ams polymers ltd share price Management discussions


Chemical Industry is one of the oldest industries in India, which contributes significantly towards industrial and economic growth of the nation. Since this industry has numerous forward and backward linkages, it is called the backbone of the industrial and agricultural development of the country and provides building blocks for many downstream industries.

The Indian Chemical Industry has witnessed robust growth in the past decade and has been ranked 6th largest in the world and 3rd largest in Asia according to United Nations Industrial Development Organization (UNIDO). It is expected to register a growth of 8-9% in the next decade and double its share in global chemical industry to 5-6% by 2022.

Government recognizes Chemical Industry as a key growth element of Indian Economy. In Chemical Sector, the Indian Government allows 100% FDI. Manufacture of most of chemical products is delicensed except life hazardous. Its share in manufacturing sector GDP is -16% and Government has target to increase it to at least 25% by 2025.

The Chemicals Industry in India is the largest consumer of its own products, consuming 33% of its output. With promising growth trends in the Chemicals Industry, this internal consumption is also set to rise.

Indian Chemical Industrys main growth segments are Petroleum and Petrochemicals, Chlor-Alkali, Pesticides, Specialty Chemicals and Pharmaceuticals & Bulk Drugs.

Petrochemical Industry mainly comprises of Polymers, Synthetic Fibers, Fiber Intermediates and Plastic Processing. They find wide application in domestic as well as industrial sectors.

The Indian Petrochemical Industry originated in 1970s and saw rapid growth during the 1980s and 1990s. However, it faced setbacks in 2008 due to surge in prices of crude oil. Growing at a CAGR of 14%, Petrochemical Industry in India is likely to reach USD 10Obn by 2020 from the current size of about USD 40bn.

India is the 4th largest producer of Pesticides after USA, Japan and China. India is the 3rd largest producer of Pesticides in Asia.

High potential for growth in chemical industry

The industry comprises both small-scale and large units (including MNCs) and produces thousands of products and byproducts ranging from plastics and petrochemicals to cosmetics and toiletries. The industry consumes a significant share (around one-third) of its own production. The industry has a 14% weightage in the overall Index of Industrial Production (IIP) which gives an indication of its importance in the countrys industrial growth. A robust chemical industry ushers in many economic and strategic benefits for the nation. The chemical industry is expected to contribute US$ 300 billion to Indias GDP by 2025.

India holds a strong position in exports and imports of chemicals at a global level and ranks 14th in exports and 8th in imports at global level (excluding pharmaceuticals). In terms of volume of production, it is the twelfth-largest in the world and the third-largest in Asia. Currently, the per capita consumption of products of the Indian chemical industry is one-tenth of the world average, which reflects the huge potential for further growth. The Indian advantage lies in the manufacturing of basic chemicals that are also known as commodity chemicals that account for about 57% of the total domestic chemical sector.

Industry structure

The chemical industry can be broadly classified into two segments - organic and inorganic chemicals. Organic chemicals cover over half of all known chemical compounds, and include petrochemicals, drugs, cosmetics, agrochemicals, etc. Inorganic chemicals comprise alkalis, dyes and dyestuffs.

Based on a more functional classification, chemicals can be divided into basic, specialty and fine chemicals.

Alkali chemicals form the highest chunk in the total chemical production in India. During FY10, alkali chemicals production (till February 2009) was 5.5 MMT and accounted for around 71 % of the total chemical production. The dyestuff sector is one of the important segments of the Indian chemical industry and has forward and backward linkages with a variety of sectors

such as textiles, leather, paper, plastics, printing inks and foodstuffs. The textile industry accounts for 70% of the consumption of dyestuffs.

Trend in production of the chemical industry

In the Indian chemical industry, alkali chemicals enjoy the highest contribution in the total production with 71.9% in the total production from April to July 2021 (FY22), production of polymers accounts for -59% of the total production of basic key petrochemicals in 2019. The chemical industry is expected to contribute US$ 300 billion to Indias GDP by 2025. Chemical production reached 903,002 MT in December 2021. Nonetheless, the growth in production of organic chemicals has been extremely sluggish. In India, specialized chemicals account for 18% of the total chemicals and petrochemicals market. The whole market size is estimated to be around $32 billion in FY19. From FY19 to FY22, demand for specialty chemicals is predicted to expand at a CAGR of 12%. India is a global supplier of dye, accounting for -16% of the global production of dyestuffs and dye intermediaries. India has strong presence in the exports market in the subsegment of dyes, pharmaceuticals and agrochemicals. The country exports dyes to Germany, the UK, the US, Switzerland, Spain, Turkey, Singapore and Japan. The Indian dyes and pigments market is projected to reach US$ 63.0 billion by 2022.

Growth of Chemical Industry

The domestic chemicals sectors small and medium enterprises are expected to showcase 18-23% revenue growth in FY22, owing to an improvement in domestic demand and higher realization due to high prices of chemicals. The chemical sector has witnessed growth of 13-14% in the last 5 years while petrochemicals have registered a growth of 8-9% over the same period. The major growth drivers, behind Indias chemical industry could be listed as follows:

• Structural advantage: With a growing market and purchasing power, the domestic industry is likely to growth at over 10-13% in the coming years. Growing disposable incomes and increasing urbanization are fuelling the end consumption demand for paints, textiles, adhesives and construction, which, in turn, leads to substantial growth opportunity for chemicals companies.

• Rising domestic demand in chemical end-use sectors such as agriculture, consumer and retail, infrastructure, auto and electronics, and healthcare could spur around 50 percent of incremental growth in chemicals as the economy grows. Each of these is expected to drive chemical demand, creating lucrative value pools across most chemical subsegments.

• Indias attractiveness as a manufacturing destination has been rising because of competitive labour costs, its ability to build a plant at less cost than in the developed world, and recent changes to corporate tax rates that have shaped a more supportive ecosystem. Many Indian specialty chemical players have developed distinctive capabilities and established supply relationships with global networks.

• Promising export potential: Chemicals constitute -5.4% of Indias total exports. India already has a strong presence in the export market in the sub-segments of dyes, pharmaceuticals and agro chemicals. India exports dyes to Germany, the UK, the US, Switzerland, Spain, Turkey, Singapore and Japan.

• Indias Ease of Doing Business ranking has been steadily improving. India ranked 63rd in 2019, up 14 places from its 2018 spot.

Government Policies and FDI Investments

Today, the Indian Government allows 100% FDI in chemicals. The government has implemented schemes such as Make in India, Aatmanirbhar Bharat, and Production-Linked Incentive (PLI) with the objective of improving the competitiveness of domestic manufacturing, attracting investments, and increasing exports. These initiatives are expected to boost domestic production and also increase demand for chemicals and petrochemicals within India.. The entrepreneurs need to submit only I EM with the DIPP provided no locational angle is involved. Only the following items are covered in the compulsory licensing list because of their hazardous nature.

? Hydrocyanic acid & its derivatives

? Phosgene & its derivatives IsocynatesS di-isocynates of hydrocarbons

A number of initiatives have been proposed in the 12th 5-year plan (2012-2017) to boost the growth of Indian Chemical industry. Few highlights are:

Investment policies:

? Target to increase the share of manufacturing in GDP to at least 25% by 2025 (from current 16%). Investments in manufacturing in the chemical sector are absolutely essential to ensure growth of the Indian chemical industry

? Governments proposal to set up of a technology up-gradation fund of -USD 80 Mn in the 12th plan for chemicals.

? Proposal to establish an autonomous USD 100 Mn chemical innovation fund by securing 10% of the total inclusive national innovation fund set up by the National Innovation Council to encourage commercialization efforts for innovations generating inclusive growth

? Other initiatives:

? Government readiness to provide incentives for bio-based raw materials to reduce dependence on crude oil, encourage companies to seek "Responsible Care Certification" and facilitate priority loans to those who meet environment norms

? Governments plan to expedite the consolidation of multiple legislations governing the chemical industry into one Integrated Chemical Legislation. This legislation should cover the entire life cycle of chemicals. This will act as REACH like legislation for safe use of chemicals for protection of human health & environment

? Chemical industry could be granted tax and duty reductions for specific identified products such as import duty reduction on inputs like coal, furnace oil, naphtha, etc., inclusion of a wider range of inputs under CENVAT credit and encouraging companies to set up captive power plants

? Policies have been initiated to set up integrated petroleum, chemicals and petrochemicals investment regions (PCPIRs). PCPIR will be an investment region spread across 250 square kilometers for manufacturing of domestic and export related products.

? Simplified procedures for FDIs as most of the chemical sector products fall under the automatic approval route for FDI/NRI investment upto 100%

Chemical industry had to face the brunt of global slowdown in past 2-3 years. Global economic uncertainty along with recent regulatory issues has resulted in low FDI inflows to the country. FDI in Chemical industry dropped from USD 749 Mn in FY09 to USD 362 Mn in FY10. However, FDI inflow picked up in FY11 reaching USD 2,345 Mn and USD 4,041 Mn in FY12. Indian Chemical industry also managed to lead industrial IIP in FY13. As per CSO sources, Chemicals IIP for FY13 stood at 3.1 % while the overall IIP was 0.8%.

Key Trends & Developments

Indian Chemical players have been focusing on sustainable development. Water, environmental impact, raw materials, safety over lifecycle and energy use is some of the issues grappling the industry. Indian chemical companies are largely investing in innovative solutions to find appropriate answers to these challenges.

Chemical industry is also offering new products according to the changing requirements of the market. The industry has developed microbial de-colorization and degradation procedures for textiles and begun exploring bio-diversity for natural dyes and developing eco-friendly methodology for synthetic dyes. Hindustan Petroleum Corporation Ltd (HPCL), a public sector refiner, has stated its intent to bring to market green lubricants developed from renewable feedstock. DuPont, as part of its R&D strategy, has set up a knowledge center in India focusing on areas like green technologies for refinery processes. Tata Chemicals has established an Innovation center to focus on green technologies in emerging areas such as nanotechnology, fermentation and bio-fuels.

Future Prospects& Investment Opportunities

Indian chemical industry is expected to register a growth of 8-9% in the next decade and is expected to double its share in global chemical industry to 5-6% by 2021. Indian Chemical industry has the potential to grow significantly provided some of the key growth imperatives are taken care of. Securing Feedstock, Right Product Mix, M&A opportunities are currently the key imperatives for chemical industry in India. Few investment opportunities can be highlighted as:

? Chemical companies in India can either explore alternate feedstock or invest in setting up plants in resource rich nations to secure feedstock

? Companies need to invest in exploring the right product mix to be competitive and profitable using the available feedstock in India i.e. Naphtha and its derivatives

? Indian companies can explore possible Merger, JV opportunities for technology, capital or access to international market by taking advantage of increasing expansion of western companies in India

? Chemical companies can invest in exploring strategic energy management and strategic water management to cut down their energy costs and contain water availability concerns

? Companies can invest in upcoming PCPIRs in India and overcome challenges related to infrastructure, power and water availability.

? There are good opportunities in segments such as Specialty Chemicals, Specialty Polymers, for catering to huge emerging domestic demand as also as a manufacturing hub.


Strength/Potentials Weakness/Problems

Investment Incentive Policy

Less used of technical niche

Educational Supply

Inability of Production diversification

Industrial development strength

Improper productivity improvement tools implementation

Strong Local Market potential

Relatively small scale by international standards

Guiding national policies and strategies

Insufficient hazardous waste processing facilities

Young and talented workforce upcoming

Insufficiency of awareness on R&D

Availability of precious raw materials

Insufficiency of chemical consuming industrial sectors

Opportunities/promises Threats/Pressures

Human Resource availability

High Chemical Producing companies competition

Government focus on investment policies

Insufficiency of raw matter inputs

Geographical Setup

Environmental impact-analysis

Increasing investments in private sector

Insufficiency of financial aids and corpus


The Companys success largely depends upon the quality and competence of its management team and key personnel. Attracting and retaining talented professionals is therefore a key element of the companys strategy. The resignation or loss of key management personnel may have an adverse impact on the Companys business, its future financial performance and the result of its operations.

This year, our industry has been impacted by the COVID 19 Pandemic and the subsequent lockdown on economic activity. However, your company has shown resilience during this time and we believe we will come out stronger.


The Company has adequate internal audit and control systems. Internal auditors comprising of professional firm of Chartered Accountants has been entrusted with the job to regular conduct the internal audit and report to the management the lapses, if any. Both internal auditors and statutory auditors independently evaluate the adequacy of internal control system. Based on the audit observations and suggestions, follow up, remedial measures are being taken including review thereof. The Audit Committee of Directors in its periodical meetings, review the adequacy of internal control systems and procedures and suggests areas of improvements.

AMS POLYMERS LIMITED (Formerly, Sai Moh Auto Links Ltd) : 38th ANNUAL REPORT The organization is well structured and the policy guidelines are well documented with pre defined authority. The Company has also implemented suitable controls to ensure that all resources are utilized optimally, financial transactions are reported with accuracy and there is strict adherence to applicable laws and regulations. The Company has put in place adequate systems to ensure that assets are safeguarded against loss from unauthorized use or disposition and that transactions are authorized, recorded and reported.

The Audit Committee of Directors in its periodical meetings reviews the adequacy of internal control systems and procedures and suggests areas of improvements. Needless to mention, that ensuring maintenance of proper accounting records, safeguarding assets against loss and misappropriation, compliance of applicable laws, rules and regulations and providing reasonable assurance against fraud and errors will continue to remain central point of the entire control system.


Human resource is considered as key to the future growth strategy of the Company and looks upon to focus its efforts to further align human resource policies and processes to meet its business needs. The Company aims to develop the potential of every individual associated with the Company as a part of its business goal. Respecting the experienced and mentoring the young talent has been the bedrock for the Companys growth.

Human resources are the principal drivers of change. They push the levers that take futuristic businesses to the next level of excellence and achievement.


Investors are cautioned that this discussion contains statements that involve risks and uncertainties. Words like anticipate, believe, estimate intend, will, expect and other similar expressions are intended to identify "Forward Looking Statements". The company assumes no responsibility to amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. Actual results could differ materially from those expressed or implied. Important factors that could make the difference to the Companys operations include cyclical demand and pricing in the Companys principal markets, changes in Government Regulations, tax regimes, economic developments within India and other incidental factors.

For and on Behalf of the Board of AMS Polymers Limited (Formerly, Sai Moh Auto Links Limited)


(Anand Kumar)

?ate: 01stSeptember, 2023 Managing Director

Place: New Delhi DIN: 01381489


AMS POLYMERS LIMITED (Formerly, Sai Moh Auto Links Ltd) : 38th ANNUAL REPORT