GLOBAL ECONOMY OVERVIEW
The global economy is yet again at a highly uncertain moment, with the
cumulative effects of the past three years of adverse shocks- most notably, the COVID-19
pandemic and Russias invasion of Ukraine-manifesting in unforeseen ways. Though, the
global economy saw a remarkable recovery during the pandemic and other related headwinds,
albeit from a lower base. The World Economy is facing several challenges such as
incremental inflation, the cost of living, trade wars and protracted geopolitical
conflicts. The world economy has finally regained its positive growth momentum. Effective
economical stances undertaken by Governments across the world helped build the way for
more resilience across nations and businesses, to stay future-prepared and on their toes.
The shock of Russias invasion of Ukraine in February 2022 continues to reverberate around
the world. The Russian-Ukraine humanitarian crisis and consequent supply-chain
disruptions, hikes in energy prices, rising commodity prices, and widespread inflation all
weighed heavily on the overall prospect of the global economy in 2022. To battle
inflation, central banks worldwide hiked policy interest rates. As a result, inflation
moderated by the end of the year. However, despite inflation, global trade flourished in
2022. By mid-December, global trade in goods grew 10%, and global trade in services grew
15% yearly. Also, global trade volumes grew significantly during 2022, signaling a rise in
global demand. As per IMF World Economic Outlook, January 2023, the world economy grew by
3.4% in 2021-22 with an upgrade of 20 basis points from the previous forecast. Post
Covid-19 pandemic, the sharp recovery in economic activities went subdued by the gradual
yet firm grip of inflation that surcharged in the first half of 2021-22. As a cascading
effect, the advanced and emerging economies also faced a slowed-down economic pace. For
the advanced economy, according to IMF World Economic Outlook, January 2023, the estimated
real GDP growth figures are 2.7% in 2021-22 and 1.2% in 2022-23 while for the emerging
economies, the estimated figures are to stay at 3.9% for 2021-22 and 4.0% for 2022-23.
(Source: World Economic Outlook (imf.org))
INDIAN ECONOMY OVERVIEW
Indian economy continued to remain strong in the face of adverse global
macroeconomic challenges during the FY 23. According to the data by MoSPI (Ministry of
Statistics and Programme Implementation), Indias GDP grew by about 7.2% in FY23. Indias
economic growth story was primarily supported by robust investment activity reinforced by
government capex push, return of private consumption and capital formation, which also
helped generate employment in the country. Further, the widespread vaccination drive
lifted consumer sentiments which sustained over all consumption both industrial and
domestic fronts. Though, the global turmoil in FY23 triggered broad-based inflation
worldwide, and India was no exception. In April 2022, retail inflation, measured by CPI
(consumer price index), reached the highest (7.79%). RBI increased interest rates to
contain the soaring inflation. By the end of this fiscal, CPI (consumer price index) came
down to 5.66%. The index of industrial production grew by 5.1%, against a growth of 11.4%
in FY22. Despite this drop, GST collection in FY23 stood at H18 lakh crore, clocking a
growth of 22% over last year. It shows the resilience of the Indian economy amid several
global headwinds. Net Direct Tax collections (provisional) for the FY23 stood at H16.61
lakh crore marking a growth of 17.63% on a y-o-y basis. However, despite weak global
demand, merchandise exports hit a record high of US$ 447.46 billion, registering a 6.03%
growth over FY22. Imports, on the other hand, rose to US$ 714.24 billion in FY23. Last
year it was US$ 613.05 billion. As a result, the trade deficit moved north to US$ 266.78
billion. Net FDI declined by nearly 27% to US$ 28 billion in FY23 as compared with US$
38.6 billion a year ago, mainly due to moderation in gross foreign direct investment
inflows and an increase in repatriation. Fitch Ratings affirmed Indias long-term
foreign-currency issuer default rating (IDR) at BBB- with a Stable outlook, backed by
robust growth outlook and abating core inflation pressure. In an effort to push the
infrastructure capex, in the financial budget for FY24, the Central Government announced a
massive increase of 33% in the capex outlay to H10 lakh crore, about 3.3% of the GDP This
is said to have a multiplier effect resulting in additional economic activities and job
creation with all round economic activity being the single point agenda. (Source:
Government publications & RBI)
GLOBAL CHEMICAL INDUSTRY:
The global chemical output grew by 2% in 2022 (2021 it grew by 5%) and
is expected to grow by 3% in 2023 as we expect Asia- pacific region to bounce back. India
and China will be the main growth drivers for the Asia-pacific region both in terms of
production and demand as well for chemicals. The deterioration of the economic environment
in 2023 will affect demand for most chemical products amid high feedstock and energy
costs. Moreover, increased supply due to big capacity additions in Asia will put more
pressure on chemical margins globally, now that the cost of freight from Asia has eased
substantially, reviving competition that was largely absent in 2021 and 1H22. Trends will
vary across regions, with European producers most severely affected due to high regional
energy costs, and US and Middle East producers continuing to benefit from lower domestic
gas prices. Chinese producers reliance on coal feedstock will mitigate the effect of high
oil prices, and we expect Chinas GDP growth to pick up in 2023, after weak growth in 2022
due to the restrictions of its Zero Covid policy. Sustainability has increasingly become a
focus for the chemical industry and many companies are responding with shift to green
chemistry and commitments to decarbonisation, recycling and resource recovery. Large
companies are leading the way to net-zero greenhouse gas emission commitments. Initiatives
such as European plastic tax and green hydrogen stimulus packages in the US, Canada and
Europe are accelerating the adoption of sustainable practices and goals. Industry players
are showing heightened focus on new and innovative technologies such as Carbon Capture and
Utilization (CCU).
In addition, companies continue to advance work on chemical recycling,
green hydrogen, etc. These will boost usage of renewables, improve energy efficiency,
reduce emissions and create new market for carbon and other by-products as part of an
increasingly circular economy. Chemical companies are likely to focus on repositioning
their asset portfolios and balancing trade-offs between different strategic options with
critical considerations such as scale, the scope of products and growth opportunities. To
deliver strong growth and improve financial performance, firms may consider looking into
few activities like investment In high value added opportunities, consumer preference,
etc. (Source: Various industry reports (Deloitte Chemical Industry Outlook 2022,
C&EN World Chemical Outlook, etc.)
INDIAN CHEMICAL INDUSTRY:
The Indian specialty chemicals sector looks at a period of fast-paced
growth driven by several market forces. India is emerging as a preferred manufacturing hub
for specialty chemicals for domestic and export markets. Approximately 20% of the total
chemicals market in India1, the specialty chemicals sector has been playing a pivotal role
in driving the chemicals industrys growth. The Indian chemicals industry is a major
player in the global market, ranking 6th in production and 14th in exports2. The sector
provides essential building blocks and raw materials for many industries, including
agrochemicals, pharmaceuticals, textiles, paper, paints, and soaps. It is valued at
US$220b, and projected to grow by approx. 9% p.a. during 2020-25 to reach US$300b by FY
2025. The sector is expected to hit the US$1t mark by FY 2040. Indian specialty chemicals
companies are at their lifetime high capex with healthy revenue and earnings growth over
FY19-22. They benefit from strong demand from global clients as they look beyond China and
increase domestic consumption. Stock prices are also at their lifetime peak and remain
well above global valuations.
In the future, strong demand uptick from domestic and international
markets will continue to aid revenue growth for Indian specialty chemical players. This
growth will result in strong earnings in the medium term and sustain high valuations.
Companies with robust chemistry and technical skills and a healthy balance sheet are
expected to continue outperforming cyclical/ bulk commodity players, which may experience
price volatility once China ramps up production in FY23.
The fast-paced growth of the Indian specialty chemicals industry is
inevitable. However, companies will need agility to adapt quickly to the evolving
macroeconomic and industry landscape to ensure sustainable and transformative growth over
the longer term. They also have to focus on customer value creation through product
differentiation, identification of customer needs through focused customer collaboration,
and building resilient supply chains supported by higher investments in R&D and
digital. They must reduce their carbon footprint by adopting alternative methods that
create a green ecosystem. The industry will seek continued government support to create a
business-friendly environment and world-class infrastructure, including additional PCPIRs
and feedstock availability to fuel growth. In conclusion, while the macroeconomic levers
of growth, such as rising population and increasing disposable income coupled with
exports, will provide the requisite tailwinds, the Indian specialty chemicals industry
will need to consciously focus on innovation, decarbonization, digitalization, automation,
and investing in skilling its workforce (Source : EY Chemicals Industry Report)
INDUSTRY STRUCTURE AND DEVELOPMENT:
Your company is a global manufacturers and suppliers of Fine &
speciality chemicals. Your Company is one of the leading players in the industry which has
a balanced portfolio of technical along with backward integration for some products.
Availability of technically trained manpower, seasonal domestic demand and production
capacities for generics built to cater to overseas markets are the other reasons for
strong exports. Exports account for more than 51.66% of the company production. Your
Company is a leading manufacturer of Specialty Chemicals with diversified end uses into
Agrochemicals, Pharmaceuticals, High Performance Polymers, Paints, Pigments, Printing
Inks, Rubber Chemicals, Additives, Surfactants, Dyes, Flavors & Fragrances, Home &
Personal Care applications, etc. Your Company makes continuous efforts to explore and
innovate new products & processes in all segments. This diversified end-user base
helps the Company to reduce its risk from downturn in any individual business segment and
also to capitalize on the growth opportunities in each of the end-user segments. The
Company had upgraded its various manufacturing units into Zero Liquid Discharge Units
(ZLD) and also has put in place various processes to control/limit generation of effluents
and improve the treatment of the same. As part of the Risk Management policy, the relevant
parameters for all manufacturing sites are analyzed to minimize risk associated with
protection of environment, safety of operations and health of people at work and monitored
regularly with reference to statutory regulations and guidelines defined by the Company.
The Company fulfills its legal requirements concerning emission, waste water and waste
disposal. Improving work place safety continued to be top priority at all manufacturing
sites.
For more details, please refer to our website www.indoaminesltd.com
FINANCIAL PERFORMANCE AND RATIOS:
| Sr No Particulars |
FY2022-23 |
2021-22 |
Change |
% Change |
| 1 Revenue from operations (net) |
92,206.18 |
78,018.43 |
14,187.75 |
18.19% |
| 2 EBIDTA |
8,454.68 |
6,074.73 |
2,379.95 |
39.18% |
| 3 Profit before Tax |
5,261.54 |
3,507.63 |
1,753.91 |
50.00% |
| 4 Profit after tax |
3,799.53 |
2,480.26 |
1,319.27 |
53.19% |
| 5 Net worth |
21,733.88 |
18,302.92 |
3,430.96 |
18.75% |
| 6 Debt |
22,992.76 |
20,630.25 |
2,362.51 |
11.45% |
| 7 Trade Receivables |
20,226.84 |
18,527.77 |
1,699.07 |
9.17% |
| 8 Inventory |
11,409.31 |
9,800.93 |
1,608.38 |
16.41% |
| 9 Debt Equity Ratio |
1.06 |
1.13 |
-0.07 |
-6.19% |
| 10 Current Ratio |
1.20 |
1.08 |
0.12 |
11.11% |
| 11 Receivables Turnover Ratio |
4.56 |
4.21 |
0.35 |
8.31% |
| 12 Inventory Turnover Ratio |
8.08 |
7.96 |
0.12 |
1.51% |
| 13 EBIDTA Margin (%) |
9.17 |
7.86 |
1.31 |
16.67% |
| 14 PBT Margin (%) |
5.71 |
4.54 |
1.17 |
25.77% |
| 15 PAT Margin (%) |
4.12 |
3.22 |
0.90 |
27.95% |
| 16 Interest Coverage Ratio |
4.55 |
4.19 |
0.36 |
8.59% |
| 17 Net Profit Margin |
0.04 |
0.03 |
0.01 |
33.33% |
OPPORTUNITIES & THREATS:
The Chemical Industry is critical for the economic development of our
country providing products and enabling technical solutions in virtually all sectors of
the economy. The demand for our products is steadily increasing both in India and abroad.
Key drivers for success in the chemical sector include proximity to strong growth markets,
greater ease in doing business and the continued development of petroleum, chemicals and
petrochemical investment. Your Company is ready to take the challenges of increased demand
by continuously adding capacities, adding new products and investing in upgradation of its
manufacturing capacities. The in-house R&D Department has been developing quality
products and is also striving for achieving cost efficiencies. The industries in which our
products have application are growing at a reasonable pace. We have a fair chance of
improving our position as a reliable supplier of good quality chemicals to these
industries. Our Core Competence in chemical handling and manufacturing supported by an
able technical team, should provide a lot of opportunities and scope to the company to
improve its performance. We enjoy leadership position in some of the products in domestic
market, driven by strong in-house technology, diversified product portfolio and customer
base. The commodity nature of some of our products makes them susceptible to fluctuations
in raw material prices and exchange rates. Petroleum based raw materials are subject to
international gas/crude oil price fluctuation. Being a global player, we are also exposed
to competition not only from domestic players but also large international players. Cheap
imports have posed problems, which are being addressed by consistency in quality of the
products and improving production efficiencies and also by initiating anti-dumping
investigations.
SPECALITY CHEMICALS:
From CY2020 to CY2025, the speciality chemical market is expected to
grow globally by CAGR of 6.2% and in India by CAGR of 5.2%. This growth is expected to be
led by sustained demand in end-use customer segments for our intermediate and speciality
chemical products, which are experiencing consumption-led growth in India and key global
markets. The Indian chemical industry plays a pivotal role in contributing to the economy
of the country, accounting for approximately 7 per cent of GDP and is expected to reach
USD304 billion by 2025, up from USD178 billion in 2021. The industry continues to remain
an attractive hub for opportunities for both domestic and multinational manufacturers.
Specialty chemicals segment comprises a significant portion of India s chemical industry.
With rising demand for value-added products by both domestic consumption and exports, the
industry has experienced a significant increase from end-user segments such as the food
industry, automobile industry, real estate, clothes and cosmetics, among other industries.
Additionally, the Indian specialty chemicals industry is also expected to outpace China,
Japan and the rest of the world. The Indian specialty chemicals industry has expanded
exponentially in recent years. It represents 22 per cent of India s overall chemicals and
petrochemicals market and is valued at $ 32 billion. The industry is anticipated to reach
USD64 billion by 2025 at a CAGR of 12.4 per cent (Source: Indian Specialty Chemicals,
Yes Securities, January 2022, Livemint, June, 2022).
INTERNAL CONTROL SYSTEMS:
The Company has comprehensive internal control systems commensurate
with the nature of its business and size and complexity of its operations. They provide
reasonable assurance on effectiveness and efficiency of its operations, reliability of
financial reporting and compliance with the applicable laws and regulations. The internal
control systems that deploy an amalgam of modern and traditional processes are routinely
tested and upgraded for both design and operational effectiveness by the Management and
the same is audited by the Statutory Auditors. The Company has an in-house Internal Audit
department which includes professionals from finance, data analytics and engineering
disciplines and is also working with reputed audit firms specializing in internal audits
and assurance domain. The annual internal audit plan is reviewed and approved by the Audit
Committee in beginning of the financial year to ensure adequate coverage. Together, they
have the responsibility to bring in excellence in the function, continuously identify
areas of operations requiring strengthening and introduce best processes and practices to
manage a growing business which comprises subsidiary, joint venture and associate
entities. Progress of internal audit plan, significant observations noted during internal
audits and status of identified actions and recommendations are reviewed by the Management
periodically and by the Audit Committee on quarterly basis.
RESEARCH AND DEVELOPMENT (R&D):
Over the years, the company has launched several new products by
establishing an DSIR approved In-House R&D unit that innovates products and helps to
attain better production efficiencies. We have a dedicated team of experienced scientists
who provide us with a strong base for introducing new products, and process development,
quality, safety standards and environmental protection. We will continue to invest towards
technological development that not only improves our product and process, but also helps
us to minimize the impact of climate change.
INDUSTRIAL RELATIONS:
The company maintains very cordial & healthy industrial
relationship. Company undertakes various measures to get view of the employees on safety,
performance improvements, employee benefit schemes etc. This ensures employees
participation in the day to day operations of the company. Imparts training both internal
& external to its employees which keeps them refresh with the new changes taking place
& improves their efficiency. Your Company is continuously striving to create
appropriate environment, opportunities and systems to facilitate identification,
development, and utilization of their full potential and inculcating a sense of
belongingness. Your Companys industrial relations continued to be cordial &
harmonious during the year under review.
HUMAN RESOURCES:
Your Company considers its employees the most valuable assets. It
emphasises fostering a culture that empowers employees to cultivate their talent and
improve communication while increasing their productivity. Employee well-being is also
high on the HR agenda. The HR team takes care of the peoples safety and wellness,
motivation and training of its employees for their career growth. The Company has
empowered its team to make decisions that will improve business operations and help them
execute business strategies better. It recognises and rewards employee and team
contributions to the furtherance of business performance. This goes a long way in
motivating the team for greater efficiency and planning their career path with futuristic
goals. We also continued to maintain a cordial and amicable relationship with workers at
all our sites. The total number of employees on the rolls of the Company, as on March 31,
2023, was 568 as against 512 on March 31, 2022.
Your Directors wish to acknowledge the sincere and dedicated efforts of
the employees of the company and would like to thank them for the same.
SAFETY, HEALTH & ENVIRONMENT:
Industrial safety is being considered as very important aspect. At each
location one person is specifically designated to see that proper rules of safety are
observed & no compromise is made from safety angle. Periodically industrial safety
seminar is organized to train employees on safety rules. We conduct safety audit both
internal & external to trace out any loop holes from safety point of view and the
changes, new measures recommend is implemented on priority. All safety equipments such as
fire extinguisher, sparklers etc. are always keep in proper condition. There were no major
accidents during the year under review.
POLLUTION CONTROL MEASURES:
Your company is very sensitive towards environment & pollution
control. The Company sets a strong focus on continuously steering its environmental
performance towards increased sustainability and setting new environmental benchmarks
though leading edge operations and innovation. With our vision to become climate neutral
by 2050, we have set ourselves ambitious targets that allow us to measure our success
based on clearly defined metrics and milestones. All sites undergo a regular aspect,
impact review of their environmental and necessary control measures are implemented to the
mitigate and control the possible impacts. The sites stringently monitor and ensure
compliance with all the State Pollution Control Board requirements. Additionally, Company
has set up the goal to achieve implementation of sustainable water management systems at
all sites in areas of high-water stress. A water risk assessment annually is conducted to
identify sites located in water risk regions and measures required to mitigate the risks.
The Company has undertaken sustainable initiatives on clean technology, energy efficiency,
renewable energy, etc. We have identified savings potential through detailed analysis of
energy consumption across operations and oversees all forms and usages of energy at the
Company - electricity, heating and cooling, steam, natural gas, nitrogen. By implementing
this program, many improvement projects are being identified to optimize our energy usage
across all sites. Some of them are as under: -
• Agro-Mass Briquettes, being the most economical fuel, are used
to produce 95% of steam required on site
• VFD installation for pumps, blowers etc.
• Improvement of cooling water supply system efficiency
• Use of transparent roof sheets and Solar Tubes for natural
lights thereby leading to reduction in energy consumption
• Increased usage of energy efficiency of new equipments
• Use of Turbo Ventilators for extraction of heat from the
building
• Use of LPG instead of Furnace oil for clean environment.
The Companys emissions, effluents and wastes are within the
permissible limits set by State Pollution Control Boards of respective States.
RISKS & CONCERNS:
Business is all about taking risks with the objective of capitalizing
on emerging opportunities. As such, INDO AMINES LIMITED takes calculated risks in
identifying the products and processes which are commensurate with present industry
standards. The Company identifies risks which could impact business operations and address
them ahead of time leveraging root cause analysis. The Comp any focuses on early
identification of probable risks based on the dynamic and evolving external ecosystem and
believes in mitigating risk early with the objective of minimizing business disruptions.
The Audit Committee and Management team work in tandem to identify the risks and mitigate
them. Following are some of the major risks and migratory responses for the Company: -
1) Environmental Risk :
Change in climate plays an essential role in driving the Companys
business. The demand for the Companys various products is highly based on climatic
changes. Your Company manufactures Specialty Chemicals, which exposes it to significant
environmental concerns. Effluent discharge, hazardous pollutants, inappropriate waste
management, and resource depletion are only a few of the primary risks that the Companys
business is exposed to.
Mitigation Measure:- Your Company has built a long-term business
with decades of experience by adhering to all the applicable rules and regulations. The
Company ensures that all of its operations and environmental responsibilities are taken
good care of. The Company has invested in environment friendly methods that include Zero
Discharge Plant and moved towards utilization of bio fuel energy and is further adding
more to grow its sustainable footprints while being responsible.
2) Changes in Government Policies:
The Companys business and decision making may get affected due to
certain Government interventions and new policies. The Company follows established
regulations but the risk of the Companys products failing to meet compliance standards
can negatively impact its business operations and sales.
Mitigation Measure :- Your Company enjoys a strong global presence
and a rich clientele across Home, Personal Care and Performance Chemicals, Textiles, Agro
chemicals, etc. The Company proactively ensures that its business follows all the
regulatory standards, financial frameworks and conducts audit at periodical intervals.
The Company has aligned its policy on risk assessment to that of the
global approach and risk assessment reports are reviewed at regular intervals. The Company
has also adopted a focused approach toward risk management in the form of a corporate
insurance program. The goal of this program is to optimize the financing of insurable
risks by using a combination of risk retention and risk transfer. The program covers all
potential risks relating to the business operations of the Company at its various
locations. As part of the global policy, the relevant parameters for all manufacturing
sites are analyzed to minimize the risk associated with the protection of the environment,
the safety of operations, and the health of people at work. These are then monitored
regularly concerning statutory regulations prescribed by government authorities and
guidelines defined by the group. The Company fulfills its legal requirements concerning
emission, wastewater, and waste disposal. Improving workplace safety continues to be the
top priority at all manufacturing sites. The Company continues its focus on compliance in
all areas of its business operations by rationalizing and strengthening controls. This is
also an important component of our Code of Ethics. The Company has set in place the
requisite mechanism for meeting the compliance requirements and periodic monitoring to
avoid any deviation. We aim to set exemplary and sustainable standards, not only through
products, services, and performance but also through integrity and behavior. As part of
continuing efforts to ensure that we maintain such exemplary standards and to provide
employees with a good understanding of the Anti-Trust/Competition laws, we have launched
and imparted training on the aforesaid topics. The business operations of the Company are
exposed to a variety of financial risks such as market risk (foreign exchange risk,
interest rate risk, and price risk), credit risk, liquidity risk, etc. The risk management
program focuses on the unpredictability of financial markets and seeks to reduce potential
adverse effects on financial performance. The Companys business - critical software is
operated on a server with regular maintenance and backup of data and is connected to a
centralized computer center with physically separated server parks operated by the group.
The systems parallel architecture overcomes failures and breakdowns. The global
communication network is managed centrally and is equipped to deal with failures and
breakdowns.
CORPORATE SOCIAL RESPONSIBILITIES:
The Corporate Social Responsibility Committee was constituted as per
Section 135 of the Companies Act, 2013 ("the Act") read with the Companies
(Corporate Social Responsibility Policy) Rules, 2014.
The average profit of the Company for last three years is Rs 3,223.50
Lakh. Prescribed CSR expenditure is Rs 64.47 Lakhs. Details of CSR spent during the
financial year 2022-23 are as per Annexure V enclosed. The Corporate Social Responsibility
(CSR) policy of the Company has been posted on website of the Company.
OUTLOOK:
The Company has established a leading position in domestic market and a
presence in international market with a reputation for reliable service and quality
products. For the financial year 2023-24, the overall growth scenario is expected to
remain robust, although significant challenges persist in the global market. Our focus
will continue on sustainable growth by taking measures for increasing our market share of
existing products and also introducing new products. Increased competition from global and
domestic players, are putting pressure on sales prices. With the growing demand for
Companys products, the capacity of sites in Maharashtra is being enhanced. During the
financial year 2023-24, we expect our investments in various other projects which will in
turn add to both, top-line and bottom-line. We will continue with our efforts for
improving our bottom-line by expanding our product-range, while re-looking at business
strategies and models, wherever necessary. We will continue our efforts for improving
efficiencies and margins.
Cautionary Statement
Statements in the Management Discussion and Analysis describing the
objectives, projections, estimates and expectations of the Company, its direct and
indirect subsidiaries and its associates, may be forward looking statements within the
meaning of applicable laws and regulations. Actual results might differ substantially or
materially from those expressed or implied. Important factors that could make a difference
to the Companys operations include, among others, economic conditions affecting
demand/supply, price conditions in the domestic and overseas markets in which the Company
operates, changes in the Government regulations, tax laws and other statutes and
incidental factors.
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