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 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 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 professional to manage day to day operations efficiently. For more details, please visit www.dynaind.com

OVERVIEW:

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.

OPPORTUNITY:

India is one of the largest exporters of Dyes & Intermediates across the global. Indias capability in low cost manufacturing, availability of technically trained manpower, better price realization globally and strong presence in market are the key growth drivers. Your company is key manufacturer of Dye and Dye stuffs in India which is a growth market. This offers regular opportunities & helps 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 able to enjoy the market leadership position. Its geographical position & the vicinity to customers also offer added advantage in servicing the customers.

THREATS:

1. Changes in the tax laws, Government policies, and regulatory requirement might affect the companys business.

2. The cost of Natural gas prices and electricity for Chemical Industry has been ongoing bone of contention for decades, and at times of high oil prices, the cost of feed stocks can put the industry at a huge disadvantages.

3. Compliance issues with the environmental norms and regulations

COMPETITION :

1. Raw Material :

Securing the necessary raw materials for chemical processes can be challenging in India, often resulting in higher feedstock costs compared to countries like the Middle East, China, and other Southeast Asian nations.

2. Infrastructure Challenges: Limited access to railway depots, ports, and inadequate pipeline connectivity pose obstacles to the seamless delivery of raw materials. Additionally, small and medium-sized industries face power supply issues as they may not have access to captive power plants.

3. Logistics: While most chemical industries are located on the west coast, primarily in Gujarat, to be close to raw material sources and ports, the main demand from end users often comes from the south and north regions. This geographical disparity leads to increased transportation costs and raises overall production expenses.

4. Global Competition: Cheaper chemical imports from low-cost manufacturing centers like China have intensified competition in India. Since joining the World Trade Organization, India has reduced import tariffs on various products, further increasing competitive pressures.

5. Plant Underutilization: Due to oversupply in the global petrochemical market, the cost of petrochemicals has decreased, causing domestic manufacturers to underutilize their production facilities.

6. R&D Limitations: The high cost associated with research and development discourages domestic manufacturers from introducing new products to the market, hindering their ability to innovate and adapt.

SEGMENT WISE AND PRODUCT WISE PERFORMANCE :

The Company operates within a solitary business segment i.e. manufacturing of chemicals and dyes. Further, all products of the company are classified as "Dyes". Hence, Segment/Product wise report is not given separately.

RISK AND CONCERN :

Risk	Impact	Mitigation
Competition	The Company might fail to act on the underlying	The Company is always aware of new
	opportunities in a timely manner -	prospects in the chemical industry and
		responds proactively by introducing new
	- Increased and intensified competition might hurt
		products to its portfolio.
	the Companys market share, margin profile, and
	return on capital employed.	- Our long-standing client connections help us
		manage this risk as a chosen supplier and
		dependable partner. Constantly review peers
		and focus on quality of the product and timely
		servicing the customer.
Raw material	Increase in Gas prices and the pricing of other	Our backward integration enables us to receive
price risk	raw materials might have an impact on the bottom	a consistent supply of Inputs at a low cost.
	line.	Further, the Company is constantly working
		towards Multi supplier approach so as to lessen
		our reliance on single supplier, reducing the risk
Disaster Risks	The Company might be hit by force majeure	We ensure our preparedness to face such
	events such as cyclone etc.,	events. Our manufacturing plant(s) are insured
		against natural risks.
Foreign	Foreign exchange rate changes might have a	Our strong foreign exchange hedging
currency	substantial influence on our financial performance	mechanism and processes, such as forward
exchange		contracts, help us to manage this risk
rate risk

INITIATIVES BY THE COMPANY:

The Company has taken the following initiatives:

.Concentration on the reduction of costs by undertaking a specific exercise in different fields.

. Concentration in Increase of Exports.

. Focusing on the modernization of manufacturing process to improvise quality and reduction of costs.

. The Company is quite confident that the overall productivity, profitability would improve in a sustainable manner, as a result of this strategy.

. The company has demolished the old Plant and Machineries and install new Plant and Machineries with latest technologies to improve the quality of product and avoid any uncertainty at Companies Unit.

OUTLOOK :

For the year 2023-24, the Companys focus will continue to be stable, as the Company continues to work on distribution expansion and strengthening of supply chain. The Company is confident to meet the challenges with its strength in marketing network, its strategic planning, Research & Development productivity improvement and cost reduction exercise. 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.

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.

HUMAN RESOURCE :

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 61 employees excluding Directors & KMP as on year ended 31 March, 2024.

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.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

In terms of performance, FY 2023-2024 has been a moderately good year. Company is focused on the task on hand in terms of better reliability of operations and more focussed market efforts. Our financial performance reflected the steady operational performance. Our revenue from continuing operations declined by20.82% to Rs.3613.86 Lakhs.Loss Before Taxwas Rs.41.12 Lakhs and loss for the period was Rs.29.95Lakhs. Cash and cash equivalents at the end of the year stood at Rs.4.62 lakhs.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFOR :

Sr. No.	Particulars	2023-24	2022-23
1	Debtors Turnover Ratio	3.83	3.75
2	Inventory Turnover Ratio	2.83	3.36
3	Interest coverage ratio	3.12	14.41
4	Current Ratio	1.85	2.73
5	Debt Equity Ratio	0.32	0.05
6	Operating Profit Margin	(0.14)	3.84
7	Net Profit Margin	(0.84)	2.51
8	Return on Net worth	(0.64)	2.43
9	P/E Ratio	(66.65)	16.46

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:

Despite our efforts to improve operational efficiency and market presence, this year has been challenging, resulting in a loss compared to the previous year. Consequently, our company has experienced a decrease in return on net worth.

DISCLOSURE OF ACCOUNTING TREATMENT :

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.

CAUTIONARY STATEMENT

The statements in the "Management Discussion and Analysis Report" section describes 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.

	By Order of the Board of Directors
	-Sd/-
	NEERAJ SHAH
Place : Ahmedabad	Managing Director
Date : 13-08-2024	DIN : 05112261

FINANCIAL HIGHLIGHTS

REVENUES :

Total income during the year under review was Rs. 3645.80 Lacs (Previous year Rs. 4691.03 Lacs).

OPERATING EXPENSES :

The operating and other expenses for the year ended 31 March, 2024 were Rs. 3405.12 Lacs (Previous year Rs. 642.24

Lacs).

PROFIT AFTER TAX :

The net profit after tax during the year under review period was Rs. (29.95) Lacs (Previous year Rs. 114.06 Lacs).

INTEREST ON BORROWINGS :

The Company has incurred interest cost of Rs. 30.05 Lacs (Previous year Rs. 10.49 Lacs).

CAPITAL EMPLOYED :

The Return on Average Capital Employed (ROCE) for the year ended 31 March, 2024 was (0.11)% as compared to

4.89% for the last year.

RETURN ON NET WORTH :

The return on Average Net worth (RONW) for the year ended 31 March, 2024 was (0.64)% as compared to 2.43% for

the last year.

FIXED ASSETS :

There was addition of Rs. 1603.86 Lacs to the Fixed Assets of the Company. (Previous year Rs. 547.57 Lacs).

SHARE CAPITAL :

At present, the Company has only one class of shares – equity shares with face value of Rs. 10/- each. The authorized

share capital of the company is Rs. 3, 50, 00,000/- divided into 35, 00,000 equity shares of Rs. 10/- each. The paid up share

capital of the company is Rs. 3, 02, 85,000/- divided into 30, 28,500 equity shares of Rs. 10/- each.

During the year under review, the Company has not issued shares with differential voting rights nor granted stock

options nor sweat equity. Out of the profits for the year ended March 31, 2024, a sum of Rs. Nil has been transferred to

General Reserve. (Previous year Rs. Nil)

SUNDRY DEBTORS :

Sundry debtors amount to Rs. 927.86 Lacs as of March 31, 2024, as compared with Rs. 942.52 Lacs as of March 31, 2023.

These debtors are considered good and realizable. The need for provisions is assessed based on various factors

including collectability of specific dues, risk perceptions of the industry in which the customer operates and general

economic factor, which could affect the customers ability to settle.

CASH AND CASH EQUIVALENTS :

The bank balances include both Rupee accounts and foreign currency accounts. Advances are primarily towards

amounts paid in advance for value and services to be received in future. Advance income tax represents payments

made towards tax liability and also refunds due for the previous year. The Companys liability towards income tax is

provided for. Electricity and other deposits represent electricity deposits, telephone deposits, insurance deposits and

advances of a similar nature. Sundry creditors for other liabilities represent amounts accrued for various other

operational expenses. Advances received from clients denote monies received for the delivery in future. Provisions for

taxation represent estimated income tax liabilities.

By Order of the Board of Directors

-Sd/-

NEERAJ SHAH

Place : Ahmedabad Managing Director

Date : 13-08-2024 DIN : 05112261