Diamines & Chemicals Ltd Management Discussions.

INDUSTRY STRUCTURE AND DEVELOPMENT:

Your Company is key producer of Ethylene amines based in India having its plant at PCC Area, P.O. Petrochemicals; Vadodara. The Products Ethylene Amines find their application in various industry segments such as Active Pharmaceutical Ingredients & Pharma-Intermediates, Specialty Chemicals, Agro-chemicals, Resins, Water treatment chemicals. Petroleum production chemicals. Additives and in many other vital specific sub applications. The plant facility is equipped with up to date manufacturing equipment and supported by R & D Center and quality assurance department which are equipped with advanced equipment and analytical instruments, the new pilot plant will be constructed in place of existing pilot plan with latest facilities. The Company has an excellent team of experienced and qualified professional to manage day to day operations efficiently. For more details please visit www.dacl.co.in.

PERFORMANCE:

Total revenue (net of taxes) for the year 2020-21 amounted to Rs. 6,536.95 lakhs compared to Rs. 7,138.46 lakhs of the previous year 2019-20. The operating profit after tax amounted to Rs. 2,103.37 lakhs compared to Rs. 2,398.58 lakhs in the previous year.

SEGMENT-WISE PERFORMANCE

The Company has identified and is working in two reportable primary segments. Thus, the disclosure particulars as per Ind AS-108 on Operating Segments Reporting are made part of this Annual Report in Note 40 of Standalone Financial Statements.

STRENGTHS & OPPORTUNITIES:

Your company is key manufacture of ethylene amines in India which is a growth market.

This offers regular opportunities & helps company market needs very effectively. Over the years, the company has developed robust Systems which help to maintain and sustain the operations despite sever challenges it faces & able to enjoy the market leadership position in one of the segments it operates. Its geographical position & the vicinity also offer added advantage in servicing the customers.

Ethylene Amines are building blocks for many industries & hence your company that this fact will continue to offer potential to grow by exploring manufacturing possibilities of derivatives based on homologues of Ethylene Amines.

CONCERNS & THREATS;

Since companys core business is Ethylene amines, any negative Development or upheavals taking place in the market place may affect the performance of the company. Fluctuating prices of certain key raw materials also has potential to impact the performance in short term.

Company also has to compete with competitors who are either forward or backward integrated & has advantage of scale of economies & thus can swamp the markets with excess & lower priced or even duty free products.

Your company recognizes & understands these challenges very well and always braces itself to compete effectively by providing superior, reliable and timely customer support to the end users.

OUTLOOK:

Since March 2020, the World Health Organisation declared COVID 19 as pandemic. The Company has adopted measures to curb the spread of infection in order to protect the health of its employees and ensure business continuity with minimal disruption including remote working, maintaining social distancing, sanitization of workspaces etc.

The Board of Directors has not identified any material impact on the operations and financials of the company as at 31st March, 2021. Considering that the Company deals with Specialty Chemicals and Power Generation, there has been minimal disruption with respect to operations including production and distribution activities.

The Company has not experienced any difficulties with respect to market demand, collections or liquidity. The Company will continue to closely monitor any material changes to future economic As the COVID-19 situation continues to evolve in India and globally, the impact on future operations would depend upon how the uncertainties associated with pandemics nature and duration unfold.

For the year 2021-22, the Companys focus will continue on sustaining and maintaining the market share in certain industry segment where company enjoys market leadership position. This will be achieved by forging stronger relationship with customers and by negotiating and entering in to beneficial contracts with the suppliers of raw materials.

The Ethylene amines business is going through demand-supply imbalance on global level and this is expected to continue in the year 2021-22 also. Your company Is well aware of the challenging scenario lying ahead and taking necessary steps by planning activities properly at operational stages.

In January, 2021 the Company has received Sale Certificate for Industrial Plot, in Dahej Industrial Estate, Dahej, Ankleshwar. The said Industrial Plot is acquired under e-auction process held through Liquidator/IP appointed by Honble NCLT, New Delhi, All the transfer formalities with local authorities of Industrial Plot are under process.

Considering the current Covid-19 situation is exceptional and dynamic, company is not in a position to gauge with certainty, the future impact on its operations. Considering the present Second wave of Covid 19 situation, we do not have significant impact on business of the company. The company is well positioned to fulfill its existing orders/contracts/arrangements.

HUMAN RESOURCE:

Human Resources Development, in all its aspects like training in safety and social values is under constant focus of the management. Relations between the management & the employees at all levels remained healthy & cordial throughout the year. The Management and the Employees are dedicated to achieve the corporate objectives and the targets set before the Company. The Company has been regularly monitoring its policy for enhancement in the skills of its employees by providing need-based training.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has a proper and adequate system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposal. The internal control systems are supplemented by an extensive program of internal audits, review by management guidelines & procedures.

Companys control systems are time tested, documented and recognized under ISO Certification. On the financial side, periodic audits by Internal Auditors and External Auditors provide a means where by identification of areas of improvement & Corrective Measures Taken whenever applicable.

The Company has an independent internal audit system, covering on a continuous basis, the entire gamut of operations and services spanning major business functions. The internal audit functions include evaluation of all financial & major operating system controls. The internal audit findings and recommendations are reviewed by the Audit Committee and are then reported to the Board.

WHISTLE BLOWER POLICY

The Company has a Whistle Blower policy in place to deal with instances of fraud and mismanagement, if any. The details of the policy are explained in the Corporate Governance Report and the said whistle blower policy is posted on the website of the Company.

KEY FINANCIAL RATIOS:

Ratio FY 2020-21 FY 2019-20
Debtors Turnover Ratio (times) 5.74 6.90
Inventory Turnover Ratio (times) 4.28 5.55
Current Ratio (times) 9.69 8.44
Operating Profit Margin (%) 41.26 50.87
Net Profit Margin (%) 33.48 34.61
Earnings Per Share (times) 21.50 24.52
Dividend Per Share (Rs.) 5.00 8.00
P/E Ratio (times) 12.29 6.03
Return on Net Worth (%) 24.74 36.80

Reason for significant change:

• Operating/Net Profit margin has fallen due to decrease in sales Revenue and Increase in the Cost of Raw Material Consumption.

• Interest Coverage and Debt Equity Ratio is not relevant here as company has not availed any long term debt during the year. No major utilization of working capital loan during the year.

• P/E Ratio has increased due to rise in Share Market Price about 79% as well as EPS is reduced by Rs. 3.00. CAUTIONARY STATEMENT:

The statements in this Management Discussion and Analysis describing the companys objectives, projections, estimates and expectations are "forward looking statements". The forward looking statements made In the Management Discussion and Analysis Report are based on certain assumptions and expectations of future events. Actual results might differ materially from those anticipated because of changing ground realities. The Directors cannot guarantee that these assumptions are accurate or these expectations will materialize.

For and on behalf of the Board
Amit Mehta
Date: May 18, 2021 Executive Chairman
Place: Mumbai DIN:00073907