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Dear Fellow Shareholders,
It gives me immense pleasure to present to you the 2015-16 annual report of the Company. The fiscal year 2015-16 witnessed the country''s economy getting stronger as improved focus on fiscal targets and rolling out of favorable policies led to the economy growing strongly by 7.6% during a time when most of the world''s major and developing nations are struggling. The interest rates have fallen, inflation is under 5%, fiscal deficit reduced to a low of 3.99% and foreign exchange reserves strengthened to an all-time high of USD 355.60 bn as on 31st March, 2016. The various initiatives (‘Digital India'', ‘Make in India'' and ‘Start-up India'' among others) undertaken by the government to simplify ease of doing business in India is likely to contribute to the economic growth momentum and boost the manufacturing sector.
In the past, despite big investments, Indian economy was more about work-in-progress considering the fact that most of the infrastructure and industrial expansion projects were stuck at some levels. This led to a vicious cycle creating troubles for all the sectors of the economy. However, things have started to change as projects are getting clearances, road and rail expansion projects are on fast track, agriculture sector is getting the required importance and more importantly FDI policies have been eased out for various sectors which shall lead to foreign players entering the markets and sharing their technical expertise. This positive move shall provide the much-needed kick to the industrial concerns in India and contribute to the economic growth.
The past two years were a difficult one for the petrochemicals industry as weakening oil prices led to buyers being reluctant to procure goods expecting a further decline in oil prices. This led to inventory pile-ups and pressure on margins. However, after the oil price falling to a relatively low level, the scenario is expected to stabilize with no major shocks for the industry players. The stabilizing crude prices would result in better margin realizations for the Company.
Moreover, with the increased government focus on rural water management and infrastructure projects along with the reviving construction and automobile sector, the demand for plasticizers, paints and unsaturated polyester resins are expected to rise. Your Company, being a proactive one, anticipated this upcoming demand trend and embarked on various capacity expansion and operational efficiency enhancement programme that are completed and have stabilized operations. With this, your Company is well-poised to make most of the opportunities and grow.
I am happy to state that with immense focus and years of planning, we have managed to strengthen the fundamentals of the Company. In spite of undertaking large-scale expansion project and investing in environment protection and process improvement technologies, we have emerged to be a relatively low debt Company with a debt: equity of 0.32 as on March 31, 2016. This has resulted in improvement of our credit ratings by India Ratings & Research from ‘IND BBB '' to ‘IND A-'' for long- term borrowings and ‘IND A2 '' to ‘IND A1'' for short-term borrowings. We are proud of the fact that not only are we the largest Phthalic Anhydride producer in India, but we are also amongst the most environment-friendly companies in India across all sectors. We have strengthened the recovery process at our plants thereby utilizing 100% steam generated from processes for producing power that meets the entire energy requirements of our plants and reduces oil consumption. We have also installed effluent management system that utilizes wastes generated from operations for developing value-added products having commercial value.
As a responsible Company, we shall continue to focus on investing in environment-friendly processes and utilizing a part of profits towards our community development initiatives. In 2015-16, we spent a sum of Rs. 26.87 lacs (2% of our net profits) towards education, healthcare and community services.
I would like to thank all the shareholders who have been with us through good and bad times. I would like to assure you that the Company is sweetly positioned in the industry to make the most of the upcoming opportunities to grow and enhance shareholders'' value. Finally, I would also like to thank all our employees, whose efforts and expertise have contributed to the growth of the Company, and our customers, bankers and vendors for their continued support to the Company.
MM Dhanuka Chairman