Dear Shareholders,
It is my pleasure to present to you the Annual Report 2018-19 and share the Company's
performance journey and future strategy of the Company.
The last fiscal year marked 90th year of IVP Limited. Over the past three
years the Company has consciously invested and upgraded its plant and infrastructure to
upscale its production facilities and made them contemporary and ensured that they
continue to adhere to all current safety and environmental norms for chemical companies.
The Company has also invested for diversification of its finished goods portfolio, to
ensure that it stays relevant in the years ahead. These small but important steps were
necessary for the future growth and sustainability of the Company.
The Financial Year 2018-19 experienced lot of headwinds in the form of crude price
volatility and depreciation of rupee which affected the margin. Political uncertainty in
view of elections also weighed on consumer confidence during last quarter. The slowdown in
manufacturing intensified in last quarter severely affecting automotive industry. Besides,
rural stress and NBFC stress also amplified in later part of the year affecting the
market. Your Company has shown resilience in the face of above challenges by growing the
revenue substantially so that your Company could maintain its market share in the foundry
industry and made some inroads in the footwear industry. However, with much higher
revenues and long working capital cycles, the interest cost of the Company has
consequently risen sharply.
The foundry industry, which is the key industry we operate in, recorded good growth in
the first half of Financial Year 201819, however, the slowdown in second half negated the
earlier gains and overall foundry casting production remained stable. With lower demand,
and consequent competition among suppliers led to margin erosion in the foundry chemical
industry. However, despite lower margins, your Company witnessed 11% growth in the volume
in foundry chemicals.
The footwear industry, where the Company supplies PU systems, the market was stagnant.
This was affected by an unprecedented situation with many challenges posed by high
volatility in imported raw material prices, a depreciating rupee, severe liquidity crunch
with customers, all resulting in subdued demand. This was further accentuated by some
disruptive tactics of low-price dumping by China suppliers on an opportunistic basis that
further led to a significant squeezing of the margins in footwear industry.
Despite such challenging times, the Company remained focused on its long-term vision
and thus continued to invest in capacity expansion and sustainability initiatives at its
manufacturing sites. Your Company has now identified Adhesives and Insulation as the new
growth application areas for our PU resins to provide the additional momentum for the
growth of the Company.
Gross Revenues from Operations grew to R 31,988 lakhs in the current year from R 27,554
lakhs in the previous year. EBIDTA this year, however, was lower at R 1,154 lakhs as
compared to R 2,230 lakhs in the previous year. PBT dropped substantially to R 28 lakhs in
the current year from R 1,641 lakhs in the previous year, while PAT was R 338 lakhs in the
current year as compared to R 1,039 lakhs in the previous year.
Near-term growth dynamics are unlikely to change dramatically. Factors like (1)
continued tighter financial conditions, (2) sluggish private capex in near term, (3)
possible slower public capex amid fiscal constraints etc. will weigh on the growth outlook
ahead. The estimate of GDP growth is lowered to 6.8% approx. for the FY 2019-20, amid
domestic structural overhang and global slowdown concerns constraining significant pick-up
in growth. However, fresh private investment may happen in latter part of FY 2019-20 with
policy and political certainty, along with easier monetary stance. Besides, there could
also be increased policy focus ahead to correct food anomalies to favor agriculture terms
of trade and address the rural distress. These are good growth indicator of momentum for
domestic consumption.
As you may be aware that India is 6th largest economy at USD 2.6 Trillion
and aspires to become a USD 5 trillion economy in next 5 years and a USD 10 Trillion
economy in next 8 years. All these will be fueled by focus on Make in India, Private
Public Partnership, Digitization, more thrust on Defense, Infrastructure, Agriculture and
Automobile sectors to increase the consumption. In the longer run, GST simplification with
e-invoicing should create a single market with more transparency and manufacturing sector
should get a boost in the form of corporate investment which will increase the
productivity and growth.
It is with this optimism and future growth prospects, I would like to assure you that
your Company, with its enhanced portfolio of product offerings, will continue to grow and
we shall continue to make all efforts for maximizing Shareholders' value and return.
Sincerely,
Vishal Pandit
Chairman
29th May, 2019.