AksharChem (India) Ltd Management Discussions.

AksharChem (India) Limited is one of the leading organic chemicals manufacturing company based in India with a focus on exports to over 20 countries. Our product offerings fall into two categories being dyes and pigments, within the organic chemical spectrum. We are specialised in manufacturing Vinyl Sulphone, H Acid and CPC Green which have multiple applications in textile, inks, rubber, plastics, paints and leather industries. We are one of the key manufacturers in the chemical markets for these products and have been recognised as Star Export House by the Government of India. We believe that we have built strong reputation in our markets, over 29 years of experience that has translated to a customer base. The Company has also put up its feet in the new market of Precipitated Silica which is going to be fully established in near future.


Our manufacturing facility is located in Gujarat, with installed manufacturing capacity of 11,400 MTPA, as of March 31, 2020. Our facility is fully integrated and equipped to manage products from the stage of chemical treatment to dispatch, lending us competitive advantages such as cost effectiveness and maintenance of quality standards. Our facility includes automated and cost-efficient systems and quality control and quality assurance laboratories, among others.

After completion of expansion the production of H-acid has started and the process has been normalized during the year 2019 and the production of H-Acid is now stabilized and the company has produced at full capacity. Precipitated Silica Project is under progress. We are at the stage of completion. The project is expected to complete in H2 of FY2021. The full benefit will be available from FY2021 -22 onwards.


The world scenario of chemical industry is changing very fast. The Market share of Western countries are declining because of higher cost mainly utility cost and labour cost, and currency appreciation. Emerging countries like India are capitalising on this, pushing the industry to the next stage through development in technology, innovation, and trade. This trend is expected to continue in the future.

2019-20 is a challenging year for us where we have witnessed a slowdown in the economy. We have witnessed a slowdown in consumption pattern across all industries specifically in textile industry who are main consumers of our products. Even during the slowdown, we have been able to maintain reasonable volumes of sale. Decrease in revenue was largely on back of softening in realization. In addition to the prices, the sales reduced due to reduction in demand from end user industry. The market for Dyes and Intermediates is looking subdued for near term and the Company expect gradual pick up in upcoming period.


China market remained core focus during the year 2019-20 as compliance to strict environment norms had witnessed either production restriction or permanent shutdown of several units in Pigment industry in China. Such development has eventually opened opportunity for Indian makers in China market and AksharChem too

have established its footprint with significant growth opportunity in future. Company has worked on several new grades of Pigment Green 7 which have been technically approved by our existing customers with opportunity to increase sales volume in the coming years Intensify focus on production, application profile research and development to explore possibility for new market in Coatings and Plastic industry.

Company is considering participation in trade exhibition, advertise in trade journals, improving packing and product safety as major tools for market and brand promotions. South East Asia is one of the fastest growing market and company is focusing more on strengthening its presence in the area to achieve growth in sales in tune of 7-10% annually. Company is also considering to expand market in domestic, focus on plastic industries which continue to grow 10% annually for past several years and offers significant opportunities for colorant producers. Company foresees good growth in certain market segments including plastic and packaging inks and succeeded to expand customer base in the industries.


The Profitability of the Company was affected mainly due to internal and external factors. During the year 2019-20, textile market was under tremendous pressure which resulted into ultimate decline of sales. Fluctuation in the exchange rate and in the crude oil affected the Company adversely.


The financial performance of the year 2019-20 in terms of revenues was impacted due to low volumes, which were a result of slowdown in the economy, which led to reduction in demand from end user industries. The volume was 8,771 MTPA for FY2019-20 and our current capacity utilization blended basis stands at 80%. Net revenue from operations for FY2019-20 is Rs. 26,014.50 Lakhs as compared to 32,288.38 Lakhs for FY2018-19, a decline of 19% is due to lower realisation in key products like Vinyl Sulphone and other dye intermediates as there is a lower demand in the textile industry. The pricing pressure is mainly coming from China which is a key supplier of dye-intermediate. The Chinese supply has risen as global slowdown led by trade war forced government to revive the chemical units and settle the environment issues. The pigment though was largely unaffected and the company continues to register healthy volume numbers supported by strong capacity utilization. Below are the Financial Figures forthe financial year 2019-20.

Particulars 2019-20 2018-19
Revenue from operations 26,014.50 32,288.38
Other Income 105.24 534.89
Total Income 26,119.74 32,823.27
Profit for the year before Finance Costs, Depreciation, Exceptional Items and Tax Expenses 2,694.50 3,983.54
Less: Finance Costs 110.76 91.61
Profit forthe year before Depreciation, Exceptional Items and Tax Expenses 2,583.74 3,891.93
Less: Depreciation 672.78 551.24
Profit forthe year before Exceptional Items and Tax Expenses 1,910.96 3,340.69
Add/(Less): Exceptional Items Nil Nil
Profit forthe year before Tax Expenses 1,910.96 3,340.69
Less:CurrentTax 499.73 738.62
Less: Deferred Tax (168.36) 343.12
Less: Adjustment of tax for earlieryears (Net) 7.32 Nil
Net Profitfortheyear 1,572.27 2,258.95

IMPORTANT RATIOS (Changes with respect to the Previous Year)

Ratio 2019-20 2018-19
Debtors Turnover Ratio (Days) 48 37
Inventory Turnover Ratio (Days) 97 59
Interest Coverage Ratio (Times) 30 98
Current Ratio 2.73 2.77
Debt Equity Ratio 0.05 0.04
Operating Margin Ratio (%) 20 19
Net Profit Margin PBT (%) 7 10
Return on Net Worth (%) 6 9


The certification of ISO 9001:2015 and IS014001:2015 is a testimony to the Companys commitment towards quality, safety and sustainable environment friendly approach. Further, The Company is having the certificate for registration of trademark from the Registrar of Trade Marks, Trade Marks Registry, Gujarat for its logo i.e. AksharChem and its product Pigment Green 7, i.e. Asaflow.


The Board has adopted policies and procedures to ensure the orderly and efficient conduct of its business, including but not limited to the prevention and detection of frauds and errors, the safeguarding of its assets, the accuracy and completeness of the accounting records, adherence to the companys policies, periodical review of financial performance of Company and review of the accounts every quarter by Statutory Auditors.


The Management of the Company is driven by the mission to help the employees realize their potential to develop, grow and achieve their purpose, to build the right culture and capabilities to enable us to delight our customers.

There is no change in the attrition rate. Further as the new project of Precipitated Silica is coming, the Company has started recruiting new employees. During the year under review Eighteen (18) employees were appointed by the Company. The Company has 155 employees as on year ended March 31,2020. The Board of Directors had admired the efforts put in by all employees to achieve good performance and looks forward to its continuation.