ANNUAL REPORT 2010-2011
In our letter last year, we had reaffirmed our commitment to turn around
Amal. We had shared with you some of the initiatives we will take to create
long-term value, and we are happy that we have remained on course against
odds, and as we write this letter, we have completed implementation of the
3 initiatives as mentioned on page 1 of this Annual Report. We trust these
and further initiatives will show their impact in the months ahead and help
in our endeavour to accomplish a decisive turnaround in a difficult
Our Company manufactures and markets in all 5 products, namely Sulphuric
Acid 98%, Oleum 65%, Oleum 25%, Sulphur Trioxide and Sulphur Dioxide.
Barring Sulphur Dioxide and to some extent Sulphur Trioxide, both of which
have low demand, the other products are commodity in nature whose prices
and contributions fluctuate significantly. The price of key raw material,
Sulphur, also varies from month to month. In essence, the way to succeed in
these products is to ensure full deployment of steam (a byproduct),
excellent conversion efficiency and high capacity utilization.
It may not be out of place to mention that as we write this letter, the
price of Sulphur is at a high and the prices of the aforementioned products
have not kept pace with it. Consequently, the contribution margins of the
products have touched their lowest and the business is unlikely to generate
the anticipated profit in Quarter 2. We are nonetheless pursuing the other
initiatives which are in the long-term interest of the Company even if the
recovery may take more time than earlier envisaged.
During 2011-12, in addition to taking the aforementioned 3 initiatives, we
have already identified and taken up implementation of 3 more initiatives,
as mentioned on page 1, which will require marginal investments. Once
completed, these initiatives will help in further improving manufacturing
efficiency and competitiveness. In essence, at this time, we are making
investments to first obtain value so far unrealized from the existing
investments. These initiatives form Phase 1 of our strategy.
At the same time, we are exploring and evaluating new value added products
in our chosen areas with relatively low investments so that we do not
become highly leveraged. We had considered manufacturing a chemical
intermediate used in the Pharmaceutical industry, as mentioned in our
letters to you in the last Annual Report. We have not gone ahead with the
project as we are revalidating its long-term viability in view of changed
circumstances. We will have more clarity about such investments, which form
Phase 2 of our strategy, during 2011-12.
We have during the year made further changes in the Board of our Company.
We have appointed Mr Sujal Shah, a reputed Chartered Accountant, and Mr
Abhay Jadeja, a reputed Solicitor, as two additional Independent Directors.
Along with Mr Naresh Singhal (as the Chairman), they form the Audit
Committee of our Company. During the year, Mr Mrighank Dutta, Dr Rana
Vishnoi, Mr Ghanshyam Parekh and Mr Bharat Trivedi resigned from the Board,
and we wish to thank them for their valuable contribution.
We wish to take this opportunity to thank the Independent Directors for
their significant involvement and guidance not only for improving the
performance of our Company, but also to establish and institutionalize
processes to enhance Corporate Governance. On behalf of all our colleagues
on the Board, we wish to thank the customers for their support and
employees for their commitment and dedication and for identifying and
executing several improvement measures.
We look forward to your understanding in our quest for recovery.
With best wishes,
(Vasudev Koppaka) (Sunil Lalbhai)
Managing Director Chairman