Hemo Organic Ltd Management Discussions

BUSINESS ENVIRONMENT GLOBAL ECONOMIC OUTLOOK

Global economic growth and trade flows expected to remain steady:

Global growth is forecasted to be range-bound between 2.6% and 3.1% in 2024. Growth is likely to increase at 3.2% in 2025. However, these projections are lower than historical average of 3.8% (2000-19) due to factors such as restrictive monetary policies, reduced fiscal support and low underlying productivity growth.

World trade growth is forecasted to be 3.3% in 2024 and to increase 3.6% in 2025. However, current trade growth is lower than historical average of 4.9% due to rising trade distortions and geo-economics fragmentation. In 2024, oil prices are expected to decrease in the range of 2-2.5%, fuelling global trade.

Global inflation to decline driven by lower rates in advanced economies:

Global inflation is predicted to be at 5.8% in 2024 as against 6.8% in 2023. It is expected to further decrease to 4.4% in 2025. Advanced economies are anticipated to lower inflation faster, coming down to 2.6% in 2024 from 4.6% in 2023. Inflation in emerging market and developing economies is projected to remain at 8.1% in 2024, only a slight drop from 8.4% in 2023.

INDIA ECONOMIC OUTLOOK

• Indian economy is projected to grow at 6.5% - 7% in FY 25. Strong growth in India is supported by robust domestic demand and growth in the manufacturing and services sectors;

• Inflation Rate likely to decline from 5.4% in FY 2024-25 to 4.5% in FY 25. Bank repo rate is maintained at 6.5% in 6th consecutive meeting in February to bring down the inflation rate towards targeted 4%;

• Indias trade deficit showed considerable improvement in April-January 2023-24. Overall trade deficit for April- January 2023-24 is estimated at US$ 70.43 billion as compared to the deficit of US$ 111.99 billion during April-January 2022-23, registering a decline of 37.11%;

• Capital expenditure for FY 2023-24 stands at 3% of GDP ( 10 lakh crore), indicating the Governments commitment to invest in the countrys growth. Moreover, the Government has announced an even larger allocation of 11.11 lakh crore for next fiscal year (3.4% of GDP), which demonstrates their long-term vision for the economy. Of this amount, a considerable sum of 1.68 lakh crore has been earmarked for the Ministry of Chemicals and Fertilisers, reflecting the Governments emphasis on promoting the chemical and agriculture sectors. Overall, these budgetary allocations signal the Governments determination to accelerate economic growth and create a more prosperous and resilient India.

(Source: Budget, RBI, S&P Global, PIB, Argus Seaborne Coal Outlook, CEA)

CHEMICAL INDUSTRY Global Chemical Industry

Global chemical production (excluding pharmaceuticals) is forecasted to increase by 2.7% in 2024, surpassing the growth rate of the previous year (2023: +1.7%). Advanced economies are expected to see modest production growth following a significant decline in previous year (2024: +0.8%, 2023: -4.9%), while growth in emerging markets is anticipated to grow slightly (2024: +3.5%, 2023: +4.8%).

In China, the largest chemical market, lower but still notable growth in chemical production is expected at 4.0%. This growth is primarily driven by the consumer goods and electronics industries. Other emerging markets in Asia, are expected to gradually recover with India being the main growth contributor at 4.5%.

United States is anticipated to see a slight recovery in chemical demand (2024: +1.1%, 2023: -1.0%) after a year marked by destocking and weak industrial growth. Growth is expected across most customer industries in the manufacturing sector, with additional growth expected in the automotive industry. However, uncertainties remain due to high interest rates and the risk of recession, particularly in the construction sector.

Global agrochemicals market experienced a decline in 2023 due to channel destocking, price corrections, and volatile weather. This trend is reflected in a 25% decrease in crop protection chemical exports from India and a steeper decline in Chinese exports, emphasising the industry-wide impact and the need for adaptation. Despite challenges, a gradual recovery is anticipated in 2024.

INDIAN CHEMICAL INDUSTRY

India is the 6th largest producer of chemicals in the world and 3rd in Asia, contributing 7% to Indias GDP. India holds a strong position in exports and imports of chemicals at a global level and ranks 14th in exports and 8th in imports at the global level (excluding pharmaceuticals). The Indian chemical industry stood at US$ 254 billion in 2023, and is expected to reach US$ 304 billion by 2025, registering a CAGR of 9%. The cumulative FDI equity inflow in the chemical industry reached US$ 21.71 billion from April 2000 to September 2023.

India saw no table improvement in its chemical trade balance (Chapters 28 to 38 excl. 37), with deficit dropping from US$15 billion in FY 2022-23 to US$2 billion in FY 2023-24. This is largely driven by 15% decrease in import volumes, falling from US$74 billion in FY 2022- 23 to US$63 billion in FY 2023-24. Meanwhile, exports marginally increased from US$60 billion in FY 2022-23 to US$61 billion in FY 2023-24.

India is the 4th largest producer and 2nd largest exporter of Agrochemicals globally. In FY 2024-25, agrochemicals exports from India reached US$ 4.2 billion, dropped by 22% from FY 2022-23. India is fast emerging as major global manufacturing hub for agrochemicals due to low manufacturing cost, low labour cost, technically trained manpower, and high production capacity.

Interim Union Budget 2024-25, focusses on key trends like EV ecosystem adoption, scaling up renewable power installations, promoting chemical manufacturing for import substitution, fostering green chemical production, and encouraging decarbonisation. Tax reforms, PLI initiatives, and government expenditure align with these goals.

(Source: Interim Union Budget 2024-25, IBEF, Ministry of Commerce, Expert Market Research)

SPECIAL NOTE ON CORONAVIRUS PANADEMIC

causing significant disturbance and slowdown of economic activity. The Company has made committed efforts to support its business stakeholders, employees and service providers. The effect of Covid-19 on the Company is insignificant. Looking at current situation the company does not predict any significant effect of Covid-19 on the Company as the Company is presently not carrying out any business activities. The Company is continuously monitoring the situation and taking necessary actions in response to the developments, to minimize the impact on the business of the Companys Future prospects.

FINANCIAL PERFORMANCE (Rs, in Lacs)

Particulars	F.Y. 2023-24	F.Y. 2022-23
Revenue from Operations	2.24	0.48
Other Income	-	-
Total Income	2.24	0.48
Operating Expenditure before Finance Cost, Depreciation and Amortization	23.49	5.94
Earnings before Finance Cost, Depreciation and Amortization	(21.25)	(5.94)
Less: Finance Cost	(1.81)	-
Less: Depreciation and Amortization Expenses	-	-
Profit/(Loss) before Tax	(23.06)	(5.46)
Less: Tax Expense
Profit/(Loss) after Tax (PAT)	(23.06)	(5.46)
Particulars	F.Y. 2022-23	F.Y. 2021-22

REVIEW OF PERFORMANCE

In the financial year 2023-24, the Company has earned ^ 2.24 Lacs from revenue from operations compared to ^ 0.48 Lacs for the financial year 2022-23. Due to increase in Legal and professional expenses, the Company has incurred Loss after tax of ^ 23.06 Lacs during the financial year 2023-24 as compared to loss after tax of ^ 5.46 Lacs in the financial year 2022-23.

KEY FINANCIAL RATIO

Particulars	Numerator	Denominator	As at March 31, 2024	As at March 31, 2023	% change from March 31, 2023 to March 31, 2024
Current ratio	Current Assets	Current Liabilities	6.50%	0.56%	1060.00%
Debt- Equity Ratio	Current borrowings + Non Current Borrowings+ lease payments	Shareholders Equity	(392.48%)	(68.68%)	471.00%
Return on Equity ratio	Net Profits after taxes - Preference Dividend	Average Shareholders Equity	144.08%	228.68%	-37.00%
Inventory Turnover ratio	Cost of material consumed	Average Inventory	200.00%	10.13%	1874.00%
Trade Receivable Turnover Ratio	Net credit sales = Gross credit sales - sales return	Average Trade Receivable	31.52%	8.06%	291.00%
Trade Payable Turnover Ratio	Net credit purchases = Gross credit purchases - purchase return	Average Trade Payables	-	-	-
Net Capital Turnover Ratio	Net sales = Total sales - sales return	Average working capital = Current assets - Current liabilities	(3.01%)	(3.01%)	0.00%
Net Profit ratio	Net Profit after tax	Net sales = Total sales - sales return	(1181.49% )	(1146.21% )	3.00%
Return on Capital Employed	Earnings before interest and taxes	Capital Employed = Tangible Net Worth + Total Debt + Deferred Tax Liability + Lease Payments	57.93%	28.51%	103.18%

OPPORTUNITIES

With the change in the segment of Companys Activities, following are the Opportunities for the Company:

> The Company is being managed by well experienced promoter with positive attribute to strive for challenges for future.

> Trading activities has turned out to be fruitful and there is good scope of future growth and profitability.

THREATS

> Future uncertain Factors

> Competition

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an efficient system of internal controls for achieving the following business objectives of the Company: Efficiency of operations

> Protection of resources

> Accuracy and promptness of financial reporting

> Compliance with various laws and regulations

> Compliance with the laid down policies and procedures

HUMAN RERSOURCE

Equipping the Company with an engaged and productive workforce is essential to our success. We look for commitment, skills and innovative approach in people. In assessing capability, we consider technical skills and knowledge that have been acquired through experience and practice, along with mental processing ability, social process skills and their application. We continue to invest in developing a pipeline of future talent and nurture them. As part of this process, we provide development and training opportunities to our workforce, which motivates and encourages them to grow in their work. Total 5 employees were employed in the Company. The Company has been maintaining cordial and healthy Industrial Relations, which has helped to a great extent in achieving the upper growth.

CAUTIONARY STATEMENT

Statements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the Companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.