CHAIRMAN'S STATEMENT

I am glad to welcome you all at the 31^st Annual General Meeting of your company.                  

The Directors’ Report and the Audited Annual Accounts for the year 2003-04 are already with you for quite sometime and with your permission, I take them as read. 

The turnover of your company increased from Rs. 4545 lacs in 2002-03 to Rs. 5623 lacs in 2003-04, achieving growth of about 23%.  Steep rise in the crude oil prices and its derivatives has led to cost escalation.  Strengthening of Rupee against US Dollar has adverse impact on the sales realisation.  Thus, the margins were under severe pressure from both ends.  Relentless efforts in improving cost control and operating efficiency coupled with better forex and funds management enabled your company to achieve higher profit before depreciation and tax of Rs. 655 lacs as against Rs. 593 lacs in the Previous Year registering an increase of about 10%. 

Even after absorbing higher depreciation, Profit before tax for the year under review has been Rs. 272.69 lacs as against Rs. 265.57 lacs in the Previous Year. 

Your Directors have recommended a dividend of Rs. 2.00 per share (P.Y. Rs. 2.00) for the financial year 2003-04. 

The reallocation and restructuring of certain existing manufacturing facilities is underway to improve the operating efficiency by optimal resource allocation.  Your company will be augmenting and expanding the facilities in its Meta Amino Phenol (MAP) plant as well as in its Multi Purpose Plant (MPP) to meet the emerging opportunities.  The growth plan for setting up plants for derivatives of MAP have also been chalked out.  The growth plan is aimed at harnessing of synergy benefits and expanding the business platform.  Your company, with these new capabilities, will be better poised to address the future opportunities.    

Inflation creeping to higher digits, hike in raw material prices consequent to globally rising crude oil and steel prices and forex market movements will have vital impact on the current year’s performance. The profit after tax for the first quarter of the current year has been at Rs. 32 lacs as against Rs. 52 lacs in the corresponding quarter of the Previous Year. 

The company has good orders on hand and considering the trend it is expected that the company will attain higher level of turnover in the current year.   The turnover of your company during the first five months of the current year has been at Rs. 2618 lacs compared to Rs. 2105 lacs in the corresponding period of the Previous Year. 

Gradual responsiveness of market in absorbing atleast partial cost escalation and progressive increasing share of high value added products in the turnover is expected to have favourable impact.  Various initiatives have been undertaken to further control cost and improve efficiencies at all levels.  Barring unforeseen circumstances your company will achieve improved performance.  

I, on behalf of the Board and myself, wish to place on record our appreciation for the co-operation and support extended by State Bank of India and Exim Bank of India.  Your company’s employees at all levels have contributed significantly in achieving the excellent performance which, I thankfully acknowledge.  To my colleagues on the board I am grateful for their valuable advice and support.  Last but not least, I thank you all for the trust and confidence reposed in us and for sparing your valuable time in participating in the meeting.

Thanking you,
Jai Hind

A.D. Javeri
Chairman & Managing Director
September 15, 2004