Diamines & Chemicals Ltd Management Discussions

INDUSTRY STUCTURE 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 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 Standalone revenue (net of taxes) for the year 2023-24 amounted to 10,676.05 lakhs compared to

11,330.69 lakhs of the previous year 2022-23. The Standalone operating profit after tax amounted to

1777.13 lakhs compared to 4221.95 lakhs in the previous year.

SEGMENT-WISE PERFORMANCE:

The company has identified and is working in two reportable primary segments viz. Specialty Chemicals and trading in Fruits and Vegetables. Thus, the disclosure particulars as per Ind AS-108 on Operating Segments Reporting are made part of this Annual Report in Note 39 of standalone Financial Statements.

STRENGTHS & OPPORTUNITIES:

Your company is key manufacturer of ethylene amines in India which is a growth market. This offers regular opportunities & helps the company to cater to 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 and is able to enjoy the market leadership position. Its geographical position & the vicinity to customers also offer added advantage in servicing the customers.

Ethylene Amines are building blocks for many industries & hence your company believes 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 have the potential to impact on performance in the short term.

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

OUTLOOK:

The Board of Directors has not identified any material impact on the operations and financials of the company as at March 31, 2024. Considering that the Company deals with Specialty Chemicals, 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 conditions.

For the year 2024-25, the Companys focus will continue 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 a global level and this is expected to continue in the year 2024-25 also. Your company is well aware of the challenging scenario lying ahead and taking necessary steps by planning activities properly at operational stages.

KEY DEVELOPMENT DURING THE YEAR:

During the year, Equity shares of your Company has been listed on main board of National Stock Exchange of India Limited (NSE) on September 25, 2023.

Your Company has received approval from Gujarat Pollution Control Board (GPCB) for Proposed Expansion of Synthetic Organic Chemicals in existing manufacturing unit.

Your Company has obtained the License from Gujarat Pollution Control Board (GPCB) for Proposed Expansion of Synthetic Organic Chemicals in existing manufacturing unit and ISO 9001:2015, ISO 14001:2015 & ISO 45001:2018 from Bureau Ventas (India) Private Limuted (Certification Business).

Wholly Owned Subsidiary:

DACL Fine Chem Limited (DFCL), Wholly Owned Subsidiary of the Company has received Consent to establish (CTE) on December 18, 2023 from Gujarat Pollution Control Board (GPCB) for Proposed Plant of Formulation Chemicals and Lithium based derivatives in unit of M/s. DACL Fine Chem Limited at Plot No. D-II-E-16, Dahej –II Industrial Estate. Tal.: Vagra, Dist: Bharuch as on March 01, 2024.

Further, DFCL has commenced its commercial production of Specialty Chemicals at Plot No. D-II-E-16, Dahej –II Industrial Estate. Tal.: Vagra, Dist: Bharuch.

DFCL received Factory License on March 22, 2024 from Directorate Industrial Safety and Health, Gujarat State for the unit of M/s. DACL Fine Chem Limited at Plot No. D-II-E-16, Dahej –II Industrial Estate. Tal.: Vagra, Dist: Bharuch.

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 achieving the corporate objectives and the targets set before the Company. The Company has been regularly monitoring its policy for enchaining the skills of its employees by providing need-based training.

In employee development, your Company has conducted one to one session with department heads and individual contributors on individual capability building & behavioural attributes. It will help to motivate employees for multi-tasking & enhancing ways of working.

In employee recruitment, your Company has recruited 38 new members in our team for new projects, R&D and for other support functions, which includes workmen, engineer & manager level employees who come with their functions expertise & technical knowhow. Your Company is also working on retaining our experienced members to have combination of young aggressive team & experienced senior team.

In employee engagement, your Company has formed engagement committee to plan celebration of various cultural & religious festival throughout the year. These celebrations kept working culture positive & vibrant throughout the year.

In employee training & development, your Company has invested 1719 man hours for motivational training & functional trainings are also going on.

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 whereby identification of areas of improvement and 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 2023-24	FY 2022-23
Debtors Turnover Ratio (times)	5.25	7.37
Inventory Turnover Ratio (times)	2.83	2.91
Current Ratio (times)	7.77	5.46
Operating Profit Margin (%)	22.73	52.93
Net Profit Margin (%)	17.08	38.19
Dividend Per Share ()	2.50	6.00
Earnings Per Share (times)
Basic ()	18.16	43.15
Diluted ()	18.16	43.12
P/E Ratio (times)	27.71	9.31
Return on Net Worth (%)	12.44	35.91

Reason for significant change:

- Operating/Net Profit margin/EPS/Return on net worth have decreased on account of reduction in average sales price of material mix as well as increase in cost of raw material consumed.

- 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.

- Current Ratio Increased due to comparative increase in Fixed deposit & inventory.

- P/E ratio Increased on account of Decrease in EPS factor.

- Dividend for FY 2022-23 includes Interim and Final whereas FY 2023-24 includes Final dividend. Dividend per share reduced due to retention of cash accruals for future capex planning.

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 24, 2024	Executive Chairman
Place	: Mumbai	DIN: 00073907