Chemplast Sanmar Management Discussions

Economic Overview

Over the past couple of years, the world economy has faced a number of overlapping crises, including the recent liquidity issues stemming from a series of global banking crises. While the impact appears to have been contained, these uncertainties continue to undermine the confidence among consumers and businesses to spend, therefore impacting economic growth.

Despite these challenges, the Indian economy has undergone a remarkable transformation and the country has positioned itself as a global economic powerhouse. Indias economic growth is driven by a surge in domestic consumption, rise in capital expenditure, foreign investments, supportive Government policies, a thriving manufacturing sector, and impressive export performance. According to the World Bank, in 2022 India emerged as one of the fastest-growing economies in the world and currently ranks as the fifth-largest economy, with a Gross Domestic Product of around USD 3.5 Trillion as of March 2023. Although headline inflation is elevated, according to the World Bank and the Reserve Bank of India (RBI), it is projected to ease to an average of 5.2% in 2023-24 from around 6.6% in 2022-23, amid easing global commodity prices and moderation in domestic demand. The RBI has withdrawn accommodative measures to rein in inflation by hiking the policy interest rate. Indias financial sector also remains strong, buoyed by improvements in asset quality and robust private-sector credit growth.


Real GDP Growth


2022 2023 2024


6.8% 5.9% 7.3%

According to the April 2023 World Economic Outlook published by the International Monetary Fund (IMF), the Indian GDP is expected to grow at 6.8% in 2024. This growth is expected to be supported by numerous initiatives such as Atmanirbhar Bharat, Make in India, Digital India, Skill India, and Startup India, launched by the Government to promote economic growth, self-reliance and development in the country.

To further promote growth and development, the Indian Government is focussing on increasing capital expenditure. The Union Budget for 2023-24 has prioritised four key areas, namely Gati Shakti, Inclusive Development, Productivity Enhancement, and Financing of Investment. These initiatives aim to improve the countrys infrastructure, enhance productivity, and provide accessible and sustainable growth for all. Moreover, the capital expenditure was increased by 33%, amounting to Rs 10 Lakh Crores and constituting

3.3% of GDP. This substantial investment in infrastructure is expected to have a significant positive impact on the economy and drive sustainable growth. In addition to infrastructure, the Governments focus on green growth, and financial sector reforms demonstrates its commitment to strengthening Indias self-reliant growth engine for the future. With these measures in place, the Indian economy is well-positioned to attract more investments and create new job opportunities, which will further drive growth and development in the country.

In April 2023, the RBI paused the trend of raising the key benchmark policy rate after six consecutive increases, thereby retaining the benchmark interest rate at 6.5%.

This move was intended to offer greater reassurance and leeway to the market, while aiding in the stabilisation of the economy by mitigating inflationary tensions. However, factors like slower consumption growth, challenging external conditions, rising borrowing costs and sluggish income growth are expected to weigh on private consumption, and could constrain the overall growth and development of the Indian economy.

(Source: World Economic Outlook, April 2023: A Rocky Recovery ( )

Company Overview

Chemplast Sanmar Limited (referred to as CSL or Chemplast or the Company) is a leading Speciality chemicals manufacturer in India with a focus on Speciality

Paste PVC resin and custom manufacturing of starting materials and intermediates for pharmaceutical, agro-chemical and fine chemicals sectors. CSL is the largest manufacturer of Speciality Paste PVC resin in India. In addition, CSL is also the fourth-largest manufacturer of Caustic Soda and the largest manufacturer of Hydrogen Peroxide in South India and the oldest manufacturer of chloromethanes in India. Further, the Companys wholly-owned subsidiary, Chemplast Cuddalore Vinyls Limited (CCVL), is the second-largest manufacturer of Suspension PVC resin in India and the largest manufacturer in South India.

CSL has a strong focus on sustainability and safety. The manufacturing facilities are certified ISO 9001:2015 for quality management systems and ISO 45001:2018 for Occupational, Health and Safety Management Systems. In addition, CSL and CCVL have received the ‘Responsible Care certification for maintaining best practices in operations.

The coastal units at Karaikal (CSL) and Cuddalore (CCVL) have desalination units which ensure that the water required for operations is drawn only from the sea and no groundwater is drawn. The Company has also adopted zero liquid discharge at all the manufacturing facilities, wherein no treated effluent from manufacturing operations is discharged onto the land or into any water body. CSL has also voluntarily conducted yearly sustainability audits for all the manufacturing facilities since 2010-2011.

Human Resource

CSL recognises that its employees are a key asset and that investing in them will enable it to create value for all its stakeholders. As the Company expands and executes new projects, it places significant successfully attracting professional talent to fill positions at various levels. The Management of CSL is committed to creating a supportive and nurturing work environment through various employee engagement programmes, enabling employees to excel in their respective fields. CSL also engages a diverse workforce, as its human resources department organises training and development programmes to enhance skills and knowledge. As of March 31, 2023, the Company had a total of 1219 permanent employees.


Spe ciality Paste PVC Resin

Poly Vinyl Chloride (PVC) resins are derived from its monomer, Vinyl Chloride Monomer (VCM). VCM is polymerised to obtain PVC.

Essentially, PVC resins can be classified into: (a) Sus pension resin (b) Spe ciality Paste resin, also called dispersion resin or micro-suspension resin; and

(c) Cop olymer resin.

Speciality Paste PVC resin is used to make flexible products (such as artificial leather, gloves, tarpaulins, conveyor belts and coated fabrics). Suspension PVC is largely a basic product while Speciality Paste PVC resin is a niche product. In India, CSL and Finolex Industries Limited are the only producers of Speciality Paste PVC resin.

CSL is the largest manufacturer of Speciality Paste PVC resin in India, with an installed production capacity of 66 kt per annum (ktpa) as of March 31, 2023. The manufacturing facility is located at Mettur, Tamil Nadu. CSL is also expanding the Speciality Paste PVC resin capacity by 41 ktpa at Cuddalore, Tamil Nadu, which will further cement its leadership position in India.

According to CRISIL Research, the market for Speciality Paste PVC resin in India was around 143kt in 2019-20. This is forecasted to grow to around 180ktpa by 2024-25.. As against this, current domestic production is only around 80ktpa, thus resulting in a gap of over 60ktpa which is being met through imports. This gap is expected to increase to around 100ktpa by 2024-25.

2022-23 Review

The domestic demand for Speciality Paste PVC resin in 2022-23 registered a strong growth of 17%, reaching 163kt, compared to 139kt in 2021-22. The recovery in auto sector and foot wear segment fuelled the growth in demand for Replace with Speciality Paste PVC resin In the recent past, downstream processing industry in the NCR region used to face curtailed operations in

Q3 the spike in air pollution around this time used to trigger the regulatory authorities into curtailing the use of coal. However, this year, with many of the leather cloth units shifting to gas based fuel, operations could continue mostly unhindered.

In contrast to India, the demand in US and Europe was weak due to high inflationary pressures and rising interest rates while Chinese demand was also pretty low due to frequent lock downs. Though China lifted Covid-19 pandemic lock down restrictions post lunar holidays, the demand was sluggish resulting in China exporting more and more material to India. In this scenario, from the middle of 2022-23, international prices started falling at regular intervals, thus pushing processers to buying on just in time basis. The price reduction was also facilitated by ocean freight rates reverting to near earlier levels. Prices fell by 37% during or the course of the year.

The Company recorded the highest ever production and sale of speciality Paste PVC resin during FY 23.


The demand is expected to be robust during FY 2023-24. Post-Covid-19, the spending on travel and foot wear segment is certainly on an increasing trend. Use of light weight luggage and high fashion shoes are trending now. Increasing demand for eco-friendly products will promote use of artificial leather products that are also affordable. The increasing population and affordability will give a boost to processors to look for new developments in usage of leather cloth.

The processing industry also is constantly upgrading technology, quality and product designs, thus opening up greater export opportunities. New units are also constantly being set up.

In view of the above, it is expected that the demand will continue to be robust and the expanded volumes from the new facility can cater to the increased demand. Prices and consequently margins however, will continue to be under pressure and will improve only when the flood of low-priced imports from China ceases, on a recovery of the local demand in that country.

Custom Manufactured Chemicals

Custom manufacturing is the exclusive manufacturing of non-commercially available molecules for a specific company. These molecules are manufactured conforming to specific properties and processes. Custom synthesis is usually done at a small scale, where the quantity of produced molecule remains low as opposed to the practice of custom manufacturing, where large-scale production of specific molecules or compounds are undertaken by a third-party manufacturer for a specific client.

Custom manufacturing is preferred by pharmaceuticals and agrochemical manufacturers. The major reasons for opting for custom manufacturing are:

Non -availability of assets at the customer handle multi-step synthesis; and

Low cost alternatives for manufacturing specific molecules in the regions with low cost of production.

2022-23 Review

The Custom Manufactured Chemicals Division (CMCD) has registered an impressive growth in sales of existing products during the year mainly driven by strong demand from various end customers. The Company has received a sustainability award from one of our key customers. This wouldfurtherhelpustostrengthen entry barriers, including expectation our relationship with the customer by securing more new products. During the year, the Company received confirmation from one of its customers that it has been selected to supply an advanced intermediate for an already established generic AI. Letter of Intent (LOI) for this was signed in April 2023. Based on this development, along with the signing of an LOI for another intermediate signed in November 2022 and a healthy pipeline of products, the Company decided to kick-start the next phase of expansion of the multi-purpose facility. While Phase 1 is expected to come on stream by Q2 of the next financial year as originally scheduled, the Company is targeting to commission the next phase before the end of next financial year.


India is estimated to have around 50% share of global Agri CDMO market by 2027 which gives enough head room for the existing players. The demand for custom manufacturing has shifted to the developing countries due to better cost economics as compared to developed economies. The demand for custom manufacturing catered to by Indian manufacturers is likely to grow with India becoming a key supplier. The Covid-19 pandemic has further strengthened the demand for pharmaceutical custom manufacturing in the country, with global pharmaceutical giants outsourcing vaccine manufacturing to Indian players in addition to stronger demand for various medicines. The demand for custom manufacturing in agrochemical space is also likely to see a boost with discovery of new and improved pesticides, herbicides and fungicides getting more traction. Key drivers of Indias market share gain is on account of energy crisis in Europe, increasing EU regulatory constraints, decreasing trust on Chinese supply chain reliability and growing trust of Indian players to work with complex chemistries. India will be a focus region as to companies move away from China. The downturn observed in Chinas speciality chemicals industry is of serving as an opportunity for Indian manufacturers, who have now gained a cost advantage over their

Chinese counterparts. The changing regulatory and policy environment in China has led global companies to diversify supply risk, thereby improving export opportunities for Indian players. This is because very few countries, other than India, have the requisite scale, technology, raw materials and government support to capture this opportunity.

The Custom Manufacturing industry in particular has of significant high standards of Environmental, Health and Safety compliance, extended customer validation and approvals process, ongoing process innovation and optimisation, high-quality standards and stringent specifications. Further, the end customers are usually required to register their suppliers with regulatory bodies as a source of intermediate products or active ingredients, and this leads to high switching costs. Besides, CSL leverages on its chemistry process research and manufacturing capabilities to focus on providing custom-made intermediates for molecules that are in the early stages of their life cycles. This gives the Company an opportunity to be among the initial suppliers for such products to the innovators.

Oth er Chemicals


Chloromethanesareusedassolventsinpharmaceutical manufacturing, in the making of refrigerant gas, and in agrochemicals. Chloromethanes are largely divided into four types of products - Methyl Chloride, Methylene Di Chloride (MDC), Chloroform and Carbon Tetrachloride (CTC). The pharma sector accounts for the largest share in MDC demand, where it is used as a solvent. MDC also has other applications, such as in foam blowing segments, aerosols, polycarbonate resins and adhesive formulations. Besides, it is a key raw material for HFC 32, increasingly used as a refrigerant in air conditioners. CTC is used as a feedstock in agrochemical intermediates. Chloroform finds use in the production of tetrafluoro ethylene that goes to make polymers such as PTFE, used as a non-stick coating on pans and other cookware. These are also used in containers and pipes for storing corrosive chemicals. Chloroform is also widely used in making R22 and other refrigerant gases.

2022-23 Review

The year 2022-23 began amidst the backdrop of the less virulent ‘Omicron strain of Covid-19 with marginal impact across various consumption segments. Demand for Chloromethanes (CMP) began on a steady note, especially in the key pharma sector. Off-take from the adhesive and foam sector continued to remain good as well. Tight availability coupled with lower import arrivals and high energy prices in Europe gave impetus to firm FY. New capacities were set up by other companies during the year, to an extent of around 200ktpa. Startup and stabilisation issues kept the operating rates of the new plants low, thereby supporting firm the end of Q3.

The real impact of additional capacities were felt during the last quarter of the year as full operating rates coupled with limited export order book with local producers led to price crash in both MDC and Chloroform. The demand slump was more pronounced in CTC with synthetic pyrethroids segment witnessing a much sharper drop in demand from the end of Q3, as their exports to major markets in Latin America and Europe were severely impacted by droughtconditions. building block for

Overall domestic demand for MDC grew by 7% from 345kt to 370kt during the year, driven by the

Pharma sector which remains as the single-largest consumption sector.

Chloroform demand grew by 17% from 155kt to 181kt during the year, driven by PTFE demand. CTC demand contracted by 19% from 27kt to 22kt during the year.

The Companys production of Chloromethanes stood at 34,971 mt, while sales, excluding captive consumption, was 32,826 mt during the year.


The Indian CMP market witnessed an increase in supply with the addition of 200ktpa by two players during 2022-23. As supply is in excess of demand, the price erosion witnessed in 2022-23 is likely to linger in the immediate ensuing quarters before demand catches up.

The long-term demand outlook however is quite positive. Pharma sector continues to be the major consumer segment for CMP, especially MDC and Chloroform. India ranks among the lowest in per capita healthcare expenditure globally, which is a clear indicator of the growth potential. PLI schemes announced by GoI through DoP (Department of Pharmaceuticals) for critical Bulk Drugs (Rs 6,940 Crores), Medical Devices (Rs 3,420 Crores) and pharmaceutical drugs worth Rs 15,000 Crores will all provide impetus for growth given the Govts pitch for a ‘Make in India campaign. Hence demand for MDC and Chloroform is likely to remain robust going forward.

Demand for CTC continues to remain sluggish due to low export orders for Synthetic Pyrethroids from Europe and LatAm markets likedomestic prices

Argentina theearlypartofthe and Brazil, as these countries faced a severe drought situation last year. This trend is expected to continue till atleast the end of second Quarter, after which a revival is likely as export demand for the new season is expected to pricestill be normal. With increased HFO production in India, another opportunity has opened up for CTC which is encouraging in the long-run.

Caustic Soda

Caustic Soda and Chlorine are joint products manufactured by the electrolysis of brine, with hydrogen being produced as a by-product. Caustic Soda is a basic chemical which is used in a variety of industries and is a significant products, while chlorine is a key feedstock for a variety of products. The major end-use industries for Caustic Soda and Chlorine include textiles, chemicals, paper, PVC, water treatment, alumina, soaps and detergents, and chlorinated paraffin wax. The Company has manufacturing facilities of caustic soda at Mettur and Karaikal with a total capacity of 119 ktpa.

2022-23 Review

Being a very basic alkali with a strong correlation between consumption and economic activity, Caustic

Soda witnessed a steady demand at the start of the new FY. However, by the end of Q1, higher yarn prices forced several small and mid-sized textile processors in the South to cut down operating rates or shut plants due to unviable cost economics. Hence, demand from this sector started witnessing a downward trend whilst other segments like paper & pulp, alumina and ETPs exhibited a steady demand for the product. The year also saw stabilisation of new capacity set up in 2021-22, and the commissioning of additional capacity in the western part of the country. Drought / energy crisis in Europe gave an opportunity for domestic producers especially in the West to book huge export orders during the period between Aug-Oct22 which supported firm domestic prices as availability became tighter. Prices started softening again from the beginning of the last quarter as limited export order book with domestic producers forced them to drop prices locally to control inventories.

The Companys production of Caustic Soda was 1,03,032 mt while sales, excluding captive consumption, stood at 98,677 mt during the year.


The Caustic Soda market in India remains in a long position, as capacity additions continue without interruption, in line with steady demand. With export opportunities to Europe and US drying up with recessionary conditions in both geographies, prices are likely to stay subdued through the whole of 2023-24.

While the demand for Caustic Soda continues to remain good from the alumina, paper and pulp sectors, the textile sector continues to see headwinds as higher yarn prices coupled with lower export orders have forced several small and mid-sized units to scale down production.

Hydrogen Peroxide

Hydrogen Peroxide is mainly used in the pulp & paper industry for bleaching pulp and de-inking recycled paper. It is also used in textiles, electronics, food and beverages, & healthcare industries. Along with peroxyacetic acid, Hydrogen Peroxide is one of the important components in manufacturing peroxide-based disinfectants. It is also used in various municipal and industrial applications. CSL has installed capacity of 34 ktpa (50% basis) and is the largest manufacturer of hydrogen peroxide in South India.

2022-23 Review

During the year under review, the Company gradually enhanced sales of Hydrogen peroxide to textile and paper & pulp sectors. Domestic availability was tight in the second and third quarter due to curtailed production from a couple of domestic producers on the back of restricted supply of gas, in addition to lower imports from Bangladesh (due to a safety incident at their container terminal). These factors had a positive impact which enabled us achieve month on month higher volumes and finally culminated in highest monthly sale of 2,528 mt in December 2022. However, production was moderated in the fourth quarter based on make-or-buy economics along the caustic chain. The Companys production of hydrogen peroxide was 25,284 mt while the sale was 25,316 mt during the year.


The growth of the paper & pulp industry will contribute to the demand for hydrogen peroxide. While the textile markets long-term growth will be driven by factors such as rising population, income levels, organised retail, and e-commerce. It is expected that the market size would expand as hygiene improvement would continue to be one of the main factors that would drive the size of the market in the future. This offers a new and developing market for hydrogen peroxide due to its ability to kill bacteria, viruses and fungi.

Chemplast Cuddalore Vinyls Limited (Subsidiary Company) (CCVL) Suspension PVC

Suspension PVC is used in both rigid and flexible applications. Pipes, profiles and roofing sheets are typical examples of rigid applications while flexible hoses, tubings, wires and cables, calendared sheets and films are typical examples of flexible applications. Demand for Suspension PVC in the global market is largely linked to the construction industry and therefore economic development. In recent years, Suspension PVC consumption has been concentrated in developing Asian economies such as China, India, Vietnam, and Indonesia. China accounts for more than 40% of global S-PVC consumption by region. India is one of the fastest-growing large markets for Suspension PVC globally while other major consuming regions are other Asia-Pacific Europe, and the Middle East and Africa.

2022-23 Review

Domestic demand was very healthy in 2022-23, registering a growth of over 30% to 3.75 million mt, though demand in Q2 and Q3 was a bit low. However, the year witnessed consistent decline in price as demand in the rest of the world collapsed for a variety of reasons - US demand from construction segment started to slow down due to increase in mortgage rates and high inflationary pressures and European demand was down due to higher energy prices and recessionary conditions. Above all, China demand did not recover even after lifting of Covid-19 lockdowns.. With prices coming down month on month, processors started buying only on need basis with everyone in the supply chain attempting to hold very minimal inventory. This resulted in demand slow down in Q2 domestic demand started to recover in Q3 as customers felt the prices had bottomed out and restocking started taking place. The demand from construction sector was at its peak in Q4 with the push to complete the projects under Jal Jeevan Mission giving further impetus.

As international prices continued to drop, domestic prices also followed suit and fell by 41% by Mar23 compared to the prices that prevailed during Apr22.

CCVL recorded the highest ever production and sale during FY. Production increased to 3,24,007 mt from 2,97,657 mt during 2021-22, while sales increased to 3,25,007 mt from 2,99,268 mt in FY 22.


The demand from construction and water supply sectors is expected to remain strong in 2023-24 also. The current moderate price levels will also give a fillip to usage of PVC products. The governments push for countries, North America, Western usage and ISImarked pipes will result in lower filler higher PVC consumption.

The Government of India has been taking various initiatives to provide tap water connections to every household by 2024. The following initiatives by the government are expected to propel the demand for PVC resin in India.

Jal Jeevan Mission (JJM)

Jal Shakti Abhiyan: Catch the Rain (JSA:CTR) 2022

The extension of PMKSY from 2021-22 to 2025-26 has been approved by the Government of India, with an overall outlay of Rs 93,068.56 Crores

Amrut 2.0 Scheme

The growth in investments in real estate sector in Tier

II and Tier III cities is expected to boost the demand for PVC plumbing pipes and fittings. uPVC windows and doors are also catching up very well with most real estate developers. Completion of all Central Governments projects will gain urgency with the impending elections in 2024. All these augur very well for demand for Suspension PVC resin in India. On the price front, recovery will greatly depend on demand recovery in China, US and EU.

Risk and Mitigation

Risk Category

Risk Description

Mitigation Strategy

Environmental Risk

The Companys operations have an environmental impact that extends beyond the disposal of chemicals.

Chemplastiscommittedtoreducingitsenvironmentalfootprint through a range of initiatives, including investing in advanced pollution control technologies, implementing sustainable practices, and adhering to environmental regulations.

Energy consumption and waste that contribute to the Companys overall impact on the environment.

This generation are also significant factors proactive approach showcases the Companys dedication to responsible and eco-friendly operations.

Health and Safety Risk employees

Exposure to hazardous materials, including chemicals, can pose a significant and members of the surrounding community, potentially leading to serious health problems.

Chemplast prioritises the safety and well-being of its employees and the community. It enforces strict safety protocols and provides regular training on safety procedures.

The Company conducts regular health assessments and provides personal protective equipment (PPE) to employees to help protect them from potential hazards in the workplace. Safety audits and ongoing training demonstrate its commitment to ensuring a safe work environment. The Company subjects itself to stringent safety audits by reputed international organisations like the British Safety Council and all its plants at Mettur and Cuddalore have been awarded the Five Star rating by the British Safety Council.

Supply Chain Risk

Owing to the nature of its business, Chemplast is heavily reliant on its supply chain for the sourcing of raw materials, research and development, distribution, and delivery of its products. Disruptions to the supply chain, stemming from either natural disaster or geopolitical tensions, could impact the availability and cost of critical inputs.

Chemplast has demonstrated resilience in managing its supply chain by maintaining strong relationships with its suppliers and ensuring visibility and traceability despite the challenges. The Company diversified its sources, monitored and evaluated performances, collaborated with industry players, and invested in technology to ensure a seamless functioning of its supply chain.

Financial Risk

Chemplast faces potential losses due to market conditions like commodity price fluctuations, tax rates, currency rates, or supply and demand imbalances.

Chemplast has hedging strategies, prudent financial management, and revenue stream diversification. It expands into other global regions and products, while leveraging a strong network. The Company maintains regular communication with its stakeholders, suppliers, and clients to stay updated on market trends and changing demands, enabling it to stay ahead of the curve.

Regulatory Risk

Chemplast, being in a highly regulated industry, recognises the potential consequences of non-compliance with regulations and standards, which could lead to fines, legal penalties, and reputational damage.

Chemplast has reliable compliance management systems, including monitoring and auditing procedures, to ensure continued adherence to regulatory requirements. The Company stays up-to-date with modifications to regulations and adapts procedures accordingly to minimise regulatory risk and protect its financial performance and reputation.

Financial Performance

Summary of the financial performance is presented below:

Rs Crores


Standalone Consolidated
2022-23 2021-22 2022-23 2021-22
Sales and other income 2,222.42 2,044.81 5,020.97 5,949.47
Profit before interest, depreciation and taxes 331.53 660.20 548.03 1,254.29
Profit/(Loss) before tax and exceptional items 216.49 433.63 252.01 795.55
Exceptional items (49.80) - (80.50) -
Profit/(Loss) before tax 166.69 433.63 171.51 795.55
Tax expenses (21.12) (54.15) (19.16) (146.90)
Profit/(Loss) after tax 145.57 379.48 152.35 648.65

Financial Performance Standalone

On a standalone basis, the revenue from operations and other income increased to Rs 2,222.42 Crores for 2022-23 from Rs 2,044.81 Crores in 2021-22. The increase is primarily driven by trading income from sale of Vinyl Chloride Monomer (VCM) to its subsidiary CCVL, higher volumes of almost all the products and increase in revenues of the Custom Manufacturing business. Profit before tax and exceptional items for 2022-23 was Rs 216.49 Crores against Rs 433.63 Crores in 2021-22. Although the Company achieved a revenue growth of 9% when compared to 2021-22, the drop in profit before tax and increase in mainly due to significant energy costs.

The steep reduction in profit before tax was partially offset by reduction in finance cost by Rs 113.11 Crores. The reduction in finance cost was primarily due to interest on non-convertible debentures in 2021-22 which were repaid in full at the end of Aug 2021 by utilising the proceeds from the IPO.

The Profit after Tax and exceptional items for 2022-23 was Rs 145.57 Crores, as against Rs 379.48 Crores in 2021-22.

Financial Performance Consolidated

On a consolidated basis, the revenue from operations and other income stood at Rs 5,020.97 Crores for 2022-23 against Rs 5,949.47 Crores in 2021-22. The profit and exceptional items for 2022-23 was Rs 252.01 Crores against Rs 795.55 Crores in 2021-22. The drop in revenue and profits on a consolidated level was mainly due to steep drop in the prices of Speciality Paste PVC, Suspension PVC and Chloromethane products, coupled with an increase in energy costs.

The steep reduction in profit before tax was partly offset by reduction in finance cost byRs 167.59 Crores. The reduction in finance convertible debentures in 2021-22 which were repaid in full at the end of Aug 2021 by utilising the proceeds from the IPO. The Profit after Tax for 2022-23 wasRs 152.35 Crores, as against Rs 648.65 Crores in 2021-22.

Risk Assessment and Management

The Company has a well-defined Risk Management System. Pursuant to Regulation 21 of the SEBI LODR, the Board of exceptionalitemsis Directors constituted a Risk Management Committee to monitor and oversee the Risk Management System. The composition of the Risk Management Committee, terms of reference and total number of committee meetings held during the year under review are given in the Corporate

Governance Report.

The Risk Management Policy of the Company as recommended by the Risk Management Committee and approved by the Board of Directors of the Company can be accessed on the Companys website: The risk management system of the Company ensures that all risks that the organisation faces including strategic, financial, credit, market, liquidity, security, property, legal, regulatory, IT, reputational and other risks are identified and the impacts are then assessed. Mitigation plans are then drawn up and beforetax these plans are effectively reviewed and implemented, thus minimising the impact on the Companys operations and reputation. CSLs commitment to risk management underscores its focus on sustainable growth, while reinforcing its firm dedication to deliver value to its stakeholders.

Risk Classification

All the risks have been broadly classified into the following categories;

Strategic risks Risk arising out of macro-economics and other external conditions, which can significantly impact the Companys strategic business decision, future aspiration, and financial Fin ancial Financial risks arising due to various

risks uncertainties in the financial market or inadequate financial reporting

Com pliance risks Risks arising out of regulatory non-compliance

Operational risks Risks of loss due to insufficient resources, inadequate processes or failure thereof, or insufficient skill or people

Risk Categorisation

All the classified risks have been grouped as under, based on an assessment of likelihood of occurrence and impact on account of the occurrence.

I. Priority risks II. K ey risks III. Managed risks IV. Low risks

For each of the risks, mitigation plans have been drawn down and reviewed periodically including the implementation status of mitigation plans. periodic assessment of ERM is carried out to identify any new risks due to major change in the business model, external environment, Govt. regulations, etc.

Internal Control Systems

Adequate internal controls, systems, and checks are in place, commensurate with the nature of the Companys business and size. The management exercises financial control on the operations through a well-defined budget monitoring process and other standard operating procedures. Internal audit for 2022-23 was carried out by R.G.N. Price & Co., Chartered Accountants covering all significant of operations. All significant observations of the Internal

Auditors are placed before the Audit Committee together with corrective actions.

The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control in the Company, and compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the reports of Internal Auditors, the management undertakes appropriate corrective action in their respective areas.


The Company places immense importance on employee well-being, providing better tools, technology, and techniques to enhance performance, while also ensuring occupational safety and health at workplaces and manufacturing sites. A culture of learning, sharing, and assisting others is fostered, emphasising the importance of having a growth-oriented mindset. Chemplasts commitment to personnel development has enabled it to attract and retain skilled employees, ensuring continued growth and success. The Human Resource department consistently strives to maintain constructive work relationships, fostering a positive work environment.

Industrial relations with changes in employees key financial ratios,remained cordial during the year. Human Resource Development activities continued to receive considerable attention. The emphasis was on imparting training and developing the skill set of employees to enable them face the challenges in an increasingly complex work environment. The total number of permanent employees working as of 31 March, 2023 was 1,219.

Cautionary statement

Certain statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations, or predictions may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Actual results may differ from those expressed or implied. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, fluctuation in forex rates, changes in Government regulations, tax regimes, economic developments within India and the countries in which business is conducted, and other incidental factors.

Financial Ratios alongDetails of significant with detailed explanation there of (only if change is 25% or more as compared to the immediately previous year)

Analytical Ratios



March 31, 2023

March 31, 2022

% Variance


Trade Receivables Turnover Ratio

Net Sales

Avg. Trade Receivable




The ratio is lower in Mar 2023 mainly on account of higher trade receivables as of 31 March, 2023 from trading activity of Rs 115 Crores (Mar 22 Nil).

Interest Coverage Ratio


Interest & Lease Payment




Ratio higher in 2022-23 on account of pre-payment of debentures out of the IPO proceeds during Sep 2021.

Current ratio

Current Assets

Current Liabilities




Debt-Equity Ratio

Total Debt

Stakeholders Equity



During 2021-22, the Company repaid the entire debt out of the IPO proceeds, hence the debt equity ratio was zero in March22.

Net Profit Margin

Net Profit after Taxes

Revenue from Operations




Reduced price realisation of Paste PVC, Suspension PVC and Chloromethanes products, coupled with increased cost of power & fuel has led to lower profits and consequent reduction in net profit margin.

Return on Net Worth

Net Profit after Taxes

Net Worth




Net profit after tax in 2022- 23 is lower by around 62% compared to 2021-22. Hence lower ratio.