Distinguished Members, my Colleagues on the Board, Ladies and Gentlemen,
Welcome to the 58th Annual General Meeting of your Company. This is my second meeting as Chairman and it is a moment of both, joy and satisfaction for me. As you are aware, this has been a milestone year in the history of the Company. In 2010, we changed the name of our Company from ICI to AkzoNobel as a precursor to uniting the various AkzoNobel entities in India. This year, was defined by the merger of three AkzoNobel Group companies in India—Akzo Nobel Coatings India Private Limited, Akzo Nobel Car Refinishes India Private Limited and Akzo Nobel Chemicals (India) Limited—with Akzo Nobel India. As a merged entity, Akzo Nobel India has been catapulted to the league of large sized corporate in India. As one Company, we have nine business units, substantially increased portfolio, a wider reach in market, a larger talent pool and increased number of manufacturing and R&D facilities.
While this year has been momentous for us in the positive sense of the word, the same cannot be said of the economic environment that we have been operating in. We are going through tough economic conditions, both, globally and in India. A drought has been officially declared, the devaluation of the rupee has nullified any potential impact of stabilizing raw material prices that had spiraled upward over last one year. Stress is rising on the demand side, with inflation remaining unabated and consumer confidence slipping. With industrial production not picking up, sectors like auto, consumer durables and realty slowing down, the overall GDP growth forecast is being pegged at an all time low of 5.8% - 6%, perhaps even lower, and we have challenging times in the year ahead.
Despite this slowdown in the Indian economy, I am confident that our growth story will continue to be vibrant and positive. This confidence comes from the scale that the merger has offered Akzo Nobel India- it has made it stronger and ready to take on further challenges. The strategy of the Company has been re-defined and the Board is closely monitoring all the new developments. The plans are ambitious; the path clearly delineated.
You all must have received the Annual Report for 2011-12, which has the ‘Power of One’ as its theme. As ‘One AkzoNobel’ we are a united force. Our edge in coatings & chemicals technology coupled with R&D access presents us many opportunities. We have plans for entering new categories and recently launched our wood finishes & adhesive business. We have the capability of offering a coating solution for practically every substrate and meeting every type of need for performance, protection, durability and great looks. We have rolled out our Customer focused solutions - Key Account Management model, providing customers the benefit of a single window access. We now have even greater expertise and capabilities to script our success story.
As we shared with you in the Annual Report, the total revenue for the year, at Rs 2100 crores has been a milestone for the Company as this is the first time we have crossed the psychologically significant figure of Rs 2000 crore. This achievement is largely led by the growth in the Decorative Paints business. Profit before tax was at Rs 246 crore, higher than the previous year by 12%. I have the pleasure to announce that your board recommended an increase in the dividend to Rs 20 per share and also proposed a share buyback programme at Rs 920 per share through a tender offer. Both physical and demat shareholders were able to participate in this offer; the Company has bought back a total of 13 lakh shares. Underlining its commitment to the Company and its confidence in the growth opportunities in India, AkzoNobel N.V. has further invested in the shares of the Company during the year.
I would now like to share with you some other achievements of the year. We continued with our focus on new to market products solutions across various business lines - these innovations will give us a stronger footing in the coatings business. We have commissioned a 30 million litre facility in Hyderabad and have added new capacity for Coil coatings at Bangalore. With the merger, we now have five operating factory sites and are adding one more integrated Greenfield site at Gwalior. In addition to our Research & Development centre in Mumbai, we now have the advantage of our International Research Centre, in Bangalore, with a force of 105 talented scientists; this, I am confident, will result in further innovation. I am also pleased to inform you that our Chemicals business won the National Safety Award from FICCI and has been winning the National Safety Council awards for the last three years.
At Akzo Nobel India, we are of the firm belief that it is our people who will provide Tomorrow’s Answers Today.TM They will open the doors of future success for the Company. Post merger, the number of employees has gone up from 1,027 to 1,716. Propelled by our belief that as our people grow, so do we, we do our utmost to offer them opportunities to allow their skills to flourish. And, when Akzo Nobel India was declared one of the best overall talent management organizations of the year at the World HRD Congress 2012, we felt that our efforts were not in vain.
I would like to share with you the Company’s performance in the quarter April-June 2012 which was approved by the Board at its meeting held earlier today. The Company has been able to grow its top-line for the quarter to Rs 5630 million despite tough economic conditions. However, this figure is not comparable with the figures reported for the corresponding period of the previous year in view of the merger.
Pressures on margin from costs has impacted all businesses, resulting in PAT for the quarter dropping to Rs 609 million against Rs 680 million reported for the same quarter last year.
Accountability and transparency are the key pillars of governance in our Company. Strong internal controls and multi-level checkpoints guarantee that we work within this framework. In this way, we make sure that our commitments to all of you are met and promises delivered.
Corporate social responsibility and sustainability are of great significance to all of us at Akzo Nobel India. These are not mere catchphrases, they define our every action. We care for the weaker sections of society; we feel deeply about the environment. These values are at the forefront of all that we do. It has always been your Company’s endeavour to reach out to the less privileged, making it a part of our business to transform their lives.
In concluding, I thank you all for being here; it is your encouragement that makes us eager to strive for greater heights. Let us now move on to the main business of Akzo Nobel India’s AGM, as listed in the notice of the meeting.
Nihal Kaviratne, CBE, Chairman
Akzo Nobel India Limited