• GLOBAL CHEMICAL INDUSTRY OVERVIEW AND OUTLOOK:
• Global Chemical Industry
Global chemical growth moderated in 2022 due to lockdowns in China,
supply chain bottlenecks, and disruptions caused by the Russian invasion of Ukraine. As a
result, global chemical output grew by only 2.0% in 2022.
In 2023, production is expected to expand at 2.9% amid rebound in
Western Europe and the Asia-Pacific. The industry is focussing on meeting the growing
global demand and enhancing sustainability through carbon reduction projects and advanced
recycling and recovery. The biggest risk to the outlook is persistent inflation and
continued increase in interest rates that could prolong and deepen the downturn, but other
risks may include escalation of wars, financial instability, and supply chain disruptions.
The US chemical industry had a strong start in 2022, with output growing by 3.9%. However,
in 2023, this growth is expected to marginally decline due to deceleration in end-use
markets, a stronger dollar, and lower global growth.
Many manufacturers have increased inventories of raw materials and
products due to supply chain issues, which resulted in higher-than-normal inventories at
the end of the year. US chemicals remain advantaged due to abundant domestic production of
natural gas. Capital spending grew 9.0% to US$ 33.5 billion in 2022 and is expected grow
at 3.6% in 2023. After declining by 3.2% in 2022, chemical production in Western Europe is
expected to marginally grow at 0.8% in 2023. This is mainly due to an uncertain energy
price outlook and depressed economic growth outlook. However, the silver lining is that
natural gas prices have dropped to their pre-war levels and are expected to remain below
the 2022 levels. Chinas chemical industry is expected to recover after the lifting
of COVID-19 restrictions. Sectors such as pharmaceuticals and agricultural chemicals Are
expected to lead the growth.
(Source: Chemical Processing, American Chemistry Council, C&EN)
• INDIAN CHEMICAL INDUSTRY:
Indian Chemical Industry
The Indian chemical industry is the 6th largest producer of chemicals
globally and 3rd in Asia. India ranks 14th in chemical products exports and 8th
in imports. The Indian chemical industry stood at US$ 232 billion in 2022, and is expected
to reach US$ 304 billion by 2025, registering a CAGR of 9.3%. The cumulative FDI equity
inflow in the chemical industry (excluding fertilisers) was US$ 20.96 billion from April
2000 to December 2022. This constituted 3.35% of the total FDI inflow across sectors.
India is the 4th largest producer of agrochemicals globally and reached a value of almost
US$ 6 billion in the year 2022. The market is further expected to grow at a CAGR of 8.5%
between 2023 and 2028, to reach a value of almost US$ 9.82 billion by 2028. Agrochemicals
sector exports accounted for US$ 4.84 billion in CY 2022 with Y-o-Y growth of 28.7 %,
while imports were US$ 1.69 billion with Y-o-Y growth of (2.39)%. Increased Government
initiatives to assist farmers and rapid technological advancements are propelling the
growth of the agrochemicals sector. Specialty chemicals constitute 22% of the total
chemicals and petrochemicals market in India. The sector is expected to reach US$ 40
billion by 2025. A significant opportunity for the Indian chemical industry is the
increasing demand for specialty chemicals globally. Another opportunity for the industry
is the growing demand for green chemicals, which are eco-friendly and sustainable. For CY
2022, the export value of chemicals and allied products was up by 5% year-on-year, to US$
63* billion, while imports were up 22% year-on-year, to US$ 95.96* billion.
The Indian chemical industry has numerous opportunities, considering
the supply chain disruption in China and the trade conflict among the US, Europe and
China. Anti-pollution measures in China will also create opportunities for the Indian
chemical industry in specific segments. The dedicated integrated manufacturing hubs under
Petroleum, Chemicals and Petrochemicals Investment Regions (PCPIR) policy is expected to
attract an investment of Rs. 20 lakh crore (US$ 276.46 billion) by 2035. Additionally,
special incentives through PCPIRs or SEZs (Special Economic Zones) to encourage downstream
units will enhance production and further boost the industry growth. Source: Union Budget
2023.
*HS Code Chapter 28-32, 3301-3302, 3402-3404, 35,38, 3901-3914,
4001-4003, 4005
(IBEF, Ministry of Commerce, Expert Market Research)
• COMPANY OVERVIEW
• SEGMENT AND PRODUCT PERFORMANCE
The Company operates through three verticals- Specialty chemicals, Agro
chemicals and Chemical intermediaries. Through its subsidiary company K.P International
Limited Company is having manufacturing facility at GIDC, Dahej. After successfully
started production from June-2021, Company has gained domestic client network and also
increased their Export. For further expansion and to achieve attractive future growth,
Company is currently working on Phase-III Production. The company is having potential
export market in various countries like USA, Spain, Turkey, Brazil, Thailand, Korea,
Mexico, Japan, Indonesia, Bangladesh, Malesia, Russia.
FY 2021-22 ended on a good note despite of having temporary disruption
and adverse microeconomic situation, the Company managed to have healthy revenue growth as
well as it continues to meet the commitments. With the vision of expansion of Capacity,
the Company have worked for the best Results.
• FINANCIAL PERFORMANCE
Revenue of the Company is from 2097.08 Lakhs to 1833.73 Lakhs. Profit
After Tax is from 83.92 Lakhs to 83.90 Lakhs during the year. Despite of many challenges,
the Companys EBIDTA is from 170.96 Lakhs to 164.42 Lakhs and able to maintain
profitability of the Company on consolidated bases.
• Key Financial Ratios
The Key financial ratios for consolidated financials are as per the
below table:
| Particulars |
FY 2022-23 |
FY 2021-22 |
| Debtors Turnover Ratio |
5.06 |
4.07 |
| Inventory Turnover Ratio |
6.10 |
LIGN=RIGHT>14.24 |
| Interest Coverage Ratio |
84.28 |
34.72 |
| Current Ratio |
1.54 |
1.67 |
| Debt Equity Ratio |
0.38 |
0.48 |
| Operating Profit Margin (%) |
8 |
5 |
| Net Profit Margin (%) |
5 |
4 |
| Return on Net worth (%) |
1 |
1 |
• DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE
IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:
Net worth of the company as on 31.03.2023 was Rs. 1563.17 lacs whereas
on 31.03.2022 figure was Rs. 1549.68 lacs. Increase in net worth is mainly due to profit
recorded in profit and loss account.
• Risks and Opportunities
Higher energy costs due to higher coal and fuel costs is a significant
risk to the Companys business performance. Other risks include pricing risk on
account of capacity additions, higher inflation and recessionary pressure (both global and
domestic) leading to demand slowdown, currency devaluation, and changes in the export
sector or imports from global markets.
The Company continues to remain focussed on keeping the costs low,
including variable costs like fuel, salt and limestone through raw material
securitisation, and continuous improvement programmes to help mitigate the adverse impact
of these risks such as diversifying energy sourcing in addition to current sources to
improve sourcing flexibility, working on changing fuel mix, maximising use of alternate
energy sources, different contracting strategies and continuing with strategies like
commodity hedging / advance fixing of prices. Execution of expansion project, adherence to
more stringent environmental norms, packaging and improving safety performance in a
sustainable manner are other key areas that the Company continues to focus on during FY
2023-24.
Excessive rains are resulting in dilution of brine, which is affecting
captive solar salt availability, leading to rise in cost of production as there is an
increased need to purchase salt. Changes in monsoon pattern may also have adverse effect
on the agrochemicals demand. Carbon emissions taxation will impact the cost of production.
The Company is developing a holistic carbon abatement strategy at a corporate level, which
will help in mitigating this risk.
In addition to enhanced ease of doing business, customer partnerships
around themes of innovation and sustainability continue to offer opportunities for
stronger customer connect. Increasing value-added products and sustainable supply chain
practices like bulk material are some steps the Company will continue to focus on. Using
technology for digitalisation of the plants, and making processes smoother for customers
and internal stakeholders is going to be crucial as the Company heads into a digital age.
Multiple projects around plant and supply chain automation, as well as customer
relationship management are being implemented.
• DEVELOPMENT IN HUMAN RESOURCES:
The most valuable resources are the employees of the Company hence the
Company always believes to have balanced environment. When the Company strategize the
different areas, healthy and smooth functioning goes simultaneously. Consistency in
quality, efficiency and customer satisfaction are always prioritized above all by the
Company.
• INTERNAL CONTROL SYSTEM:
Your Company remains committed to improve the effectiveness of internal
control systems for business processes with regard to its operations, financial reporting
and compliance with applicable laws and regulations. Your Company has adequate internal
controls in place designed and developed to:
a) Safeguard its assets from unauthorised use or losses
b) Conduct its business operations efficiently in line with
companys policies
c) Maintain accuracy, completeness & reliability of the Financial
and accounting records
d) Compliance on laws and regulations
e) Detect and prevent any fraud the frauds in the accounting &
reporting system The Company monitors the efficacy and functioning of its internal
financial controls through periodic internal audits and multiple authority levels for
expenditures and budgetary controls.
• Cautionary Statement
Certain statements contained in the Management Discussion and Analysis
may be statements of the Companys beliefs, plans and expectations about the future
and other forward-looking statements that are based on managements current
expectations or beliefs as well as a number of assumptions about the Companys
operations and factors beyond the Companys control or third party sources and
involve known and unknown risks and uncertainties that could cause actual results to
differ materially from those contemplated by the relevant forward-looking statements.
Forward-looking statements contained in the Management Discussion and Analysis regarding
past trends or activities should not be taken as a representation that such trends or
activities will continue in the future. There is no obligation to update or revise any
forward-looking statements, whether as a result of new information, future events or
otherwise. You should not place undue reliance on forward-looking statements, which speak
only as of the date of this Annual Report.
|
For and on behalf of the
Company |
|
Sd/- |
Sd/- |
|
Ketankumar Patel |
Hrishikesh Rakholia |
| Place: Ahmedabad |
Managing Director |
Director |
| Date: 6th September, 2023 |
(DIN:01157786) |
(DIN:08699877) |
+91-9892691696
