Chemicals dyes Industry
In view of the slow- down on the economic front over the world and its corresponding
impact on chemical dyes Industry across the globe, the chemicals dyes business experienced
very challenging conditions during the year. With high natural / synthetic prices and the
slowing down in end-product demand, customers undertook production cuts at periodic
intervals. This did impact the demand for chemicals dyes adversely. The resultant mismatch
in supply and demand of certain key chemicals impacted their selling prices, resulting in
pressure on margins. Cost increases on account of various inputs, aggravated the situation
further. Despite this, our Company managed to retain its volumes at the previous years
levels.
Industry Structure and Development
Chemical industry is capital as well as knowledge intensive industry. This industry
plays a significant role in the Global economic and social development. It is also human
resource intensive industry and hence generates employment. The diversification within the
chemical industry is huge and covers more than thousands of commercial products. Chemicals
are used in a wide variety of products and processes. They are major contributors to
national and world economies, their sound management throughout their lifecycle is
essential in order to avoid significant and increasingly complex risks to human health and
ecosystems and substantial costs to national economies. There is immense potential for
increasing consumption within the country as also for India to become a reliable supplier
of such quality chemicals to the world.
Chemicals play a major role in improving the quality of life by enabling the
manufacture of the goods and materials that need whilst mitigating adverse environmental
impact. By developing new usages of chemicals, processes and sustainable routes to produce
novel environmental friendly materials, it can achieve low carbon processes that can make
high value products of the Company for humans and solve energy and sustainability
challenges.
Our Company is a manufacturer and supplier of Chemical Dyes, Dye Intermediates and
Basic Chemicals. It currently focuses on manufacturing basic chemicals to feed dye
intermediates and dyes manufacturing through a successful strategy of backward
integration. The product range caters mainly to textiles industries. The Company has its
manufacturing facility at Khed, District Ratnagiri. The setting up of additional
production facilities will enable your Company to capture a higher market share out of
additional production volumes.
Total income generated for the financial year ended March 31, 2020 is Rs. 10.29 as
against Rs. 8.12 crores for the financial year ended March 31, 2019. The Loss before tax
is Rs. 69.96 lacs for the year ended 2019-20 compared to Rs. 37.05 lacs for the year ended
2018-19. The Net profit after tax is Rs. 256.77 lacs for the financial year 2019-20 as
against Rs. 40.96 lacs for the financial year 2018-19.
Business Outlook: Opportunities and threats
Over the last fifteen years, the Indian chemicals industry has graduated from
manufacturing principle chemicals in a highly regulated market to being a mature industry
in a liberalized economy. Until 1991, India had a closed economy, with the domestic
chemical industry enjoying protection in the form of differential import duties on raw
materials and finished chemical products. Chemical manufacturing was largely controlled by
licensing regulations. This industry is among the fastest growing industries in India. The
bulk of chemicals produced in India comprise either upstream products or intermediates,
which go into a variety of manufacturing applications.
Indian chemical companies with well-built systems and structured operations are likely
to be benefited. It has been contributing to Indias growing economy in a phenomenal way.
Today, India has achieved considerable progress in production of basic organic and
inorganic chemicals, dyestuffs and intermediates. Those companies who are manufacturing
highly valued chemicals and who are compliant of industrial quality standards can make
their mark not just in India but even in the overseas markets as well.
The sales efforts are also well supported by a team of technical experts who play a
pivotal role in providing pre / post sales technical services, training to customers
employee, on-site back-up, recipe and process customization, product development etc.
Our Companys R&D activities broadly comprise various processes for developing new
products, standardizing analytical methods and identifying substitutes for key raw
materials. Through the R&D centre, the Company continuously interacts with consumers
to obtain feedback on its existing as well as new products to complement its new product
development activities.
Threats, Risks and Concerns:
The Company is a manufacturer and suppliers of Dyes, Intermediates and Basic chemicals.
However, the following major issues may hamper business operation as well as growth of the
Company:
(a) Volatility in prices of raw material especially crude oil and transportation cost
can adversely affect the business operations and can thin out the profitability of the
Company.
(b) The Company is doing business with various countries, therefore, our business
operations and growth is dependent upon the political, climatic, economic, regulatory and
social environment of such countries.
(c) The Company is a exporter therefore; the volatility in foreign exchange rates may
affect the business operation as well as growth of the Company.
The Company is continuously working towards achieving further improvements in the
quality of its products as well as in technological and operational efficiencies of its
manufacturing processes. It also strives to develop new products to improve its
participation in the market and enlarge its product range. The company is also, through
its strong research initiatives, engage in developing new products which would meet the
emerging needs of its customers and the environmental challenges of the future. The
pricing scenario of chemicals dyes, accordingly, is likely to undergo a positive change
with the reduction in the global supply position.
Periodic assessment across the Company is undertaken to identify and thereafter
prioritize significant risks. Owners are identified for all such risks and are assigned
the responsibility to develop and deploy mitigation strategies. These are subjected to a
review by the Board.
With the expectation of an improvement in the market conditions for the Chemical
Industry during the year, the Company will endeavour to perform better than the last year.
Potential impact of COVID-19 and various steps taken
The Companys Production facilities operated at B-12/2, Lote Parshuram Industrial Area,
Taluka: Khed, Dist. Ratnagiri, Maharashtra, India remained shut down from March 24, 2020
due to Lockdown.
The Company has partially resumed its operations at the factory from 20th
April. 2020 after receiving the prior permissions from the concerned authorities and
adhering to the safety norms as prescribed by the Central and State Government of India
As per Guidelines of Stat e Government and all the office staff have adopted work from
Home and are working regularly from their respective homes.
Exhaustive measures have been undertaken by the Company to ensure safe workplace for
the employees with appropriate social distancing and high standard of hygiene.
The Company has also taken various steps such as thermal screening of all employees and
visitors, sanitizing the premises on regular basis, enforcing wearing of masks, asking all
employees to have Arogya Setu App on their mobiles and continuously follow guidelines as
prescribed by the Central or State Government from time to time. Work from Home option is
also continued for certain category(s) of employees. The Company has also ensured complete
adherence to all safety guidelines to minimize the spread of this deadly corona virus.
It is not easy to assess the full impact of COVID-19 with reasonable certainty, however
currently, with the close down of the factory as stated above, have impacted the overall
production of our Dyes & Chemicals upto the contribution of 60% of our sales.
As regards our Dyes & Chemicals business have been affected on account of paucity
and irregularity of orders. Our business has thus been affected by Covid-19, to the extent
mentioned.
The profitability of the Company has been impacted on account of shut down of
production due to the Corona outbreak. However, with the slowly opening of lockdown we
anticipate better operations in the near future.
Segment-wise or product-wise performance
The company has only one manufacturing plant and a unified marketing and administrative
set-up due to which segment wise disclosures of Liabilities and Profitability cannot be
determined.
The Company operates in one business segment, namely manufacturing & trading of S.
O. Dyes & Chemicals and geographic segments i.e. the Domestic and the Overseas are
summarised as follows. :
| Particulars |
Domestic |
Overseas |
Total |
| Sales |
70,31,340 |
737,77,496 |
808,08,836 |
| (99,08,707) |
(548,91,436) |
(648,00,143) |
| Total Sales |
70,31,340 |
737,77,496 |
808,08,836 |
| (99,08,707) |
(548,91,436) |
(648,00,143) |
Note: Figures in bracket represent previous year figures.
Financial and Operational Performance
The highlights of the Financial Operational Performance are given below :
| Sr. No Particulars |
2019-20 |
2018-19 |
| 1. Sales/ Income from Operations |
808,08,836 |
648,00,143 |
| 2. Other Income |
221,34,017 |
164,46,314 |
| 3. Sub - Total |
1029,42,853 |
812,46,457 |
| 4. Total Expenditure (Before Interest) |
1077,35,761 |
828,17,827 |
| 5. Profit Before Interest and Exceptional Items |
(47,92,908) |
(15,71,370) |
| 6. Profit/Loss from Ordinary Activities Before Tax |
(69,95,627) |
(37,05,060) |
| 7. Profit/Loss After Tax |
(256,76,934) |
(40,95,875) |
Internal control systems and their Adequacy
Effective Internal Control Systems have been out in place by the Management to provide
reasonable assurance for :
- Safeguarding Assets and their usage
- Maintenance of Proper Accounting Records and
- Adequacy and Reliability of the information used for carrying on Business Operations.
Key elements of the Internal Control Systems are as follows:
(i) Existence of well defined organisational structure and Authority
(ii) Existence of Corporate Policies for Financial Reporting and Accounting
(iii) Existence of Management Information System updated from time to time as and when
required
(iv) Existence of Internal Audit System
(v) Review of Opportunities and Risk factors depending on the domestic scenario and to
undertake measures as may be necessary.
The Company has appointed an Independent internal auditor to conduct internal audit and
to ensure effective compliance and effectiveness of the Internal Control Systems in place.
The members of the Audit Committee are regularly reviewing the Internal Audit Reports
for the audit carried out in all the significant areas of the operations. In addition to
it, the Audit Committee approves all the audit plans and reports for significant issues
raised by the Auditors. The Internal Audit Reports are circulated on a regular basis for
the perusal of the Senior Management and appropriate action is taken as and when required.
Material developments in Human Resources / Industrial Relations front, including number
of people employed
In view of the acute shortage of skilled and equipped human resources prevailing in the
country, our focus during the year was to enhance the capabilities of our existing
workforce. In order to ensure employee motivation and confidence level which would enable
the Company to face the current challenges and seize future opportunities, various
initiatives were taken for the same. Necessary steps are taken to strengthen the areas in
which the employees of the Company need improvement. The Company complies with all the
regulations pertaining to Safety. The Company continues to have an excellent track record
in the area of Safety. The main objective of the company is to achieve zero accident/
incident and safe working environment. Regular programmes are therefore held on health and
safety awareness, fire fighting and first aid, apart from other development programmes.
Industrial relations remained cordial during the year.
The employee development is quite extensive as the Company believes in investing in the
human capital at our own company first and foremost. At present there are in all 39
employees associated with the Company. The Company has invested its time and resources in
training and developing its workforce to become indispensable resources for the Company
later on.
The Company believes individuals in any organization is a vital resource and must be
valued, nurtured and retained. Employees are the most valuable assets and truly the
backbone of an organization. Every employee in his/her own way contributes towards the
success or failure of an organization. Without employees in an organization, even the most
powerful machinery with the latest technology would not function.
Details of significant changes in key financial ratios & Return on Net Worth
There are no significant changes i.e., change of 25% or more as compared to the
financial year 2018-2019 in key financial ratios such as Debtors Turnover, Inventory
Turnover, Debt Equity Ratio, Net Profit Margin, etc.
Moreover there is no specific change Return on Net Worth as compared to the financial
year 2018-2019.
Cautionary statement
Statements in the Management Discussion & Analysis Report describing the Companys
objectives, projections, estimates, expectations or predictions are ‘forward looking
statements within the meaning of applicable securities laws and regulations. Actual
results could differ from those expressed or implied depending upon various economic
conditions like raw material availability and prices, cyclical demand and pricing in the
Companys principal markets, fluctuation in forex rates, changes in Government
regulations, tax regimes, economic developments within India and the countries in which
business is conducted, and other incidental factors. The Readers are cautioned not to
place undue reliance on the forward looking statements.
|
For and on behalf of the Board of Directors |
|
Chromatic India Limited |
|
Sd/- |
|
Vinod Kumar Kaushik |
|
Whole Time Director |
|
(DIN: 02586479) |
| Place: Mumbai |
|
| Date: September 5, 2020 |
|
+91-9892691696
