Atul Ltd 2009-10

Corporate Identity Serving Diverse Industries Purpose and Values Overview by the Chairman Operational Highlights Financial Analysis Research and Technology Safety, HealthandEnvironment Serving the Society Directors’ Report Management Discussion andAnalysis Report on Corporate Governance Financial Statements Dividend The Board of Directors of the Company recommend payment of dividend of Rs 4 per share on 2,96,61,733 equity shares of Rs 10 each fully paid up. The dividend will entail an outflow of Rs 13.84 crores on the paid-up equity share capital of Rs 29,66,17,330. Profitability Sales in terms of volume on an average increased by 18%; however due to steep reduction in prices of raw materials and the consequent fall in selling prices, sales at Rs 1168 crores (including exports of Rs 513 crores) registered only a negligible growth of less than 1%. Mainly because of a lower loss on account of exchange rate differences, the PBT grew by 75%, from Rs 46 crores to Rs 80 crores. The business Divisions mainly consolidated the spurt in profitability achieved during the previous year with the exception of Polymers which experienced a strong rebound and Colors which grew by about 10% and cut losses. Though lower than the previous year, the Company achieved reasonable cash flow from operations and reduced its borrowings by Rs 73 crores to Rs 295 crores which has substantially improved its leverage ratios and its capacity to raise finance for expansion and acquisitions. The Company improved its efficiencies through yields and de-bottlenecking, and focused on obtaining better realizations for its products. Finance The interest and finance charges for the year was Rs 26 crores compared to Rs 41 crores during the previous year - a decrease of 38% as compared to stagnant sales growth. The net interest to sales ratio, as a result decreased to 2.13% from 3.44% last year. In the current year, the benchmark PLR and LIBOR interest rates showed downward bias for most part of the year. LIBOR rates were at historical low levels during the year. The Company took benefit of lower LIBOR rates by increasing utilisation of Buyers’ credit to reduce the interest cost. Efforts are on to reduce the interest cost as a % of sales through better working capital norms and utilization of assets. The Company follows a prudent financial policy and aims to maintain optimum financial gearing at all times. The Company has repaid loans of Rs 66 crores during the year and the Debt to Equity ratio was 0.56 as on March 31, 2010. During the year CARE reaffirmed the rating of PR1 for short term debt and A- for long term debts of the Company. The Company takes forward contracts and uses other basic derivative products from time to time as permitted by the RBI to cover its net exports. These are purely based on the actual exposure or likely future anticipated export receivables, but never in the nature of speculation. The Company does not hold or issue derivative financial instruments for trading or speculative purposes and all the derivative transactions entered into by the Company are to mitigate or offset the risks that arise from its normal business activities only. Loans taken were used for the purpose that they were sanctioned for by the respective banks or financial institutions. Projects During 2010-11 the Company acquired Rubber and Polyurethane Adhesives business and brand ‘Polygrip’. The acquired business recorded a sale of Rs 28 crores in 2009-10 prior to acquisition. The Company is in the process of integrating the acquired business with that of Polymers Division. It will also commission p -Cresol project of 8000 mt, which on full capacity basis will generate revenue of Rs 120 crores. Insurance The Company has taken adequate insurance to cover the risks to its people, plant and machineries, buildings and other assets, profits and third parties. Directors Mr N N Wadia resigned from the Board with effect from June 1, 2009 due to preoccupation. The Board places on record its appreciation for his invaluable contribution as a Director for more than three decades. According to Article 134 of the Articles of Association of the Company, Mr B S Mehta and Mr S M Datta retire by rotation and being eligible offer themselves for reappointment at the forthcoming Annual General Meeting (AGM) scheduled on August 31, 2010.