Dear fellow shareholder
The annual report that you behold is a special one-for you for me and for all ofthose who have been associated with polycab india over the decades. It is polycab's firstas a listed company.
Your company's initial public offering (ipo) of ' 13453 million was subscribed 52times (excluding anchor portion) in an overwhelming response.the issue received bids forover 918 million shares against the total issue size of 25 million shares.the reservedportion for qualified institutional investors was subscribed 97.78 times (excluding anchorportion) while retail investors subscribed 4.35 times.
On 16 april 2019 the first day oftrading on the bse and nsethe polycab share openedat ' 633 on both exchanges hit the intra-day high ofRs. 667.80 before closing at '654.80 up 22% over the issue price of ' 538.
To all of you welcome to polycab.
2018-19 has been stellar
As has been detailed and explained in the following pages your company climbed newheights of business and financial excellence in fiscal 2018-19 (fy19).
In fy19 net revenue from operations rose 18% to ' 79560 million from ' 67703 milliona year ago and profit after tax was up 40% at' 5003 million from ' 3586 million. In eachof the last 5 years in not a single year have polycab's revenue and profit not improvedon the previous year.
As has been the case for a few years now the demand scenario continued to bechallenging yet your company once again responded in fy19 with all-round improvements inliquidity asset management profitability and leverage.this was because we reduced ourdebt burden and improved our management of receivables and focused on profitable growththrough acquisitions of quality clientele and better realisation. Also helping was ourdifferentiated enhanced product mix being driven by a committed sales and distributionnetwork to institutional and retail customers. The fact that we manufacture in-house mostof our products allows us to provide guarantees of quality service and short-noticesupply that few competitors can match.
More hearteningly even as we maintained our leadership in markets for electrical wiresand cables the share of fmeg a business we entered only 5 years ago in polycab's totalrevenues grew from 0.3% in fy14 to 8% in fy19 to ' 6433 million at a cagr ofll6%.Polycab's evolution from a largely b2b play to a large b2c brand is thus on a firm fasttrack.
Our growth into an emerging consumer electricals powerhouse has also been driven byinvestments in branding and marketing. For example polycab's investment in the indianpremier league (ipl) since 2016 has provided a huge lift to our brand's visibility inhouseholds. Helping us get the eyeballs is in no small measure owing to our brandendorsers all star actors: paresh rawal since 2014 for wires; r madhavan since 2018 forfans; and ayushmann khurrana for switchgear in 2019.
Our positioning line connection zindagi ka created in 2014 continues toresonate in the minds and hearts of our customers.
Capturing the multi-market opportunity
With our scale efficiencies quality and wide product portfolio that offers aone-stop electricals solution for customers and contractors and a logical synergisticbackward integration and expansion that leverages our strengths for future market andproduct scenarios we see several business opportunities.
The indian markets forthe fmeg productswe make and ofwires and cables are similar insize and potential. But your company has 12% of the wires and cables market and a mere 1%of fmeg markets in which we are present. The market for wires estimated at 1.5% of gdpis expected to grow (according to research from crisil) at nearly 15% in the next 5 yearswith increasing share of organized players. Between fy18 and fy23 the estimated annualgrowth rates for our fmeg markets are: fans at 7%; lighting and luminaires at 7%; andswitches and switchgear at 9%-again with the organized sector growing relatively faster.Going by the current growth rate of our fmeg business increasing brand presence and fastacceptance polycab is well set for a formidable role in india's fmeg sector.
At the macro level india is demonstrating continued gdp growth with a fast growingurban population.
The increase in consumer spending infrastructure growth industrial investments andthe inevitable rise in nuclear more affluent families will drive demand for innovativeand premium products of the kind manufactured and sold by polycab.
Polycab's way of doing business is to keep it simple: drive revenues; manage costs;improve efficiencies; build the brand and make it highly visible; enhance distribution;and thereby create value for stakeholders. Our strategy:
Consolidate our leadership position in wires and cables by targeting key growthdomestic and export sectors such as mining oil and gas shipping power renewablesinfrastructure construction automotive telecommunication and agriculture. We willexpand our customer base by utilizing our research and development capabilities to developnew and innovative products.
Continue to expand our fmeg business in india and abroad by leveraging our branddistribution network diverse customer base and manufacturing capabilities. The focus willbe to broaden our distribution reach increase rural penetration and expand our retailfootprint.
Strengthen brand recognition by increasing brand awareness and customer loyaltythrough creative promotions and new-age marketing using both digital and traditionalchannels and increased one-to-one interactions with distributors dealers andend-consumers.
Underpinning our strategy will be our 24 manufacturing facilities; our 3100 plus strongpan-india network of authorized dealers and distributors; and the 100000 retailoutlets-these will grow as we invest to stay ahead of the curve.
To sharpen our competitive edge we not only manufacture our products in-house but havealso integrated backwards. A good example is the 50:50 joint venture with trafiguracreated in 2016 to produce copper wire rods in a new plant at ryker gujarat. Once fullyoperational the ryker plant will fulfil much of our demand for this critical rawmaterial. Besides our existing manufacturing includes other key raw materials that gointo our fmegs and wires and cables.these include aluminium and aluminium rods; severalgrades of pvc rubber xlpe compounds; gl wires and strips. The resultant enhancedreputation of being a highly reliable supply chain partner provides us a premiumpositioning that our industry peers will find hard to emulate.
Polycab's sustained success over several decades is grounded in our core values ofsimplicity teamwork trust-building customer focus and meeting commitments to ourdifferent stakeholders. Sticking to these values has given us a unique standing andrespectability in our industry and with customers. They play a major role in our successcollaborate as we do with them closely to develop products that are in sync with theirchanging needs.
For the 119000 shareholders who have now joined the polycab family let me on behalfof all of us at polycab assure you of our commitment and service to all. Thank you so muchfor your overwhelming support. Together we shall build the polycab of tomorrow.
Chairman & managing director