CHAIRMAN’S MESSAGE
Dear Shareholders,
On behalf of the Board of Directors and the Company, it is my pleasure to present the Annual Report along
with the Audited Financial Statements for the year ended 31st March, 2018 and also extend a warm
welcome to you to the 57th Annual General Meeting of your Company.
Economic Overview
The economy averaged a growth of 6.7%. However, Q4 of the fiscal year was strong at 7.7% aided by the
manufacturing, construction and services sectors. With the economy adjusting to the impacts of the
government’s demonetization and GST initiatives the growth slowly recovered in the third and fourth
quarters of the year. Although export growth was flat, the recovery was due to increase in government
expenditure and overall investment growth.
The Global Economic Prospects Report of the World Bank projects GDP growth at 7.3% during the on-going
fiscal and 7.5% for the next two succeeding years. Moody has upgraded the country’s sovereign credit
rating in nearly 14 years to Baa2 and changed its rating outlook to stable from positive as risks to
India’s credit profile were broadly balanced. The positive mood was further strengthened by the fact
that India was ranked 30 spots higher in the World Bank’s Ease of Doing Business Index.
Energetics and Explosives Businesses
Our Production and Sales volumes for the year were higher, however, due to fall in prices in major
tenders, the consolidated revenue has shown a marginal decrease from Rs, 551 crores in the previous year to
Rs, 500 crores, although, the profits from the business has been maintained.
While the competition and price realizations are going to remain on a downward trend, the Company and its
wholly owned subsidiary IDL Explosives Limited ( IDLEL ) have initiated several projects for up gradation and
modification of processes with additional capex to enhance quality, productivity and safety to create
superior value. IDLEL has also obtained increase in licensed capacities at 13 locations which enhance
production of bulk explosives by over one lakh tonnes.
R&D efforts are also underway to not only improve processes but also to introduce new products based on
customer preference.
The activity in the defence sector is increasing, especially with the stabilization of the “Make in
India” projects and initiatives. The niche areas which are catered to by our Special Product and Metal
Cladding Groups are coming into prominence and we expect to develop more sophisticated products for these
niche markets.
Currently, we have a good order book of Rs, 704 crores. More orders are in the pipeline, we, therefore,
expect major growth over the next 2 - 3 years.
Realty
The first block of 14.54 lakhs sft ( Blocks 3A and 3B with MLCP for 2500 cars ) in the Company’s
‘Ecopolis’ project at Yelahanka, Bengaluru, a certified LEED Gold rated building, has inked its
first lease. In line with the industry norms, after the initial rent-free period which is allowed for fit
outs, revenue streams would follow. Block 2 of the SEZ area of 10.06 lakh sq.ft, another green building which
is pre-certified LEED Gold rated, is also nearing completion. It will be ready for fit outs by Q4 of 2018-19.
With this breakthrough, the Company and the Developer are actively considering proposals for early monetizing
of these assets.
As announced recently, the first Lease Agreement has been signed with AXA Business Services Private
Limited, one of the major leading multi-national insurance/financial companies for one full floor ( 73,465
sft ) in Block 3. The revenue stream will start after the fit out period from Q3 F 2019.
With the on-going improvement of social infrastructure including the Metro Rail, North Bengaluru will
offer alternate IT corridor to already saturated prime markets of Outer Ring Road, SBD, CBD, Whitefield and
Bannerghatta Road. Ecopolis can cater to the needs of occupiers looking for large floor-plates, in firming up
their real estate requirements to expand operations in other corridors of IT/ITES office.
Hyderabad has been gaining prominence in the international business map as a Contemporary City. The
recently held Global Entrepreneurship Summit being a testimony to it. Economic rents, occupier-friendly state
government policies and robust supply pipeline are likely to invite cost-conscious occupiers to Hyderabad. The
100-acre integrated mixed use township is located in Kukatpally which is very close to the IT/ITES hotspots of
Hitech City and Gachibowli. This township comprises of IT/ITeS office space, Retail segment, Educational
Institution, Hotel, Hospital and Residential apartments. The master plan has been redesigned and a detailed
design for Phase 1 of the development is currently being developed.
Investments
The FY 2018-19 promises to be an interesting one as planned combination between Houghton International
and NYSE listed Quaker Chemical Corporation progresses. The 10% investment in Houghton International Inc.
held through its wholly owned UK subsidiary will result in approximately 2% holding in the Quaker Chemical
Corporation. The combination then will be a global leader in the space of process fluids, chemical
specialties, and technical expertise to the global primary metals and metal working industries. Quaker
Chemical Corporation continues to be in productive discussions with the European Commission and Federal Trade
Commission regarding the Combination. Based on the information available to date, the Quaker Chemcial
Corporation expects to receive approval from the regulatory authorities and close the Combination in the
fourth quarter of 2018. As you would have observed from the financial statements prepared in accordance with
the newly introduced accounting standards i.e., IndAS, fair value of this investment was Rs, 440 crores as on
March 31, 2018.
I take this opportunity to convey my gratitude to my colleagues on the Board for their cooperation and
valuable contributions during the year. I appreciate the Management and employees for their efforts in the
major cost and process optimization and new product initiatives during the transition phase to build a more
efficient and customer oriented business in line with future demand patterns.
I also extend my sincere thanks to all our Shareholders for their continued trust and support.
Warm regards,
Ajay P Hinduja
August 10, 2018
CHAIRMAN
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