This report includes discussion on the following matters within the
limits set by the Companys competitive position: GLOBAL DYNAMICS AND MACRO ECONOMIC
SITUATION
As the difficult times of COVID-19 pandemic are behind us and the world
has started to recover from its impact, the material cost, logistics cost and other
aspects of uncertainties are gradually coming under control. This is helping businesses
and economies to recover and slowly be back on track for growth.
The overall raw material availability, shipping cost & berth
availability have also improved. At the same time, the continuing war keeps uncertainties
at a very high level and various countries, especially, in Europe, have been negatively
impacted. While the chemical business in general continues to be reasonably stable (even
seeing growth in some cases), there has been significant negative impact on Agrochemicals
& Pharmaceutical segment in terms of competitive price and demand.
Due to continuing uncertainties, it is critical for the businesses to
remain vigilant and be agile in aligning their actions in consonance with unexpected
changes and development.
Your Company is proactively monitoring the global and local
developments that may affect its business operations adversely and also ensuring a very
robust risk management to counter such developments.
INDUSTRY STRUCTURE AND DEVELOPMENTS
Your Company manufactures products that finds applications in Polymers,
Paints & Pigments, Pharma, Agrochemicals, Personal Care Products etc. While, there has
been some negative impact on agrochemicals and pharma businesses, your Company has not
been adversely impacted as the quantum of this applications are not significant.
The polymer application continues to grow due to innovation in the end
product profile and usage. Overall the structure of user industry has not undergone any
major change in terms of demand, application profile or the potential in foreseeable
future so far as Companys products are concerned.
During the year, the raw material prices have gone down to reasonable
level and the logistics cost has also significantly reduced compared to COVID-19 period.
This has helped ensure the affordability of the end products. The logistics delays are
largely the things of the past and nowadays timely incoming and outgoing deliveries are
again becoming the norm.
As the Company does not have major business in agrochemicals
application, there has not been any major impact on the Companys volumes and
profitability due to current difficult market conditions. In case of pharma segment, the
overall demand has remained subdued and it is expected that there will not be any major
change in 2023-2024.
Your Company is facing tough competition in some of the products from
domestic manufacturers as well as international ones. This puts pressure and may reduce
profitability for such products. Generally, there is a monthly or quarterly negotiation
for pricing in some of these products. This situation does not allow strategic
relationships in such products.
OUTLOOK FOR THE INDUSTRY
While the long term outlook for Chemical Industries remain positive, in
the short run the macro level issues being faced by the world would continue to bring in
uncertainties. The very high in energy prices (which have somewhat moderated) are still
quite high and that has continued to create issues for many chemical manufacturers in
Europe. Some such manufacturers have curtailed their production which consequently has
affected various suppliers.
At present, the build-up of inventory and consequent demand levels are
expected to impact negatively in the short run. However, the overall long term demand
structure is expected to remain positive.
The overall market for Acid and Alkyl Chlorides has not been adversely
impacted despite significant challenges and it is expected that there would not be any
major impact in mid to long term. This is mainly due to the importance of the Chlorides as
a critical element in various applications like pharmaceuticals and polymers.
Considering the above, the overall long term outlook for Companys
products, remain positive. Your Company continues to develop new products and will keep on
adding them to its portfolio as the approval and validation happen.
SNAPSHOT OF PERFORMANCE
You would be happy to know that your Company has achieved highest ever
business volumes and profits during the year under review. This and previous years
performance have been helping the Company build a stronger financial profile and cash
flows which provide a stable and strong impetus for future growth.
POLYMERS AND SPECIALITY PLASTICS AND PERFORMANCE MATERIALS
The market for the Companys products that find application in
polymers and specialty plastics has been consistent. The market for such polymers and
plastics is expected to grow at a steady pace due to the potential increase in demand for
high strength, lightweight and durable materials in various industries like automotive,
defence, aircraft manufacturing, construction and firefighting.
The innovation in polymers and development of new types are also
contributing towards steady and consistent growth of the business. As one of the largest
producers of Acid Chlorides products that go as monomers into polymers, your Company is
ready to capture such growth. Your Company has built an excellent reputation in this
market as a quality supplier.
PHARMA
The demand for Companys products that are used in manufacturing
Pharmaceuticals has been steady. In this application segment, there are many manufacturers
and hence the competitions is quite intense. Due to long term relationships and very solid
reputation as a reliable and ESG focused supplier, your Company has been able to largely
maintain its market share.
The Company is developing more products that find application in
pharmaceuticals. Typically, commercialisation of such products take a log time because of
patent expiry timeline, testing and validation and ascertainment of the shelf life.
OTHER APPLICATIONS
Your Company has been gradually increasing the volumes of the products
that are used in manufacturing Organic Peroxides. Organic Peroxides are used in the
synthesis and modification of polymers that create cross linked polymer chain for e.g.
Elastomers.
The Company has been manufacturing Acid Chlorides that go into making
surfactants that go into making personal care products.
Both these application areas have good potential and your Company is
focused on gradually growing the business and market share in these areas.
AGROCHEMICALS
The Company has limited number of products that are used in
Agrochemicals manufacturing. Due to highly price sensitive nature of the market in this
segment, margins are constantly under pressure.
Since, the Company has a very limited presence in this segment, as a
strategy the Company would continue to maintain same presence while having a focus on
other application segments.
OPPORTUNITIES AND THREATS
Opportunities
While there is significant uncertainty in the markets due to current
global economic and political situation, your Company has good opportunities to grow in
various geographical markets and application segments by adding new products which include
Acid Chlorides, products based on such Acid Chlorides and other products.
As a regular practice, your Company constantly interacts with the
customers to understand their requirements and develop products that they need in short
term and long term.
The product development is a continuous process at the Company which
helps in ensuring that the opportunities are captured as they arise.
Threats
Besides the threats of competition, which are well managed through
excellent relationships and exemplary quality and delivery, the threat for the business of
your Company can be raw material shortages, raw material pricing, logistics issues etc.
Your Company has a well-designed process to proactively identify such
threats & take appropriate steps to overcome them.
Due to large volume of business having cost plus pricing, the threat of
increase in input cost would not significantly impact the profitability of the business.
RISKS AND CONCERNS
The current uncertain business environment and extreme difficulty in
projecting the future course of business and economy can pose a significant risk for the
industry as a whole and your Company.
The key to manage the business well in such a challenging environment
is to constantly monitor macro and micro level events and actions and be agile to adapt to
the emerging situation well in advance.
Your Company has a robust Risk Management mechanism that ensures that
timely and effective actions are undertaken to mitigate the risks and minimize the adverse
impact, if any.
While the Company has large volumes with a couple of major customers
and in few products, it is not a significant risk considering the stable and consistent
demand for the end products and the financial strength and market leadership of its key
customers with whom the Company enjoys an excellent relationship based on mutual trust and
commitment. However, the Company is mindful of the need for broadening the product list
and has added more regions, customers and products in the year under review.
If large economies go into recession, it will have significant impact
on global markets in all industries and can also adversely impact your Companys
business.
PREPARING FOR THE FUTURE
In order to have further major growth, your Company is looking at
various options in terms of future growth as at present there is a limited scope for such
growth at current production site. The product inquiry pipeline is quite good due to your
Companys reputation & trustworthiness. This would provide a basis for further
growth in future.
SEGMENT WISE PERFORMANCE
The Company has only one business segment, namely
"Chemicals". The information in respect of secondary segment as per the Indian
Accounting Standard (IAS-108) "Segment Reporting" issued by the Institute of
Chartered Accountants of India is given under Note No. 40 in the Notes forming part of the
Consolidated Financial Statements.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company maintains an adequate and effective internal control
system commensurate with its size and complexity. The internal control systems are
supplemented through an extensive internal audit programme and periodic review by
management.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE
The net sale of the Company for the year under review is Rs.82564.97
Lakhs as compared to Rs.59667.42 Lakhs in the previous year, an increase of 38.38%. Export
sales have increased to Rs.71567.11 Lakhs from Rs.45274.95 Lakhs in the previous year i.e.
an increase of 36.73%. Domestic sales have decreased to Rs.10997.86 Lakhs from Rs.14392.46
Lakhs in the previous year i.e. a decrease of 23.59%. The Company has achieved a net
profit of Rs.8348.02 Lakhs for the year 20222023 as against Rs.6540.42 lakhs in the
previous year, i.e. an increase of27.64%.
HUMAN RESOURCES
Human Resource Department plays essential role in managing, assisting
and dealing with employees related matters including various functions, such as policy
administration and framing, recruitment process, employment and labour laws, learning,
training and development.
The Company supports in fulfilling the aspirations of its employees and
nurture the aptitude and expertise of its workforce, providing them with various learning
opportunities by organizing Training and Development Programmes to enable them to upgrade
their skills which in turn helps in increasing their knowledge, capability and capacity to
achieve theirs and the Companys desired goals and targets.
Performance of the employees in the organization is monitored
frequently through an Online Performance Management Systems. Employees are regularly
timely feedbacks and suggestions which improves their productivity and performance.
Apart from this, various informative and interactive sessions are
arranged by the Company by hiring renowned faculties through which proper guidance and
awareness is created amongst the employees.
The Company also provides various other facilities like gymnasium,
table tennis court, meditation room etc., at its registered office for its employees
health and welfare security.
A special meeting of all the female employees is conducted every month
wherein all female employees share and discuss problems, if any, faced by them during the
course of their employment. Issues/grievances, discussed in the meeting are directly
presented to the Managing Director and accordingly actions are taken/suggested.
The Company has a support plan for widows of employees. A fund is being
maintained from which the widows are given monthly contribution that helps them in
managing their family financial requirements.
COMMUNITY ENGAGEMENT AND ENVIRONMENT MANAGEMENT
The Company strongly believes that organisations and businesses can
play a significant role in creating a sustainable and inclusive future for its
stakeholders. It believes in a cohesive, inclusive and integrated society in which all
individuals have access to opportunities for personal and economic growth. For several
decades, the Company has consistently demonstrated its concern for the community (both
internal and external) and a respect for its environment and the local ecology. It has
been associated with a scalable, sustainable and integrated development of communities in
and around its location at Ekalbara in Vadodara District.
Sustainability concerns are an integral part of the Companys
value system. Over the years, the Company has embedded these values into its operations in
a variety of ways, such as promoting rural development, undertaking and establishing
programmes and processes for greening and conservation and promotion of volunteerism
within the organization.
The Company is a member of Global Sustainability Platform
‘ECOVADIS and has achieved Silver Rating in Ecovadis Audit. The Company is also
a signatory to Responsible Care, an initiative of Indian Chemical Council and is process
of becoming a full-time member.
TRAINING PERFORMANCE
To develop the skills and instil behavioural and personality
development traits in all supervisory staff and managerial cadre, the Company organized a
number of training programmes during the year. These training programmes are identified
through the Performance Management System by synchronizing organizational needs with
individual needs.
In addition, the Company provides extensive safety training to
employees every year.
INDUSTRIAL RELATIONS
Industrial peace and harmony based on healthy employee relations have
continued throughout the year. The Management and the Union of employees enjoy a very
cordial and mutually respectful relationship. The grievances/issues raised by the
employees Union were given due attention. The issues brought up by them were settled
through regular meetings and interactions between the Management and the Union and action
as mutually agreed were taken to settle them.
DETAILS OF SIGNIFICANT CHANGES TN KEY FINANCIAL RATIOS
| Sr. No. Financial Ratio |
As at 31st March, 2023 |
As at 31st March, 2022 |
Explanation in case of change of 25% or more |
| 1. Debtors Turnover (no. of days) |
52.24 |
60.66 |
- |
| 2. Inventory Turnover (no. of days) |
28.84 |
40.46 |
Turnover has increased with same inventory
levels. |
| 3. Interest Coverage (no. of times) |
6.87 |
8.99 |
Increase in finance cost. |
| 4. Current Ratio (no. of times) |
1.73 |
1.47 |
- |
| 5. Debt Equity Ratio |
0.25:1 |
0.28:1 |
- |
| 6. Operating Profit Margin (%) |
19.96 |
20.78 |
- |
| 7. Net Profit Margin (%) |
10.10 |
10.92 |
- |
| 8. Return on Networth (%) |
20.68 |
19.67 |
- |
CAUTIONARY STATEMENT
Statements in this report on Management Discussion and Analysis
relating to the Companys objectives, projections, estimates, expectations or
prediction may be forward looking within the meaning of applicable securities laws and
regulations. These statements are based on certain assumptions and expectations of future
events. Actual results might differ materially from those expressed or implied depending
upon factors such as climatic conditions, global and domestic demand-supply conditions,
finished goods prices, raw materials cost and availability, foreign exchange market
movements, changes in Government regulations and tax structure, economic and political
developments within India and the countries with which the Company has business and other
factors such as litigation and industrial relations. The Company assumes no responsibility
in respect of forward-looking statements herein which may undergo changes in future on the
basis of subsequent developments, information or events.
To the Members of
Transpek Industry Limited
1. We, Bansi S. Mehta & Co, Chartered Accountants, the Statutory
Auditors of Transpek Industry Limited ("the Company"), have examined the
compliance of conditions of Corporate Governance, for the year ended March 31, 2023, as
stipulated in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46(2) and
paragraphs C, D and E of Schedule V of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 (collectively referred to as "SEBI Listing
Regulations").
Managements Responsibility
2. The compliance of conditions of Corporate Governance is the
responsibility of the Management. This responsibility includes the design, implementation
and maintenance of internal control and procedures (including the preparation and
maintenance of all relevant supporting records and documents) to ensure the compliance
with the conditions of the Corporate Governance stipulated in the SEBI Listing
Regulations.
Auditors Responsibility
3. Our responsibility is limited to examining the procedures and
implementation thereof, adopted by the Company for ensuring compliance with the conditions
of the Corporate Governance. It is neither an audit nor an expression of opinion on the
financial statements of the Company.
4. We have examined the books of account and other relevant records and
documents maintained by the Company for the purposes of providing reasonable assurance on
the compliance with Corporate Governance requirements by the Company.
5. We have carried out an examination in accordance with the Guidance
Note on Certification of Corporate Governance issued by the Institute of the Chartered
Accountants of India ("the ICAI"), the Standards on Auditing specified under
Section 143(10) of the Companies Act 2013, in so far as applicable for the purpose of this
certificate and as per the Guidance Note on Reports or Certificates for Special Purpose
issued by the ICAI which requires that we comply with the ethical requirements of the Code
of Ethics issued by the ICAI.
6. We have complied with the relevant applicable requirements of the
Standard on Quality Control (SQC) 1, Quality Control for Firms that Perform Audits and
Reviews of Historical Financial Information, and Other Assurance and Related Services
Engagements.
Opinion
7. Based on our examination of the relevant records and according to
the information and explanations provided to us and representations provided by the
management, we certify that the Company has complied with the conditions of Corporate
Governance as stipulated in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46
(2) and paragraphs C, D and E of Schedule V of the SEBI Listing Regulations during the
year ended March 31, 2023.
8. We state that such compliance is neither an assurance as to the
future viability of the Company nor the efficiency or effectiveness with which the
Management has conducted the affairs of the Company.
Restriction on use
9. The certificate is issued solely for the purpose of complying with
the aforesaid SEBI Listing Regulations and should not be used by any other person or for
any other purpose. Accordingly, we do not accept or assume any liability or any duty of
care or for any other purpose or to any other party to whom it is shown or into whose
hands it may come without our prior consent in writing. We have no responsibility to
update this Certificate for events and circumstances occurring after the date of this
Certificate.
For BANSI S. MEHTA & CO.
Chartered Accountants
FRN. 100991W
PARESH H. CLERK
Partner
Membership No. 36148
PLACE: Mumbai
DATE: May 18, 2023 UDIN: 23036148BGWKSC8560
+91-9892691696
