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Himadri Speciality Chemical Ltd.

BSE: 500184 | NSE: HSCL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE019C01026 | SECTOR: Chemicals

BSE Live

Mar 09, 10:43
46.25 0.30 (0.65%)
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NSE Live

Mar 09, 10:43
46.20 0.30 (0.65%)
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Annual Report

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Chairman's Speech

Dear shareholders,

India represents one of the most exciting opportunities in the world today.

At Himadri, we believe that the country is stepping out of an economic slowdown, driven by a pro-business government at the Centre eager on accelerating reforms and implementing ground-level infrastructure initiatives. The result is that even as India grew 7.6% during the last financial year, the fastest across any major economy, the fact that it reported 7.9% growth in the fourth quarter indicates that the growth is trending faster and is sustainable.

After years, India has started to reap the twin benefits of high interest costs and low inflation, generating real returns, which we believe represents the foundation of capital formation, larger savings and increased private consumption. The easing interest rates and investments becoming cheaper will create another round of growth of the country''s economy.

There are other realities that favor India. According to International Monetary Fund, per capita income in India is only US$1,688, compared with US$8,280 in China. With 50% of its population being under the age of 25, and 65% under 35, India enjoys the advantage of a young labour force as well.

The Indian Government has prioritized the development of a manufacturing base with the objective to transform India into the world''s go-to destination for manufacturing, the same way China did a couple of decades ago.

India is attractively placed to capitalize: the country''s manufacturing wages are a quarter of what they are on China''s Eastern coast, a significant advantage.

India has taken a number of decisive steps in the infrastructure sector (like the introduction of the hybrid annuity model for road construction and easing of interest rates) which are expected to create the necessary infrastructure to drive manufacturing growth.

Moreover, a slew of initiatives like Make in India, Skill India, Startup India and Digital India will drive economic growth in the years that lie ahead. According to the World Bank''s Doing Business Report 2016, India ranks 130 out of 189 countries in terms of ease of doing business, moving up four places from last year''s adjusted ranking of 134.

We believe this is the beginning of a long-term improvement trend.

Himadri''s presence in strategic business spaces enables it to leverage these emerging economic trends. The Company manufactures products for the country''s core sectors - steel, aluminum, automotive and infrastructure development. The result is that with India growing, Himadri is expected to grow as well. Himadri''s advanced carbon materials are integral components of lithium-ion batteries. With growth in the smart phones and electric vehicles segments exploding and an ever-increasing consumer hunger for longer battery lives, this sector is poised to take off like never before.

Despite a volatile situation, demand in the aluminum industry is expected to improve owing to growing use of aluminum in sectors like automobiles. To make the vehicles cost-effective, lighter and reduce emission, a number of global automobile majors are focusing on aluminum as one of the key raw materials in the manufacture of components.

Alcoa, the US aluminum group, expects global demand for the metal to grow 6% this year, only slightly slower than 2015, in spite of volatility in the financial markets. The domestic demand for aluminum is expected to be strong owing expected economic growth. With the power sector getting back on fast track, the demand for aluminum is expected to rise as the power sector is one of the major aluminum consumers in the country.

Himadri is also producing SNF, a key admixture for concrete that is expected to perform better owing to increased construction in the country and a low penetration of construction chemicals in India. We are also at the final stages of acquiring approval for advance carbon black for li-ion batteries, which will open up a sea of opportunities. Growth in demand for lithium-ion (Li-ion) batteries has encompassed a range of application areas, including consumer electronics, hybrid as well as electric vehicles and energy storage. While the ubiquity of hybrid vehicles and full-electric vehicles has yet to be manifested on global roads in greater numbers, the process of a marked shift towards more fuel-efficient and eco-friendly means of transport as a switch from conventional gasoline powered vehicles has commenced. Besides, the battery is gaining traction as the source of power for portable electronic devices including mobiles, digital cameras, laptops and tablet PCs, among others.

For a country like India, which is still in its industrialization phase, the increased consumption of steel and aluminum is imminent; there can be no national growth without these metals. Besides, with housing construction expected to accelerate and the country''s automotive sector reporting a rebound, a company like Himadri can look forward to a sustained growth in off take.

On account of these reasons, I am optimistic that Himadri will add significant value in the hands of stakeholders over the foreseeable future.

Bankey Lai Choudhary,

Managing Director