes, generation of renewal energy to reduce hydrocarbon-based
power, and the recycling, reuse, and recharge of water at all our plants. We have also
designed and marketed products that are not only manufactured with less carbon intensity,
but also deliver power savings, longer life, and higher biodegradability. Besides
maximizing rooftop solar installations in our facilities, we have taken one more step
towards augmenting green energy by successfully commissioning a wind-solar hybrid (3.30 MW
wind turbine and 2.80 MWp of solar energy) project in partnership with a leading supplier.
This project is expected to generate 15 million units annually, thereby increasing the
share of renewable energy to 14% of our overall electricity mix. It gives me immense pride
to share that APAR is the first Indian company to release the Environment Product
Declaration and Certification (EPD) for AL59 conductors. This document transparently
communicates the carbon emissions through the entire life cycle of products. As the
world's largest Aluminium and alloy manufacturer, APAR is committed to taking the
lead in responsible manufacturing.
Powered to Excel
In conclusion, I would like to reiterate that APAR is well positioned
in the markets globally where we see growth – from the addition of renewable energy,
infrastructure expansion in T&D, mobility in the form of new metro railways,
locomotives, coaches, electric vehicles, mechanization of agriculture in India and
developing markets and finally the growth in telecommunication and data transmission
infrastructure. In each of these segments we have globally approved products. What should
benefit the company is that these growth drivers are fundamental to the new world as the
current state is being transformed and will last the better part of the coming decade. I
wish to express my heartfelt gratitude towards all our stakeholders: our shareholders,
employees, customers, bankers, and regulatory authorities all over the world for their
unwavering faith and support. We sincerely commit to building a business which delivers
products and services which are Better, Faster, Cheaper and Greener.
Yours Sincerely,
Kushal Desai