Kemistar Corp. Management Discussions


• 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

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)



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.


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


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.


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.


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)