Our Company has a diversified portfolio of carbon products. We are the
only Company to have a fully integrated specialty carbon complex,
specialising in developing coal tar by-products and derivatives
(advanced carbon material, coal tar pitch, carbon black, corrosion
protection and naphthalene). We can now also boast of the fact that we
are engaged in power generation also.
Understandably, the Company enjoys a formidable downstream presence in
the aluminium, graphite, lithium-ion batteries, infrastructure, tyres
and rubber application sectors.
We have successfully augmented our carbon black capacity. We added to
our portfolio a new SNF plant; a coal tar pitch plant in China and
commissioned advanced carbon plant. The result was that the Company
reported a creditable year in 2011-12,despite the economies around the
world trying to grapple with the vagaries of the downturn: topline grew
60.46 % to Rs. 1123.36 crore, EBIDTA grew 16.64% from Rs. 192.56 crore
in 2010-11 to Rs. 224.60 crore in 2011-12.
Himadri Chemicals has a large portfolio of products catering to the
needs of diverse industries and carving for itself a niche in its
sector. Even though dark clouds of economic crises hover on the
horizon, our industrial presence and performance especially over the
last financial year serve for us as the proverbial silver-lining.
Over the years, there has been a demographic shift in the manufacture
of aluminium products from Western countries to Asia. Large capacities
have been harnessed in the Middle East, China and India leveraging
proximate demand, low power costs and the easy availability of
competitively-priced raw material. In turn, this increased supply has
grown in direct proportion with the consumption of aluminium products
in downstream sectors.
Indian crude steel production is expected to grow at a compound
aggregate growth rate (CAGR) of around 10% in during 2010-2013. This
bodes well for the Company on multiple grounds through generation of
raw material for Himadri and simultaneously represent attractive
downstream prospects. Coaltar accounts for ~3.5% of the coke produced.
From the coal tar distillation process we derive ~50-55% of coal tar
India''s aluminum industry is the principal consumer of coal tar pitch;
it accounts for around 78% of coal tar pitch consumed globally. India
is engaged in a rapidly bolstering its aluminium capacity as the centre
of gravity shifts from Europe to India-China-Middle East.
India is one of the strongest emerging telephony markets in the world.
The country''s mobile penetration is expected to grow to 72% by 2016
which provides a scope of switching from landlines to cell phones
widening the market for lithium ion batteries and materials derived
from our distillation process.
India''s consumption of carbon black is growing by about eight percent
per year. About 95% of the carbon black is consumed by the country''s
rubber industry. Demand is expected to grow by about nine or ten
percent over the next five years. A staggering increase in the
country''s infrastructural sector as well as the burgeoning automobile
industry can prove to be the perfect agents promoting the demand for
Himadri Chemicals expects to capitalise on these trends through its
extensive integration and a growing presence in India and China, two of
the fastest growing suppliers of raw material for the Company''s
operations, ensuring not just consumers but also end products.
This two-country presence will enhance flexibility and enable the
Company to service the growing demand for coal tar distillation
products in India, China and the rest of the world.
While the aforementioned data places our prospects from a medium-term
perspective, the short-term appears to be a completely different ball
game altogether. The Indian economy decelerated in 2011-12, the rupee
depreciated 14.57 % against the dollar which resulted in marked-to-
market losses of around Rs.89.55 crores. In turn, an industry delay in
commissioning new coke oven batteries affected coal tar availability
playing havoc with the fortunes of your Company. The slowdown in the
Indian economy affected steel production, which in turn, affected the
production of coal tar. Due to this the Company''s dependence on costly
imported coaltar increased and affected profitability in the long-run.
In turn, the increase in the raw material cost for carbon black could
not be offset by an increase in realisation. Besides, a slowdown in the
Chinese construction industry resulted in a naphthalene surplus that
affected realisation in India, also affecting our profitability in an
extremely adverse fashion.
During the short term, we expect to maintain topline growth on account
of increasing capacities of its core capacities as well as those of the
byproducts and try to shrug off the constraints imposed on the margins
due to an increase in raw material costs.
The increase in coke oven capacities and aluminium smelter expansions
were delayed, which jolted our profitability and this pressure is
likely to sustain into the current financial year. On the brighter side
of things, once the coke oven projects under expansion at various
integrated steel plants are completed it will increase coal tar
availability. We are working to commission the incremental capacity of
coal tar pitch to meet the increasing demand from the aluminium sector
by this year-end.
We are expecting the lithium-ion battery market to increase, resulting
in an increase in the demand for our products.
We expect to leverage our capability in core carbon competencies and
strengthen our business model by expanding our distillation capacity by
a significant 60%. This we intend to leverage on basis of the accruals
and debt by the end of the fourth quarter of the current financial
year. This expansion will enhance our distillation economies as well as
the economies of our downstream by- products.
At Himadri Chemicals, our long-term vision is to enhance value-addition
for the gamut of products that come out of our conveyor belts. This
facilitates strengthening of margins around base products, increases
our distillation capacity, enhances the quantum of raw material
required to feed by-product manufacture and widen our coverage of
diverse carbon finished products.
This positioning will reinforce our global brand of being a focused and
integrated carbon corporation, enhancing value in the hands of the
Your Directors have pleasure in presenting the 24th Annual Report,
together with the audited financial statements and the Auditor''s Report
of your Company for the financial year ended 31st March, 2012.
Mr. D.P. Choudhary