MANAGEMENT DISCUSSION AND ANALYSIS REPORT
This Report contains forward-looking statements that involve risks and uncertainties.
When used in this Report, the words anticipate, believe, estimate, expect,
intend, will and other similar expressions as they relate to the Company and/or its
Businesses are intended to identify such forward-looking statements. The Company
undertakes no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise. Actual results,
performances or achievements could differ materially from those expressed or implied in
such forwardlooking statements. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of their dates. This report should be read
in conjunction with the financial statements included and the notes.
INDUSTRY STRUCTURE AND DEVELOPMENT
1. GLOBAL SCENARIO
• Global Economic Scenario
Textile Auxiliaries Market was estimated at the global level to reach value of US$
9,992.4 Million in 2022. Sales prospects of textile auxiliaries are expected to witness a
steady growth rate of 5.2% and are expected to top a valuation of US$ 16,589.3 Million by
2032. The growing apparel and clothing industry, increasing usage of textiles auxiliaries
for various application, and shifting focus towards environmentally and eco friendly
products are bolstering the demand for textiles auxiliaries across the globe.
The global textile auxiliaries market forms around 38.1% of the global textile
chemicals market worth nearly US$ 24.7 billion in 2021. The global textile auxiliaries
market is representing impressive CAGR of 4.3% during the forecast period 2023 to 2032.
The global textile auxiliaries market size stood at USD 8.43 billion in 2022 and is
predicted to reach USD 12.52 billion by the end of 2032, representing an impressive CAGR
of 4.3% during the forecast period 2023 to 2032.
• Textile Auxiliaries Market Dynamics:
The usage of natural and environmentally safer textile auxiliaries is anticipated to
boost market growth due to strict governmental regulations implemented on the practice of
toxic chemicals in textiles. With textiles being progressively accepted for innumerable
applications such as apparel, home furnishings, and others there has been an outbreak of
activity in the bigger textile industry, and compliant growth in the textile auxiliaries
market too. Apparel endures to be a foremost application segment in the textile
auxiliaries marketplace on account of flourishing clothing commerce in both, established
and emerging nations across the world.
One of the major influences propelling the market is the vigorous growth of the apparel
market in emergent economies. Yet, pollution problems triggered by the finishing industry
and textile dyeing are expected to confine the growth of the market to some extent.
• Textile Auxiliaries Market Segment analysis:
Textile Auxiliaries Market was valued US$ 9.52 Bn. in 2020 and is expected to reach US$
12.70 Bn by 2027, at a CAGR of 4.2% during a forecast period. The report study has
analyzed revenue impact of covid-19 pandemic on the sales revenue of market leaders,
market followers and disrupters in the report and same is reflected in our analysis. The
Textile Auxiliaries are used for washing and dying of yarns and fabrics. The auxiliaries
are formulated in the forms of cationic, non-ionic, surfactants and amphoteric. Textile
chemicals are widely used by textile processing industry for dyeing and processing of
textiles to get the final end product with required characteristics.
• Textile Finishing Chemicals Market:
The global textile finishing chemicals market is estimated to reach USD 8.2 billion by
2024, at a CAGR of 5.5% during the forecast period. The major factors driving the market
include the growing demand of technical textiles and functional home textile finishes.
However, stringent environmental regulations regarding the disposal of textile finishing
effluents serve to be a major restraint for the market.
2. INDIAN ECONOMIC SCENARIO
• Chemicals market in India
Indias chemicals industry is de-licensed, except for few hazardous chemicals. In the
Indian chemical industry, alkali chemicals have the largest share with ~71.9% in the total
production from April to July 2021 (FY22); production of polymers accounts for ~59% of the
total production of basic key petrochemicals in 2019. The chemical industry is expected to
contribute US$ 300 billion to Indias GDP by 2025.
India holds a strong position in exports and imports of chemicals at a global level and
ranks 14th in exports and 8th in imports at global level (excluding pharmaceuticals). The
chemicals industry in India covers more than 80,000 commercial products with overall
market size standing at US$ 178 billion in 2018-19. The industry is expected to grow at
9.3% to reach US$ 304 billion by 2025 on the back of rising demands in the end-user
segments for specialty chemicals and petrochemicals. The specialty chemicals sector is
expected to reach US$ 40 billion by 2025.
Indian manufacturers have recorded a CAGR of 11% in revenue between FY15 and FY21,
increasing Indias share in the global specialty chemicals market to 4% from 3%, according
to the Crisil report. A revival in domestic demand and robust exports will spur a 50% YoY
increase in the capex of specialty chemicals manufacturers in FY22 to Rs. 6,000-6,200
crore (US$ 815-842 million). Revenue growth is likely to be 19-20% YoY in FY22, up from
9-10% in FY21, driven by recovery in domestic demand and higher realisations owing to
rising crude oil prices and better exports. In FY22, Indias dye exports totaled US$ 3.24
billion.
Chemical production reached 907,639 MT in August 2022, while petrochemical production
reached 1,727,019 MT. In August 2022, production levels of various chemicals were as
follows: Soda Ash: 267,416 MT, Caustic Soda: 283,279 MT, Liquid Chlorine: 203,195 MT,
Formaldehyde: 26,842 MT and Pesticides and Insecticides: 18,881 MT.
Despite decreasing demand for polymers due to COVID-19 pandemic, India is likely to
witness growth to ~32 million tonnes from 2020 to 2030.
The domestic chemicals sectors small and medium enterprises are expected to showcase
18-23% revenue growth in FY22, owing to an improvement in domestic demand and higher
realisation due to high prices of chemicals.
Supply disruption in China has caused the global end-user industries to diversify their
vendor base mainly towards Indian players. Closure of plants in the EU and China due to
increasing environmental concerns have favoured Indian manufacturers to invest further in
specialty chemicals. From April 2021 to February 2022, exports of organic & inorganic
chemicals increased 33.75% YoY to reach US$ 26.48 billion.
In the chemical sector, industrial licensing and 100% FDI, under the automatic route,
are allowed with exception to few hazardous chemicals. FDI inflows in the chemicals sector
(other than fertilisers) reached US$ 19.09 billion between April 2000 to December 2021.
Indian companies are witnessing interest from strategic investors led by Japan, Korea
and Thailand, as they seek to diversify supply chains from China
This includes large deals in FY 2020—KKRs $414 million acquisition of JB
Chemicals and Pharmaceuticals Ltd. and Carlyles $210 million acquisition of SeQuent
Scientific Ltd.
The Indian Government supports the Industry through research & development and
initiatives such as reducing basic customs duty on several imported products and promoting
the Make in India campaign.
A 2034 vision for the chemicals and petrochemicals sector has been set up by the
government to explore opportunities to improve domestic production, reduce imports and
attract investments in the sector. The government plans to implement production-link
incentive system with 10-20% output incentives for the agrochemical sector; to create an
end-to-end manufacturing ecosystem through the growth of clusters.
Lower per capita consumption and ease of doing business are promoted by the Indian
government; this reflects good investment opportunities with huge growth potential.
The government has established four petroleum, chemicals and petrochemical investment
regions (PCPIRs) as investment regions for petroleum, chemicals and petrochemicals, along
with associated services. Plastics Parks have been set up to facilitate technology
development and conducive ecosystem to produce specialised plastic products.
In December 2020, the PCPIR policy is being completely redesigned. Under the new PCPIR
Policy 2020-35, a combined investment of Rs. 10 lakh crore (US$ 142 billion) is targeted
by 2025, Rs. 15 lakh crore (US$ 213 billion) by 2030 and Rs. 20 lakh crore (US$ 284
billion) by 2035 in all PCPIRs across the country. The four PCPIRs are expected to
generate employment for ~33.83 lakh people. ~3.50 lakh persons have been employed in
direct and indirect activities related to PCPIRs by the end of 2020.
The government is planning to hold roadshows in eight overseas markets for the proposed
investors summit planned in January 2022, with focus on the petrochemicals sector, and is
eager to attract investors to its newly launched Petroleum, Chemicals and Petrochemicals
Investment Region (PCPIR) near the upcoming crude oil refinery in Pachpadra village (in
Barmer district, Rajasthan).
Under the Union Budget 2022-23 the government allocated Rs. 209 crores (US$ 27.43
million) to the Department of Chemicals and Petrochemicals. PLI schemes have been
introduced to promote Bulk Drug Parks, with a budget of Rs. 1,629 crores (US$ 213.81
million).
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.
Indian manufacturers have recorded a CAGR of 11% in revenue between FY15 and FY21,
increasing Indias share in the global specialty chemicals market to 4% from 3%, according
to the Crisil report. A revival in domestic demand and robust exports will spur a 50% YoY
increase in the CAPEX of specialty chemicals manufacturers in FY22 to Rs. 6,000-6,200
crore (US$ 815-842 million). Revenue growth is likely to be 19-20% YoY in FY22, up from
9-10% in FY21, driven by recovery in domestic demand and higher realisations owing to
rising crude oil prices and better exports.
Moreover, according to the CRISIL report, the specialty chemicals market in India would
grow faster than China, increasing its market share to 6% by 2026 from 3-4% in fiscal
2021. A shift in the global supply chain brought on by the China+1 strategy and a
resurgence in domestic end-user demand will fuel significant revenue growth of 18-20% in
2022 and 14-15% in 2023.
• India Textile Chemicals Market Report
India textile chemicals market stood at $ 1.5 billion in 2017 and is projected to grow
at a CAGR of around 10% to reach $ 2.6 billion by 2023, on the back of growing demand for
high-quality finished textile products.
Stringent environmental regulations imposed in China against pollution have forced
several Chinese textile dye manufacturers to discontinue their operations, thereby
resulting in opportunities for Indian players to further penetrate the international
market.
India is the second largest textile exporter in the world and the state government of
Maharashtra is taking initiatives to establish around nine textile parks, which is
expected to encourage domestic textile manufacturing, which in turn is anticipated to spur
the demand for textile chemicals in India in coming years.
• Chemical Finishing in Textile
Chemical finishing in textile plays an important role but the recent trend to
"High Tech" product adds a great popularity to it. With the increase of high
performance textiles, the popularity of chemical finishing has also increased. The
chemicals and auxiliaries that are utilized in a year is about one-tenth of the worlds
fiber producation. About 6 million tons of chemicals are consumed for 60 million tons of
fiber The consumption of chemicals in finishing covers 40% of total textile auxiliaries.
Within the textile finishing group, the product breakdown, based on TEGEWA, is given as a
survey in the following table. In terms of value, the repellent group is the leader with
the highest ratio of cost per amount. This reflects the relatively high cost of the
fluorochemical subgroup of repellents.
BUSINESS OVERVIEW
The Company is in trading & manufacturing of Chemicals, Dyes and Auxiliaries
products. Company produce finished Textile Auxiliaries & Chemicals by mixing basic
Textile Auxiliaries& Chemicals with our standardised formulation of chemicals with the
help of stirrers. The Company produce Foil Binders, Printing Inks and Zari Binders in our
Company with the variety of ranges and specialisation as per the demand of the client.
OPPORTUNITIES AND THREATS
SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE
OUR PRODUCT
Textile Auxiliaries
The Textile Auxiliaries are specially used for washing and dying of yarns and fabrics.
These auxiliaries are formulated for textile products in the forms of cationic, non-ionic,
surfactants and amphoteric. These auxiliaries find usage in textile industries for dyeing,
finishing, printing and sizing fabric applications. Textile auxiliaries chemicals,
commonly called as the dyeing auxiliaries are formulated chemical compounds which are used
in various operational processes in a textile. It is formulated chemicals used for,
dyeing, printing, and effectively completing the manufacturing process to get the desired
effect.
It is an essential product which is essential for a textile industry because it helps
in the preparation of the substrate, which is used for colouration. It is also used for
stabilization of the medium of application, plays a major role in increasing the fastness
property of dyeing and modification of the substrates.
We are manufacturing the Foil Binders of different specifications as per the
requirements of the processing houses. The product manufactured by us are innovative and
compete with the market on the price range. The quality of our product is accepted by the
processing houses and they got desired results by using our product satisfactorily, on
account of that, we have developed cordial relation with the customers and got repetitive
orders.
Value Added Printing Products
By looking at the revolution in the textile industries, in our Company, we manufacture
the Value Added Printing Products by way of dyes and chemical for the textile industry.
The Value Added Printing Products involves below mentioned products:
• Value Added Printing
• Glitter Powder
Our company was incorporated on December 10, 2021. In the period of 01.04.2022 to
31.03.2023, companys Revenue from Textile Chemicals & Auxiliaries is Rs. 11021.65
Lakhs.
OUTLOOK
The company was incorporated on 10th December, 2021 with an object to take
over the undergoing business of M/S Ravi Chem which is engaged trading activity of Dyes
and Intermediates. Further company got listed on BSE SME Stock Exchange and utilized the
Net Proceeds to acquired M/S Polychem Export, Partnership Firm which is engaged in trading
of Textile Dyes, Intermediaries, solvents, Resin, Chemicals and Auxiliaries. In the period
of 3 Months, company has earned Net profit of Rs 51.73 lakhs in FY 21-22. After that in FY
22-23 company has earned Net profit of Rs 273.89 lakhs.
The roadmap of the company for is as follows:
• Our growth will depend upon the improvement of the operational efficiencies. The
improvement of operational efficiency will enhance the profitability of the Company. We
intend on implementing various measures to improve our operational efficiencies, including
undertaking measures to reduce our consumption of disposable items and avoid wastage. We
intend to maximize our operational efficiency by achieving greater integration and by
implementing a stronger supply chain management.
• The Company is planning to expand its business activities in not only Gujarat
but also in other states of India.
RISK AND CONCERNS
• Constant advancements are required to stay combative in the market, especially
in terms of technology for improving product quality.
• Disruption in supply of materials from the major suppliers would adversely
affect operations.
• Our business involves handling and storage of hazardous chemicals, which are a
potential risk to the environment.
• Unable to retain or acquire competent and experienced employees may hamper the
Companys ability to pursue its growth strategies effectively.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has in place an adequate system of internal control commensurate with its
size and nature of its business. These have been designed to provide reasonable assurance
that all assets are safeguarded and protected against loss from unauthorized use or
disposition and that all transactions are authorized, recorded and reported correctly and
the business operations are conducted as per the described policies and procedures of the
Company. The Audit Committee and the Management have reviewed the adequacy of the internal
control systems and suitable steps are taken to improve the same.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
Since the company is incorporated on 10th December 2021, revenue from
operation for the period ended on 31st March, 2023 is Rs. 11021.65 lakhs.
EBITDA came in at around Rs. 703.85 Lakhs and Profit after Tax was Rs. 273.89 Lakhs. The
company expects to be in a good wicket in FY24 leaving all the disruptions behind. The
company was able to keep its operations afloat and has managed to remain focused on
network building and human resource development to sustain growth for the coming years.
To conserve resources for the Companys future growth plans, no dividend is being
recommended by the Directors for the year ended 31st March, 2023.
Company has recorded a total Sales of Rs 11021.65/- lakhs in current financial year
2022-23 as compared to Rs 1412.49/- in previous financial year 2021-22.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES
The company firmly believes that its human resources are the key enablers for the
growth of the company and are an important asset. Hence, the success of the company is
closely aligned to the goals of the human resources of the company. The company has over
122 employees, skilled and unskilled combined who are proficient and carry rich
experience. They form a perfect team, and are the true reason behind the improvement of
the performance of the Company. Taking this into account, the Company would continue to
invest in developing its human capital and establishing its brand on the market to attract
and retain the best talent.
DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIO
The Company was incorporated on December 10, 2021 therefore the ratios for financial
year ended on March 31, 2022 will be comparable with figures of financial year ended on
March 31, 2023.
• Interest Coverage Ratio
The interest coverage ratio measures the ability of a company to pay the interest on
its outstanding debt. This measurement is used by creditors, lenders, and investors to
determine the risk of lending funds to a company. The companys Interest Coverage ratio is
2.20% in FY 22-23 and 6.19 % in FY 2021-22.
• Current Ratio
The company is maintaining its Current Ratio at 3.26% in FY 22-23 which is intended to
make sure it has enough resources to meet its short-term obligations. That was 2.06 % in
FY 21-22.
• Debtors and Inventory Turnover Ratio
Debtors Turnover Ratio measures how many times a business can turn its accounts
receivable into cash during a period. The company is maintaining its Debtors Turnover
Ratio at 1.18%, indicating good liquidity in financial year 22-23 which was 0.16 %
in previous year 21-22.
The inventory turnover ratio is an important tool which measures how well a company
generates sales from its inventory. The company in FY 2023 has maintain a healthy
Inventory turnover ratio at 6.49% which was 0.53 % in previous FY 2022, which
suggests that the company is able to sell goods quickly and there is existence of demand
for the products and services provided by the company.
• Operating Profit Margin (%)
The operating margin measures how much profit a company makes on an amount of sales
after paying for variable costs of production, such as wages and raw materials, but before
paying interest or tax. It is calculated by dividing a companys operating income by its
net sales. The Company aims to maintain a stable Operating Margin Ratio; however, in
FY2023 Operating Profit Margin was 6.00%.
• Debt to Equity
The debt-to-equity (D/E) ratio is used to evaluate a companys financial leverage and
is calculated by dividing a companys total liabilities by its shareholder equity. The
FY23 Debt- to Equity ratio of the company is 0.33% which in FY22 was 1.14%.
• Net Profit Margin (%)
The Net profit margin is intended to be a measure overall success of a business. Net
Profit of company for the year ended on 31st March, 2023 is Rs. 273.89 Lakhs
which was Rs. 51.73 Lakhs in
FY 21-22. However, the company is expecting to be on more profitable terms in the
upcoming financial year. In FY 2023, Net Profit Margin of the company was 2.49% and In FY
2022 is 3.66%.
RETURN ON NET WORTH
The Company witnessed a significant Return on Equity at 4.63% in FY 22-23 which
was 0.92% in FY 21-22. The company expects to be on a good wicket in the coming Fiscal
Years.
| Place: Surat |
For and on behalf of the Board of Directors |
| Date: 16/08/2023 |
Bhatia Colour Chem Limited |
|
Sd/- |
Sd/- |
|
Rameshchand Chanduram Bhatia |
Bharat Brijlal Bhatia |
|
Whole-Time Director |
Chairman |
|
DIN:09431185 |
DIN:09095082 |
+91-9892691696
