industry Structure & Development
Food colors are prevalent in our daily life and are even in foods and drinks we
wouldnt expect, these are substances which are added to food or drink to change its color
for acceptability. It improves texture and appearance of the product. Food colors are
classified into natural food colors, synthetic food colors, and blended food colors. Food
colors come in liquids, powders, gels, and pastes, and are used in meat products,
beverages, dairy, bakery & confectionary, processed
food & vegetables, and oils & fats. The food colors market includes both
natural and synthetic colors. Artificial color is
a chemical compound, which is used to improve the appearance to food or enhance the
food flavoring characteristics.
Consumption of processed and packaged foods has increased due to an increase in the
number of working professionals
and modernization. The increased consumption of processed food products such as
ready-to-eat snacks, soft drinks, convenience foods, processed dairy products, and others
has resulted in an increase in the use of various food colours. To provide an appealing
appearance, these colours are mixed into processed food products and beverages. The appeal
of food products is as important to the ingredients used in the production of the food
products as it is to the consumers. These colours are used differently in different
products. Colorants are used in greater quantities in soft and carbonated drinks than in
food products. The rising consumption of soft drinks in developing countries will allow
for rapid growth in the food colors market in the coming years.
Opportunities and Threats
Color is a key component to increase the ultimate appetizing value and consumer
acceptance towards foods and beverages. Synthetic food colors have been increasingly used
than natural food colors by food manufacturers to attain certain properties such as low
cost, improved appearance, high color intensity, more color stability and uniformity. The
global food colors market size grew from $3.21 billion in 2022 to $3.53 billion in 2023 at
a compound annual growth rate (CAGR) of 10.1%. The Russia-Ukraine war disrupted the
chances of global economic recovery from the COVID-19 pandemic, at least in the short
term. But is further expected to grow at a CAGR of 6% between 2022 and 2032, surpassing a
valuation of US$ 1,066 Million by the end of 2032.
The Indian food colorants market is projected to witness a CAGR of 5.3% over the
forecast period (2020- 2025).
The food colorants market in the country is dominated by the small-scale food
industries, including confectionery, snacks and sweet, and beverage, and some
multinational industries. The synthetic food color segment dominates the Indian food
colorants market. The consumers of the country prefer the consumption of low-priced food
products, which leads to higher utilization of synthetic colors in the processed food
industry, as the color of the food plays a significant role in enhancing the visuals and
the appetite. The FSSAI, an Indian regulatory body, allows the food colors in different
foods. Colors, such as Tartrazine, Sunset Yellow, Ponceau 4R, Indigo Carmine, Brilliant
Blue and Carmosine, are the synthetic colors that are widely used in the market studied.
However, the regulation of several food regulatory authorities on synthetic food color
may hamper the growth of market. Also, the changing consumer preference towards the
natural ingredient may impede the growth of synthetic food color market. Though challenges
are many the demand of Synthetic food color is in rise then natural color due to the cost,
process, applications, and quality of natural ingredients. Also the extraction process of
natural ingredients is complicated and time-consuming.
Risks and Concerns
• Volatility in Currency rates of USD.
• Global Raw Material Prices.
• Stringent environmental regulations & conditions imposed.
Although synthetic food colors have been approved for human consumption, the need to
replace these ingredients with natural alternatives has increased. Thus, manufacturers are
launching various products with natural ingredients, owing to surge in demand for
nutritious and natural ingredients.
Financial and Operational Performance
(a) Net Sales and Other income
Sales during the year ended March 31, 2023 were Rs. 28813 Lakhs as against Rs. 24264
Lakhs in the previous year, an increase of Rs. 4549 Lakhs in comparison over the previous
year. During the year Operating Income was Rs. 728 Lakhs and other income increased from
Rs. 27.84 Lakhs to Rs. 34.34 Lakhs.
(b) Expenditure
The total expenditure increased from Rs. 22892 Lakhs to Rs. 29969 Lakhs for the year
under review showing a increase of Rs. 7077 Lakhs over the previous financial year.
(c) Profit
There was a Net Loss of Rs. 361 Lakhs during the year under review.
(d)Significant changes (i.e. change of 25% or more as compared to the immediately
previous financial year) in key financial ratios -
Name of Ratio |
Numerator |
Denominator |
31st March 2023 |
31st March 2022 |
% changes over previous year |
Reasons for more than 25% changes |
Debt Service Coverage Ratio |
PAT+Depr.+In terest on TL |
Interest on TL+Repaym ent of TL |
0.68% |
1.04% |
(34.75%) |
See Note# |
Return on Equity Ratio |
PAT |
Average Equity |
(2.06%) |
8.80% |
(123.36%) |
See Note# |
Trade payables turnover ratio |
Total Purchases |
Average Trade Payables |
0.78 |
0.74 |
5.91% |
See Note# |
Net capital turnover ratio |
Total Revenue from Operation |
Net Working Capital |
(15.70%) |
(24.66%) |
(36.33%) |
See Note # |
Net profit ratio |
Net Profit ( PAT) |
Total Revenue from Operation |
(1.22%) |
5.68% |
(121.50%) |
See Note# |
Return on Capital employed |
Earnings Before Interest and Taxes (EBIT) |
Capital Employed = Tangible Net Worth + Total Debt +
Deferred Tax Liability |
4.67% |
11.34% |
(58.81%) |
See Note# |
Return on investment |
Income generated from invested funds |
Average of Investment & Fixed Deposits |
5.51% |
4.41% |
24.93% |
NA |
Note:-#
During the FY 2021-22, Company has started the production at Unit 3 at Dahej and has
transferred Capital working process to respective assets in the middle of the year and has
claimed depreciation thereon and during the FY 2022-23 company has claimed full year
depreciation. And also Increase in Interest repayment which was taken for Unit 3 at Dahej
and under utilisation of Production capacity of Unit-3 on account of teething problem.
Segment wise or Product wise performance
The Company is engaged in manufacturing and marketing of Dyes & Intermediates.
There is only one reportable segment
i.e. "Dyes & Dyes Intermediates". So the segment wise or product wise
performance report is not given in the report.
Outlook
The increased consumption of processed food products such as ready-to-eat snacks, soft
drinks, convenience foods, processed dairy products, and others has resulted in an
increase in the use of various food colours. The appeal of food products is as important
to the ingredients used in the production of the food products as it is to the consumers.
Synthetic food colors have been increasingly used than natural food colors by food
manufacturers to attain certain properties such as low cost, improved appearance, high
color intensity, more color stability and uniformity. Colorants are used in greater
quantities in soft and carbonated drinks than in food products. The rising consumption of
soft drinks in developing countries will allow for rapid growth in the food colors market
in the coming years.
The Indian and Global food colorants market is projected to witness a CAGR of 5 to 6%
over the forecast period (20222032).
Environmental & Hazardous Safety And Quality Assurance
In pursuit of excellence & meeting the changes that happen time to time & also
to fulfill the requirements received from customers, your Company continued to integrate
its ISO 9001:2015, ISO:14001, FSSC:22000, HACCP and other certification. Your Company is
committed to ensuring the highest standards of environment management and strict
compliance with regulatory requirements at all times. All the products manufactured by
Dynemic meet the regulatory requirement under FSSAI, EU, USFDA and also fulfill criteria
of Kosher & Halal, & WHO-GMP Certification.
Your company is committed to socio-environmental aspects and go beyond compliance norms
of competitive authorities. Internal Control Systems And its Adequacy
Your Company has a comprehensive system of internal controls to safeguard the Companys
assets against loss from unauthorized use and ensure proper authorization of financial
transactions. The Company has an exhaustive budgetary control system to monitor all
expenditures against approved budgets on an ongoing basis. The Company maintains a system
of internal controls designed to provide assurance regarding the effectiveness and
efficiency of operations, the reliability of financial controls and compliance with
applicable laws and regulations as applicable in the various jurisdictions in which the
Company operates.
Human Resources
Our employees are our most precious assets and we value their commitment. Relations
with the employees at all levels remained cordial during the year. Your Company has 490
permanent employees as on March 31, 2023.
Disclosure of Accounting Treatment
The Financial Statements are prepared in accordance with Indian Accounting Standards
(Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 and the Companies
(Indian Accounting Standards) (Amendment) Rules, 2016 notified under Section 133 of the
Companies Act, 2013 (the Act) and other relevant provisions of the Act. The previous
year figures have been regrouped/reclassified or restated, so as to make the figures
comparable with the figures of current year. The significant Accounting Policies which are
consistently applied have been set out in the Notes to the Financial Statements.
Cautionary Statement
Certain statements under "Management Discussion & Analysis" may be
forward looking statement within the meaning of applicable securities laws and
regulations. The forward looking statements are based on certain assumptions and
expectations of future events. Actual results may differ materially from those expressed
or implied from the statement since the Companys operations are influenced by many
external and internal factors beyond the control of the Company.
|
For and on Behalf of the Board of Directors |
Ahmedabad |
Bhagwandas K. Patel Dixitbhai B. Patel |
August 14, 2023 |
Managing Director Director |
+91-9892691696
