Letter to the shareholders Dear Shareholders, Journey Atul completed 70 years of operations on March 17, 2022. It all began in 1947, when Kasturbhai Lalbhai, its legendary Founder, arrived at the banks of river Par in Valsad district of Gujarat state and decided to buy the surrounding 1,000 plus acres of land within 90 seconds, saying to his son, Siddharth Kasturbhai, that the land was beckoning him. His foresight, depth in thinking and attention to details continue to inspire us and the Values he steadfastly adhered to – integrity, perseverance, discipline, trusteeship in business and larger purpose – are at the core of our Company and will remain so in the times ahead. World economy 2021-22may forever be remembered as one of themost uncertain fiscals because of initially the pandemic and subsequently the geopolitical conflict, both of which have caused immense suffering. Still, it is essential to find reasons to be hopeful. The World GDP at US$ 95 tn grew by 5.90% and that of India at US$ 2.95 tn grew by 9.50%. GDP of the USA, China, Japan, Germany and the UK remained ahead of India and grew between 2.40% and 8.10%. The three key lessons of 2021-22 –workwith compassion, invest in people and be strong in local markets – are applicable to countries and companies alike, and our Company is imbibing them. Chemicals and Pharmaceuticals1 World Chemical industry and Pharmaceutical industry are sized at US$ 5 tn and US$ 1.45 tn and they grew by 25% (mainly because of lower base) and 11% respectively in 2021. Indian Chemical industry and Pharmaceutical industry are sized at US$ 175 bn and US$ 45 bn and they grew by 29% and 8% respectively in2021-22. The two industriesaccount for 7%of the world GDP and provide an excellent potential to its constituents to improve, innovate and grow. Our Company has been a part of these industries and will review, rationalise and renew its product portfolio of 900 products and 400 formulations. Sustainability The concept of sustainability with its four pillars – environmental (protecting air, land and water), economic (maintaining high and stable growth), human (investing in health and education) and social (acknowledging interdependence and interconnectedness) – can be used to guide decisions at different levels. Our Company, in its own small way, has evolved, nurtured and promoted the concept in its operations since its inception andwill strengthen it further. Transformation to climate neutrality is a central test of our time, and team Atul aims to see that such transformation and competitiveness are not mutually exclusive. 2021-22 Our Company achieved its highest (standalone) sales of ` 4,929 cr (from ` 3,460 cr in 2020-21) and profit before tax of ` 804 cr (from ` 773 cr in 2020-21 excluding one-time dividend). The performance indicators such as, EBIDTA and RoCE were down to 19% and 24% compared to 26%2 and 28%2, the earlier best achieved in 2020-21 and 2019-20 respectively. Our Company successfully completed its second buyback of own shares, this time of ` 70 cr (as against ` 50 cr the first time in 2020-21). The Directors recommended 250% dividend against 200% in 2020-21; the pay-out was 12%. Investment and growth Our Company completed investment of ` 374 cr during 2021- 22. The investment under implementation in the Company and its 100% subsidiary entity, Atul Products and 98% subsidiary entity, DPD was ` 1,600 cr. The above investment of ` 1,974 cr has the potential to add sales of ` 2,300 cr. The two retail businesses grew in volume by 17% and have a huge potential – we are confident to steadily and substantially expand their market reach in and outside India. 2021-22 and 2022-23 are two fiscals with the highest investment (so far) – our Company will continue to be prudent in its investment so as to remain resilient. Subsidiary, joint venture and associate entities Combined sales of Atul Bioscience (100%), Osia Infrastructure (100%), DPD (98%), Atul Rajasthan Date Palms (74%) Rudolf Atul Chemicals (50%), Anaven (50%) and Amal (49.85%) reached their highest (from ` 309 cr) to ` 518 cr. Profit before tax, however, increased from ` 42 cr to only ` 47 cr because of i) poor performance of Atul Bioscience, ii) continuing stabilisation of Atul Rajasthan Date Palms, iii) teething trouble in Anaven, iv) higher input cost in Amal and v) higher interest and depreciation in general. These entities will invest ` 100 cr in 2022-23. Their best days are still ahead. Mandates We continue to focus on the five enduring mandates. One, drive efficiency in manufacturing and other processes; two, pervade ‘R&D’ and ‘information technology’ in every function; three, become world-class in people productivity and remain lean in fixed costs; four, conserve cash even while growing and evolving the future and five, engage with customers on ideas with large potential. We implemented the learnings from the fire in one of the plants at Atul site on April 20, 2022. The assets and loss of profit were adequately insured. A new plant will be built, and meanwhile other actions are underway to gradually regain lost sales. 20 Atul Ltd | Annual Report 2021-22
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