Chairman's Speech
Chairman’s Speech 20th Annual General Meeting

Ladies & Gentlemen,

I have pleasure in welcoming you to the 20th Annual General Meeting of your Company

Performance of the Company
The Company’s performance has been discussed at length in the Directors’ Report and in the Management Discussion and Analysis Report.

To recapitulate, the company’s gross turnover increased to Rs.139.85 crores for the year from Rs.100.80 crores in the previous year. The gross profit was Rs.4.1 crores and the net profit after depreciation and tax was Rs.1.03 crores as against Rs.9.07 crores and Rs.6.19 crores respectively for the previous year. This steep fall in the net profit is mainly on account of substantial increase in the feedstock cost and the higher depreciation due to the commissioning of the new plant. The accumulated carry forward losses has also been reduced to Rs.6.87 crores from Rs.7.90 crores.

Poly Iso Butylene (PIB) is mainly consumed in lubricants and additives sectors, which cater to the automotive industry. Due to a worldwide recession, which began from the middle of 2008, the automotive industry witnessed a downturn.

This, to a large extent, affected the consumption and demand for PIB from the automobile sector during the second half of 2008. Due to this the financial year 2008-09 witnessed inventory unwinding by most customers with no fresh demand / production which lead to significantly reduced demand and off-take of PIB.

Despite the doubling of the capacity and improvement in the turnover, the profit margins were under tremendous pressure as your company was catering to new users, where price competitiveness for entry was an issue.

Even though the automobile and construction industries have witnessed some improvement in the current year 2009, your company has been making conscious efforts to develop new applications in several other segments like the packaging and polymer industries. Our efforts in new applications / new business developments are beginning to yield fruit in a small way. The export market is still key to the growth and profitability of your company. While the local market is encouraging, there is still excess capacity in the country which will only be balanced once exports pick up.

There have been “Green Shoots” and some signs of recovery in certain sectors of Indian economy and in some parts of the global economy, in the first quarter of this financial year (April - June 09).

Auto Sector - particularly for the four wheeler segments are recording growth. However, the impact of below average monsoon on the Indian economy is expected to keep demand flat in the auto sector as a whole.

With intense business development efforts which are showing results in new applications / new markets, we expect the PIB sales to show a growth trend during the second half of this financial year (Oct 09 - Mar 10). Serious efforts for further improving operational efficiency and reduction in all costs are under way.

I take this opportunity to express my thanks to all the shareholders for their continued cooperation. I am thankful to my fellow Directors for their support and valuable guidance. I also thank our employees, all our customers, dealers, suppliers and other business associates for their support and cooperation.

I look forward to your continued support to take the company in to a promising future.

With warm regards,

Chairman & Managing Director
Kothari Petrochemicals Ltd.

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