ANNUAL REPORT 2000-2001
SHREE RAMA MULTI-TECH LIMITED
I welcome you all to the 8th Annual General Meeting of the Company. The
Annual Report has been with you for some time and I am sure, you would have
taken time to go through the same.
The global economy is going through extremely difficult times. The slowdown
in the US economy and the incidence of terrorism, which led to the war in
Afghanistan, have not helped matters. There has been an overall slowdown in
almost every sector including the packaging industry.
In fact, the Packaging Industry the world over, as well as in India, is
going through a consolidation phase. There have been mergers and
acquisitions which will be good for the industry, as economies of scale
will increase volumes and improve margins. It will also boost R&D efforts
to introduce new cost effective products required by the FMCG Industry. We
at Shree Rama are also looking for good opportunities for
mergers/acquisitions/ - joint ventures/strategic alliances to improve value
for our shareholders.
The growth of the packaging industry largely depends on the growth of the
FMCG industry. With the performance of the FMCG sector falling way below
expectations in the year 2000-2001, the performance of the packaging
industry has also been affected and your company is no exception to this.
During the year, the volumes and margins for the laminated tubes segment
remained under pressure. The past year also saw a market trend for
downsizing of laminated tubes, in the country. As a result of these
factors, while our sales during the year increased in quantitative terms,
there was no positive impact on our profit margins. Thus, while the
operating income increased to Rs. 240.28 Crores from Rs. 204.63 Crores in
the previous year, profit after tax declined to Rs. 38.14 Crores from Rs.
We are firmly committed to meet both the immediate and long term
expectations of our shareholders. Thus, despite lower profits, the Board of
Directors has recommended a dividend of 30x/0 for the year under review as
compared to 24% (on pro-rata basis) in the previous year.
Our expansion programme to increase our manufacturing capacity of plastic
laminated tubes, labels and stickers is being implemented in phases and is
expected to be completed by December, 2001. There has been a delay in
completion of the construction of the factory, due to the earthquake in
Gujarat. As a result, the last phase of the expansion project has been
delayed by about three months. However, there has been no cost overrun.
As the business environment changes, it is important for all companies to
gear up to meet the challenges of the future. In this context it is
extremely important for us to look beyond a domestic presence. China offers
a huge market potential for laminated tubes which is further fuelled by the
enormous replacement demand arising out of conversion from aluminium to
laminated tubes. After carrying out a detailed study of market potential,
we have chalked out a well planned strategy to enter that market. We have
established a subsidiary company called Shree Rama Multi-Pack (Guangzhou)
Limited, taken factory premises on lease and are now going ahead with
setting up a facility to produce PE tubes and laminated tubes in China.
This project is expected to go on stream in the second half of 2002.
Though the corporate governance code will be applicable to our Company in
the year 2001-2002, we have been complying with most of the requirements of
the corporate governance code and the relevant information about the same
has been given in the Annual Report sent to you.
As I mentioned to you last year, we have charted our course for the future
with meticulous care and planning. We are also seeking long-term tie-ups
with large customers for the steady supply of our products. We continue our
R&D efforts towards introducing new cost effective products, as well as
enhancing our product range to include higher value-added products.
We look forward to an opportunity for mergers/acquisitions/joint ventures/
strategic alliances to consolidate our position in the packaging industry.
We shall aLso be Looking more aggressiveLy at the other developing markets
of the worLd. WhiLe pursuing our growth, we constantLy strive to control
and reduce costs at all levels for improved productivity and profitability.
We remain committed to strengthen our position in the global packaging
Before I conclude, I would like to thank our valued customers who have
supported us and constantly encouraged us to work closely with them in
introducing new products. I would also like to thank our Foreign Equity
Investors, Financial Institutions, Banks. and Shareholders for their
continued support. Last but not least, I express my sincere appreciation
for the dedicated efforts of all our employees.
Vikram R. Patel
Chairman & Managing Director
10th November. 2001