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Chairman's Message

Dear Shareholders,

I write to you at the end of another iconic year for your Company. It has been a year of diversification into new product streams aligned to the evolving taste of the consumers, and also a year of moving further up the value chain towards the higher end of the market. While our newly launched Consumer Products Business has opened to excellent response, our foray into CPVC and UPVC pipes and the fittings business promises to unveil new vistas of expansion for us. With these initiatives the stage is now set for us to scale higher echelons of growth. As you are well aware, changing lifestyles and aspirations have always guided our strategic focus, and it further steered our growth charter during the year despite the challenging macro environment. The business continued to be pressured by persistent stagnation in the real estate market, particularly in the residential space, coupled with increased competition from global brands. In addition, the volatility in the market posed serious risks to our progressive plans through the year, threatening to derail our growth trajectory. But we handled these myriad challenges efficiently and with focus. Also, on the brighter side, some signs of positivity emerged in the commercial real estate segment and we were quick to make the most of the opportunities on the strength of our leaner and more flexible business model. This enabled us to leverage the potential in the replacements market to drive expansion in the Building Products Division (BPD). We also initiated focused measures to strengthen our Packaging Products Division (PPD)by venturing into new and more profitable avenues of growth, notably in the manufacture of security caps and closures. Besides, our newly launched Consumer Products Business business is already showing signs of delivering extraordinary prospect, triggering a new wave of optimism in the organisation.

The external macro environment is also witnessing noticeable winds of change, which promise to further propel growth for the industry. The Government's initiatives to boost the economic sentiment, led by initiatives such as `100 Smart Cities', `Swachh Bharat Abhiyan' and housing for all are beginning to translate into some positive change on the ground and we see these developments emerging as precursors of growth. The Government's decision to housing loan interest rates also comes as a welcome move, as it makes homes more affordable.

In my opinion, market dynamics, coupled with an expanding middle class, will continue to create higher demand for our products across all our business segments.

Building efficiencies

Elaborating further on our performance during the year, one key factor that equipped us to battle the market unpredictability was our focus on enhancing operational and cost efficiencies across our business fabric. From fuel and raw material savings to increased recoveries, especially at our Bahadurgarh plant, we have successfully achieved excellent efficiencies through our value chain and remain committed to the creation of higher efficiencies going forward. I am confident that our improved operational efficiencies, backed by better cost management, will play a pivotal role in further consolidating our leadership position across all our business segments in the coming years. Talking of efficiencies, as you know environmental protection and resource management has also been a core thrust area for your Company over the years. Our water efficiencies today match global standards and we are credited with setting up the first Effluent Treatment Plant in Haryana. We have the distinction of offering the largest range of WEP star-rated products and also the largest range of green certified faucets. Reduced fuel consumption at the kiln, better raw material mix and recycling of broken sanitaryware are other key measures we have initiated to nurture ecological and resource-led efficiencies.

Nurturing The Brand

As mentioned earlier, growing competition, especially from international brands, has emerged a serious threat in recent times, necessitating enhanced focus on nurturing our brand strength. While we already enjoy strong brand salience. We have now upped the ante even more, with a healthy 360°promotional package encompassing the print, TV and digital (including social) media. The result of our brand and marketing initiatives is manifest in the increased visibility and recall of our brands.

Social Agenda

Besides our strong environmental and water saving focus, our social agenda encompasses a wide expanse of other activities aimed at promoting inclusive growth. As a socially aware and responsible corporate, we have imbibed within our organizational framework a people-centric philosophy that drives our Corporate Social Responsibility (CSR) focus. We have in place a well-documented CSR policy that is centered on the eradication of hunger and poverty, promotion of education, health and gender equality, providing vocational skills and ensuring environmental sustainability, among others. During the year gone by, we launched a new CSR project in Bhiwadi, Rajasthan, under the aegis of `AapkeLiye', involving construction of toilets and a Community Water Centre (CWC) for integrated development of Sahrod Village in the first phase. With this project, which also encompasses water supply and distribution, we have taken another major step in taking forward our CSR agenda.

The Way Forward

It has, no doubt, been an exciting and satisfying year for us, and we take pride in the many milestones we have achieved during 2015-16. But these successes would not have been possible without the dedicated and unstinted efforts of our team members, who have individually and collectively steered our ambition to become the preferred choice of consumers in the businesses of our presence. I would like to take a moment to thank all members of the HSIL family, as well as all other stakeholders, on my own behalf and on behalf of all the Board members. Having come so far, it is time now to look ahead and surge forward to cross new frontiers of growth. What I see  ahead is substantial expansion across all our business divisions. The real estate sector is already showing signs of improvement and the wide consumer acceptance of our Consumer Products Business promises excellent potential for higher growth, going forward. The innovative products we have added to our PPD business segment will also start contributing to our revenues in the coming years, adding a new shine to our performance. Our focus on retail, which continues to be a strong growth driver for the industry, also augurs well for our future growth. With such positivity to propel our growth, and with the continued support and cooperation of all our stakeholders, customers and business partners, I am sure we shall notch even bigger successes going forward.

Warm regards,
Rajendra K Somany
Chairman and Managing Director
HSIL Limited

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