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Chairman's Speech

 

Dear Shareholders,

Good Morning.

On behalf of the Board of Directors it is my pleasure to welcome you to the 55th Annual General Meeting of Phillips Carbon Black Limited. Thank you for your presence.

The Notice convening this meeting and the Annual Report for the year 2015-16 have been with you for some time now. So, with your permission, I am taking these as read.

May I give a brief update on the economic situation and your Company's performance during FY 16 and the outlook for the current year-

Global economic recovery continues slowly, but at a fragile pace. Global automobile industry witnessed demand increase of only 2% in FY16, which is less than FY15 growth of 2.7%. Revival of automobile sales in major European countries, such as Spain, Italy, UK, France and Germany contributed to a growth of 8-9% in FY16. Rising consumer spending, low gasoline prices and pent-up demand boosted automobile sales in US. Emerging markets of Eastern Europe, South America and Africa whose income are dependent on commodity prices, saw a sharp decline in auto sales. Demand decreased by as much as 30 to 40% in a few countries. Auto demand in Asia, driven by China and South Asia moved at a slower pace of approx. 3.2%. China's move towards a consumption-driven economic model, is reflected in higher passenger car sales, while Japan continues it's degrowth in auto sales. Global demand for passenger car tyre grew by 2% with improved demand in Western Europe, North America, China and India. Global demand for truck tyre declined by 2% with OEM segment demand going down by about 7%. In emerging markets, tyre demand continued to decline.

In FY16, Indian Automobile Industry's domestic market recorded a rise in passenger vehicle sales by 7%, commercial vehicle by 11% and muted growth of 1 - 3 % in two and three wheeler segments. Low cost of ownership, improving demand from infrastructural activity and better than a normal monsoon should empower the FY17 growth across these segments. Auto exports from India grew by 1.9 % on account of less sales in two wheeler segment. Indian Tyre Industry recorded lower production amid exports falling by 13-15% and increased imports by 12-14%. FY17 growth across these segments is expected to improve with growing rural demand and increased infrastructural activity.

Amidst these developments, your company could post handsome earnings growth-

During FY 16, your Company's operating profit rose to Rs. 230.19 crore, as against Rs. 210.21 crore in the previous year. This was achieved mainly through higher capacity utilization.

In line with our vision - "A trusted Global player providing cutting edge solutions to our Partners and an exciting workplace to our People", your Company has undergone a "personal odyssey of the self" and has embarked upon a major transformational journey by focussing on building capabilities with a strong emphasis on people.

Being a responsible corporate citizen, the focus areas of your Company are concentrated on increasing access to health, education and holistic development with a focus on the underprivileged people living around its manufacturing units and other establishments- Your Company is well adapted to the requirements of the communities where the Company's manufacturing set-ups are located and takes initiatives to ensure that PCBL employees align themselves to the needs of preserving the environment. These involve interactions between the Company and the community representatives in terms of contributing to the environmental and economic development; afforestation, rain water harvesting, recycling of waste, treatment of waste water, zero emission and spillage policy. Your Company has woven several initiatives around its CSR philosophy - health, hygiene, education and environment being the focus areas. Your Company's efforts towards environment conservation, sustainability and social projects have been detailed in the Report on CSR Activities in the Annual Report.

Dividend-

Based on the Company's performance, the Board of Directors of your Company, at its meeting held on 13th May, 2016 has recommended a dividend of 25 %, i.e., Rs. 2.50/- per equity share for the year ended 31st March, 2016. This will entail a total cash outflow of Rs. 10.37 crore including dividend distribution tax. Towards this, the Company seeks your approval as shareholders at this Annual General Meeting. Going forward, your Company's thrust will be on capturing growth opportunities across its business - Demand for Carbon Black in India is expected to grow @ 6 - 7% during the next couple of years. With its wide product portfolio basket, manufacturing units located strategically near to the customer location, PCBL is well positioned to cater to rising demand. Global Carbon Black industry operated at capacity utilization of 75 - 80% in FY16 against demand supply imbalance. Overseas demand for Carbon Black is expected to grow @ 4-4.5 %. Your Company, has indeed, endeavored to walk the talk by establishing proper supply chain distribution network to ensure timely delivery, service to customers and broaden its presence in the international market. This will continue to be a major thrust area for your Company in the coming years. Your Company continues to focus on various initiatives to improve operational efficiencies like improving yield, exploring new geographies for feedstock sourcing, as well as investing in technical capabilities for developing new grades particularly for non-rubber applications.

Before concluding, let me thank every stakeholder for the confidence reposed in the Board and Management of the Company. I would like to thank my fellow Board Members for their unstinted support and guidance.

Thank you, ladies and gentlemen

Note: This does not purport to be a record of the proceedings of the Fifty - fifth Annual General Meeting