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 2024-25 amounted to 7514.57 lakhs compared to 10,676.05 lakhs of the previous year 2023-24. The Standalone operating profit after tax amounted to 448.73 lakhs compared to 1777.13 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 40 of Standalone Financial Statements.

STRENGTHS & OPPORTUNITIES:

Yourcompany is key manufacturer of ethylene amines in India which isagrowth market. Thisoffersregular opportunities& helpsthe company to cater tomarket needs very effectively. Over theyears,the companyhas developed robust Systemswhichhelp to maintain andsustain theoperations despite severchallenges it facesand is able toenjoy the marketleadership position. Its geographical position & thevicinitytocustomers also offeradded advantages inservicing the customers.

Ethylene Amines are building blocks for manyindustries& henceyour companybelieves thatthis factwill continueto offerpotential to growbyexploring manufacturing possibilitiesof derivativesbased onhomologues of EthyleneAmines.

CONCERNS&THREATS:

Since companys core business is Ethylene amines, any negative Development orupheavals taking place in the marketplace may affecttheperformance of thecompany. Fluctuating prices ofcertainkey rawmaterials alsohave the potential to impact onperformance inthe short term.

The company also has to compete with competitors who are either forward or backwardintegrated & hasthe advantage ofscaleofeconomies & thus canswamp 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, 2025. 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 2025-26, 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 2025-26 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, the Company has received In-principle approval from Stock Exchanges on September 19, 2024 to allot 9,16,390 (Nine Lakh Sixteen Thousand Three Hundred Ninety) warrants ("Warrants"), each convertible into, or exchangeable for 1 (one) fully paid-up equity share of the Company of face value of 10/- each at a price of 552/- (Rupees Five Hundred Fifty-Two only) each (including the Warrants subscription price and Warrant exercise price) including premium of 542/- (Rupees Five Hundred Forty-Two only) each payable in cash aggregating upto 50,58,47,280/- (Rupees Fifty Crores Fifty-Eight Lakh Forty-Seven Thousand Two Hundred Eighty only) on preferential allotment basis to the Promoter/ Promoter Group of the Company and certain identified non - promoter persons / entities by way of preferential allotment. The Company has allotted 9,06,390 Warrants on October 01, 2024, on receipt of 25% subscription money from proposed Allottees.

The Warrants may be exercised into equity shares in one or more tranches by the Proposed Allottees at any time before the expiry of 18 months from the date of allotment of the Warrants (October 01, 2024). After conversion, Equity of the Company will be raised by 906390 Equity Shares.

Wholly Owned Subsidiary (WOS):

During the year, the meeting of Board of Directors of WOS held on October 23, 2024, the Board was informed that the WOS require fund of 20,00,00,000/- (Rupees Twenty Crores Only) for the procurement of additional land for plant set up, payment of professional fees for engineering / consultancy contract and including deleveraging the interest cost and other relevant cost to meet implementation of proposed project for Specialty chemicals. The WOS will receive consideration 20,00,00,000/- in cash from the Company in lieu of issuing Equity shares on preferential basis at a price as may be decided based on the valuation report of the registered valuer, for an amount not exceeding 20,00,00,000/- in one or more tranches.

HUMAN RESOURCE:

Human Resource (HR) Departments primary objective is to strategically manage the organizations most valuable asset - its people. This involves attracting and hiring the right talent, fostering employee development through training and performance management, ensuring a positive and productive work environment, and aligning workforce capabilities with organizational goals. HR also plays a critical role in maintaining legal compliance, promoting employee engagement and retention, and driving a culture of continuous improvement and innovation to support long-term business success.

HR department facilitates different kinds of training in all aspects like functional, Safety, Environment, BBS, Compliance etc. It helps to enhance employee skills, improve performance, support career growth, increase efficiency, ensure compliance, and boost engagement. It helps the organization adapt to change, stay competitive, and achieve its goals effectively. In the current reporting period, the company has invested 430 man-hours in motivational training, alongside ongoing functional training programs. These efforts help the organization remain agile, competitive, and aligned with evolving business needs.

Our company prepares individual KRAs (Key Result Areas) and KPAs (Key Performance Areas) through structured meetings with the respective Heads of Departments (HODs). This collaborative approach ensures that every employees responsibility and performance indicators are well-defined and aligned with their departmental goals. Importantly, all individual objectives are directly linked to the overall corporate objectives, creating a clear line of sight from personal performance to organizational success. This alignment drives accountability, enhances focus, and supports the achievement of strategic business outcomes.

In line with our growth strategy, the company has on boarded 24 new team members across projects, R&D, and support functions. This includes skilled workmen, engineers, and managers who bring technical expertise and functional knowledge. Our company is aggressively focusing on employee retention by creating a supportive, engaging, and growth-oriented work environment. We are implementing targeted initiatives such as structured career development programs, competitive compensation, regular recognition and rewards, employee wellness activities, and open communication channels. By listening to employee feedback and addressing their needs proactively, we aim to build long-term trust, reduce turnover, and foster a committed, high-performing workforce aligned with our organizational goals.

In employee engagement, our 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. The Engagement Committee is responsible for fostering a positive, inclusive, and motivating workplace culture. Its main role is to design and implement initiatives that boost employee morale, strengthen team collaboration, and enhance overall job satisfaction. This includes organizing events, recognizing employee achievements, gathering feedback, promoting wellness, and encouraging open communication. By actively engaging employees, the committee supports higher productivity, lower turnover, and a stronger connection between employees and organizational goals.

We strongly believe in promoting a healthy work-life balance, enabling our employees to spend quality time with their families, enjoy their social lives, and recharge mentally and physically. By supporting flexible and balanced work environments, we empower our team members to maintain personal well-being, which in turn enhances focus, productivity, and overall performance at work. A happy, well-balanced employee is key to both individual success and organizational growth.

We are committed to maintaining 100% legal compliance across all our HR practices and organizational operations. Upholding full compliance with applicable laws and regulations is fundamental to our ethical standards and business integrity. This commitment ensures a fair, safe, and transparent workplace for all employees while protecting the companys reputation and long-term sustainability.

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:

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

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.