Chairman's Letter

Dear Fellow Shareholders,


For some, 2017-18 was a challenging year, either because of regulatory changes such as the implementation of the Goods and Sales Tax, or macro-economic concerns such as weakening domestic demand and higher commodity prices, to name a few. We are, by no measure, immune from these external factors at Max Ventures and Industries Limited (MaxVIL). Yet for us, FY2018 has been a year of progress and promise.


While FY2017 was about launching new business verticals, FY2018 was about further sharpening the business models of each of those verticals and establishing a strong foundation for delivering sustained growth.

Some of the earlier steps we took towards creating this foundation in early 2017 were our transactions with New York Life Insurance Company (NYL), whom we brought on board as a key strategic shareholder in MaxVIL with an investment of ₹ 121 crore for 22.51% stake; and the partnership we inked with Toppan Printing Co. Limited, a Japan-based multinational corporation with interests in Information & Communication, Living & Industry, and Electronics, to lead our manufacturing business – Max Speciality Films, to newer heights.

Another seminal initiative in this series of transactions aimed at driving unimpeded growth in our businesses came earlier this year in the form of a Rights Issue of nearly ₹ 450 crore with rights for existing shareholders, leading to the issuance of nearly 74 million new equity shares with a face value of ₹ 10 each. As part of this issue which was concluded in August 2018, the Company’s shareholders were entitled to subscribe for new shares with pre-emptive rights at a fair issue price of ₹ 61 per share.

I am pleased to share that the Rights Issue was oversubscribed with New York Life displaying continued confidence by subscribing to their portion of rights entitlement and maintaining their shareholding at 23% post the rights issue. We also had some new domestic anchor investors came on board with a significant increase in shareholding by subscribing to additional shares.

The capital raised through the rights issue will be used to meet MaxVIL’s long-term financing needs for capital expenditure and growth plans, especially in our real estate subsidiary Max Estates Limited (MEL). As you are aware, MEL focuses on Grade-A commercial spaces. Its flagship project Max Towers, a prime commercial tower of ~0.6 million sq. ft. located on the Delhi-Noida Direct flyway, will be ready in FY2019 and work on the second project, the redevelopment of Max House in Okhla, New Delhi is set to commence in FY2019.

As you will read in the Managing Director’s letter as well as in the specific sections that discuss business performance, we have made significant tangible progress in each of our business verticals. However, allow me to briefly share a few highlights of your Company’s financial performance in FY2018. During the year, MaxVIL reported consolidated operating revenues of ₹ 739 crore, primarily through our Speciality Films business. We reported an EBITDA of ₹ 57 crore during the year, ~28% higher compared to the previous year. We also reported a significant improvement in our bottomline with a Net Profit of ₹ 3.4 crore as opposed to a Net Loss of ₹ 6.6 crore in the previous year. The coming year will witness another first for MaxVIL with the unveiling of our signature commercial project Max Towers, which we are hopeful and confident will serve as the benchmark for our credentials as real estate developers.

During the year, MaxVIL reported consolidated operating revenues of ₹ 739 crore, primarily through our Speciality Films business. We reported an EBITDA of ₹ 57 crore during the year, ~28% higher compared to the previous year. We also reported a significant improvement in our bottomline with a Net Profit of ₹ 3.4 crore as opposed to a Net Loss of ₹ 6.6 crore in the previous year.

With the launch of Max Towers, we also expect a significant jump in our revenues as a steady flow of annuitybased income starts flowing in.

Moving on from our businesses to the larger external context in which we operate, I believe that with ease of business improving, higher transparency and governance levels, the Government led by the Prime Minister has laid a foundation of sustainable growth for the nation and its economy. We are fortunate enough to operate in a country that can withstand the short-term pain arising from the twin reforms of demonetisation and the GST, to continue unhindered on its trajectory as one of the fastest growing economies in the world. This positive climate, I should note, has been a significant motivator behind MaxVIL’s plans.

India’s enduring appeal as a key outsourcing destination will continue to fuel expansion initiatives from corporate real estate occupiers based out of US, Europe and Asia.

The Indian real estate sector, and specifically the commercial real estate market, presents excellent growth opportunities. India’s enduring appeal as a key outsourcing destination will continue to fuel expansion initiatives from corporate real estate occupiers based out of US, Europe and Asia. With an overall positive business sentiment in Corporate India, occupiers having been optimistic in recent times. I firmly believe that India will continue to retain its position in the global economy, with better growth prospects expected to support commercial real estate transactions in 2018-19.

Moreover, at a time when poor planning, lack of attention to detail and a lamentable lack of service excellence have widened the trust gap between consumers and developers more than ever, we are already on a much stronger footing compared to most other existing players. One of the elements underpinning this optimism is the Real Estate (Regulation and Development) Act, 2016 (RERA), which was a welcome development and Max Estates was already fully compliant when it was implemented. RERA is a sign that consumers are increasingly demanding higher quality and paying a premium for trust, authenticity and quality. I am confident that MaxVIL will successfully deliver to the changing needs of the aspirational and discerning Indian buyer.

As for our BOPP business, while the global industry continues to grow at 5%, domestic growth is at a healthy 10%. With a penetration of just 0.3 kg per capita in India, compared to the global average of 1.15 kg, there is immense headroom for growth in the Indian polymer films market. One of the oldest and most respected BOPP specialists in India, Max Speciality Films had been serving more than 30% of domestic demand for speciality films with only 10% of the installed domestic capacity. With the launch of its new manufacturing line earlier this year, MSFL is expected to achieve a growth of approximately ` 400 Cr. or 60% in revenues over the next year.

We have spent three years working hard to create not only a portfolio of new businesses, but a new legacy that we can proud of. Wish us harder work and higher growth so that we can continue to progress along our chosen path of service excellence.

Warm regards,

Analjit Singh

Chairman, Max Ventures and Industries Limited