Dear Fellow Stakeholders
It is with a strong sense of satisfaction that I pen this note on the
financial year gone by, wherein we planned and started working towards
what we set out to.
We completed the administrative integration of India Foils during FY
2010-11, the benefits of which started accuring. With this, Ess Dee now
has pan India presence with two manufacturing hubs located at Daman and
Kolkata and spokes located at Daman, Vasai, Goa, Sikkim, Baddi,
Kamarhati and Hoera.
In line with our Hubs and Spokes model strategy, all the facilities are
located close to the customer base ensuring tailor made offerings,
lower inventory carrying cost and prompt supplies. The Rolling Capacity
has been enhanced to 37,000 MTPA enabling us to meet the rising demand
from end user industries.
It pleases me to inform you that our initiatives have bolstered our
business model and made it even more robust than before.
We are optimizing the production at Kamarhati plant (West Bengal) and
recommenced operations at the Hoera plant (West Bengal) which had been
shut down since 2003. With this, we have taken a giant step towards
backward integration as Hoera also has its caster plant with an
installed capacity of 11,000 MTPA wherein it converts aluminium INGOTS
to aluminium foil sheets, this being the primary raw material for the
company.
We hope to raise erstwhile IFL''s performance level too to that of Ess
Dee''s.
Integration to tap the opportunities in the User Industry
In terms of the macroeconomic headwinds, the outlook remained positive
despite the continued overhang of global uncertainty.
NFor our end user industry too, the outlook remains positive. India''s
pharmaceutical market size has nearly doubled since 2005. It is
expected to reach USD 20 billion by 2015, reflecting a compounded
annvjal growth rate of 11.7 per cent between 2005-2015 and establishes
India''s presence in the world\ top ten pharmaceutical markets. India is
already the third-largest market in the world in terms oW>lume and
Fourteenth in terms of value.
According to an analysis carried out by the Associated Chambers of
Commerce and Industry of India, the Fast Moving Consumer Goods market
is expected to witness more than 50% growth in its rural and semi-urban
segments by 2012. Overall, it is projected to grow at a CAGR of 10% to
carry forward its market size to over Rs 1,06,300 crore from the
present level of Rs. 87,900 crore.
Notably, packaging is an integral aspect of the entire supply chain
management of these companies. Packaging not only protects and
preserves the product but is also a strong marketing and communication
tool in today''s competitive scenario. It is interesting to note here
that while the packaging cost to our end users ranges typically from
2-7% of the total cost pie chart, it is responsible protection and
preservation of 100% of its value. Hence, as the end user industries
grow, the packaging industry is bound to grow.
Innovation, the Cornerstone of Our Organic Growth
Against the backdrop of such favourable headwinds in our user
industries, our company is perfectly positioned to tap this
opportunity. Adapting to and innovating around changing needs is our
core strength.
Over the years, we have developed long term relationships with leading
pharmaceutical companies by way of registration as an approved vendor
in the Pharma Dossiers of the customers. This has primarily been on
account of our focus on innovation. Our manufacturing facilities are
certified with some of the most stringent regulatory and quality
standards in the Industry, which we feel will work as entry barriers,
secure our numbers and drive future growth.
Within the FMCG space, we have made reasonable headway with the top
food and other product companies, especially the prophylactics segment.
Number Speak
In term of consolidated group numbers, the income from operations grew
by 15.7% to Rs.68,068 lacs. This was primarily driven by the widespread
acceptance of Cold Form Blister and Child- Resistant-blister packaging.
Other aluminium foil based flexible packaging laminates besides PVC and
PVdC coated PVC based thermoforming solutions continue to do well. Alu
Alu, a cold forming laminate for pharmaceutical blister pack
applications has also gained high acceptance from consumers.
Our Profit before Depreciation, Interest and Tax (PBDIT) stood at Rs.
17,056 lacs, up by 8.2%. A clearer picture emerges at the Net Level
where Profit after Tax stood at Rs. 11,801 lacs, reflecting a jump of
165%. This abnormal rise was due to the Loss after Tax for FY 2008-09
on account of the merger of India Foils which was absorbed in FY
2009-10.
Future Impact
During the year, we strengthened our revenue mix, commercialized
breakthrough new packaging products, undertook backward integration
initiatives and enhanced capacities. The impact of these initiatives
will not only provide us greater sustainability but also heighten the
scalability prospects of our business.
Having positioned ourselves to achieve maximum impact with our
innovation and integration activities, we plan to increase our rolling
capacity from 37,000 MTPA in order to meet the rapidly growing
requirements of our consumer industry.
The Road Ahead
Going forward, we plan to capitalize on the opportunities presented by
the growth in our end user industries. We are well positioned to reap
the benefits of integration in terms of enhanced capacities, backward
integration and an overall de-risked and stronger business model.
Through our focus on Research and Development we will continue to
remain at the forefront of innovative packaging solutions.
Our Assurance
The Foundation has been laid for a quantum leap in performance levels
in the coming years. I have no hesitation in crediting much of our
success to our dedicated employees who have worked tirelessly to build
a sustainable and scalable business model.
I also take this opportunity to thank all our stakeholders for their
continued support and assure you that we will leave no stone unturned
to exceed expectations.
Sudip Dutta
Chairman and Managing Director
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