Dear Shareholders,
In the last fiscal year, the global economy continued to face multiple challenges and
uncertainty due to prevailing geo-political events be it COVID-19, Ukraine war, resulting
in a slowdown across the world. Spiralling costs of raw materials, supply chain
disruptions and tighter monetary policies have all had an adverse impact on demand across
industries, including the pigment industry.
This resulted in a sharp reduction in demand and significant pricing pressures on
Sudarshan, adversely impacting our sales volumes and hence, financial performance.
However, as the famous philosopher Friedrich Nietzsche said, That which does not kill
us makes us stronger', and I firmly believe that difficult times, often, contain within
them the opportunity to reenergise and emerge stronger, that is precisely what Sudarshan
did.
So, it is with immense pride that I present to you, Sudarshan's Annual Report for the
fiscal year 2022-23.
The theme for this year is aptly titled Re-energising for LEAP to 3. Our workforce
regrouped and emerged re-energised to close the year on a positive note.
Resilience at Sudarshan
Sudarshan continues to be a resilient company built on a strong foundation, committed
towards its long-term strategy, and is poised for growth.
In order to meet the uncertainties, additional 3 initiatives were very well driven in
the fiscal year - prioritising cost reduction, optimising working capital and ensuring
commissioning of all capex projects.
This year we continue to emphasize and accomplish on the 4 main pillars of our
long-term strategy :
1. Launching New Products: All pending CAPEX projects with a total investment of Rs.
750 crore have been completed. Consequently, Sudarshan's product portfolio has undergone a
complete transformation. We now offer the widest and broadest portfolio of enhanced
products that have given us a definitive edge in internationa markets.
2. Foraying into New Businesses: We are proud to announce that we have successfully
launched the following four new businesses.
• CICP
• Solvent Dyes
• Pigment Preparation
• Digital Inks
3. Strengthening Go to Market Strategy: Additionally, we have strengthened our Go To
Market strategy. The overall market reach has improved including our distribution network
along with reinforcing our presence in Asian markets.
4. Achieving Cost Leadership: All aspects of our business operations were monitored
closely, and stringent cost-reduction measures were implemented that resulted in
significant cost savings. We optimised our inventory successfully and reduced global
inventory days which has helped in reducing networking capital.
Highlights of our financial performance
Despite the various setbacks we faced last fiscal, we ended FY 2022-23 with a stable
financial performance. Our total income from operations stood at Rs. 2,302 crore in FY
2022-23 as compared to Rs. 2,201 crore in FY 2021-22, marking a growth of around 5%.
EBITDA for the period ending March 31, 2023, was Rs. 211 crore versus Rs. 275 crore last
year. We registered an EBITDA margin of 9.2% in FY23 versus 12.5% over the same period
last year. Our PAT for the year was Rs. 45 crore, compared to Rs. 130 crore for the same
period last year.
During the fiscal year, we focused on optimising our working capital, especially
inventory levels and accounts receivable, to generate free cash flow. This has
successfully reduced our working capital debt levels. I am pleased to state that our
multi-pronged strategy in the focus areas have borne fruit, as corroborated by a strong
revival in our financial parameters during the fourth quarter of FY 2022-23.
On 6th April 2023, the Company completed the sale of its freehold, clear,
and marketable titled land admeasuring around 5.76 Acres along with the structures
standing thereon located at 162, Wellesley Road, Pune for a net consideration of Rs.356
Crore. The proceeds realized from this sale are being used for strengthening the Balance
Sheet of the Company.
Building a global culture
Our people are our biggest strength and as we transform into a global organisation, to
fulfil our mission - To be world-class global colour solution provider with an innovative
and vibrant culture', we are focused on building a truly global workforce. We have
implemented several comprehensive initiatives and programs based on our core values, which
we believe will be instrumental in creating a positive, inclusive and vibrant,
work-culture at Sudarshan. For us, our people are the key differentiators, as they have
been helping us in successfully executing our strategy and building a global culture.
Sustainability at Sudarshan
Sustainability has always been a priority for Sudarshan. As a chemical company, we are
cognizant of our impact on the environment and constantly strive to minimize our
environmental footprint by embedding sustainability into all aspects of our operations. We
have recently released Sudarshan's maiden ESG report, with the theme 'Growing together for
a Sustainable Future', derived from the Company's larger purpose of - 'Growing together by
being Spiritually Fulfilled, Socially Just, and Environmentally Sustainable'.
We recently participated in the annual EcoVadis Sustainability Rating assessment and
have achieved the prestigious Silver Recognition Level, raising our score from 57 last
year to 67 this year. This accomplishment places us among the top 25% of companies
worldwide with sustainable business practices.
Making a difference.
Sudarshan has always had a culture of giving back to the community.
We have implemented several CSR initiatives by working closely with several
stakeholders at the ground level. We have in place a dedicated and structured program -
'Sudha', through which we seek to make a long-term, positive and visible difference to the
communities we operate in.
Poised for Growth
Despite the setbacks in the last two years, Sudarshan has clearly mapped and factored
the various extrinsic and intrinsic influences in its long-term strategy.
The extrinsic factors like consolidation of the pigment industry at the top; major
challenges with one of the key North American supplier; the adoption of the China-plus-one
strategy by companies seeking to reduce their reliance on China; emergence of India as a
strong player in global chemical industry along with stabilization of raw material prices
and continuing high energy costs in Europe, are both a challenge and an opportunity for
Sudarshan.
As we step into the new fiscal year, we remain both, vigilant and optimistic. Sudarshan
has been able to turn the intrinsic factors into advantages like the completion of new
capex projects has resulted in a comprehensive product portfolio; a significant headroom
is now available to grow in non-traditional geographies; the overall productivity
improvement has resulted in cost competitiveness and finally getting the unwavering
support of the most important Sudarshan asset - Energized teams with entrepreneurial
mindset.
We are poised to leverage these opportunities and regain growth, further consolidating
our market leadership position. However, we will maintain our current levels of rigorous
fiscal discipline, optimise our operations and control costs to bolster our competitive
edge and improve our financial performance.
In conclusion
Although it has been a difficult and demanding year, it has been an immensely rewarding
one. Our people have demonstrated to us that resilience, creativity, and collaboration can
overcome the most challenging of situations. I am confident that our success this past
year has inspired all of us at Sudarshan to Re-energise for LEAP to 3. This strategy has
served us well and I believe that it will help build the necessary momentum to leap
forward into a brighter tomorrow.
I would like to conclude by expressing my heartfelt gratitude to all our stakeholders
for their continued dedication, hard work, guidance, and faith in us. I look forward to
growing together with all of you and achieving our collective dream of being a leading
global player in the pigments industry and leaving behind a better world.
Warm regards,
Rajesh Rathi
Managing Director.