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e» Uniply03.10.2016Bombay Stock Exchange Limited,25th Floor, PhirozeJeejeebhoy TowersDalal Street, Fort,Mumbai - 400001The National Stock Exchange of India Limited,Exchange Plaza,BandraKurla Complex, Bandra (E],Mumbai - 400 051Scrip Code: 532646Scrip Code: UNIPLYDear SirjMadam,Scrip Code: 532646jUniplySub: Submission of Annual Report for the fmancial year 2015-16Pursuant to Regulation 34 of the SEBI (Listing Obligations and DisclosureRequirements) Regulation, 2015. Please find enclosed Annual Report for the financialyear 2015-16. Please take the same into your records.Thanking You,Yours Sincerely,For Uniply Industries Limiteds.s tv-·S.S.DeepthiCompany SecretaryM No.ACS-43814Encl: As aboveUniply Industries Limited# 5, Branson Garden Street, Kllpauk, Chennai . 600 010, IndiaEmail:Info@unlpIY,lnPAN' AAACU1411A,CIN0 914426605995L20293TN1996PLC036484G 914426602273m.'"Iwwwumo y.m

PRODUCT info@trisyscom.comAWe are notjust turninga companyaround.We are buildingone of India’smost Uniply Industries LimitedBrand Activity Report 2015-16

“The world’ssecond mostpopulouscountry andonly twoprominentplywoodbrands. Thatseemedillogical”Venue of AGMCaution regarding forward-looking statementsThat’s what we said when we first heard of anopportunity to buy Uniply Industries Limited in 2014.This document contains statements about expected future events and financial and operating results of Talbros Automotive Components Limited, which areforward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties.There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to placeundue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from thoseexpressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualificationsand risk factors referred to in the management’s discussion and analysis of the Talbros Automotive Components Limited Annual Report 2015-16.

§ Sometimes when you get too deep into theminutiae you lose the big picture.§ So this then is our big picture.§ There are half a dozen cement companiesin India with an installed capacity in excess of5 mn TPA.§ There are half a dozen steel companies inIndia with an installed capacity in excess of 1mn TPA.§ But when it comes to interior infrastructurelike plywood? Just two big companies.§ We believe that the next decade is going tobe dramatic for India’s plywood sector.§ More homes and offices. Larger homes andoffices. Increased plywood use. Increaseduse of value-added plywood. Fasterreplenishment.§ Creating an opportunity for a number ofsuccessful plywood companies.That’s where we come from.

There werejust four thingswe consideredwhen we beganlooking closely atUniply 2 Uniply industries Limited

A company on the verge of goinginto BIFR. A company with a negligible nationalplywood market share. A company that had reported lossesfor two years leading to the end of2014‑15. A company that most analysts hadgiven up on - market capitalization of amere Rs 22 cr.The prospects in one word: Hopeless.Annual Report 2015-16 3

Sceptics weremany and thebusiness case grim.4 Uniply industries Limited

1The company suffereda large trust deficit; subquality product returnsfrom the recent past werehigh; the unsettled businessof most dealers ran intocrores; most dealers neverknew if they would ever gettheir money back.quickest to sell, not whatwould have been the mostprofitable.2The company waspromoter-controlled;emotional loyalty wasmissing; professionals wereabsent; the business wasnot being scaled.5The Uniply brand didnot stand for somethingdistinctive in the mind ofthe prospect; worse, thelogo was being representedby different typefaces indifferent media.4The line that one heardextensively in the companywas ‘How much did wemanufacture yesterday?’and not ‘What wasyesterday’s profit score?’3The company was divorcedThe business case lookedfrom market reality; thegrim.company made what wasAnnual Report 2015-16 5

Scepticismand value gohand in hand6 Uniply industries Limited

We recognised that the worst thing one could dowas appraise from the outside while one was buyingwhat existed on the inside.So we reversed the paradigm.We (the promoter management specifically)embarked on exhaustive due diligence.By working on the shopfloor.By understanding the manufacturing process.By talking to employees.By engaging with the trade.By interviewing customers.By studying global trends.And, most importantly, by spending quality time withthe promoter who intended to exit the business.Only after we had comprehended where thebusiness had come from, where it stood and whereany new management (presumably competent)could take the business, did we decide.We felt there was a business case. We decided topress forward.Annual Report 2015-16 7

1We addressed the secondmost populous market on theone hand and one of the mostunder‑consuming on the other.2Despite the gloom,there were anumber of reasonswhy we felt wecould suceed in theplywood business.8 Uniply industries LimitedThe industrypossessed highentry barriers

3 4 5 6The country’sorganizedmanufacturersaccounted foronly 30 per centof the Rs 20,000cr plywoodand associatesector; the toptwo brands ofthe country’splywood sectoraccounted for20 percentof the sector,leaving a largeroom for otherorganizedbrands.The proposedintroductionof the GSTpromised toreduce thecost differentialbetweenorganized andunorganizedmanufacturers,accelerating theshift towards theformer.There is agrowing respectfor brandedproducts(slightly moreexpensive) overanonymousvarietiesproduced byunorganizedmanufacturers(slightlycheaper).There is agrowingconsumerrespect forproducts thatare environmentfriendly; thismovement ismanifest visiblyin the country’splywood sector,an evidentopportunity.Overview: The industry and company prospects appeared bright.Annual Report 2015-16 9

Reinhold Niebuhronce said: ‘God,grant me theserenity to acceptthe things Icannot change,the courage tochange the thingsI can, and thewisdom to knowthe difference.’10 Uniply industries Limited

It wouldappear thatthe Uniplystory washopeless.Uniply wasconsidered anational brandwith a regionalpreference.Uniply’sdealers neverdelayed theirremittancesinto thecompany (sobad debtswere not anissue).12 34Not to essproducts weredealersmanagersconsideredvirtually ranwere sound,world-classthe company, whose abilityfor the largestpromotingcould bepart of thethe product inadvancedcompany’stheir regions.throughhistory.competentsupervisors.567The challengewas reallyin makingthe goodbetter andtransformingthechallenginginto theacceptable.Annual Report 2015-16 11

clarAt Uniply,the firstthing wecorrectedwas clarity;clarity ofwhat weessentiallyneeded tobe.12 Uniply industries Limited

rity§ There were a number of problems at the just-acquiredUniply, but the one that appeared far too fundamental toignore was one of personality.§ Uniply appeared to be a plywood company by name; itwas actually a veneers company by action.§ For a company that generated a larger value-additionfrom the plywood segment over veneers (around 900bps higher than veneers), one would have assumed thatthe company would have focused on generating morerevenues from plywood. That was not the case; thecompany generated only 50 percent of revenues fromplywood while the rest of the revenues were derived fromlower-margin veneer products.§ So the first thing that we selected to fix was ourorganisational direction. We would progressively evolveinto a predominantly plywood company, we would widenthe plywood product mix, we would focus on value-addedplywood varieties, we would invest in sophisticated brandbuilding and we would progressively evoke the desiredrecall: ‘If it is good, then it must be Uniply.’§ There was not as much of a financial crisis within Uniplyas there was an identity crisis.§ So over the next few months, Uniply completely removedlow value-added face veneers from its product mix andemerged as a completely plywood organisation.Resolving its identity.Annual Report 2015-16 13

At Uniply, thepriority was not justin marketing morevalue‑added productslike plywood; it was alsoin marketing more valueadded plywood.14 Uniply industries Limited

The lowest hanging fruit in the acquired Uniplywas in a segment called Ecomate MR. Thisrepresented the base of the company’s salespyramid. The product was priced Rs 55 to Rs 60 asq ft, less than half of the company’s highest-pricedplywood brand. And this is where the tragedy lay: two of ourhighest-priced plywood brands – ATS and BWR –accounted for cumulatively for around 50 percentof our revenues, which was almost equivalent to therevenues that we derived from our lowest-pricedproduct, at a time when the company generatedaround Rs 7 cr of ply revenues a month. Virtually destroying its personality. The new Uniply management reworked theproduct mix. Today, 75 per cent of the company’srevenues (monthly revenue of Rs 15 cr) are derivedfrom the two highest-priced brands. The largestrevenue driver of yesteryears now accounts foronly 5 per cent of revenue (and largely outsourcedaround established quality standards).At the reinvented Uniply, it is not the quantum ofrevenues alone that we are driving at; it is theirquality as well.Annual Report 2015-16 15

Team buildingproved to be themost challengingexercise at Uniply.When we wentout to recruita President forour company,we resolvedthe issue byfinding thebest-in-class.We will spendwhere we needto spend, nocompromise.16 Uniply industries Limited

There wastalent; there wasno motivation. There werepositions;there were noprofessionals.12345 There werepeople; there wasno organizationalarchitecture.One of the first things that we did was to make a consideredlateral recruitment. Our President. Drawn hard core from thetrade. Someone who understood the business bottom-up.Someone the entire organization could report to. Liberatingthe promoter and Managing Director to drive the companyentrepreneurially ahead without getting bogged down in day-today nitty-gritty.Thereafter, we restructured our sales and marketing functions.Where we targeted revenues not just for the company eachquarter; we drilled down to targets per sales representative in linewith the prevailing industry benchmarks.For the first few months, the promoter managed various rolls,stabilised functions before handing them over to newly-recruitedprofessionals and established policies for functional sustainability.This combination – promoter direction and policy – kickstartedorganizational renewal, policy stability and directionalpredictability.The ad hoc was replaced by the process; the erratic yielded tothe predictable.Result: an organization had begun to re-emerge.Annual Report 2015-16 17

Uniply’s biggestthreat was notfrom competition;it was from itself.18 Uniply industries Limited

The acquisition of any company – Uniply included – is usuallyconducted by an entrepreneur. Gradually, the entrepreneur is required to transform his roleand become a manager. As he does so, he evolves from hunter tofarmer. And sadly, so evolves also the DNA of the company that heacquired. When we acquired Uniply, one of the things we resolved was thatthis would not happen. The hunter would remain hunter. And this is how we went about preserving the promoter’s role andleveraging it for sustainable organisation benefit: he would directlymanage select functions – finance and marketing, for instance – untilthese had acquired the maturity and critical mass to be professionallydelegated. Meanwhile, he would continue to do what he was bestat: seeking opportunities. And this is what we have to report as a result: even as we arefinding our feet, we have concluded relevant acquisitions, we haveentered adjacent business segments, we are automating our plantand we are extending from product sales to solutions delivery.The message: And we’ve only just begun.Annual Report 2015-16 19

groAt Uniply,the more weshrink, thefaster weare likely togrow.20 Uniply industries Limited

owAt Uniply, we recognize the smallerthe Balance Sheet, the more profitableit could become.Uniply’s culture of enforced dearthhas been an advantage: we havebeen far more innovative in the useof accruals than we would otherwisehave been.For one, we strengthened our termsof trade with vendors and dealers. Thepre-acquisition Uniply generated Rs107 cr of turnover in 2014-15 againstworking capital of Rs 155.50 cr; thepost-acquisition Uniply generatedRs 136 cr revenues in 2015-16 on aRs 42 cr working capital outlay.We successfully negotiated a lowercost for the debt that we borrowed:from 17.25 per cent when we acquiredthe company in April 2015 to 12.95per cent towards the end of 201516. Besides, we moderated interestoutflow from Rs 80 lacs per monthto Rs 43 lacs per month across theperiod.We started making larger batchesof focused plywood product lines,which minimised the number of batchchange-overs, enhancing economiesand shopfloor productivity.We rationalized our large450-decorative veneer inventorybook to the fastest-moving 40varieties, which virtually addressed therequirements of 80 per cent of panIndia projects.We rationalized 20 per cent of theplywood manufacturing team withoutcompromising output.We believe that a combination ofthese initiatives will help us growprofits faster than employed capital.Resulting in the two words that areabsolutely music to our ears.Profitable growth.Annual Report 2015-16 21

1Plywood is differentwood strips bondedby resin.When we firstmentioned‘environmentfriendly’the criticsdismissed thisas a fancy spin.Until theyheard what wehad in mind.22 Uniply industries Limited2Over the years, there isincreasing alarm about thequality and quantum ofresin going into plywood.Besides, with this resinbonded plywood sharingintimate space withconsumers, there is agrowing question beingasked: ‘Is the plywoodreally safe?’

3 4 5At Uniply, wecreated a fullfledged researchand developmentteam to developenvironment-friendlyplywood varieties inline with the mostdemanding globalbenchmarks.This is what wehave to show forour commitment:when weacquired Uniply,the companymanufacturedplywoodbenchmarkedwith E3 guidelinesonly; within thefirst quarter ofacquisition, wegraduated to thedemanding E1standard.This E1 standarddoes interestingthings for ourbrand: makes usinternationallyacceptable;enhances peerrespect and providesour dealers with yetanother handle topush our productsin a competitivemarketplace.The verdict:Forward‑looking.Annual Report 2015-16 23

compensAt Uniply,dealers askedif we wouldcompensate100 per cent forpoor quality.We refused;we venturedto compensate300 per centinstead.24 Uniply industries Limited

m‑nsate§ In the business of plywood manufacture and marketing,the most critical sales driver is the confidence of theprimary customer.§ The dealer.§ If the dealer knows he is getting first-rate quality, he willpush sales. If the dealer knows he is getting a product thatwill never be returned by the customer, he will fight for you.§ So when we first engaged with our trade channels, oneof the first things they were eager to know was whether wewould refund 100 per cent in the event that a product wasproved as sub-quality.§ We refused.§ We refused because the desired amount did not factorthe cost of installation; did not factor the prevailing cost ofplywood; did not factor the consumer’s inconvenience.§ We offered 300 per cent* instead.The result: Our dealers began to vow their loyalty.*On ATS plywoodAnnual Report 2015-16 25

Plywood isplywood.Why wouldanyone needto commissionR&D in an oldand well-knownproduct space?26 Uniply industries Limited

At Uniply, we made a distinctivebreak from industry tradition bycommissioning a research anddevelopment initiative withinthe first month of acquisition in2015‑16.This decision was a result of thecompany’s conviction that fromthis point onwards, innovationwould drive corporate growth; themore innovative companies wouldaccount for a disproportionatelyhigher share of market growth.The company moderated itscomplete import dependenceuntil June 2015 to 60 per centimport dependence from June2015, coupled with higher qualitybenchmarks.Over just the next three years,the company intends to becompletely independent ofimports, generating 100 percent of its plantation materialrequirements from within 500kmof its plant.This forex-neutral programmewill make it possible for Uniplyto capture a larger portion of thesectoral value chain than mostindustry peers.The moral: To go forwards,it often makes sense to stepprudently backwards.Annual Report 2015-16 27

The big question:does a barelyturned‑around Uniplypossess the resourcesto grow its business?28 Uniply industries Limited

1Uniply expects to respondto the growing needs ofits business – ongoingplus plant automation plusasset acquisition - througha blend of financingmeasures.2The plant automation andEuroply asset acquisition:totaling Rs 52 cr fundedthrough debt and equityare good example ofprudent financing.3The result is that thecompany’s proposedRs 52 cr expansionprogrammes are beingfunded with modestgearing and likely togenerate peak revenues ofRs 350 cr on the one handwhile generating costsavings and productivityincreases on the other.4So even as the company’score business continues togrow organically, the newrevenue streams are likelyto enhance revenues andmargins.The magic: volume andvalue.Annual Report 2015-16 29

We didn’t acquireUniply to justturn it around.We acquired thecompany to createone of India’s mostexciting interiorinfrastructurebrands.30 Uniply industries Limited

A company that wouldn’t just make andmarket products, but a company that wouldtransform the quality of the country’s interiors. A company that wouldn’t just do what everyother plywood company did, but a companythat would create a niche and occupy it. A company that wouldn’t just manufactureproducts, but a company that would delivercomplete customer solutions. A company that wouldn’t just be profitable,but a company reporting possibly the highestindustry margins. A company that wouldn’t just grow byplaying the usual industry rules, but one thatwould rewrite some rules and emerge as abenchmark.Annual Report 2015-16 31

If you think that2015-16 wasexciting at Uniply,wait till you hearAgenda 2016-17.32 Uniply industries Limited

Even as Plan A wasunfolding, we hadembarked on Plan B.Concurrently.Laminated flooring andinner laminates: Weare entering these largeaddressable markets in2016-17.Turnkey design andbuilding solutions: Weintend to engage withlarge corporate clientsand assume design andbuilding contracts on aturnkey basis, providinga one-stop deadlinedsolution and graduatingfrom a product supplierto consultant.The good news: Noneof these businesseswill require a higherworking capital outlay,strengthening our ROCE.The big line: AtUniply, we are notjust compressingwood strips; we arecompressing time aswell.1 2 34 5Annual Report 2015-16 33

succWeakeconomicconditionsare justwhat weneed tosucceed.34 Uniply industries Limited

ceed§ At Uniply, we recognize that a weak marketbrings the best out of us; makes us workharder; encourages innovation; increases thenumber of opportunities.§ We see years and years of sustainablegrowth ahead.§ Now come to why we see it this way:residential conditions are abysmal acrossIndia.§ However, at Uniply, we see aspirationsovertaking thrift; we see home-prideover

Bombay Stock Exchange Limited, . DalalStreet, Fort, Mumbai- 400001 Scrip Code: 532646 TheNational Stock Exchange ofIndia Limited,

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