Dynamic Industries Ltd Management Discussions

INDUSTRIAL STRUCTURE AND DEVELOPMENT

The Company is in the business of manufacturing of Chemical and Dye and Dye Stuffs. Your Company is a key producer of Synthetic Organic Dyes, Acid Dyes, Direct Dyes and Solvent Dyes based in India having its Plants situated at Gujarat Industrial Development Corporation (GIDC), Vatva, Ahmedabad, India. The Products find their application in various industry segments such as Textiles, leather, cosmetic, paper printing, plastics to shade their products etc. The plant facility is equipped with up-to-date manufacturing equipment and supported by an R&D Center and quality assurance department which are equipped with advanced equipment and analytical instruments. The Company has a dedicated team of experienced and qualified professionals to manage day to day operations efficiently. For more details, please visit www.dynaind.com

The financial statements have been prepared in compliance with the Indian Accounting Standards (Ind AS) issued by The Institute of Chartered Accountants of India (ICAI) which have been notified under the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS Rules), of the Companies Act, 2013. The management of the company accepts responsibility for the integrity and objectivity of these financial statements, as well as for various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably present the companys state of affairs and profit for the year.

India solidifies its dominance as the worlds leading hub for dyes and dye intermediates production, fuelled by cost-efficient manufacturing, a highly skilled workforce, and resilient global demand amid geopolitical shifts and supply chain diversification away from China. As a key player in this segment, the company is primed to capture this momentum through its scalable operations and customer-focused innovations.

Strategic investments in sustainable, low-impact dye technologies position us to meet tightening international regulations, such as EU REACH updates and US EPA green chemistry standards, unlocking premium markets in textiles, leather, and inks. Our robust internal systems—enhanced by AI-driven quality controls and ERP integrations—ensure agility against raw material volatility and trade disruptions, while sustaining double-digit growth.

The companys Gujarat-based location offers unmatched logistics advantages, with proximity to various ports enabling faster exports to high-growth regions like Europe, the US, and Southeast Asia. Looking ahead to FY 2026–27 and beyond, rising demand for bio-based dyes, digital color-matching solutions, and circular economy practices will further amplify our competitive edge, driving long-term value creation.

1. Changing Rules and Regulations: New environmental laws, taxes, and adverse government policies, EU carbon taxes, and chemical bans—can raise costs and slow down operations in FY 2025–26.
2. Rising Costs of Fuel and Raw Materials: High prices for oil (now $80–90 per barrel), gas, and coal, plus supply shortages from weather issues, hurt profits. Its hard to pass these costs to customers when demand is soft.
3. Tougher Pollution and Safety Rules: Stricter limits on waste water, emissions, and factory safety mean more spending on clean tech. Breaking rules can lead to fines, closures, or bad reputation.
4. Global Trade Problems: Wars, tariffs (like US-China), shipping delays, and changing export rules make it harder to sell abroad and get materials.

1. Shift in Customer Expectations: Buyers are now looking for suppliers who can offer better quality, faster delivery, and more consistent performance. This increases competition among chemical manufacturers.
2. Pressure from Low-Cost Producers: Companies from other countries, especially those with lower production costs, continue to put pressure on pricing in the global market.
3. Need for Product Innovation: Customers are increasingly asking for new and specialized products. Companies that are slow to develop new products may lose market share.
4. Growing Focus on Sustainability: More buyers prefer suppliers who follow eco-friendly processes and use sustainable raw materials. Companies that do not adapt may face difficulty in retaining customers.

5. Export Market Uncertainty: Changes in international demand, trade rules, and shipping conditions can affect export opportunities and increase competition in overseas markets.
6. Rising Expectations on Delivery and Service: In todays market, customers expect quicker response, better service, and flexible supply. Companies that cannot meet these expectations may find it harder to compete.

The Company is exposed to risks arising from competition, fluctuation in raw material prices, operational disruptions, foreign exchange movements, and technological changes. These risks may affect production efficiency, margins, and overall business performance. The Company manages these risks through a focus on product quality, strong customer relationships, efficient procurement, preventive maintenance, insurance coverage, foreign exchange monitoring, and continuous process and technology improvement.

The Company has taken the following initiatives:

• Expansion of export activities, targeting new geographies and leveraging existing global partnerships to diversify the revenue base and reduce dependence on domestic demand cycles.
• Ongoing modernization of manufacturing processes by adopting automation, digital control systems, and lean manufacturing techniques, aimed at improving quality, consistency, and cost-efficiency.
• Investment in clean and sustainable technology, including upgraded effluent treatment systems and environmentally friendly chemical processes, to align with global ESG standards and future-proof operations.
• Introduction of skill development and technical training programs for plant personnel to ensure effective handling of modern machinery and safety compliance.

For the year 2026-27, the Company expects business conditions to remain competitive, with continued focus on stable operations, market expansion, and supply chain strengthening. The Company will continue to work on improving its distribution network, ensuring better customer service, and maintaining efficient production planning to meet changing market demand.

The Company remains confident of facing industry challenges through its strong marketing network, strategic planning, and continuous efforts in research and development, productivity improvement, and cost control. In the current environment, special focus will also be given to managing raw material prices, improving operational efficiency, and maintaining strong relationships with customers and suppliers.

Going forward, the Company will continue to explore opportunities for growth by offering quality products, improving service levels, and entering into more favourable arrangements with raw material suppliers. With these efforts, the Company expects to maintain steady progress in FY 2026-27 and beyond.

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.

Your Company firmly believes that employees are the most valuable assets and key players of business success and sustained growth. Various employee benefits, recreational and team building efforts are made to enhance employee skills, motivation as also to foster team spirit. Industrial relations were cordial throughout the year. The Company has 68 employees excluding Directors & KMP as on year ended 31st March, 2026.

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.

In terms of performance, FY 2025-2026 has been a moderately good year. The Company remained focused on improving the reliability of its operations and making more focused market efforts. Our financial performance reflected the steady operational performance. The Company recorded revenue from continuing operations of Rs. 7,158.37 Lakhs. Profit Before Tax was Rs. 252.96 Lakhs and profit for the year was Rs. 182.22 Lakhs. The profit for the year increased as compared to the previous financial year, reflecting an improvement in the overall profitability and operational performance of the Company. Cash and cash equivalents at the end of the year stood at Rs. 7.81 Lakhs.

"Through our continued focus on operational efficiency and strengthening our market presence, the Company has delivered improved financial performance this year. This has resulted in a higher profit compared to the previous year, leading to an increase in return on net worth."

The Financial statements have been prepared in compliance with the Indian Accounting Standards (Ind AS) issued by The Institute of Chartered Accountants of India (ICAI) which have been notified under the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS Rules), of the Companies Act, 2013. The financial statements have been prepared on accrual basis under the historical cost convention.

The statements in the Management Discussion and Analysis Report section describe the Companys objectives, projections, estimates, expectations and predictions, which may be forward looking statements within the meaning of the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending upon the economic and climatic conditions, Government policies and other incidental factors.