CHAIRMAN
Chairman’s overview
Dear Shareholdeers,
The financial year 2013-14 was a favourable one for Rossell India from a numerical and
strategic perspective, an achievement in what was a challenging time for most businesses.
Rossell India reported a 35.81% growth in revenues and 36.07% growth in EBIDTA. These
numbers indicate that the Company reported profitable growth, wherein the increase in
profits was higher than the increase in revenues.
However, the highlight of our working was that we continued to invest in businesses of
the future with the objective of broad-basing our revenues, addressing larger
opportunities and de-risking our business model from an excessive dependence on any one
segment.
Business model
At Rossell India, we are strengthening our presence in tea plantations, aerospace and
defense products, as well as quick service restaurant chain businesses. We entered two
businesses with attractive prospects in a country marked by growing investments in
infrastructure at one end and rising consumer spending on the other. Each of these
businesses plays a specific role in the Rossell India business model. The aerospace and
defense business represents an opportunity to participate in a sector which is beginning
to take off. The quick service restaurant business is expected to address niche consumers
within a large sectoral space.
At Rossell India, we are optimistic that the complement of these businesses is likely
to generate an attractive topline, margins and surplus over time, leading to enhanced
value in the hands of those who own shares in our Company.
Business-wise performance, 2013-14
Tea: We are pleased to report that we enhanced our saleable production to a record
5.56 million kgs, 27.67% higher than in the previous year. This improved performance was
all the more creditable as it came in the face of climatic aberrations, which affected
plantation productivity in the last three months of 2013-14. Our teas (orthodox and CTC)
continued to set a sectoral benchmark, a fact reflected in qualitative consistency,
world-class field and manufacturing standards, marquee customers and higher realisations.
For instance, our tea fetched realisations worth Rs. 220.70 per kg (5% higher than in the
previous year) and more than 47% higher than the Assam average of Rs. 149.67. Besides, our
orthodox teas fetched an average Rs. 247.07 per kg (5.20% higher than the previous year)
against the corresponding Assam average of Rs. 200.61 per kg. I am pleased to state that
across a period of eight years, the Company more than doubled average realisations per kg.
Aerospace and Defense: India’s aerospace and defense budget are expected to
increase substantially over the foreseeable future. Not only can this result in direct
orders from the government but also from vendors through offset clauses. These clauses
warrant that foreign defense vendors source 30% of their contract value (for contracts
exceeding Rs. 300 crore) from Indian companies. It is expected to create an offset
domestic sector marked by several billion dollars in contract value. India is at an
inflection point as global OEMs have shown a preference for local companies to provide key
services leading to quicker turnaround and cost-effective solutions. Rossell’s
early-mover advantage translated into a strengthening of credentials, as a result of which
the Company achieved its first overseas export order for wire harness and looms from
Boeing, USA, the world’s largest OEM aerospace company. The Company was recognised as
a key industry partner by a major European avionics company as well. Your Company is at an
advanced stage of discussion for orders from various OEMs.
Hospitality:
The Company plugged the gap related to North Indian cuisine in the Indian QSR space
through the Kebab Xpress brand, a first-of-its-kind Indian food chain providing hygienic,
quality, delicious and affordable North Indian cuisine. The Company added four outlets to
its chain in 2013-14 and intends to take the total to 20 outlets by end-FY2015.
Road ahead
We are optimistic of our prospects as each of our new businesses are perched at the
bottom-end of a long industry curve while our mature tea business continues to report
profitable growth.
As a growth-driven corporate, we will continue focusing on enhancing our profitability
in our existing businesses with the objective to accelerate momentum and enhance
stakeholder value.
Going ahead, I am confident that our performance will validate our business strategy to
enter relatively unconnected businesses in response to overarching national and sectoral
opportunities.
With best regards,
H.M. Gupta
Executive Chairman