Kesar Petroproducts Ltd

"We will weather the prevailing slowdown, build additional downstream capacities, diversify our product mix and engage in backward integration with the objective of building a stronger and sustainable company."

Kesar Petroproducts performed creditably during the last financial year when it grew revenues 3.19 per cent and profit after tax 52.13 per cent over the previous financial year.

At our Company, the principal objective is to enhance our business sustainability. Our understanding of 'sustainability* does not necessarily indicate a continuous growth in revenues and profits. We do believe that in our commodity business there will be periods of business sluggishness alternating with phases of significant recovery, in this environment, our principal objective would be to resist sectoral downtrends - remain profitable on the one hand and maximize recovery during phases of industry rebound on the other.

Strengthening business sustainability

I am pleased to report that we have done preciously this during the last few years through various initiatives.

One, we strengthened our throughput - from a time we generated ^146.18

crore in revenues in 2014-15 to 2017-18 when we generated

?180 crore in revenues - validating our capability in investing in manufacturing facilities, generating a higher throughput and being engaged deeper with customers.

Two, we ran an austere ship during the last few years, sustained by no access to short-term loans from banks to fund our working capital until the cooling period following our exit from BIFR had passed.

Three, we broadened the product base of our Company - from a considerable dependence on CPC to the manufacture of alternative products, whereby the proportion of the latter has increased by 10 per cent of our overall product mix today.

Four, by leveraging our sizable capacity - 9 per cent share of the global CPC market - in exchange for superior economies..

A sense of macro-optimism

The management of Kesar Petroproducts is optimistic of its long-term prospects for some good reasons.

As the consumer revolution has grown, there has emerged a greater role for vibrant colours in the consumer persuasion process. This focus has strengthened on account of improved printing technologies. The result is an enhanced ability to deliver any colour on demand and the ability to go into finer shade variations

within a single colour. The result is that not only has the quantum of our downstream business progressively increased, but there has been a growing room for quality value-added products. At our Company, we are capitalizing on this reality through a dynamic business model that is perpetually extending from one principal product to a number of value-added downstream alternatives.

There is a greater emphasis on the use of environment- friendly technologies. This emphasis is not only coming

from communities living in the periphery of pigment manufacturing facilities but also coming from customers needing to work with vendors employing responsible manufacturing practices, mitigating the risks of any environmental under-performance affecting product delivery and business continuity.

The market for pigments continues to grow, while the larger dyes market de-grows. Pigments presently account for just 2 per cent of the overall colours market, indicating a multi-year opportunity.

China has closed pigment capacities until stronger environment safeguards are introduced, an evident opportunity for manufacturers in India. Besides, China's pigments sector has been affected by higher wages, an attractive opportunity for Indian manufacturers to only address the growing global demand but also export to China.

Where we wish to go

At Kesar Petroproducts, the short-term aberration

Petroproducts

• No debt on the books

• 70% of revenues derived from clients of five years or more

• Ability to manufacture more products through in-house productisation capability

• Graduated from commodity end to value-addition (to progressively increase)

• Increase in capacity utilisation to drive ROCE

• Plans charted for widening the value-chain (backward and forward integration)

• Unused in-factory space to facilitate quick capacity creation

notwithstanding, we believe that we address an optimistic future.

We will weather the prevailing slowdown, build additional downstream capacities, diversify our product mix and engage in backward integration with the objective of building a stronger and more sustainable company.