In terms of the provisions of Regulation 34(2) (e) of the Listing Regulations, the
Managements discussion and analysis are as follows.
GLOBAL ECONOMY OVERVIEW:
The global economy, which was recovering from the downfall due to the pandemic induced
downturn, continued to face volatility and setbacks on account of the ongoing
Russia–Ukraine war. Global inflation, which in 2022 was at its highest level in this
millennium due to rising oil and gas and food prices, is decreasing. Global consumer
confidence is also now higher. To address the current economic challenges, it is crucial
to focus on increasing employment opportunities, prioritizing public investment,
investment in education, health, digital infrastructure, new technologies and the green
economy are essential. Many developing countries are prioritizing green investments to aid
their recovery from pandemic. Several other nations are exploring transformative measures
for their economies, including implementing carbon taxes, fostering private-public
partnerships, utilizing green bonds and other mechanisms to finance the sustainable
initiatives.
INDIAN ECONOMY OVERVIEW:
As per the report of the World Bank dated April 04, 2023, Indias growth continues to
be resilient to external conditions. Having faced challenges in the form of inflation,
monetary tightening, Russia-Ukraine war, COVID 3rd wave, unemployment and interest rate
hikes, India continues to be one of the fastest growing major economies. The measures
taken by the government to boost manufacturing in new sectors by providing incentives, the
Atmanirbhar Bharat scheme, especially in Defence and Railways, the continued expansion of
public digital platforms, and transportation infrastructure are some of the likely causes
for this growth story. The continued focus on the same is expected to play alarge role in
improving Indias cost and export competitivenessin the coming years.
With a robust domestic demand, thriving services exports and favourable macroeconomic
indicators, Indias outlook stands out among its peers. The countrys sustained growth and
broad based recovery will not only benefit its own population but also contribute
significantly to the global economy in the years ahead.
INDIAN CHEMICAL INDUSTRY:
The Indian chemical Industry is one of the most important components of our economy and
contributes around 7% to the nations GDP. Despite the challenges posed by the global
pandemic, the chemical sector has not only survived but thrived. Being the 6th largest
producer of chemicals globally and 3rd in Asia, the Indian chemical industry capitalizes
on forthcoming opportunities. India ranks 3rd in chemical imports and 4th in exports over
the last five years, showcasing its crucial role in the countrys inclusive trade flow.
Indias appeal as a manufacturing destination can be attributed to an advantage of lower
labour costs, a large domestic market, a large talent pool, and an ability to build cost
effective manufacturing units coupled with Government strategies viz. changes to corporate
tax rates, public infrastructure investment and improvement and continuous efforts to
improve the ease of doing business.
The Indian government allows 100% FDI in chemicals and has plans for production linked
incentive schemes in the Chemical sector. With the shift of manufacturing out of China,
India is becoming a preferred manufacturing hub for many specialty chemicals segments. The
Indian specialty chemical market is expected to grow at ~12% CAGR to US$120 billion, which
will presumably double its share in the global market from 3-4% to6% in the next 2-3 years
to come.
GROWTH DRIVERS:
a) Rising population: Indias population has surpassed Chinas and is estimated to be
1.41 Bn as of 2022 end, which could have a positive effect on the Indian chemical sector.
b) Urbanization: Indias urban population is forecast to reach 675 Mn by 2035, ranking
second only to Chinas one billion, leading to an increase in demand for housing and
pharmaceuticals.
c) Growing replacement demand: As disposable incomes increase due to economic
improvement, lifestyles in the country are becoming more modern, which could drive the
need for chemicals.
d) Increased consumption: Indias average chemical product consumption per person is
low at USD 91 and falls significantly behind other developed nations. This is predicted to
increase notably in the next decade, as a result of Indias robust economic growth,
growing middle class and urbanization.
e) India as a strategic partner: In the past 5 years, the focus of global chemical
production has moved from China and developed countries to more stable destinations such
as India. The reasons for this change include increased global trade tensions, stricter
environmental regulations, increased labor costs in China and the impact of the COVID-19
pandemic.
f) Supplier shift: The chemical industry in China has undergone significant changes due
to industry consolidation, environmental reforms and stricter financing regulations,
resulting in increased uncertainty for companies reliant on Chinese suppliers for raw
materials. As a result, many companies have shifted their supplier base to India, taking
advantage of low-cost labour and favourable investment policies. g) Plus one strategy:
Specialty chemical firms are expected to continue growing, despite margin blips. This
growth is being driven by strong domestic demand and exports, which is being bolstered by
the China-plus- one approach in major economies. Sales are projected to rise by over 19%
until FY25, better than the 17% demand growth of the sector in FY 2020-21 and FY 2021- 22.
Indian manufacturers are expected to benefit from this trend, as plant closures in Europe
provide an opportunity for a Europe-plus one market share gain.
COMPANY OVERVIEW:
Gujchem Distillers India Limited (GDIL) was founded in 1939 and recognized integrated
chemical manufacturer. The Company meets the global essential chemicals demand through
responsible care, commitment to the integrity of quality and environment..The Company aims
to service the domestic and export markets, contributing towards the ‘Make in India
initiative and empowering sustainable growth for a safer and brighter future.
FINANCIAL REVIEW:
During the financial year 2022-23, the revenue of the Company was 28.79 lacs as
against 27.47 lacs in financial year 2021-22. Earnings before Tax, Interest and
Depreciation in the financial year 2022-23 stood at 4.83 lacs, as against 32.25lacsin
the financial year 2021-22.The Company recorded a profit after tax (PAT) of 3.58 lacs in
the financial year2022-23 as against 39.21 lacs in the financial year 2021-22.
HUMAN RESOURCE MANAGEMENT:
The ability to attract, onboard, develop and engage the right kind of talent is crucial
to an organizations long term success. Company strongly believes in continuously taking
steps towards talent management, leadership development, and employee engagement.
Employees are the back - bone of good organization and to motivate them to achieve greater
heights, the Company undertook various initiatives towards their development, enhancement
and retention. The Company considers its highly motivated and well-maintained team as its
most valuable asset. Amidst all the pressures and demands of the growing business,
Industrial Relations continued to be reasonably cordial with our Union(s).
INTERNAL CONTROL SYSTEM:
Gujchem Distillers India Limited has a sound internal control system, which aims to
assure that operations are effective and well aligned with the strategic goals and its
evolving needs. The Company sinternal controls are commensurate with its size, nature,
and complexities of its operations both at the entity and the process levels. The internal
control framework is intended to provide reasonable assurance towards the effectiveness
and efficiency of its operations, reliability of financial reporting, compliance with
applicable laws and regulations, prevention and detection of frauds and errors and
safeguarding its assets. The Audit Committee reviews the adequacy and effectiveness of the
internal control systems and tracks the implementation of corrective actions. Significant
audit observations and corrective actions taken by the Management are presented to the
Audit Committee. The Audit Committee also meets the Statutory Auditors to ascertain, inter
alia, their views on the adequacy of internal control systems and keeps the Board of
Directors informed of its major observations.
OPPORTUNITIES AND THREATS: Opportunities:
Expansion & revamping by major customers to add capacities.
Several global oil and gas majors are turning their sights on downstream chemical
opportunities. This may increase the focus on petrochemicals in India, and higher
investment in the sector could ease feed stock challenges and boost self-sufficiency.
Around the world, multiple trade disputes have arisen. These have caused changes in
international supply chains that have impacted bilateral trade agreement amongst the large
countries. Indian chemical companies may have access to sizable chemical markets that are
still open in this situation.
Sustainability is becoming an imperative, not a buzzword, with various stakeholders
placing a premium on it. Chemical companies could prioritize environmental sustainability
to protect long-term shareholder value, while continuing to comply with local regulations.
Customers looking for solutions that save operating costs.
The advantage of being a professionally managed local company adaptable to the
ever-changing business environment.
Government initiatives / incentives for setting up sourcing/manufacturing companies
within the country.
Expansion in the manufacturing capacities to cater to growing demand.
Threats:
Volatility in the global and Indian economies.
The continuing war between Ukraine & Russia.
Accelerating climate change and unpredictability of changes in the weather.
Global companies strategically buying out businesses and investing in India.
Threats from low-cost manufacturers.
Introduction of new technologies.
Changes in environmental regulations due to climate change.
Increasing costs of compliance that could potentially make certain operations unviable.
RISKS MANAGEMENT AND CONCERNS:
The growth of the speciality chemical industry is driven by R&D activities and a
need for constant innovation in the product spectrum. On the other hand, a strong R&D
set-up ensures quality management and cost reductions. Since your Company has its own
R&D Centre, the above concerns are well addressed.
The Company is exposed to safety, health, security and environmental risks, given the
diversity and complexity of the industry in which your Company operates. The Managements
commitment towards employee safety, health and the environment extends beyond accidents
and occupational health hazards to social well-being of employees. The Company conducts
frequent SHE audits to confirm its framework protocol and regulatory compliances. The
Company has a Safety, Health and Environment Policy entailing its commitment towards high
standards across its facilities. The evolution of the regulatory environment across the
globe has resulted into increased scrutiny that raises minimum standards required by the
Company necessitating increased investment in compliance. The Company considers regulatory
requirements as a source of competitive advantage and therefore abides by and strives to
exceed the changing regulatory compliance requirements to consolidate its position in
business.
Macro-economic conditions like the policy decisions of the government, currency
fluctuations and volatility in commodity prices can affect the business of the Company. As
the Companys revenue generating sources are diversified into various sectors having
strong domestic demand, such risks are mitigated to some extent.
SEGMENT-WISE OR PRODUCT WISE PERFORMANCE
The Company operates in only single segment. Hence segment wise performance is not
applicable.
SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS & RETURN ON NETWORTH
In accordance with the SEBI Regulations as amended, significant changes as compared to
the immediately preceding previous financial year in key financial ratios for the year
2022-23 which are as below:
Key Ratios:
| S.N. Particulars |
As At March 31, 2023 |
As At March 31, 2022 |
% Change Compared to Last Year |
Explanation for any change in ratio by more than 25% as compared to preceding year |
| 1. Current Ratio |
356 |
12 |
2854% |
Due to the company has given advances for the future arrangements. |
| 2. Debt-Equity Ratio |
275% |
0.00% |
275% |
Due to the company has procured the unsecured loan during the current financial year. |
| 3. Debt Service Coverage Ratio |
0.00% |
0.00% |
0.00% |
- |
| 4. Return on Equity Ratio |
0.82% |
9.45% |
-91% |
Net profit during the current financial year is decreased as compare to previous
financial year. |
| 5. Inventory Turnover Ratio |
0.00% |
0.00% |
0.00% |
- |
| 6. Trade Receivables turnover ratio |
0.00 |
1.96 |
-100% |
There are no sales made during the current financial year. |
| 7. Trade Payables turnover ratio |
0.00 |
8.11 |
-100% |
There are no sales made during the current financial year. |
| 8. Net Capital turnover ratio |
0.00 |
150.51 |
-100% |
There are no sales made during the current financial year. |
| 9. Net Profit Ratio |
0.00% |
27.65% |
-100% |
There are no sales made during the current financial year. |
| 10. Return on Capital Employed |
0.28% |
-9.04% |
-97% |
Company started trading activity in current year and due to this profit compare to
previous year is comparatively high. |
| 11. Return on Investment |
15.8% |
0.00% |
15.8% |
- |
DISCLOSURE OF ACCOUNTING TREATMENT:
Gujchem Distillers India Limited has prepared financial statements for the F.Y. 2022-23
in accordance with the Indian Accounting Standards (IND AS) as specified under Section 133
of the Companies Act, 2013.
CAUTINARY AND FORWARD LOOKING STATEMENTS:
This report contains statements, which may constitute ‘forward looking statements
within the meaning of the applicable securities laws and regulations. Forward looking
statements are based on certain assumptions and expectations of the future events. Actual
results could differ materially from those expressed or implied. Important factors that
could impact the Companys performance include, among others, economic conditions
affecting the demand / supply and price conditions in the markets in which the Company
operates, changes in the Government policies, regulations, tax laws, other statutes and
incidental factors. The Company undertakes no obligations to update or revise
forward-looking statements based on any subsequent developments, information or events.
| Registered Office |
For and on the behalf of the Board of Directors |
| Survey No. 146, Plot No. 314, |
GUJCHEM DISTILLERS INDIA LIMITED |
| 307, 3rd Floor, Ashirwad Paras-1, |
|
| S.G. Highway, Makarba, |
|
|
| Ahmedabad-380009, Gujarat |
|
|
|
Sd/- |
Sd/- |
| Place: Ahmedabad |
SAGAR SAMIR SHAH |
VIRAJ SAMIRBHAI SHAH |
| Date: August 09, 2023 |
CHAIRMAN & DIRECTOR |
WHOLE-TIME DIRECTOR |
|
DIN: 03082957 |
DIN: 07889459 |
+91-9892691696
