Black Rose Industries Limited (514183) Earnings Call Transcript & Summary

Very good afternoon to all of our Shareholders and Directors and KMPs. I, Ankit Kumar Jain, Company Secretary and Compliance Officer of Black Rose Industries Limited pleased to welcome you all to the 34th Annual General Meeting of the company. I trust all of you are safe and in good health. This meeting is being held through video conferencing in accordance with the circular issued by Ministry of Corporate Affairs and Securities Exchange Board of India. Now I request Mr. Anup Jatia, Chairman of the company, to focus at the proceedings of the meeting.

Can everybody hear me?

Yes.

Okay. Good afternoon to all our shareholders and directors participating in this Annual General Meeting through video conferencing. I wish to inform you that I have joined this meeting through video conference from Japan. We have the requisite for quorum present through video conferencing to conduct the proceedings of this meeting. Participation of members through video conferencing is being reckoned for the purpose of Quorum as a circular issued by MCA and Section 103 of the Companies Act 2013. The quorum being present, therefore, we call the meeting to order. I request the Board members on the video conference to introduce themselves.

Good afternoon, everyone. I'm Ambarish Daga, Whole-time Director, Joint Chief Financial Officer and Investor Relations Officer of the company. I have joined this annual general meeting from the registered office of the company in Mumbai through video conferencing.

Good afternoon, everyone. I'm Rishabh Saraf, Non-Executive Independent Director, and I have joined this Annual General Meeting from Mumbai through video conference.

Good afternoon. This is Abhishek Murarka. I'm a Non-Executive Independent Director of the company and have joined the meeting from Mumbai through video conference.

Apart from the directors, we also have our KMPs, statutory auditors and secretary auditors in this meeting. I now request Ankit to brief the members on certain points relating to the AGM proceedings.

Thank you, sir. I would like to apprise certain aspects which are relevant and required for the smooth conduct of this meeting. The facility for joining this meeting through video conference or other audio-visual means is made available for the members on first come, first serve basis. Members are requested to refer to the instructions provided in the notice for a seamless participation through video conference and for voting. In case members face any difficulty, they may reach out to the helpline numbers. The company has taken all the necessary steps to enable and ensure [indiscernible] and voting by the shareholders. As the AGM is being held through video conferencing, [Technical Difficulty] shareholders appointing authorized representatives under Section 113 of the Company's Act 2013, representing 3,82,49,850 shares of the company, which constitutes 75% of the company's paid up equity share capital. Statutory registers and other documents required to be maintained under the Company's Act 2013 are available for inspection by the members. Seeking to inspect such documents can send an e-mail at the designated e-mail address that is [email protected]. In compliance with the provision of Section 108 of the Company's Act 2013 and the rules made there under, the company has provided to all its member facility to exercise their right to vote by e-voting, in respect of the business, to be transacted in the Annual General Meeting. The company has availed the service provided by National Securities Depository Limited for e-voting. The remote e-voting commenced on Friday, September 20, 2024, at 9 a.m. and ended on Sunday, [ September 22, 2024 ] at 5 p.m. Thereafter, e-voting module was disabled by the NSDL. The members holding shares either in physical form or dematerialized form as on the cutoff date, September 16, 2024 were able to cast their votes electronically. Members who have not voted earlier through remote e-voting can cast their vote after the conclusion of the meeting through e-voting facility. The e-voting facility will remain open for 15 minutes after the conclusion of the meeting. Now I hand over back to Chairman, sir.

Thank you, Ankit. Dear shareholders, good afternoon, and a very warm welcome to you to the 34th General Annual Meeting of Black Rose Industries Limited for the financial year 2023 to 2024, a year in which we reached new milestones and positioned ourselves for accelerated growth in the future. Despite a challenging macroeconomic environment, characterized by a demand slowdown and suboptimal price realization, we achieved significant volume growth. Our export revenue increased from 30% to 34%, even amidst fluctuating demand in key markets. Concurrently, our domestic distribution sales grew, contributing to an overall increase in revenue. In our manufacturing sector, enhanced capacity utilization resulted in the highest ever production of acrylamide liquid with exports comprising nearly 50% of total sales. The combined performance of both the business segments has bolstered our overall profitability and led to substantial gains in our market share across product lines. The reduction in freight rates and logistics costs enabled us to strategically intensify our focus on exports. We expanded our market presence into high-potential regions including Europe, South America and the Middle East. Despite overall sluggish demand in Europe, we achieved notable traction as European companies diversify their procurement sources. Additionally, our EU REACH registration and pre-registration for Turkey REACH facilitated the acquisition of new customers and sustained profit growth. Looking ahead, we are planning to focus on exports to Asian markets, particularly Southeast Asia, Japan and the Far East due to the reemergence of challenging freight conditions in the European and American sectors. I am confident that this strategic move will enhance our position and drive future growth, delivering increased value for the company and its stakeholders. Our solid foundation, expanding market presence, focused R&D initiatives and strong partnerships with key stakeholders, combined with our exceptional talent, were pivotal to our outstanding performance this year. We remain committed to reinforcing these core drivers and have strategically embarked on a transformative path characterized by significant organizational changes. We are dedicated to cultivating a robust talent pipeline that aligns with our vision and supports our long-term objectives. To this end, we have intensified our research and development efforts to enhance our product portfolio in response to the evolving needs of our growing customer base. We have also recruited additional R&D advisers, including a Japanese expert based in India, to further strengthen our R&D capabilities. As a forward-thinking organization poised to capitalize on emerging opportunities, we have undertaken strategic initiatives to drive growth across our business divisions. Key to our future goals is the development of polyacrylamide solids technology, along with the establishment of a new R&D facility in Navi, Mumbai. Additionally, we are working on the specialty chemicals project in collaboration with the Japanese partner at our Jhagadia site, for which we have already sought environmental clearance. We are also exploring toll-manufacturing opportunities with international companies to further propel our business growth, strengthening our relationships with our key partners who are essential to our expansion plans remains a priority. Furthermore, we recognize the importance of infrastructure development in preparing for future growth, and are planning to acquire land to enhance our future operational space. Looking ahead, our strategic focus will be on further expanding our market reach with the continued support of our growing sales team. We are also planning to introduce new products into our distribution portfolio which is expected to benefit us in the coming year. The addition of new markets, both in manufacturing and distribution will further drive our growth. After a prolonged period of subdued demand, the domestic market is showing signs of recovery, which we anticipate will enhance our sales performance. Furthermore, we expect to maintain steady volume in our export business for the U.S. oil and gas sector. Concurrently, we will persist in our efforts to minimize our environmental impact and enhance safety measures guided by our validated 4R approach: Renewable, Recycle, Replace and Reduce. I would like to take this opportunity to express my sincere gratitude to our esteemed Board members and stakeholders for their unwavering support and contributions, which have been crucial to our success over the past year. I extend my heartfelt thanks to our customers for their continued loyalty and to our suppliers and principals for their vital roles in our operations. I'm also deeply appreciative of our employees for their hard work, dedication and innovative spirit. We look forward to achieving new milestones and great success with your continued cooperation. Thank you very much. Moving ahead. The annual report for the financial year '23-'24 has already been sent to all the shareholders whose e-mail IDs were registered with the company. The notice of AGM meeting, along with the audited statement of accounts for the year ended 31st March 2024 and the balance sheet as of that date and the report of directors thereon have been with you for quite some time now. And with your permission, I shall take them as read. The Secretarial audit report and Independent auditor's report on standalone and consolidated financial statements for the year ended 31st March 2024, have expressed unqualified opinion in their respective audit reports for the financial year '23-'24. And hence, in terms of Section 145 of the Companies Act 2013, auditor's report is not required to be read out. The Statutory auditor's report on the stand-alone and consolidated financial statements and Secretarial Audit Report are available in the annual report. The company has appointed Ms. Shiv Hari Jalan & Company, Practicing company Secretary in Whole-time Practice to act as a scrutinizer, to scrutinize the entire e-voting process in a fair and transparent manner. They have joined this meeting through video conference. The result of e-voting along with the scrutinizer's report, will be intimated to the stock exchange and will also be uploaded on the website of the company at www.blackrosechemicals.com and on the website of NSDL at www.evoting.nsdl.com, within 2 working days of the conclusion of this AGM. We now take up the resolutions as set forth in the notice of the 34th Annual General Meeting. The ordinary business items are listed as agenda item 1 to 3 and the special business item is listed as Agenda Item #4 of the notice, which are being read by Ankit Jain.

Thank you, sir. So item #1 is to receive, and consider and adopt the audited financial statements of the company for the financial year ended March 31, 2024, together with the report of the Board of Directors and the auditors thereon; and the audited consolidated financial statements of the company for the financial year ended March 31, 2024, together with the report of auditors thereon. Point number 2, to declare a final dividend of INR 0.55 and a special dividend of INR 0.10 per equity share for the financial year '23-'24. To appoint a Director in place of Mr. Ambarish Daga, DIN:07125212, Whole-time director who retires by rotation and being eligible offers himself for appointment. To consider and approve ratification of remuneration payable to cost auditors of the company for the financial year ending March 31, 2025. Over to you, Chairman, sir.

Since the Annual General Meeting is being held through video conference and the resolutions mentioned in the notice convening this AGM have already been put to vote through e-voting. Therefore, there will be no proposing and seconding with respect to the proposed resolutions at this meeting. Further, I hereby authorize Mr. Ankit Kumar Jain, company Secretary to declare the results of the voting and place the results on the website of the company. Now I shall request Mr. Ambarish Daga, Executive Director, to answer the questions received by the company from the shareholders through e-mail. Ambarish, please.

Thank you, Anup. We have received questions from 2 shareholders, Mr. [ Kaushik Sahukar ] and Mr. [ Anil Mehta ]. I will read out the questions followed by our answers and responses. Question number one, could you please share the capital investment plan for the upcoming projects and the expected revenue? For our upcoming projects, we are projecting a capital investment of approximately INR 60 crores to INR 100 crores for the setup of our polyacrylamide solids facility, depending on the sourcing of our equipment alongside INR 20 crores to INR 25 crores for the specialty chemicals project. Once these projects are fully operational, we anticipate a significant increase in our manufacturing revenue. At full capacity, the polyacrylamide solid facility is expected to generate around INR 250 crores in annual revenue at current market prices. While the Specialty Chemicals project is forecasted to contribute approximately INR 35 crores to INR 40 crores per year. Additionally, the company is always on the lookout for new manufacturing opportunities, leveraging its strong relationships with principles from the distribution business to drive future growth. Question number two. With increased globalization, what has the company done to increase the international breadth of knowledge and experience on the Board? The company's Board is well experienced and geared up to navigate the challenges and opportunities presented by the increased globalization. We are proud to have Mr. Anup Jatia as our Non-Executive Chairman, who brings a wealth of expertise cultivated over more than 20 years in the international chemical business. Having grown up in Japan and completed his education in the United States, Mr. Jatia, who is based overseas maintains robust international networks and is pivotal in fostering enduring relationships with our overseas business partners. Additionally, Mr. Abhishek Murarka enriches our Board with over 18 years of experience in finance and investment supported by its educational background obtained overseas. His global perspective is invaluable as we navigate international financial landscape. Mr. Rishabh Saraf with more than 20 years in manufacturing, marketing and exports comes from a family with a rich industrial legacy of over 60 years. His experience further strengthens our Board's capability to engage with global markets effectively. Ms. Deepa Poncha with over 30 years of experience as a senior human resource professional brings a wealth of knowledge and expertise across various human resource functions. Her leadership roles in both domestic as well as international companies across diverse sectors enhance our strategic vision and drive for growth. Beyond the Board composition, we have strategically hired advisers with international expertise and engaged with Japanese nationals in our R&D team in India. We are actively seeking to recruit talent from overseas to enhance our capabilities across various departments. Moreover, we have established strategic partnership with global firms, increased our participation in international forums and seminars and successfully registered with EU REACH. Our commitment to excellence is further demonstrated by certifications from EcoVadis as well as ISO 9001, 14001 and 45001. These initiatives collectively position our company to thrive in a globalized economy, which ensures a diverse and knowledgeable leadership team that reflects our commitment to international growth. Next question. How does management monitor inter-company transactions? I assume that this question refers to related party transactions as we do not engage in transactions with our subsidiary or holding companies. Our inter-company transactions primarily involve rental agreements, sales and purchase of goods, including certain raw materials and duty free licenses all amounting to approximately INR 7 crores during the previous financial year. We ensure that these transactions are conducted at market prices adhering to arm's length pricing principles. This means that we price our inter-company transactions as if they were between unrelated parties, thereby reflecting fair market value. Additionally, we have established stringent internal policies to govern these transactions, ensuring compliance with all relevant legal requirements, including tax regulations and corporate governance standards. Our robust internal audit system regularly reviews these transactions to guarantee that they meet both our internal standards and legal obligations, reinforcing our commitment to transparency and ethical business practices. Question. What are the principal objectives in the company's business plan for the next year? We are excited to share our key objectives for the upcoming year, which focus on expanding our market presence in both the distribution and manufacturing business. In distribution, we aim to increase our market share for core products such as resorcinol, ethanolamines and purified isophthalic acids, supported by strong support and partnership with our principals. In the manufacturing sector, we aim to prioritize market reach while actively pursuing new export opportunities in Southeast Asia, Japan and the Far East, alongside increasing sales in our current markets such as Europe, West Asia and the United States. Our R&D initiatives will continue to advance the development of polyacrylamide solids along with 3 other active projects in hand. To bolster our R&D capabilities, we are enhancing our setup by hiring experts from overseas as well as establishing a new world-class R&D center. Additionally, we are committed to strengthening our workforce and restructuring our operations to improve overall performance, efficiency and profitability. Through these efforts, we aim to achieve sustainable growth and drive innovations in the chemicals sector. Next question. How does the company assess its liquidity and the availability of funding sources from operations? Our company employs a comprehensive approach to assess its liquidity and the availability of funding sources to support ongoing operations. We regularly monitor cash flow statements and evaluate our fund requirement based on current operations as well as future projects and capital expenditures. This prudent management of our liquidity position ensures that we can effectively meet our operational needs while preparing for growth opportunities. In line with our commitment to returning value to our shareholders, we have distributed surplus funds generated from dividends received from our subsidiary by announcing an interim dividend of INR 2 per share. Additionally, we have leased a new facility of 6,000 square feet to establish a world-class R&D center, enhancing our innovation capabilities. We are also planning to invest in new land to create a land bank for future projects which aligns with our ongoing efforts to explore new manufacturing opportunities supported by our strong relationships with our principals. Through these initiatives, we continue to uphold a robust liquidity position, ensuring the availability of funding resources to capitalize on future growth opportunities while maintaining operational stability. Final question, what is the company doing to improve shareholder relations? To enhance shareholder relations, our company has adopted a comprehensive strategy focused on open communication and active engagement with our investors. We have improved our communication channels by issuing quarterly press releases and hosting webinars that provide updates on our performance and strategic initiatives. Additionally, our Investor Relations section on the website has been revamped to offer easy access to financial reports, governance updates and essential news. In our commitment to transparency, we are also enhancing our Annual report to ensure it is more informative and aligned with shareholder interest. Furthermore, we are leveraging our LinkedIn page to engage not just with shareholders but also with a broader audience of stakeholders. We are in the process of revamping our corporate website to ensure it provides up to date information and...

Ambarish, I think we lost you. Okay, I think Ambarish was pretty much done with the question and answer. So -- and I guess the team is not available right now. They're having a connection problem. So I would like to propose a vote of thanks. I thank the other directors who are here as well as the shareholders who have participated in the video conferencing. The business of this annual general meeting have been completed and are now announced that the meeting stands concluded. I also take this opportunity to wish all of you and your respective families best of health. Thank you very much.