We are optimistic that the ability to invest in business broadbasing will help enhance
value for all our shareholders, the basis of our long-term sustainability.
Overview
Kriti Industries was formed in 1982 with the objective to contribute to India's water
security.
During the last decade, the company has grown from annual polymer processing capacity
of 86,400 tonnes to 1,37,880 tonnes; our revenues increased from Rs 282.53 Cr in FY
2011-12 to Rs 546.09 Cr in FY 2021-22.
By the close of the last financial year, Kriti Industries possessed a credible Balance
Sheet. The company enjoyed a debt-equity ratio of 0.15, which is an index of its extensive
under-borrowing and corresponding liquidity. Besides, the company possessed a robust brand
that inspired customer confidence leading to referral or repeat business. The company's
certifications indicated that its manufacturing assets and process were benchmarked with
the most demanding standards in the world, an assurance of reliable quality. The
combination of Balance Sheet strength, brand and certifications represents a scalable
intangible platform in a competitive sector.
The prevailing health of the company's business may indicate that status quo would be a
preferred option – that what has worked until now is likely to work in the future as
well and that running in the business in an auto-pilot mode would indeed be the safest
response. However, we believe that the reverse is true; given the way the external
environment is evolving, there is a premium on the need to respond to changes in markets,
policies and investing preferences. It is imperative to catch this tide, creating a basis
for the company's scalable and sustainable growth across the coming years.
Broadbasing
At Kriti Industries, if there is one term that faithfully captures the direction of the
company, it is ‘broadbasing'. For a number of years, the company focused on the
agriculture sector, convinced that irrigation would grow in importance. The numbers
indicated that of India's total agricultural area, only 51 per cent was rain-fed, a large
room for irrigation systems to widen or deepen their coverage. As India's irrigation
movement grew, the size of its pipes sector widened.
However, there are various realities warranting a broadbasing of the company's
strategic thrust.
One, a complement of reforms and sectorial policies announced indicate that India's
economic growth will be broad-based from this point onwards. This reality will, in turn,
warrant a corresponding broad-basing of the business of companies like ours.
Two, the policies announced by the government indicate a multi-year capital expenditure
programme. This means that if the investment in infrastructure and networks is to be
sustained, there is a credible basis for a company like ours to make a decided long-term
shift in its strategic direction.
Likely outcomes
The outcome of this strategic shift is that over the next few years, Kriti Industries
is making it possible to amortise fixed costs more efficiently, the basis of increased
profitability.
These two outcomes – ability to absorb downsides and accelerate revenues on the
other – are directly linked to our need to strengthen business sustainability. We
believe that our company will build around the following strengths – enduring
relationships with primary customers (trade partners), near-complete product range that
makes it possible to service customers at a single stop, transparent and ethical
management, market leadership in specific product segments and adequate installed
capacity.
Stakeholder value
In view of this, we are optimistic that our broadbasing will translate into enhanced
stakeholder value – for the employee who seeks a long-term career with us, for the
vendor who seeks to enter into enduring supply relationships, for the customer who likely
to graduate from a company with a predominantly agriculture focus into a company with
revenues broadbased across more sectors. We believe that this broadbasing will make it
possible for Kriti Industries to create multiple revenue engines and absorb any temporary
decline in the performance of one sector without financial impairment.
We also believe that some of the non-agriculture sectors in our business mix will grow
faster than the revenues we derive from the agriculture sector, enhancing our scale on the
one hand and seeks a world-class product manufactured with consistency, for the community
or environment seeking a responsible engagement and for the financial partner (lender or
shareholder) who seeks an assured or superior return.
We are optimistic that this ability to invest in business broadbasing will help enhance
value for all our shareholders, the basis of our long-term sustainability.
Our time starts now.
| Shiv Singh Mehta, |
| Chairman |