J D Orgochem Ltd Management Discussions.

Industry Structure and Developments

Dyestu_ sector constitute one of the major components of chemical industry having vital role in the growing Indian economy. The Indian Dyestu_ Industry has transformed from being import dependent to an export driven industry. Dyes and Pigment group constitute one of the major components of chemical industry having vital role in the growing Indian economy. The Company operates into single segment with products comprising from Dyes and Dyes Intermediates which are colouring materials having its customer base in several industries such as Textile, Plastic, Paper, Ink etc. It is also the second highest export segment in chemical industry.

The Global GDP (Gross Domestic Product) was significantly lower during 2020 as compared to the growth rate in 2019. Slow private consumption, travel restrictions, shutdown of economic activities owing to COVID-19 pandemic across the globe, lead to this decline. The production of chemicals (excluding pharmaceuticals) decreased worldwide during 2020, particularly in the Asian emerging markets.

Opportunities and Performance

Dyes predominately find application in textiles with almost 80% of its production being used by textile sector. The other end applications involves paper, adhesives, art supplies, food and beverages, ceramics, construction, cosmetics, glass, paints, plastics and soap. The textile industry is expected to provide a positive growth trajectory and product demand in future due to several factors such as growing population, increasing disposable income, and changing consumer trends. The growing demand for textile dyes for various _bre types, such as cotton, polyester, and viscose, is expected to fuel the growth of the textile dyes market. The industry is likely to see new dyeing technologies coming into the market with the help of good technical expertise and R&D achievements. The market is witnessing a high growth due to the growing use of textile dyes. Low-cost of manufacturing in APAC countries and high demand for textile dyes in the region are driving the global textile dyes market.

During Financial Year 2020-21 the Company achieved sales revenue of Rs 123.20 lacs as compared to Rs. 150.15 lacs in Financial Year 2019-20. During the year the sales of Dyes was 90 MT as compared to 100 MT in previous year. At present the Company is not able to achieve significant growth in revenues and operating profits due to its inability to restart manufacturing activity.

Outlook and Strategy

The long-term growth prospects of the Indian economy being positive, the textile industry is also expected to grow in view of growing population, increasing disposable income, and changing consumer trends. The growing demand for textile dyes for various fiber types, such as cotton, polyester, and viscose, is expected to fuel the growth of the textile dyes market. With the consistent shift in the manufacturing base for Dyes and Dye-intermediates from the western countries to the Asian countries, there will be more opportunities for Dyes manufacturers. However, the Company may not be able to undertake manufacturing operations in immediate future due to financial constraints and ongoing litigation and disputes in labour matters.

Risks, Concerns and Threats

Stringent environmental regulations may hamper the growth of the dyes & pigment industry. Most of the advanced countries are imposing new and more stringent ecological norms which can restricts the exporters capability to grow, as complying with ecological norms is too expensive. Also the firegulations are having an adverse effect on the availability of raw material and intermediate input products forfi the industry. The current slowdown in Indian economy may persist for longer period affecting the overall growth. Exchange-rate fluctuations, increase in prices of Crude Oil and down-stream petrochemicals, etc are all areas of concern which your company may face from time to time.

Internal Control Systems and their adequacy

The Company has a proper and adequate internal control systems ensure there is efficient use and protection of resources and compliance with policies, procedures and statutory requirements. There are well-documented guidelines, procedures and processes, integral to the overall governance, laws and regulations. An independent firm of chartered accountants carries out the internal audit across the organization. The internal auditors review the adequacy, integrity and reliability of control systems and suggest improvements. The internal auditor conducts extensive reviews and process improvements identified during the reviews, are communicated to the management on an on-going basis. Significant observations made by the internal auditors and the follow up actions thereon are reported periodically to the Audit Committee of the Board of Directors. The Audit Committee monitors the implementation of the audit recommendations.

Discussion on Financial Performance with respect to Operational Performance

(Amt Rs. in Lakh)

Particulars FY 2020-21 FY 2019-20
Net Sales 123.20 150.15
Earnings before Other Income, Interest, Depreciation and Tax (Operating Net Profit) (50.67) (47.19)
Earnings before Interest, Depreciation and Tax (23.96) (25.17)
Profit/(Loss) before Tax (85.21) (107.06)
Profit/(Loss) after Tax (85.21) (114.00)
Other Comprehensive Income/(Loss) (3.59) 0.39
Total Comprehensive Income/(Loss) (88.80) (113.61)
Key Ratios
Debtors Turnover (Days) 69.36 22.48
Current Ratio 0.35 0.30
Operating Profit Margin (%) (41.09) (31.43)

Material Developments in Human Resources/ Industrial Relations Front

The Company believes that growth of the Company largely depends on the contribution and efforts of the employees and understands the importance of the workforce. It always lays an emphasis on creating an environment which is favorable for the employees. But as on date the Company is facing ongoing litigation with workers of erstwhile Turbhe unit and Patalganga unit at various Judiciary authorities and details of same are provided in Boards Report. Company has only four of employees on the pay roll as on 31st March, 2021.

Cautionary Statement:

Certain statements made in this Report relating to the Companys outlook, estimates, predictions etc. may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ from such estimates, whether express or implied. Several factors that could make a difference to Companys operations include climatic conditions and economic conditions affecting demand and supply, changes in Government regulation tax regimes, natural calamities, etc. over which the Company does not have any direct control.

For and on behalf of the Board
Parag Sharadchandra Kothari
Date: 29th June, 2021 Chairman
Place: Mumbai DIN: 00184852