Dear Shareholders,
The scal year 2023-24 remained challenging amid geo-political tensions,
in ation and supply chain distribution. The Indian electorate voted in favour of National
Democratic Alliance for a third term under the leadership of Prime Minister Narendra Modi.
This should ensure continuity in policy and maintain the momentum of reforms essential to
build greater competitiveness. Our country continues to be one of the fastest growing
large economies and is expected to grow at 6 to 7% in the coming years.
The Indian Chemical Industry continues to be threatened with cheap
imports from China. I am, however, happy that the Of ce of the Directorate General of
Trade Remedies and the Finance Ministry are positively inclined to consider genuine cases
of dumping. In this regard, your company Kanoria Chemicals & Industries Limited is
also a bene ciary. Recently, anti-dumping duty has been imposed on one of our primary
products, Pentaerythritol. During the year, the chemical business of the company has been
particularly conscious of cost reduction and value addition by focusing on innovative
solutions. The company is also augmenting its capacities to meet the growing demand for
construction chemicals. Expanded capacities for Formaldehyde and Hexamine are likely to
become operational by September, 2024. The solar business of the company has been disposed
of, as returns from the same were not commensurate with the investments and risks
involved.
As far as the electronic auto component business of the company under
its subsidiary APAG CoSyst is concerned, current operations in the global automotive
industry remain in turmoil with disturbances caused by the propulsion technology debate
and the megatrend towards automated driving systems. The challenging relationship with
China for both Europe and the USA is furthering this turmoil with severe negative demand
effects. This has made inventory management challenging and thereby liquidity control dif
cult. To combat this, the company has taken steps to consolidate the rst stage of
production in its European facility in the Czech Republic. This consolidation serves the
dual purpose of controlling stock levels and increasing purchasing power. Hopefully, we
shall see this move bearing fruits, towards the end of the scal 2025. As APAG CoSyst is
agnostic to propulsion technology and aligned with the automated driving megatrend,
opportunities for new contracts are ripe. Further, APAG CoSyst has become a single-source
supplier to the VW-Audi-Porsche group, the BMW-Mini-Rolls Royce group, Stellantis
(Maserati, Alfa Romeo, JEEP), GM (Cadillac), and Ford. The next years will hopefully see
APAG CoSyst develop into a strong player in the industry.
The denim manufacturing unit in Ethiopia, Africa, operating through our
wholly owned subsidiary, Kanoria Africa Textiles Plc, continues to be severely affected by
the foreign currency crisis in Ethiopia. Coupled with civil strife, business conditions
have been affected and demand has suffered. The silver lining is the Ethiopian
Government's ongoing negotiations with the International Monetary Fund for a nancial
package to boost the economy. This is, however, likely to happen only if the Government
simultaneously takes some bold initiatives for policy reform particularly on the market
determined exchange rate of the Ethiopian Birr.
I appreciate the contributions of the team at Kanoria Chemicals &
Industries Ltd, who in the face of headwinds have shown dedication, determination and
resolution. The plants are running ef ciently and the concerted drive on cost reduction is
bearing fruit. The year 2024-25 has started well for the chemical business of the company,
bolstered by the anti-dumping duty on Pentaerythritol. The increased capacities that will
come into effect at Ankleshwar, Gujarat, in the later part of the year will further help.
I am also hopeful that there shall be more clarity on the technological transition in the
auto industry and the Ethiopian Government will meet with success in their endeavor to
correct the crisis in the country.
| R. V. Kanoria |
| Chairman & Managing Director |