INDUSTRY STRUCTURE AND DEVELOPMENTS:
MACRO ECONOMY AND INDUSTRY UPDATES:
The International Monetary Fund (IMF) lowered its global growth forecast by 0.8% to
3.6% as inflation continues to rise and supply chain continues to be in disarray. Ongoing
disruptions in Supply Chain and high energy cost continuing in 2022, inflation is expected
to remain elevated for an extended period of time till the supply-demand imbalances wane
and effects of monetary policy responses in major economies kick in. Towards the end of
FY22, the Ukraine war and subsequent sanctions that disrupted global commodity markets
and supply chains further aggravated the situation. Frequent lockdowns in Chinas key
manufacturing hubs had a far-reaching effect on the global supply chain.
After seeing of 7.4% during 2020-21 in the aftermath of nationwide lockdown triggered
by the onset of Covid-19 pandemic, Indian Economy witnessed return to growth registering
8.7% GDP growth during 2021-22 fuelled by the synchronised relief and revival measures
undertaken by the Central Government and the RBI. Abundant monsoon during 2021 also
contributed to the economic rebound. The Budget 2022-23 lays emphasis on building
foundation of countrys economic development for next 25 years (‘Amrit Kaal period)
up to 2047, centenary year of Indias Independence. A boost was provided for Indias
electric vehicle policy scheme for faster adoption and manufacturing of electric vehicle
in India. . Buoyed by consistent improvement in agriculture, flattening of Covid-19 curve
thanks to the efficient roll out of vaccine leading to revival of economic activity, World
Bank estimates Indian economy to grow by 8% in 2023. The Governments Production-Linked
Incentive (PLI) scheme is expected to generate investment / capex of 1.4 trillion rupees
in various sectors like automobiles and pharmaceuticals.
CHEMICAL INDUSTRY & FLUOROCHEMICALS
Chemical companies across the world continue to face challenges in a hypercompetitive
world. According to Excellence in Chemical Logistics report, there is significant deliver
value through supply chain particularly in the aftermath of worldwide lockdown due to
pandemic. Recent serious incidents in Petro-chemical and chemical processing industries
call for significant investments and spends safety and sustainability. (source:
manufacturingchemist.com & PWC Research publication) Global Fluorochemical market is
estimated around US$ 20 billion and expected to grow at a CAGR of 5.2% and reach USD 26
billion by 2026 with Asia Pacificregion expected to account for significant share of
growing industrialisation in emerging economies like China, India and South East Asian
countries will continue to increase demand for refrigerants. The rapidly growing demand of
air-conditioning and refrigeration systems in the domestic and industrial sectors,
increasing demand from applications like oil and gas, pharmaceuticals, automotive and
transport industries are expected to drive the growth for fluorochemicals. (sources:
globalnewswire, GM insights and Business Wire, Ken Research) Due to pandemic, the demand
for fluorochemical in health care sectors have increased during the year and with
significant spend in R&D, it is expected use of fluorine compound in the manufacture
of pharma products will increase in future However, the industry will face challenges like
increased regulatory restrictions from the Governments, environment scrutiny due to
growing environment concerns, etc., Auto industry is expected to make a strong comeback
worldwide with continued emphasis on launch of electric vehicles which will further
strengthen the demand of production of aluminium and electric components (sources:
100ppi.com; Business Wire) In India the market growth of fluorochemicals is driven by
downstream sectors like Automobile, Air Conditioning, Refrigeration, Construction, Cold
Storage and Pharma / Life Science segments. Life Science segment has emerged one of the
key drivers over the years. India is expected to become 4th largest chemical producer in
the world by 2030, benefitting rising export opportunities, stability of prices, faster
end user industry growth and low penetration of specialty chemicals. (source: economic
times, economist)
BUSINESS PERFORMANCE
| Particulars |
|
|
|
Financial Year 2021 - 22 |
Financial Year 2020 – 21 |
| Sales |
320.17 |
147.90 |
| Other Income (including operating income) |
3.40 |
1.37 |
| Operating Expenditure |
245.01 |
115.22 |
| Earnings before Depreciation, Finance Cost and Taxation (EBIDTA) |
78.56 |
34.05 |
| Finance Cost |
1.02 |
0.52 |
| Depreciation/Impairment/Amortisation |
5.60 |
8.47 |
| Profit before Tax (PBT) |
71.94 |
25.06 |
| Current Tax / Deferred Tax |
18.66 |
7.59 |
| Profit after Tax (PAT) |
53.28 |
17.47 |
| Other Comprehensive Income / (Loss) |
0.66 |
0.57 |
| Total Comprehensive Income |
53.94 |
18.04 |
During the year under review, your Company undertook various initiatives to support the
country in its fight against pandemic. Your Company was able to seize the opportunity that
emerge and cater to the demand of the various customers and stakeholders. All this has
resulted in your Company emerging stronger and register good performance despite
disruptions due to second wave of Covid-19 during the first quarter. Your Company had
registered its highest ever Turnover, EBIDTA and Net Profit on the back of strong
performance of its Value Added Products (VAP) and other key products Hydrofluoric Acid and
Sulphuric Acid and significant its operation parameters like consumption norms through
sustained innovation post commissioning of new kiln at the fag- end of the previous
financial Sales and Other Income had more than doubled to 323.58 Crores from 149.26 Crores
during the previous financial year. Higher realization of Sulphuric Acid, higher volume
and realization of HF & Value-Added Products (VAP) and higher sale of AlF3 were the
key contributors for the significant along with the ongoing initiatives taken by the
company as detailed below during the last few years.
Recalibrated business strategy by diversifying to niche product & segments.
Continuous focus on downstream Value-Added Products (VAP). Strongly positioned in a
niche segment of DHF.
• Continuous focus on in-house process optimization through innovation and cost
reduction.
Man power optimization.
Expanding vendor & geography base of Fluorspar to avoid dependency on China.
Long term tie-up with a key refinery for supply of Molten Sulphur with a win-win deal.
Negotiation with key raw material suppliers for reduction in prices compared to
international price.
Thrust on Working Capital and Cash Management. Your Company is closely monitoring the
impact of the ongoing disruptions in the global supply chain due to the Ukraine war and is
taking proactive measures to minimise the risks with its continued focus on operational
& cost control.
Your Board of Directors is optimistic about the continued improvement in the
operational performance of the company in the coming years.
SEGMENT–WISE OR PRODUCT-WISE PERFORMANCE:
The Company operates in a single segment i.e., Fluro-chemicals in India and all other
activities revolve around the same. Hence, segment-wise or product-wise performance is not
applicable.
SALES VOLUME AND REVENUE:
Sales Turnover had more than doubled to 320.17 Crores from 147.90 Crores during the
previous financialyear. Higher realization of Sulphuric Acid, higher volume and
realization of HF & Value-Added Products (VAP) and higher sale of AlF3 were the key
contributors for the significant increase to total turnover was at 21% thanks to the
continued focus on improving the VAP performance.
Export turnover was higher by 40% at 15.63 crores against 11.17 crores in the
previous year. improvements in
EARNINGS BEFORE DEPRECIATION, FINANCE COST AND TAXATION (EBIDTA):
Earnings before Depreciation, Finance Cost and Taxation had increased significantly at
78.56 Crores during the year, compared to 34.05 Crores in the corresponding period of the
previous year. Factors contributing to the significant improvement in the profitability
have been preceding paragraphs. increase
DEPRECIATION / AMORTISATION:
Depreciation during the year was 5.60 Crores as against 8.47 Crores in the previous
year. During the previous year the Company had reassessed the useful life of some of its
main assets and made additional depreciation provision of 3.36 Crores.
FINANCE COST:
Finance cost, including forex cover charges on foreign exchange hedging had increased
to 1.02 Crores from 0.52 Crores in the previous year due to increase in level of business.
With continued thrust on effective working capital and cash management, the Companys cash
surplus for future growth had significantly increased to 53.83 Crores during the year from
27.72 Crores during the previous year.
FIXED DEPOSITS:
The Company does not accept any fixed deposits from the public falling under Section 73
of the Companies Act, 2013 ("the Act") and the Companies (Acceptance of
Deposits) Rules, 2014.
CREDIT RATING:
On the back of strong performance by the Company despite pandemic supported by healthy
Balance Sheet, ICRA and ACUITE Ratings have upgraded the credit rating to ICRA A- (Stable)
and ACUITE A- (Stable) for Long Term from ICRA BBB+ (Stable) and ACUITE BBB+ (Stable) and
ICRA A2+ and ACUITE A2+ for Short Term from ICRA A2 and ACUITE A2 respectively. cash
management
INCOME TAX
In line with substantial increase in profitability, the Company has accounted for tax
provision of 19.42 crores (previous year 8.66). During the year the Company has reversed
Deferred Tax provision of 0.76 crores (previous year provision of 1.07 crores).
OTHER COMPREHENSIVE INCOME / (EXPENSES)
Other Comprehensive Income / (Expenses) was 0.66 crores during the year against 0.57
crores during previous year.
Please refer Note No. 27 of the Financial Statement for further details.
TOTAL COMPREHENSIVE INCOME
Total comprehensive Income for the year was higher at 53.94 crores during the year
against 18.04 crores during previous year.
OTHER EQUITY
With the help of good performance during the year, the Companys Other Equity had
increased to 123.72 crores from 73.26 crores at the end of previous financial year. The
Company had paid interim dividend of 3.49 Crores during the year. Please refer to the
Statement of Change in Equity and Note No. 13 of the Financial Statement for further
details.
CASH FROM OPERATIONS
Cash from operations was higher at 45.17 crores compared to 37.21 crores during
previous year due to improved profitability.
BORROWINGS AND NET DEBT:
The Company had achieved debt free status during the financial year 2019-20 and
remained cash surplus during the financial year. Cash surplus had increased to 53.83
crores from 27.72 crores during the previous year.
KEY FINANCIAL RATIOS
(i) Net Debt to EBITDA: The Company achieved debt free statussincefinancial 2019-20.
Hence this ratio is not applicable for both the years.
(ii) Debtors Turnover (Days): The Debtors Turnover Days at the end of 31st March, 2022
was 23 days compared to 42 days at the end of 31st March, 2021. This shows the Companys
ability to effectively manage its credit with customers. The Debtor Turnover (days) is
calculated as Average Debtors/ Sales Turnover multiplied by 365 days.
(iii) Inventory Turnover (Days): The Inventory Turnover Days at the end of 31st March,
2022 was at 69 days versus 108 days at the end of 31st March, 2021. This shows how the
Company managed its inventory levels during the year. The Inventory (days) is calculated
as Average Inventory / Cost of Goods Sold multiplied by 365 days.
(iv) Interest Coverage Ratio: This ratio is not applicable for both the years as the
Company achieved debt free status for the past 3 years This ratio reflects the Companys
ability and strength to meet its interest obligations. (v) Current Ratio: The
Current/Liquidity Ratio as on 31st March, 2022 stands at 2.85x versus 2.35x at the end of
31st March, 2021 reflecting orsolvency position compared to the last year.
(vi) Debt to Equity Ratio: This ratio is not applicable for both the years as the
Company achieved debt free status for the past 3 years. This reflects meet its current
short-term obligations.
(vii) Return on Net Worth (RONW): The Return on Net Worth as on 31st March, 2022 stands
at 49.13% compared to 23.54% on 31st March, 2021. This was significantly higher compared
to the previous year due to higher profitability 22. This is Calculated based on
PAT/Average Net Worth.
(viii) Operating Margins: The Operating margins in FY2021-22 stands at 22.49% versus
16.96% in FY2020-21 higher operating profit in FY2021-22 compared to the previous year.
(Operating Margin = Operating Profit / Net Sales)
(ix) Net Profit Margins: The Net profit margins in FY2021-22 stands at 16.64% versus
11.82% in FY2020-21. This was higher on account of higher profitsrecorded in FY2021-22.
(Net Profit Margin = Net Profit/Net Sales).
CHANGE IN MANAGEMENT CONTROL AND INTEGRATION OF FUNCTIONS WITH M/S ANUPAM RASAYAN
As disclosed in the Boards Report and Note No.28.2 of the Financial Statements, on
11th March 2022, M/s Anupam Rasayan India Limited (ARIL) acquired 24,89,802 shares held by
Aditya Birla Group (ABG) and obtained joint control over the company along with Tamil Nadu
Industrial Development Corporation Limited (TIDCO). As per the provisions of the original
Joint Venture Agreement (JV) signed by ABG and TIDCO, ARIL obtained the Management Control
of the Company. The Companys integration with ARIL is progressing smooth and as per
schedule with successful integration of key functions like Finance, IT & HR. The
acquisition provides synergy to ARIL and ARIL is committed to grow the Companys business
further in the coming years.
RISK MANAGEMENT AND INTERNAL CONTROL SYSTEM:
Risk is an integral & unavoidable component of business. Given the challenging and
dynamic environment in which the Company operates, your Company is committed to
proactively manage risk in accomplishing its vision and goals. Though risk cannot be
eliminated, an effective risk management program ensures that risks are reduced, avoided,
mitigated or shared. In line with this, your Company has constituted a Risk Management
Committee consisting of its senior employees. The company defined the laid down the
procedure to assess the risk and minimization procedures. The risk management includes
identifying types of risks and its assessment, risk handling and monitoring and reporting.
Needless to mention, with the challenges presented by the recent outbreak of Ukraine War
leading to disruptions in the global Supply Chain the Company has identified business risk
associated with the supply chain imbalances and devised mitigation plan to manage the
risk.
The details of risk management process, assessment and identification and mitigation
plan prepared in line with The Companies Act, 2013, were reviewed by the Audit Committee
of the Company on a quarterly basis.
The Internal control systems of the Company comprising of policies and procedures
adopted to ensure the orderly and efficient conduct of its business, including adherence
to the Companys Policies, the safeguarding of its assets, the accuracy and completeness
of the accounting records and the timely preparation of reliable financial
OPERATIONAL RISK:
(a) Your Companys most significant US Dollar, since the prices of key raw materials
Fluorspar, Sulphur and Potassium Carbonate are impacted by the movement of US Dollar.
Fluorspar and Potassium Carbonate are imported. High dependence on China for Fluorspar
which is promoting export of more value-added products puts pressure on the availability
and margins
Mitigation: The Company has expanded vendor base of Chinese origin and developed
sources from other geographies, cemented relationship with these sources and successfully
avoided dependency on Chinese origin. The company is continuously exploring other options
to sustain this.
(b) Volatility in HF Demand for conventional application and downward trend in end
users segment.
Mitigation: Focus on specialty grade HF and Value-Added Products (VAPs). Retain
existing customers through competitive pricing. Expand market of HF in Asia Pacific
markets and increase export volumes. Continue thrust on expanding VAP share.
(c) Drop in Sulphuric Acid price and volatility in Sulphur price
Mitigation: Work on alternate downstream products. Reduce cost of production
through process improvement and innovation.
STATUTORY COMPLIANCE RISK:
This comprises the risk if your Company is found to have inadvertently violated laws
covering business conduct. The countrys regulatory framework is ever-evolving and the
risk of non-compliance and penalties may increase for the Company leading to financial and
reputational risks.
Mitigation: A comprehensive risk-based compliance programme including training and
adherence to the Code of Conduct is institutionalized. Your Company encourages its
employees to rely & seek professional guidance & opinion to discuss the impact of
any changes in laws to ensure total compliance. Periodic reporting to the internal
committees on any legal aspects and quarterly reporting to the Board on Statutory
compliance ensures effectiveness of the programme.
ENVIRONMENT:
This comprises risks associated with environmental pollution through the discharge of
waste and emissions which may cause damage to the local environment.
Mitigation: As enumerated in Boards Report your Company has undertaken various
initiatives towards de-risk and environment protection. Your Company ensures stringent
implementation of Safety and Environment Protection measures and the Board has mandated
accordingly. Your Company has also adopted measures such as rainwater harvesting and water
recharge that help it overcome challenges related to water availability. Your company
continue to maintain green belt within and outside the . factory premises.
CLIMATE & SUSTAINABILITY: exposurerelatestothe
This comprises sustainability related climate change risks.
Mitigation: Opportunities are assessed in line with Companys risk management
policy and have been integrated in its multi-disciplinary Risk Management Framework
classified as energy, emissions and water besides other issues. Prioritized climate risks
are managed through internal committees and with the help of Sustainability Cell of Aditya
Birla Group.
ECONOMIC RISK:
Economic slowdown particularly due to COVID 19 pandemic and disruption in global supply
chain due to prolonged Ukraine War may affect the performance of the company resulting in
downward trend in sales volume, profitability and growth.
Mitigation: The Company is continuously focussing on expanding and increasing share
of its VAPs in line with market demand. Company also has made a comprehensive Business
Continuity Plan (BCP) for the next financial year which focuses on cost and cash
optimization. The BCP is being monitored continuously as the situation evolves.
ATTRITION RISK:
Employee attrition may affect the day-to-day operations / performance of the Company.
Mitigation: To retain talent, the Company has instituted suitable reward mechanism
and provide additional specialised training to its employees. New ideas / kaizens given by
the employees are well appreciated and suitably rewarded.
FOREIGN EXCHANGE RISK:
The prices of key of raw materials are influenced significantly by fluctuating global
economic impacts the Companys margins and cash flows.
Mitigation: The Company has a well-defined Hedging Policy and hedges its net
foreign exchange risk adequately as per the policy.
CREDIT RISK:
Excess credit facility to customers and higher inventory may affect the Companys
overall performance. Mitigation: By reviewing the credit policy and credit limits
of customers, the credit limit facility is being continuously managed prudently. Inventory
and advances are continuously monitored and maintained at the desired level balancing the
dynamics of price movements and supply chain situation. Collections from customers are
being monitored everyday by the senior management.
INFORMATION TECHNOLOGY RISKS:
This comprises risks related to Information Technology (IT) systems, data integrity and
physical assets. Your Company deploys IT systems including ERP to support is business
processes, communications and operations. Risks could primarily arise from downtime,
manipulation of information, date integrity and security.
Mitigation: Your Company uses backup procedures and stores information at
difference locations. Periodical upgradation of systems with the latest security standards
are ensured. For critical applications, security policies and procedures are updated
periodically and users are educated on adherence to the policies to eliminate data
leakages.
PANDEMIC LINKED DISRUPTION IN GLOBAL MARKETS:
COVID-19 pandemic has caused huge impact on peoples lives, families and communities.
The pandemic presents a serious threat, impacting organisations in numerous ways,
potentially limiting options around recovery particularly when other companies are also
affected or challenged by logistical constraints. There are several associated risks like
operations risks, supply chain risks, health & safety, etc.,
Mitigation: Your Company has assessed this risk as part of risk identification and
mitigation process and is considering the impact thereof in all its business decisions.
Your Company is also continuously updating and expanding its Crisis Management and
Business Continuity Plan (BCP) with strong emphasis focussed on employees, customers,
supply chain contacts, other stakeholders and business assets.
GEOPOLITICAL TENSION
The rising fuel prices in the wake of geopolitical tensions have had an adverse impact
on the cost of manufacturing due to increased raw material, fuel and energy costs. For
your Companys business, raw material, fuel and logistics form significant share of the
total cost.
Mitigation: Your Company continuously make efforts to reduce the impact caused by
disruptions due to geopolitical tension by passing through the increase in main raw
materials to the customers, improving the operation parameter and sustained energy saving
schemes.
HUMAN CAPITAL
Amidst the raging pandemic, your Companys human resources has been the backbone for
carrying on business through the period of disruption and also in ensuring the safety of
the workforce & the community around its locations. Given the unprecedented situation,
the entire Organization was in a state of readiness to operate remotely from home and all
operations were carried out from stop to restart rapidly and safely. The use of virtual
medium was maximized through close online networking of teams and connect with trade
partners, customers and suppliers. The Company continued to lay emphasis on development of
talent within and strengthening the core areas of expertise by enabling continuous
learning, leveraging the digital platform. Formal digital platforms were launched to
enable sharing of ideas and best practices across work levels which had helped to drive
continuous improvement and innovation. Employees are proud to be part of your Company and
are engaged to deliver high performance. Employees have also played voluntary role in
community & social works. Your Companys Employee Engagement Score reflects engagement
and pride in being part of the organization. Your Companys employees take pride in
actively participating in all the competitions organized by the Company to improve
employee productivity and morale.
The Company continues to maintain a cordial and harmonious industrial relationship with
its employees. The Company has 136 permanent employees as on 31st March, 2022.
+91-9892691696
