Alkyl Amines Chemicals Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS:

We are global manufacturers and suppliers of amines, amine derivatives and other specialty chemicals. We have three manufacturing sites, two in Maharashtra, i.e. at Patalganga and at Kurkumbh and one in Gujarat, i.e. at Dahej. We have a Research & Development Centre (R&D) and Technology and Projects Office located at Pune, Maharashtra, equipped with advanced equipment and analytical instruments. We also have three Solar Plants located at: i) Bhoom, Dist. Osmanabad, Maharashtra, ii) Manwath, Dist. Parbhani, Maharashtra, and iii) Talegadh, Taluka Deesa, Dist. Banaskantha, Gujarat (Commissioned in January, 2024). We have an excellent team of technical and commercial professionals with expertise in chemical manufacturing and marketing. We have our Registered Office at Vashi, Navi Mumbai and Corporate Office at Worli, Mumbai.

Our products have application in important industries like pharmaceuticals, agro-chemicals, water treatment chemicals, rubber chemicals, etc. We cater to both domestic and international market. We have competition both from local and international producers. For more details, please refer to our website www.alkylamines.com

OPPORTUNITIES AND THREATS

The Chemical Industry is critical for the economic development of our country, providing products and enabling technical solutions in virtually all sectors of the economy. The demand for our products is steadily increasing both in India and abroad. Key drivers for success in the chemical sector include proximity to strong growth markets, greater ease in doing business and the continued development of petroleum, chemicals and petrochemical investment.

Your Company is ready to take the challenges of increased demand by continuously adding capacities, adding new products and investing in upgradation of its manufacturing capacities. The in-house R&D Department has been developing quality products and is also striving for achieving cost efficiencies.

The industries in which our products have application, like pharmaceuticals, agrochemicals, rubber chemicals etc. are growing at a reasonable pace. We have a fair chance of improving our position as a reliable supplier of good quality chemicals to these industries. Our Core Competence in chemical handling and manufacturing supported by an able technical team, should provide a lot of opportunities and scope to the Company to improve its performance. We enjoy leadership position in some of the products in domestic market, driven by strong in-house technology, diversified product portfolio and customer base.

The commodity nature of some of our products makes them susceptible to fluctuations in raw material prices and exchange rates. Petroleum based raw materials are subject to international gas/crude oil price fluctuation. Being a global player, we are also exposed to competition not only from domestic players but also large international players. Cheap imports have posed problems, which are being addressed by consistency in quality of the products and improving production efficiencies and also by initiating anti-dumping investigations.

OUTLOOK

The Company has established a leading position in domestic market and a presence in international market with a reputation for reliable service and quality products. For the financial year 2024-25, our focus will continue on sustainable growth by taking measures for increasing our market share of existing products and also introducing new products.

Our customers in agrochemicals and pharmaceuticals sectors are facing global competition from Chinese manufacturers resulting in loss of business. This has impacted sales of our products to major customers. Due to increase in Acrylonitrile production in China, dumping of low price imports of Acetonitrile continues to increase, resulting in reduction in its sales and creating margin pressures. We have applied for anti-dumping duty on Acetonitrile imports. However, with the global growth of chemicals focused more on Asia, it is expected that there will be further growth in chemical industry.

In order to meet the growing demand for Companys products, a newly set up plant at an investment cost of Rs. 400 crores at our existing Kurkumbh site, Maharashtra for enhancing manufacturing capacity of Ethyl Amines was successfully commissioned. We commenced commercial production from October 2023 and it is fully operational now. Hence, the old Ethyl Amines production facility shall be utilised for manufacturing of Methyl Amines, thereby enhancing the production capacity of Methyl Amines. During the financial year 2024-25, we expect our investments in various other projects to add to both our top-line and bottom-line. We will continue with our efforts for improving our bottom-line by expanding our product-range, while re-looking at business strategies and models, wherever necessary. We will continue our efforts for improving efficiencies and margins.

RISKS AND CONCERNS

The economic and business environment is fast evolving. The global market is complex and demands a very efficient and complex supply chain configuration. The Company has a risk management policy, which from time to time, is reviewed by the Risk Management Committee and Audit Committee of Directors as well as by the Board of Directors. The Policy is reviewed by assessing the threats and opportunities that will impact the objectives set for the Company as a whole. The Policy is designed to provide the categorization of risk into threat and its cause, impact, treatment and control measures. As part of the Risk Management policy, the relevant parameters for all manufacturing sites are analyzed to minimize risks associated with protection of environment, safety of operations and health of people at work and monitored regularly with reference to statutory regulations and guidelines defined by the Company. The Company fulfils its legal requirements concerning emission, waste water and waste disposal. Improving work place safety continued to be top priority at all manufacturing sites. This apart, the Company has Business Continuity Plan which provides a framework, guidance and concept of operations to support businesses to continue and/or rapidly restore their critical business functions in the event of disruption to normal operations.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Companys internal control procedures which include internal financial controls, ensure compliance with various policies, practices and statutes in keeping with the organizations pace of growth and increasing complexity of operations. We have set up a statutory compliance management system to ensure compliance with various applicable laws.

We have in place internal control systems in all spheres of activities commensurate with the size of the Company. The system is helping the Managers to advantageously assimilate information and make more knowledge-based and efficiency-driven decisions. The internal control is supplemented by effective internal audit being carried out by an external firm of chartered accountants. The Internal Auditors team carries out extensive audits throughout the year across all locations and across all functional areas. During the financial year 2022-23, the existing SAP system was replaced with HANA and the same is working satisfactorily. The Audit Committee of Directors regularly reviews the findings of the Internal Auditors and effective steps to implement the suggestions/observations of the Auditors are taken and monitored regularly.

Your Company also has laid down procedures and authority levels with suitable checks and balances encompassing the entire operations of the Company.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE AND SEGMENT-WISE PERFORMANCE AND KEY FINANCIAL RATIOS

Total Income amounted to Rs. 1,45,566 lakhs compared to Rs. 1,69,624 lakhs of the previous financial year. The profit before tax amounted to Rs. 20,247 lakhs compared to Rs. 30,856 lakhs reported last financial year.

The Company operated in one segment area i.e. Specialty Chemicals. During the financial year, our gross domestic sales amounted to Rs. 1,27,565 lakhs compared to Rs. 1,45,231 lakhs of the previous financial year. Exports reduced from Rs. 36,665 lakhs (FOB) of the previous financial year to Rs. 31,779 lakhs (FOB) for the financial year 2023-24. The details of key financial ratios i.e., debtors turnover, inventory turnover, interest coverage, current ratio, debt-equity ratio, operating profit margin, net profit margin and return on Net Worth are given in financial highlights and Note 45 and Note 48.1 to the Audited Accounts.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company believes that its employees are the key to driving sustainable performance and developing competitive advantage. The Human Resource policies and procedures of your Company are geared towards nurturing and development of Human Capital. The Company had 692 employees as on March 31, 2024. Your Company has transparent processes for rewarding performance and retaining talent.

Skill Gap Analysis and other systems are also in place to identify the training interventions required. Employee relations at all locations continued to remain cordial. Your Directors wish to acknowledge the sincere and dedicated efforts of the employees of the Company and would like to thank them for the same.

	For and on behalf of the Board
Place: Mumbai	YOGESH M. KOTHARI
Date: May 09, 2024	Chairman & Managing Director
	(DIN: 00010015)