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Chairman's AGM Speech |
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Chairman’s Speech delivered at the 25th Annual General Meeting of the Shareholders of Praj Industries Limited.
The New Decade: Recharging for Growth
22nd July, 2011 |
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Good Morning. On behalf of the Board of Directors, I welcome you all to this 25th Annual General Meeting of your Company.
By now you have received copies of the Annual Report for Fiscal 2010-11. The green initiative of the Government of India’s, Ministry of Corporate Affairs has been welcomed by all. I am pleased to say that we have achieved over 50% compliance with this initiative in the first year itself. I thank all shareholders for supporting this cause. As you know, we had begun this exercise in the previous year itself. In a small way, we have pre-empted the trend here too.
I assume you have gone through the Annual Report and consider it as read.
The fiscal 2010-11 has been one of the toughest on your Company. The performance has gone down 8% on the topline over the previous year and the profit margin has halved. It is understandable that many of you might have concerns on these areas but at the same time it is also important to acknowledge the faith kept by many of you during this period.
In the short term, we are mindful of the looming double digit inflation figure in India and the high interest rates. The global economy is still very volatile.
As mentioned in my statement in the Annual Report, your Company’s brand equity as well as market share remained very strong even during the slowdown and we are in a position to leverage the same as the economy unwinds.
Now that the past is well behind us, we are very much on a path of growth from here on.
Since the beginning of the past decade, barring the last two years, Praj has made smart returns on shareholder funds, on an average of 60%, and grown shareholder value substantially. We are now on to another decade, the second decade of 21st century. We would like to attempt similar growth trajectory and be back on the path of glory.
Biofuels is regaining its traction in the emerging markets in the first generation feedstock. The confidence level regards biofuels is increasing. In a recent survey by an industry resource, Industry executives predict over 40 percent growth in biofuels revenue in 2011 and job growth of 25 percent. Financing for renewable has also been on an uptick, particularly in the area of second generation and renewable chemicals.
We plan to deepen our relationship in these markets, offering multiple solutions. This will provide us with the scale of economy in terms of manpower utilization.
Interest in second generation bioethanol, from biomass and agri-residue like corn cobs, straw, bagasse and grasses, is getting stronger. We have been receiving enquiries from different parts of the world. People are also looking at bolt on plants. The next big opportunity is likely to be in second generation biofuels. We also see a move to revive biodiesel from non-food crops. Many Companies have come up with high yielding varieties which should create a new paradigm for biodiesel.
As you know, your Company is working in right earnest towards second generation biofules and in the area of renewable chemicals. Recently we had announced a joint development program with a second generation biotechnology Company called Qteros, USA. The program is progressing well and we are hopeful of a cutting edge solution in the near future. Praj Matrix- the innovation center is incorporating the changes required for the above in its processes and facilities and early signs show that we are moving in the right direction. Your Company is aggressively pursuing this promise by way of investments into R & D.
In the new decade, we will also pursue the Biorefinery Platform opportunities. Your Company has a strong foothold in this area. Ethanol is the starting point in a biorefinery. We are looking at other manifestations of a biorefinery to produce Food, Feed and Wellness ingredients, Energy and Biochemicals in conjunction with ethanol plants.
On another positive note, the Indian Government is strengthening its Bioenergy Mission. Already a number of initiatives have been launched, but having pledged emission reduction, the country is now following up with action. This will also give further impetus to all our work.
The Indian growth story and that of emerging markets remains fairly strong. Being consumption led, there are still areas of unmet demand. We would like to capitalize on the same.
One such business line is Brewery Plants. It is poised to grow as we see an increase in disposable income and quality of life. The brewery sector has recorded a YOY growth of 15%. Forming 10-15% of our revenues, we would like to internationalize this business to achieve higher numbers.
Water is one area which is seen as a necessity if any economy has to grow. We have made a beginning last year. We already have references in industrial water & wastewater treatment solutions. This year on will see us pushing for scale up of the business. For customized engineering, another consumption led story, we have already made investments into a new manufacturing facility in the SEZ area of Kandla which will enable ease of logistics for export business. This should see us scale up here too.
Another business where we see annuity revenue potential is bioconsumables. Here we are manufacturing a variety of additives for ethanol industry. With a good response from international markets, this area looks promising and hence we are already setting up a new, separate manufacturing plant at Jejuri in Maharashtra which will be in operation very soon.
As shared earlier, we would like Non-Ethanol business to form more than 25% of our revenues by 2013. We are close to getting there. As we target a higher topline, we will see higher absolute numbers for this initiative.
With increase in global foot prints, we have added nine new countries to our reference list. Praj is emerging as a Company with the unique ability to blend technology and execution. This is a very special combination deployed for customer’s need and satisfaction. We continue to build our future with vigour to maximize returns on all our investments while retaining our core beliefs, core values and entrepreneurial spirit.
With multiple business lines, your Company is Recharging for growth for the medium to long term while aiming at long term sustainability and maintaining focus on its core mission and realigning all its strengths. We have the people bandwidth, the infrastructure, the brand equity, a global reach and supportive investors.
I would like to reassure shareholders that we will leave no stone unturned in our effort to make it another decade of growth.
Thank you for your presence and patient listening.
Pramod Chaudhari, Chairman
Praj Industries Limited
Pune
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