Amal Ltd 2011-12

7 Management Discussion & Analysis The Company manufactures Sulphuric Acid, Oleum 65%, Oleum 25%, Sulphur Trioxide and Sulphur Dioxide at its manufacturing site at Ankleshwar. These are bulk chemicals which find their use in several industries like Dyes, Fertilizer, Personal Care, Petrochemical, Pharmaceutical, Textile, etc. These chemicals are generally sold locally and that too within a radius of 150 km from the manufacturing site. Sales for the year 2011-12 grew from ` 1,319 lacs to ` 1,354 lacs. The current global demand for Sulphuric Acid is reported to be 130 million mt per annum, assuming demand equals production and at an average growth of 6-7% per annum, the global demand for Sulphuric Acid is projected to be around 145 million mt per annum valued at US$ 11.28 bn by 2013* with Fertilizer industry contributing to 65% of the consumption. There are about 45 manufacturers of Sulphuric Acid in India accounting for 7.90 million mt per annum of production. The western region accounts for 44%, followed by eastern region at 30%, southern region at 22% and northern region at 4%. The manufacturing plant of the Company at Ankleshwar has an installed capacity of 120 mt per day and effective steps have been taken to debottleneck the capacity to 140 mt per day, the benefits of which will fully materialise in 2012-13. It will also be able to generate more steam which would be supplied to a neighbouring plant. In addition, it will also explore new value added products which will utilize Sulphur Trioxide and Sulphur Dioxide. Besides, the Company is also re-considering manufacture of a chemical intermediate used in the pharmaceutical industry. As the manufacture of the Sulphuric Acid and its downstream products are based on Sulphur, their prices and consequently their contribution margins are influenced by the international price of Sulphur and the rate of foreign exchange. The Company needs to ensure a high degree of efficiency, competitiveness and speed in its operations to achieve a good performance. * Source: ICIS Internal Control Systems The Company has appointed an external agency, Ernst & Young, an international consultancy firm, to ensure adequate internal controls for safeguarding the assets, ensuring transactions are in accordance with its policies and are duly authorized, recorded and reported, and preventing significant frauds or other irregularities. The Company is working to further strengthen the systems for internal audit, risk assessment and mitigation. During the year, it has taken further steps to improve in these areas and has specifically taken the following new initiatives: 1) Internal Control Systems & procedures were audited by Ernst & Young and quarterly transactions audit was done by another Chartered Accountant firm that is Vimal D. Desai & Associates 2) Suggestions given by both the firms have been implemented A high priority was assigned towards compliance to safety and environmental norms specified by GPCB. Human Resources Production and sales activities of the Company have been streamlined at Ankleshwar and requisite manpower has been recruited to support the activities.