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Sarla Performance Fibers Limited (SPFL) - From the desk of the Managing Director
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Dear Shareholders,

Greetings to all my Dear Shareholders.

It is no secret that 'when the going gets tough, the tough get going! The year gone by aptly describes this spirit in your company and its hardworking team of employees. Like several sports persons and leaders from different walks of life, we too when faced with adversity showed RESILIENCE.
Krishnakumar Jhunjhunwala
As we faced immense difficulties in operating our US plant while reducing losses, we were seized of the priority of achieving overall growth and profitability. New capabilities created in the India plants helped us achieve an increase in volume, revenue and profits from the geography. This to some extent helped us in overcoming the setback in US for the time being. Our cash profit before tax stood at INR 65.53cr vs 73.40 cr and cash flow from operations at INR 48.97 Cr vs 61.07 Cr for the year gone by. All this while our other income fell by 8.73 Cr to INR 18.29 Cr.

We are now thriving on this adversity in previous year and are pursuing expansion of domestic plants aimed at both India and Overseas clients. By end of this year our capacity for nylon fiber would rise by 6600 MT p.a. and polyester fiber rise 1800 MT p.a. This capacity is being added at company's new plant at Dadra, admeasuring 80000 sqft and Some additions at our existing plant at Silvassa. The total investment in this facilities would be around INR 30 cr. Our focus remains in the high value added hosiery, narrow fabrics, and thread segment. The advantage of expansion in India should start reflecting from the 2nd half of current fiscal.

The company as of FY18 has maintained a net D/E of 0.77 and net Debt/EBIDTA of 2.89. Our endeavor is to improve the working capital turns and sustain positive operating cash flow. Excluding our wind power assets, the company's core business continues to generate ROCE of 10.99%.

Another positive aspect of the Resilience is that we are building a solid management team for the long term, thinking through on our project costs, shop floor and quality management more objectively than before. Going forward the greater priority would be for profitable growth, better ROI from new projects and maintaining a strong Balance Sheet.

Last but not the least, we are working on various strategies to utilize the US plant better but without spending additional cost. The losses over there should further reduce this year. A tailwind this year could come from INR depreciation vs USD. Risk remains from rising raw material prices based on crude oil. We remain cautiously optimistic on the future prospects and would make every endeavor to reward our shareholders better.
Krishnakumar Jhunjhunwala
(MD and CEO)

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