From the Chairman to:
the Members of Thirumalai Chemicals Limited Dear Members
I am happy to share with you your Company's Annual Report for FY-19.
FY-19 was not as good as the previous year. We started with a strong first half withexcellent performance all through. From the 3rd Quarter onwards there was areduction in demand and our margins. The sharp fall in crude and commodity prices acrossthe board led to a number of issues. As a result of price volatility our customersreduced buying for fear of trading loss and this affected our revenues. Thus for H2 theresults were poor as you would have noticed.
We have taken up this opportunity to initiate a cost reduction exercise across theCompany. This will be an ongoing effort and we hope to see results from next year.
In Q1 of the current year FY-20 volumes and margins have improved. There has been largeimports of PA our main commodity product from Far East - some of this is off-spec productand hazardous.
Unlike Europe US and many other developed countries India has poor protection againstoff-spec imports. The government has been made aware of this and are taking steps toprotect the end consumer.
About 18 months ago we started a major revamp of our plants to introduce newertechnologies which will reduce cost improve safety and performance. Your Company had tocarry out this when most sections of the Plant were operational and hence a difficultexercise.
This major project has been completed and we will see contributions from aboutSeptember. This was done entirely from internal funds.
The expansion project at Dahej received approval after a long delay; we were able tostart construction only recently. We expect to complete by the end of this year and seeinitial results the next year. This plant located very close to our customers would reducelogistics and input costs; and will be an important hub for our future growth.
Our subsidiary in Malaysia had experience similar to ours in H2 in terms of a slack.Again their business started recovering in Q1.
They have recently completed their Maleic Anhydride (MAn) derivatives project and havejust started commercial production. Their cash flow continues to be good. The managementof the subsidiary went through a complete overhaul and they are working hard to delivergood performance; they are also planning on a project for further capacity growth in theircore product MAn.
The ongoing trade war between the US and China is creating significant volatality. Weare very conscious of the risks and gearing up to meet them.
The proposed Fine Chemicals / Food Ingredients project of your company in the US is inthe final stages of approval. We hope to start engineering in the next few months.
We have to be ready and we are ready to handle the increased uncertainty and risks thatall businesses are facing.
We can look forward to the future with confidence: Your Company's Balance Sheet isrobust. Our Company has an excellent reputation; we are technically and commerciallycompetent; your Company's employees at all levels are united in the effort to excel andhave the guidance of an outstanding Board.
I request you to go through the report and send your queries by email tochairman.1920@thirumalaichemicals. com.
I invite all members to join us at your company's AGM on the 25th Julywhere we can receive your guidance and suggestions.
Chairman of the Board of Directors
Thirumalai Chemicals Limited