Fellow shareholders,
2021- 22 may forever be remembered as amongst the most uncertain fiscal
because of the pandemic and later the geopolitical conflict. Nonetheless, as we write this
letter, we wish to find reasons to be hopeful - our Company wiped out the remaining
carried forward loss of ' 0.29 cr which at peak was ' 56 cr. Amal Speciality Chemicals Ltd
(ASCL), a 100% subsidiary, will soon commission its new manufacturing facility for 300 mt
per day of H2SO4 equivalent products in Ankleshwar.
Financial performance in 2021-22 declined because of low demand
of finished products (particularly H2SO4 and SO3) and
high input prices (particularly of Sulphur) for most of 2021-22 - sales rose by 43% to '
45 cr; EBIDTA decreased from 41% to 14%, PBT decreased by 69% to ' 3 cr and RoCE from 35%
to 11%. The Directors did not recommend dividend consequent to a stipulation in the
revival scheme; it is also prudent to wait till the new investment of ' 93 cr in ASCL
delivers a positive impact.
During 2021-22, we adjusted the product portfolio which helped in
preventing further fall in contribution margin by 1.2%. During the fiscal, we also
completed further debottlenecking of the capacity of SO3, Oleum 25% and H2SO4
which will help increase contribution margin. Furthermore, we added 17 team members who
will be required to take up responsibilities in sync with the forthcoming new
manufacturing facility of Amal Speciality Chemicals Ltd.
Our Company along with ASCL is expected to achieve consolidated
sales of ~ ' 135 cr at full capacity utilisation. The new manufacturing facility is
expected to be commissioned during the second quarter of 2022- 23. Our first task will be
to streamline the parameters and achieve the projections. Thereafter, we will focus on a
few proposals on hand to grow our Company beyond. We will execute proposals based on
market attractiveness and ability to compete.
So far, 2022-23 has seen the highest price of Sulphur, the key
raw material, in the last 12 years. On the other hand, it has so far been difficult to
pass on the entire increase. It is therefore possible that 2022-23 may see a pressure on
prices of finished products such as H2SO4, Oleum, SO3 and
SO2. In our view, such a situation is unsustainable and will change for the
better. Meanwhile, team Amal is taking several actions at the workplace and marketplace to
enhance performance.
Our Company contributed ' 26 lakhs towards fulfilling its obligation
to society - it was used for improving infrastructure of five schools and providing
relief to COVID-19 patients in four hospitals. The mandate is to take up projects, no
matter how small, in step with national priorities. The initiatives were implemented by
Atul Foundation - you may like to see the link at the end of the letter. The concept
‘serve and grow' is robust; it makes our Company sustainable.
We are grateful to our customers for giving us an opportunity to
serve and grow our Company - their expectations help us improve our standards. We
recognise and appreciate every member of team Amal who is persevering to improve
performance. We value the engagement, analysis, value addition and guidance of the Non-executive
Directors. In order to maintain continuity, we have inducted Mr Jyotin Mehta as an
Independent Director.
We again reiterate our five everlasting mandates: one - drive
efficiency in manufacturing and other processes, two - become financially resilient, three
- boost people productivity and remain lean in fixed costs, four - pervade R&D and
information technology in every function and five - work with customers on ideas with high
potential. We believe that the above mandates will help our Company grow better and faster
as it turns yet another page in its never-ending journey.