SRF

Dear shareholders,
 
 It gives me immense pleasure in sharing with you my thoughts on the
 performance and prospect of your Company. the year 2008-09 was truly a
 watershed year for SRF – it not only faced the economic downturn with
 strength and resilience but also expanded its footprint in two more
 countries, increasing the number to four. As indians, we feel proud to
 have created an impact at the global level.
 
 It fills my heart with joy to inform you that the global journey we
 began with the setting up of the Dubai unit in 1996 has crossed new
 frontiers. We took confident steps forward during 2008-09 through two
 foreign acquisitions: one in Thailand where we acquired Thai Baroda
 industries Limited (TBIL), and the second one in South Africa where we
 acquired the belting fabrics business of industex technical textiles
 (pvt) Limited. These are both part of our core businesses.
 
 More importantly, these acquisitions placed SRF firmly on the global
 map. Its world ranking improved from 3rd to 2nd in both the production
 of nylon 6 tyre cord as well as Belting Fabrics. While the Thai plant
 enabled SRF to get a foothold in the Asian market, the South African
 plant provided an opportunity to enter Africa, a continent of the
 future. Besides, your Company purchased two businesses of the holding
 Company, SRF polymers Limited (SRFP), the Engineering plastics Business
 (EPB) and the industrial Yarn Business (IYB) during the year. These
 acquisitions were made to achieve consolidation through greater
 synergies between businesses.
 
 The journey, however, was extremely challenging as the Company faced
 arguably one of the most turbulent global meltdowns ever witnessed, at
 least in my lifetime.  Like most of the corporate, SRF too was hit hard
 by the slowdown which began unfolding in September 2008 after a high
 growth trajectory in the first half of the year.  The demand for our
 goods declined and the prices fell precipitously. The fluctuating
 exchange rate did not help the cause either. Clearly, it was a free
 fall for the market.
 
 Yet, we continued the journey towards our destination fuelled by our
 conviction and spurred by our confidence.  The need of the hour was to
 match our ability with adaptability to be able to garner growth. We
 seized the opportunity to improve our internal efficiencies by way of
 making our systems lean. Simultaneously, we renewed our focus to
 improve our cost competitiveness through enhanced productivity and
 optimum resource utilizations.
 
 Most importantly, we remained focused on delivering value to our
 customers using innovation as the key instrument. put simply, we walked
 a tight and disciplined line to stay afloat. And, the strategy paid
 off. Even in a period of slowdown, your Company’s PAT improved by 18
 per cent to Rs 163 crore and net sales increased by 11 per cent to Rs
 1,800 crore.
 
 But what is more gratifying to see is the collective commitment of our
 colleagues across the Company to withstand such a difficult situation.
 The financial numbers do unmask the extraordinary efforts of the
 employees who not only remained resolute but also made the right moves
 to stay on course. Bolstered by its financial performance, the Company
 paid a dividend at the rate of 100 per cent amounting to Rs 10 per
 share, as against a dividend of Rs 5 per share paid last year. the
 Company had initiated buy-back of its shares aggregating to Rs 70 crore
 from the open market, which it completed in April this year.  the
 average price of the buy-back shares works out to be Rs 94.83 per share
 as against the approved price of Rs 160 per share.
 
 Overall, the Company’s performance was satisfactory when viewed in the
 context of the prevailing scenario.  to its credit, SRF continued to
 maintain its market leadership in tyre Cord (38 per cent market share),
 Belting Fabrics (60 per cent market share) and Refrigerants (40 per
 cent market share). the packaging Films Business not only achieved 100
 per cent capacity utilisation but also managed to record an increase of
 27.10 per cent in its revenue on YOY basis through a judicious mix of
 domestic and internal sales.
 
 The Fluorospeciality Business segment, which is essentially driven by
 our R&D expertise in the area of fluorine chemistry, turned around
 during the year. The success of R&D is, therefore, critical. We do
 believe that going forward, fluorospecilities will provide us a
 competitive edge in the market. You will be happy to know that our R&D
 team in Chemicals and polymers Business is actively involved in
 developing new compounds for the pharma and agro industries.
 
 Let me recount some of the other key business performance highlights.
 
 Though the top line of the Chemicals and polymers Business declined due
 to an accelerated phase out of CFCs during the year, the outlook is
 encouraging. Alongside, the focus on enhancing production of HFC 134a
 continued as a substitute for CFCs and HCFCs. HFC 134a is the in-house
 developed new generation of refrigerant, for use in automobile,
 air-conditioners and refrigerators.
 
 Staying with its long-term growth story, your Company approved a
 proposal to set up a Laminated Fabric project for expansion of TTB’s
 Coated Fabric Business at a total cost of Rs 57 crore during the year.
 This is a part of the overall plan for de-risking the Company’s
 technical textiles Business by reducing its dependence on the tyre Cord
 business.
 
 We persisted with our method of using TQM as a strategic tool of
 management for bringing improvement in every sphere of our activity
 spanning both operations and services. the success of TQM in SRF has
 inspired all of us to continue to strive towards achieving excellence
 in our business.
 
 A global outlook requires a global mindset. We strongly believe that
 situations are temporary and institutions are permanent. We therefore
 did not resort to any knee-jerk reaction of downsizing during the year.
 infact, drawing strength from our enduring value-systems of trust,
 dignity and respect for each other, we renewed our focus on people
 development during the turbulent year.
 
 We also believe that sustainable development of our business is not a
 discretionary activity. in our scheme of things, the need for safety of
 employees or the concern for climate change does not become less
 pressing just because the industry is passing through a tough time.
 this is a commitment that was duly recognised during the year when our
 Chemicals Business was conferred with the prestigious Cii-itC
 Sustainability Award for the year 2008. SRF won the ‘Commendation
 Certificate’ in the Similarly, we continued to contribute towards
 community development in tune with our commitment to the society.  We
 intensified our efforts to reach out to the poorest of the poor in
 tijara tehsil of Alwar, Rajasthan, where our chemical plant is located.
 the idea was to improve their livelihood by harnessing under-utilised
 land and water resources under our natural Resource Management (NRM)
 programme. The work on creating awareness on HIV Aids continued.
 Further, we carried forward our commitment to providing quality
 education to the children from both the privileged and the
 underprivileged sections of the society under the aegis of SRF
 Foundation.  You will be happy to know that the Shri Ram School, new
 Delhi, one of the schools run by SRF Foundation, has been rated as the
 country’s most respected Day School in a survey conducted by education
 World, a national human development magazine.
 
 We do realise that our responsibility towards nation building
 transcends regional boundaries. Recently when Bihar was struck by
 terrible floods, your Company immediately responded by donating Coated
 Fabric rolls, its own product, for constructing Child Friendly Spaces,
 tents for flood affected children.
 
 In conclusion, i want to reiterate our commitment to continue to create
 wealth for the Company’s stakeholders.  We will continue to conduct our
 business with values and ethics. We will continue to provide value to
 our customers.  We will continue to build and enhance SRF’s reputation
 of a professionally managed Company that is global in its ambition and
 outlook. And, we will continue to share our prosperity with the
 community at large.
 
 I am sure we will continue to deliver on our promises.
 
 And before i conclude, let me express my sincere gratitude to you and
 all other stakeholders including my colleagues in SRF for all their
 unstinted support towards our journey.
 
 						   With kind regards,
 						     Yours sincerely,
 
 					    Arun Bharat Ram Chairman