Dear Shareholders,
As I reflect on an exceptionally difficult year, one thing is clear – we have all been impacted by COVID-19. The cruelty of this pandemic has been unparalleled and my heart goes out to all those who are grieving the passing of loved ones, to those who have lost their jobs, and to business owners who have been forced to shut down. While it has been a tough year for many and there are still immediate and pressing matters such as economic relief and equitable and widespread vaccination rollout to address, I am hopeful that better days are ahead.
Through all the challenges, I have deeply admired the resilience of my 7,000 extraordinary colleagues at SRF, who demonstrated dedication and professionalism, and kept the business moving forward. I am also grateful to our customers and to you, our shareholders, for your unwavering trust in the Company.
Arun Bharat Ram
Chairman, SRF Limited
The Year in Review
Accelerating Growth. Scaling New Heights.
FY21 gave us an opportunity to prove our steadfastness in critical times to all our stakeholders: customers, employees, business partners, and the community.
From a financial point of view, in FY 2020-21, your Company achieved a 31% increase in profit after tax at ₹ 1,198 crore compared to ₹ 916 crore last year. Your Company’s revenue for the year stood at ₹ 8,400 crore as against ₹ 7,209 crore in the previous year, recording an overall growth of 17%. We grew market share across our businesses and continued to make significant investments in building our capabilities, nurturing talent, expanding our technology prowess, all the while maintaining credit discipline and a healthy balance sheet.
Coming to our specific Businesses now, I would like to talk about some of the milestones achieved by each of our business segments in FY 2020-21.
Chemicals Business
In FY 2020-21, the Chemicals Business accomplished strong growth of 23% Year-over-Year (Y-o-Y) to achieve record revenues of ₹ 3,645 crore.
In the Specialty Chemicals Business, our ongoing efforts to commercialize molecules for both the agrochemicals and pharmaceuticals segments are well on track and we continue to maintain a healthy product pipeline for the future. SRF’s Specialty Chemicals Business is a ‘Preferred Partner’ with most of its global customers and I am happy to share that we have been honored with the ‘Syngenta Supplier Award 2020 for Performance’ during the year.
As we grow our revenues, we will continue to invest in this segment to sustain healthy growth rates over the next few years. In this regard, I am also pleased to share that your Company will be setting up a 4th Multi-Purpose Plant (MPP) at Dahej, Gujarat. As the Business is growing, it is essential to augment facilities to capitalize on emerging business opportunities. With an expanding product portfolio, a new MPP facility will further support your Company’s endeavors to tap emerging business opportunities and ensure a robust pipeline of new, cutting-edge products in the future. Similar investments alongside improved efficiencies, and optimum utilization of capacities, should enable us to deliver operational excellence and result in even better performance, going forward.
In the Fluorochemicals Business, our prudent investments in capacities, R&D, innovation, and technology has established us as one of the very few, fully backward-integrated producers globally. To build on this foundation and take it to a new level, the team delivered another first during the year and commissioned a state-of-the-art refrigerant application lab at our chemical manufacturing facility in Bhiwadi, Rajasthan. These are significant steps in what has been an ongoing journey of growing our R&D competence and we are already seeing important new benefits.
During the year, your Company also made an important announcement to set up an additional facility to produce 95,000 MT per annum of Chloromethanes at Dahej, Gujarat. This will take our total capacity to above 190,000 MT, making SRF a global player in Chloromethanes. Our expansion plans are a big part of our overall vision of becoming a strong force in the global chemical industry and playing a much larger role in our customers’ success.
“Through all the challenges, I have deeply admired the resilience of my 7,000 extraordinary colleagues at SRF, who demonstrated dedication and professionalism, and kept the business moving forward. I am also grateful to our customers and to you, our shareholders, for your unwavering trust in the company.”
Packaging Films Business
In FY 2020-21, our Packaging Films Business witnessed robust growth of 26% Y-o-Y to achieve record revenues of ₹ 3,292 crore. Scale, operating leverage, better margins, and strong demand from marquee customers across the globe helped establish SRF as a renowned player in the global packaging industry.
With a new BOPET film line in Rayong, Thailand and the startup of our operations in Hungary, SRF’s plants now have a combined annual capacity of 270,000 tons of BOPET and BOPP films, making us one of the biggest producers of both types of films.
As I write this note, we are nearing the commissioning of SRF’s first BOPP film plant at Rayong, Thailand. Back home in India, civil work for SRF’s new BOPP line & Metallizer at Indore is also progressing as per schedule.
With the support of our esteemed customers, we are confident of a vertical start-up of all our new lines that we hope to ramp up to maximum capacities in the months to come.
Technical Textiles Business
Technical Textiles Business had an encouraging performance in FY21, aided by a quick recovery in the tyre industry. Customers continue to favour domestic supplies owing to supply volatility, which has resulted in imports substitution.
In Belting Fabrics, our focus has been on customization of fabric required by our customers from time-to-time. With our investment in modernization, capacity expansion and technological upgradation, we are aiming to build our Belting Fabrics facility in Viralimalai, India as one of the largest single-location belting fabrics sites in the world.
Other Businesses
In our Other Businesses, SRF continues to maintain market leadership in the Coated Fabrics Business, with a high-volume share driven by improved sourcing initiatives and plant efficiency. Despite the COVID-19 induced lockdown, the Laminated Fabrics Business also performed well. SRF’s semi-hot product has been well-received, and we are seeing an increase in volumes. On the other hand, due to severe oversupply conditions, margin pressure is expected to continue in this segment.
Unlocking full potential
During the year, your Company raised ₹ 750 crore from institutional investors by way of Qualified Institutional Placement. I am happy to share that your Company received an astounding response from marquee global and domestic investors, which is a testament of the robust systems and processes that we have in place. This is SRF’s future growth capital and going forward, will enable suitable organic growth over the next twelve-to-eighteen months.
What our people mean to us
Our strong FY21 performance was possible because of the passion and tireless effort of our employees. It was our highest priority to ensure the health of our employees, while also securing operations, supply chains, deliveries, and service to our customers. We committed to our employees that we would not eliminate any roles because of the COVID-19 pandemic. We also implemented efforts to support employees, including free, on-demand physical, mental and emotional healthcare programs.
As we move forward, we will make every possible effort to build, develop and retain a diverse talent pipeline while fostering a culture where everyone feels seen, heard, and empowered to thrive.
Our Community Outreach
Embedded in SRF’s DNA is a responsibility to help people not be left behind. During the year, your Company remained committed to support COVID-19 relief work following the second wave in India and several more initiatives.
SRF Foundation, the corporate social responsibility arm of SRF and our CSR volunteers worked very hard to provide emergency response through the distribution of family essential kits, kits for frontline workers, vital drugs and hospital support material like oxygen concentrators and ICU beds to the community around our plant locations in India and overseas. Besides monetary support to various NGOs working to provide COVID-19 relief across the country, the team was also involved in conducting COVID-19 vaccination camps for the local community around our plant locations. With the help of professionals, SRF Foundation also set up oxygen generation plants in Amreli district of Gujarat and the Dhar district of Madhya Pradesh for community use.
In addition, SRF Foundation has been working on-the-ground to support the educational needs of children across our intervention schools by bridging the digital divide between rural and urban India, through innovative methods, so that Learning never stops! Our Vocational Skill training centres are imparting trainings to the youth to make them employable and contributing citizens of our country.
My deepest gratitude to the team for their commitment towards making a positive change in our society.
Our Sustainability Performance
At SRF, sustainability is a key business driver and a critical component of our success. In this year’s Annual Report, we have, for the first time presented a holistic view of our value creation that goes beyond financials to equally important metrics of Environment, Social, and Governance. We are committed to ensuring our business practices are sustainable in every way possible, be it in the adoption of new technologies that enable a better, cleaner future or in the way we manage finite resources efficiently and care for our customers, employees, communities and the planet.
On behalf of the Board and management, I once again wish to thank you, our shareholders, for your continued support. We remain committed to creating long-term value for you every day.
Please be safe and stay well.
Sincerely,
Arun Bharat Ram
Chairman