archit organosys ltd Management discussions

Industry Structure and Developments:

The Company is primarily engaged in the business of manufacturing and selling of various chemical products.The production of chemicals (which includes alkali chemicals, inorganic chemicals, organic chemicals, pesticides and insecticides, dyes and dyestuff) has increased at a Compound Annual Growth Rate (CAGR) continuously.The chemical industry of India is a major industry in the Indian economy and as of 2022, contributes 7% of the countrys Gross Domestic Product (GDP). Globally, India is the fourth-largest producer of agrochemicals after the United States, Japan and China. India accounts for 16-18% of the world production of dyestuffs and dye intermediates.

Chemicals and chemical products are of significant importance in the overall manufacturing sector due to their direct and indirect applications in most industrial segments such as food and beverages, textiles, leather, metal extraction and processing, petroleum refining, pharmaceuticals and rubber. As a result, manufacturing of chemicals is closely related to the manufacturing sectors IIP.

The Indian chemicals industry stood at US$ 178 billion in 2019 and is expected to reach US$ 304 billion by 2025 registering a CAGR of 9.3%. The demand for chemicals is expected to expand by 9% per annum by 2025. The chemical industry is expected to contribute US$ 383 billion to Indias GDP by 2030.

The Company has capacity to withstand in the market and face the stiff competition prevailing in the chemical business market.

Opportunities and Threats:

The Company is optimistic about its growth prospect in the future. The Company has been concentrating on building brand image in the market.

The Company is facing stiff competition from various chemical companies in domestic market. However, Company is well positioned to leverage the opportunities to manage the challenges that have arisen in domestic market.

Segment – wise or product – wise performance:

Segment Reporting as defined in Ind AS 108 is not applicable, since the Company operates in only one segment.

Outlook:

The Company expects to increase its market share in the existing market by various scheme, especially in pharma industry, expanding its geographical coverage in more regions and undertaking large job contracts. We are cautiously optimistic of our prospects and believe that the year will go a long way in stabilizing our growth path. The Company also puts more efforts in R & D activities, reduction in process cycles, and improvement in existing process etc. The company is also diversifying in to pharma line, by importing bulk drugs and marketing in local market. Our Company has a well-established market of its own. The Directors are actively connected with the customers. Major customers of the Company include several large Indian and International companies who are engaged in the Agrochemical Manufacturing Sector, Pharmaceuticals Manufacturing Sector and Cosmetics Manufacturing Sector.

Company has developed various product like MCA, SMCA, CAC and TCAC.Company is selling their products across Pan India as well as USA, Europe, Latin America, Other Asian Countries and South Africa.

Our products find their uses mainly in pharmaceutical Intermediates like Ibuprofen, Diclofenac, Aceclofenac, Oil field chemicals used for Oil Drilling mainly In CMC manufacturing, Agriculture field product majorly 2,4 D-Acid and many others, surfactants and cosmetic products as well as day to day personal use products, also used in Pigment.

Risk and Concerns:

Company is facing competition from various small-scale manufacturers in certain products. Manufacturing cost and administrative costs are also increasing day by day. But Company is equipped to meet the challenges by better marketing tactics and effective management of cost and expenses.

The Company is also required to follow and maintain the norms laid down by Gujarat Pollution Control Board (GPCB) for discharge of its effluents. The Company is adhering to the norms laid down by GPCB and has spent a large amount of funds on changing the old machinery and erecting new machines which adhere to the new stringent laws of GPCB.

Internal Control Systems and their adequacy:

The Company has an adequate system of Internal Control relating to purchase of stores, raw materials, plant & machineries, equipments & various components and for the sale of goods commensurate with the size and nature of business of the Company.

The system of Internal Control of the Company is adequate keeping in mind the size and complexity of your Companys business. Systems are regularly reviewed to ensure effectiveness.

Financial Performance:

Financial Performance with respect to Operational Performance is discussed in the main part of the Report. Operational expenditures have also increased because of the establishment of Bhavnagar Unit.

Details of Key Financial Ratios are given below:

Ratios	2022-23	2021-22	Change %	Details of significant changes
Debtors Turnover	3.74	5.21	-28.29	Refer Note No. 1
Inventory Turnover	25.96	28.81	-9.87	-
Interest Service Coverage Ratio	10.17	7.60	33.82	Refer Note No. 2
Current Ratio (In times)	1.20	1.14	5.45	-
Debt Equity Ratio (In Times)	0.51	0.65	-22.43	-
Operating Profit Margin %	14.59	10.15	43.74	Refer Note No. 3
Net Profit Margin %	9.45	6.03	56.63	Refer Note No. 4
Return on Net Worth %	20.09	17.81	12.80	Refer Note No. 5

Note:

1. Trade receivables turnover ratio decreased due to decrease in net sales and increase in trade receivables as compared to previous year.

2. Interest Service Coverage increase is attributable to higher other operating revenue and profit on sale of fixed assets during the year considered as an exceptional item.

3. Operating Profit margin ratio increase is attributable to higher other operating revenue and profit on sale of fixed assets during the year consider as an exceptional item.

4. Net profit ratio/margin increase is attributable to higher lifting of chlorine income and profit on sale of fixed assets during the year considered as an exceptional item.

5. Return on Net Worth increase is attributable to higher other operating revenue and profit on sale of fixed assets during the year consider as an exceptional item.

Material Developments in Human Resources / Industrial Relations:

The Chemical industryis knowledge driven, considering this aspect we continue to build our team with high quality talent. The Company is putting thrust on providing training both in-house and outside. The key personnel are technically qualified and fully trained to run chemical plants.

The Company has 52 employees as on closure of Financial Year,

The Company maintains cordial & harmonious relation with its employees.

Disclosure of Accounting Treatment:

In the preparation of financial statements, there is no treatment different from that prescribed in an Accounting Standard has been followed during financial year under review.

Place : Ahmedabad	BY ORDER OF THE BOARD
Date: 26th June, 2023	FOR ARCHIT ORGANOSYS LIMITED.
REGISTERED OFFICE
PLOT NO. 25/9-A, PHASE III,	(KANDARP K. AMIN)
G.I.D.C. NARODA,	Chairman & Whole Time Director
AHMEDABAD - 382 330	DIN: 00038972