Dynemic Products Ltd Management Discussions

Industry Structure & Development

A food coloring or color additive is any dye, pigment, or chemical added to give food or beverages colors. They are available in different forms, including liquids, powders, gels, and pastes. Both commercial and home cooking utilize the use of food coloring. Food colorants are also utilized in various non-food products, including cosmetics, medications, household crafts, and medical equipment. The global food colors market size was valued at USD 3.78 billion in 2024 and is estimated to reach from USD 4.23 billion in 2025 to USD 10.40 billion by 2033, growing at a CAGR of 11.9% during the forecast period (2025-2033). Addionally, the colorful components of these compounds are frequently offered in highly refined forms to assure repeatability. For ease and stability, they can be formulated in suitable carrier materials (solids and liquids).

Opportunities and Threats

The Dye Intermediates Market is experiencing consistent growth due to the increasing demand for sustainable and high-performance dyes. A key aspect of this market is its dependence on the synthetic dye sector. Synthetic dyes are popular for their vibrant colours and durability, and they rely on specific intermediates for their production. The synthetic dyes market is constantly evolving to meet the needs of diverse industries while adhering to environmental standards. This evolution has led to advancements in biodegradable intermediates and production techniques with lower emissions, which are becoming increasingly important as industries aim to reduce their environmental impact

• Stringent regulations: Concerns about pollution and waste disposal have led governments to implement strict regulations on chemical industries, impacting production and supply chains.

• High costs of sustainable production: Complying with these regulations often requires costly upgrades to manufacturing facilities, which can be particularly challenging.

• Global restrictions: The global food colors market is facing stringent regulations regarding the use of food additives and coloring agents from regulatory bodies across various countries. Many synthetic colors are now banned or being phased out in countries like the United States, Canada, and members of the European Union over health concerns. Regulators are imposing more restrictions on permissible daily intake levels and mandatory labeling of artificial colors. This is posing major challenges for food producers who are now required to substitute synthetic colors with natural alternatives. However, many natural colors are more expensive and harder to source. The revised regulations are also increasing compliance costs for companies.

Risks and Concerns

• Changing Food Safety Regulations: Food Safety and Standards Authority of India (FSSAI) has proposed stricter limits on synthetic food colors vide Food Safety Standards Amendment Regulations, 2024. Limits for colors like Tartrazine, Sunset Yellow FCF and Carmoisine are under review. Any adverse change may impact demand for specific intermediates.

• Environmental Compliance: The Companys manufacturing facilities come under Gujarat Pollution Control Board. Non-compliance may lead to penalties, production stoppage and reputational damage.

• Raw Material Price Volatility: Key raw materials like benzene, toluene, naphthalene, Aniline and Beta are crude oil derivatives. Geopolitical tensions and freight disruptions have led to price volatility of 20-30% during the year, impacting margins.

• Customer Concentration & Audits: Export customers from US and EU require stringent certifications like FSSC 22000, SMETA, REACH registration. Failure to maintain certifications or adverse audit findings may result in loss of customers.

• Waste Management: Intermediates manufacturing generates hazardous waste and effluent. Rising cost of treatment, disposal and stricter monitoring by State Pollution Control Boards pose operational and financial challenges.

• Supply chain disruptions: Disruptions due to ongoing war Financial and Operational Performance

(a) Net Sales and Other Income

Sales during the year ended March 31, 2026 were Rs. 37171 Lakhs as against Rs. 36085 Lakhs in the previous year, an increase of Rs. 1086 Lakhs in comparison over the previous year. During the year Operating Income increased from Rs. 656 Lakhs to Rs. 671 Lakhs and other income reached to Rs. 42 Lakhs.

(b) Expenditure

The total expenditure increased from Rs. 34739 Lakhs to Rs. 35175 Lakhs for the year under review showing a increase of Rs. 436 Lakhs over the previous financial year in relation to increase in sales of current year.

(c) Profit

There was a Net Profit of Rs. 2030 Lakhs during the year under review.

(d) Significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios -

Name of Ratio	Numerator	Denominator	31st March 2026	31st March 2025	% changes over previous year	Reasons for more than 25% changes
(a) Current Ratio	Current assets	Current Liabilities	1.14	0.94	20.78%	NA
(b) Debt-Equity Ratio	Total Debt	Total Equity	0.68	0.86	(20.43%)	NA
(c) Debt Service Coverage Ratio	PAT + Depreciation + Term Loan Interest	Term Loan Interest + Term Loan Repayment	1.27	1.04	23.09%	NA
(d) Return on Equity Ratio	PAT	Average Equity	8.70%	7.06%	23.31%	NA
(e) Inventory turnover ratio	Total Revenue from Operation	Average Inventory	4.61	4.96	(7.08%)	NA
(f) Trade Receivables turnover ratio	Total Revenue from Operation	Average Trade Receivables	5.45	6.16	(11.57%)	NA
(g) Trade payables turnover ratio	Total Purchases	Average Trade Payables	3.00	3.06	(2.09%)	NA
(h) Net capital turnover ratio	Total Revenue from Operation	Net Working Capital	19.01%)	(36.70%)	(151.81%)	Decrease in borrowings
(i) Net profit ratio	Net Profit ( PAT)	Total Revenue from Operation	5.36%	4.08%	31.45%	Decrease in Finance Cost
(j) Return on Capital employed	Earnings Before Interest and Taxes (EBIT)	Capital Employed = Tangible Net Worth + Total Debt + Deferred Tax Liability	13.85%	12.95%	6.95%	NA
(k) Return on investment	Income generated from invested funds	Average of Investment & Fixed Deposits	15.19%	14.42%	5.31%	NA

Segment wise or Product wise performance

The Company is engaged in manufacturing and marketing of Dyes & Intermediates. There is only one reportable segment i.e. "Dyes & Dyes Intermediates". So the segment wise or product wise performance report is not given in the report.

Outlook

The market has been witnessing steady growth owing to increasing demand for processed and packaged food worldwide. Consumers are increasingly preferring food products that offer vibrant colors and natural appeal. This has prompted food producers to exploit available colors to enhance the visual appeal of food items. The market is expected to witness significant opportunities for growth in the coming years. Changing lifestyles and evolving food consumption patterns are contributing to the rising demand for innovative food colors across both developed and developing economies. However, stringent regulations regarding the use of synthetic colors may pose a challenge. Industry players are focusing on developing natural food colors to capitalize on the growing consumer preference for clean labels and natural ingredients in food products.

Environmental & Hazardous Safety And Quality Assurance

In pursuit of excellence & meeting the changes that happen time to time & also to fulfill the requirements received from customers, your Company continued to integrate its ISO 9001:2015, ISO:14001, FSSC:22000, HACCP and other certification. Your Company is committed to ensuring the highest standards of environment management and strict compliance with regulatory requirements at all times. All the products manufactured by Dynemic meet the regulatory requirement under FSSAI, EU, USFDA and also fulfill criteria of Kosher & Halal, & WHO-GMP Certification.

Your company is committed to socio-environmental aspects and go beyond compliance norms of competitive authorities.

Internal Control Systems And its Adequacy

Your Company has a comprehensive system of internal controls to safeguard the Companys assets against loss from unauthorized use and ensure proper authorization of financial transactions. The Company has an exhaustive budgetary control system to monitor all expenditures against approved budgets on an ongoing basis. The Company maintains a system of internal controls designed to provide assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with applicable laws and regulations as applicable in the various jurisdictions in which the Company operates.

Human Resources

Our employees are our most precious assets and we value their commitment. Relations with the employees at all levels remained cordial during the year. Your Company has 464 permanent employees as on March 31, 2026.

Disclosure of Accounting Treatment

The Financial Statements are prepared in accordance with Indian Accounting Standards (Ind AS) as per the Companies (Indian Accounting Standards) Rules, 2015 and the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 notified under Section 133 of the Companies Act, 2013 (the Act) and other relevant provisions of the Act. The previous year figures have been regrouped/reclassified or restated, so as to make the figures comparable with the figures of current year. The significant Accounting Policies which are consistently applied have been set out in the Notes to the Financial Statements.

Cautionary Statement

Certain statements under "Management Discussion & Analysis" may be forward looking statement within the meaning of applicable securities laws and regulations. The forward looking statements are based on certain assumptions and expectations of future events. Actual results may differ materially from those expressed or implied from the statement since the Companys operations are influenced by many external and internal factors beyond the control of the Company.