Braving Every Storm
We have made significant capital investment over the years towards
energy conservation equipment which has rendered excellent results for us
Dear Fellow Shareholders,
At the very outset, let me thank you for being such an important and
integral part of our journey over the past year. This year has thrown great challenges our
way, however, with your support and that of our employees, associates, business partners
and government agencies, Laxmi has kept itself healthy and has grown from strength to
strength. As you are aware, the resilience and success of the Company has been
well-reflected in the value that has been created and expanded. For this, we are sincerely
grateful.
Remarkable Resilience
The year began under the cloud of the second wave of the Covid-19
pandemic, which compelled us to put the need and urgency of dynamic planning and
implementation in our business into sharp focus. While the entire industry faced
disruptions in supply chain, general operations, and manpower availability; for Laxmi, the
commitment, dedication and hard work of our team shone through in these trying times.
Despite the uncertainties, we posted a strong performance. However, no matter how detailed
and constructive our planning was, none could foresee the calamitous floods in the Raigad
and Ratnagiri districts of Maharashtra around the end of July 2021. As a result of the
extensive floods and absence of power, the entire industrial area had to be shut down.
While our Specialty Intermediates site sustained damage and operations and inventories
were severely impacted, the Acetyl Intermediates operations were largely uninterrupted.
The co-gen power plant ensured that we still had access to power and that was a key reason
that we were able to operate the Acetyl Intermediaries site at nearly full capacity.
Thankfully, our new greenfield site at Lote Parashuram, where the Fluoro Chemical works
were being set up, remained unaffected by this natural disaster.
In spite of the temporary closure of our Specialty Intermediates works,
the teams toiled day and night so that the facility reopened on September 5, 2021 but all
the plants could come back to normalcy only towards the end of September 2021. This caused
a near 60-day disruption of capacity utilization. Restarting such complex operations in a
matter of weeks and reaching full capacity, especially when the infrastructure had been
severely waterlogged, was a herculean feat made possible by the sheer grit and
perseverance of the operations teams. Also, it is very heartening to note that during
these massive floods there were no fatalities or untoward incident leading to irreparable
harm to human life.
FY22 at Laxmi Organic Industries
As a leader in the Acetyl Intermediates industry in India, Laxmi along
with its wholly owned subsidiary Yellowstone Chemicals Private Limited dominates more than
a third of the domestic market. Globally, it supplies to more than 40 countries and has
had a consistent and direct presence in Europe over the last several years. The Company is
also amongst the largest suppliers of Fuel- grade Ethanol to oil marketing companies in
India. FY22 witnessed never seen before volatility in input prices for this vertical. The
team worked in a smart and agile manner to not only achieve a cost pass through but also
optimize margins by using our global presence as an opportunity. This has strengthened our
belief that even in the face of a severe escalation in input costs we can maintain a high
level of operational excellence and generate value for stakeholders.
The Specialty Intermediates vertical has shown robust growth during the
year on the back of ramped up production following the flood restoration, increased
realizations, and a better product mix optimization towards higher value-added products.
This performance has also been well-supported by the demand from the international market,
with exports accounting for a third of our Specialty Intermediates sales.
When it comes to Fluoro Chemicals, the Company's foray into this
sector remains on track. During the year, its acquisition from Miteni, SpA came to
fruition with equipment from Italy arriving in India. This project is expected to bring in
a library of new high margin niche products and further diversify the business keeping
forward integration with customers intact.
Global supply issues during the second and third waves of the pandemic
caused an increase in the costs and timelines associated with global trade bottlenecks
which in turn affected the pace at which the Company would have wanted to implement this
project. However, to ensure that we minimize the impact of delays, a kilo lab was set up
at our existing units and trials were conducted in our existing R&D centers. This
allowed us to produce samples that have passed customer approvals already. The Company is
confident that this increased capacity would translate to exponential gains once
commercialization is achieved in 30,000 sq. ft
INVESTED IN A LARGER AND MORE UPDATED RESEARCH CENTER DURING THE YEAR
the coming year. The Fluoro Chemicals markets in India and abroad are
ripe for penetration and offer great space to innovate and reinvent.
Delivering on Promises
The Company's efforts and resilience have paid off this year, it
has clocked a year-on-year revenue increase of 87%.
The profits have also been healthy, showing a 88% increase.
The Company's medium-term goal remains moving ahead in the value
chain in the Specialty Intermediates vertical while unlocking multiplying value through
identifying and removing bottlenecks and well thought out expansion in the Acetyl
Intermediates vertical.
With COVID-19 receding, the Company had expected the prices of raw
materials to soften and global supply chains to regain their optimal efficiencies.
However, recent international conflicts have meant that both these aspects have not seen
the normalization that was anticipated.
The Company is confident that, notwithstanding these imponderables, its
business will continue to grow, making the most of its expertise and the commitment and
passion of its people.
Advancing Towards a Sustainable Future
Laxmi is committed towards sustainable development and has been
conferred with multiple certifications in the past, which validate the Company's
stance and directional inclination. FY22 saw continued investment by the Company in both
EHS/ ESG and CSR avenues. We have been commencing projects with a mandate of incorporating
energy efficient technologies, both in design and implementation.
In this context, I am proud to share that we have made significant
capital investment over the years towards energy conservation equipment which has rendered
excellent results for us - in terms of enhanced plant efficiency which has resultantly
reduced our energy consumption and operational costs significantly. We also look forward
to adding solar power to our suite of captive wind and hydro power, thus making us one of
the few companies in the country using all three sources of renewable power.
Through the second wave we worked closely with the local authorities to
provide all support and relief measures to all impacted. This translated into our deep
acknowledgement of the lack of health facilities and infrastructure owing to which Laxmi
has launched a free mobile health unit, along with HelpAge India, to cater to 18 remote
villages around MAHAD. To ensure that the community could take benefit of the vaccines
that were introduced in 2021, the Company launched a mobile unit and successfully
vaccinated 1,937 individuals.
In the same light we have decided to invest in a larger and more
updated research center in a 30,000 square feet area. We are looking forward to moving
there at the earliest, without compromising on the ongoing innovation efforts.
A Future Full of Opportunities
The sad demise of our founder Chairman, late Shri Vasudeo Goenka, was
sudden and a cause of deep anguish to us all. However, our resolve is to keep his memory
alive by continuing to adhere to the highest governance standards and motivating ourselves
to achieve the true potential of the business that he had started.
Before parting, I must thank all of you again for your steadfast
support in making and keeping Laxmi an industry leader. We are confident that, in the
coming years, we will be able to continue to keep Laxmi ahead of the curve and continue to
add value to all our stakeholders. True to the spirit instilled by the founder Chairman of
Laxmi, we intend to make the most of the faith that you have reposed in us and discharge
our duties in the most exemplary fashion, thereby maintaining Laxmi's pre-eminence as
a responsible, conscious and value creating leader in this business.