ishan dyes chemicals ltd Management discussions

A. INDUSTRY STRUCTURE AND DEVELOPMENT.

Your Companys current product basket includes Phthalocyanine Blue range of products like CPC Blue, Pigment Alpha Blues and Pigment Beta Blue. All these products are having wide applications for various industrial purposes with good export demands. The products are being widely used in paints, textiles, inks, plastics, rubber and other industries and shown strong demand for the products of the Company during last couple of years. However, the last financial year was challenging due to significant increase in the input cost besides rise in gas and coal prices, curtailment in the consumption, rising interest rates and inflationary pressures which has impacted the margins for the products of the Company and also reduced the turnover of the Company. Due to various international factors including high inflation, increasing interest rates, Russia Ukraine war and other factors the demand for the products of the Company remained subdue during the financial year end and also in the beginning of the current year.

The Company is working out plans to expand its market and its customer base as well as to introduce new grades of products to increase turnover and profitability. Also the Company has undertaken new project with significant amount of capital expenditure with an aim to diversify into bulk chemical intermediates so as to enhance its product range and increase in revenues and margins. The management expects to commence the operations of its new project by end of 2024.

The present situation of the industry in which your Company operates provide various challenging situation arising due to outbreak of Russia Ukraine war and high inflations besides skyrocketed commodity, gas and coal prices, global increasing interest rates, curtailment of industrial and consumer demands in developed nations, anticipated slowdown in Chinese economy and also anti-dumping duty by China. The business operations for the Company are likely to remain volatile and dynamic due to various constraints and reversionary trend during 2023-24. Also the new capacities coming up in India are likely to provide very competitive environment for the operations of the Company. However, systematic and proactive efforts of the management of your Company besides establishment of the new project will support the operations favourably with a minimum disruption. In spite of various challenges and effect of the inflations the operations of your Company has shown satisfactory performance for the year ended.

B. OPPORTUNITIES, THREATS, RISK AND CONCERNS.

Your Company has gained its position in the domestic as well as international markets due to its quality products and continuous improvements which in turn has helped us to develop and maintain long term relationship with the clients and further supported us to spot for the new opportunities. This systematic approach has delivered favorable results for the Company to grow at the steady rate by creating sustainable demand from satisfied customer base and repetitive orders from them and in turn increased profitability.

Besides that, going forward, your Company also considers challenges and threats mainly on account of fluctuation in the prices of various raw materials which are linked to world Petro products and commodity prices, foreign exchange fluctuations, environmental regulations, and general global demand situation. Availability of skilled manpower and contract work force would be another set of challenges to be managed carefully for the growth of the Company.

The broader trends in the economy are expected to have a direct impact on your Companys growth prospects as well. Inflation is expected to remain elevated for the foreseeable future, driven by war-induced commodity price volatility and overall margin and price pressures. In addition, the high rate on interest cycle at the global level by various Central Banks is likely to continue for next year also and will anticipate lowering the growth and create pressure on economies particularly those in emerging markets.

In these circumstances, the ability to successfully navigate cost pressures would have a significant bearing on the overall performance of your Company. Diminishing demand due to the economic circumstances could result in fundamental shifts in consumer behaviours and adversely impact the market for chemicals. Migration to value-for-money options could also lead to reduced growth and profitability for your Company.

A well-defined structure has been laid down to assess, monitor and mitigate risk associated with these areas on a continuous basis.

C. OUTLOOKS FOR 2023-24.

The current year is likely to remain very challenging and the management of the Company is putting all efforts to protect and increase the demand for the products of the Company. Also, various cost control measures at all level of operations have been designed and implemented. During the past couple of years, the Company had incurred significant amount of capital expenditure on modernization of plant and factory building which will result in overall efficiency improvement, cost savings, increased tonnage of production. All these factors will drive the growth during coming years for the benefits of the Company.

The year is likely to remain volatile for the business of the Company and the efforts of the management would be to protect the demand and enhance revenue with the aim of minimizing loss and post profits. Also barring unforeseen circumstances, the management estimates of commencing its new plant for chemical intermediates by end of FY 2023-24.

D. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY.

We have a strong integrated internal control system which is deemed to be adequate considering the nature and scale of our class of business.

E. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO THE OPERATIONAL PERFORMANCE.

During the year under review, your Company has achieved satisfactory financial results and details are provided in the Directors report. The Company was also successful in export business during the year ended by achieving export turnover of Rs. 3275.32 Lakhs.

F. MATERIAL DEVELOPMENTS ON HUMAN RESOURCES.

Human Resource programs and initiatives in the Company are aligned to meet the future business plans and needs. Your Company believes in investing in people to develop and expand their capability. The Company has been able to create a favorable work environment that motivates performance, customer focus and innovation. The Companys strategies are based, inter alia, on processes of continuous learning and improvements.

G. CAUTIONARY STATEMENT.

The Management Discussion & Analysis describing the Companys objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include the impact of Covid-19 Pandemic, Russia Ukraine war, global and domestic demand and supply, inflation trend, rising interest rates, input costs, availability of key raw materials, changes in government regulations, tax laws, economic developments, global outlook and demand for the industrial products and other factors such as litigation and industrial relations.

By order of the Board of Directors For Ishan Dyes & Chemicals Limited

SD/-

14thAugust 2023 Piyush N. Patel

Ahmedabad Chairman & Managing Director