Despite the significant effects of both the COVID-19 pandemic and the conflict between
Russia and Ukraine, the global economy is showing signs of a steady recovery. Supply chain
interruptions are decreasing as economies gradually recover, and the war-affected energy
and food markets are beginning to stabilize. The global inflation have projected at Rs..00
% in 2023, which is set to fall from 8.Rs. % in the 2022 due to interest rates raised by
the central banks and lower commodity prices. Looking to the global economy, the baseline
forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before
settling at 3.0 percent in 2024. Advanced economies are expected to perceive a slowdown,
from 2.Rs. percent in 2022 to 1.3 percent in 2023.
In spite of the challenges, there are indications of improvement, with inflation
expected to drop to Rs..0% in 2023, providing some solace and assisting in the
stabilization of the economy. The IMF predicts 2.8% global growth in 2023, maintaining its
cautious optimism. While trade disputes and geopolitical tensions still exist, efforts to
address supply chain disruptions, implement suitable monetary policies, and foster
international cooperation can help the economy grow steadily and recover in the years to
come.
(Source: https://www.imf.org/en/Publications/WEO/ Issues/
2023/04/11/world-economic-outlook-april-2023)
In synopsis, the global economy is anticipated to grow modestly in 2023, with a number
of factors affecting the outlook. There is hope that pent-up demand in many economies and
a slow decline in inflation will stimulate growth despite the difficulties posed by
inflationary pressures and geopolitical tensions. Furthermore, governments and central
banks can aid in the recovery of the world economy by implementing supportive fiscal and
monetary policies. Additionally, technological developments and the advancements of
society can be extremely important in fostering innovation and productivity, which will
help to further accelerate economic growth in the years to come. Downside risks are still
a concern, but policymakers are navigating the difficulties presented by inflation and
other geopolitical uncertainties with skill. Having put in place proactive and successful
strategies, the global economy is on its way to a brighter economic future.
INDIAN ECONOMY:
IndiaRs.s economy remains one of the fastest growing in the world. The Indian economy
is depicting resilience despite the
effects of the global downturn, and overall economic growth is still strong. One of the
main drivers of IndiaRs.s economic growth is the countryRs.s strong domestic consumption,
which is supported by a sizable and expanding middle class. A major factor in maintaining
the nationRs.s economic momentum has also been the governmentRs.s initiatives to encourage
ease of doing business and draw foreign investment. According to the National Statistical
OfficeRs.s (NSO) second advance estimate, IndiaRs.s GDP growth is projected to be Rs.% in
FY 2022-23 compared to 9.1% in FY 2021-22. The bilateral trade also reached a record high
of USD 447.46 billion with 6.03% growth during FY 2022-23, surpassing the previous high of
USD 422.00 billion in FY 2021-22, despite the weakening external demand.
In 2023, the domestic economy will continue to grow and pick up speed. According to the
IMF, India will have a GDP per capita of USD 2,600 in 2023, which will cause a rise in
household consumption. Due to inflationary pressures, the economic growth rate is
predicted to fall to 5.9% in FY 202324. In order to combat inflationary pressures, the
Reserve Bank of India (RBI) raised the repo rate by 250 basis points in FY 2022-2023. As a
result, from 6.95% in March 2022 to 5.66% in March 2023, IndiaRs.s CPI inflation rate
decreased. India has a large growth window, and the IMF projects that in FY 2024-25, the
Indian economy will expand at a 6.3% annual rate.
A favorable domestic policy environment, various dynamic government reforms like
increased capital spending, the production-linked incentives (PLI) scheme, and Atmanirbhar
Bharat, a focus on domestic manufacturing and infrastructure development, strong domestic
demand, export growth, technology-enabled development, and energy transition, among
others, will spur growth in FY 2023-24. Additionally, the Indian governmentRs.s efforts to
attract foreign direct investment (FDI) and promote ease of doing business are expected to
further boost economic growth. Furthermore, the countryRs.s young and growing population,
coupled with increasing urbanization and rising middle-class consumption, will contribute
to the expansion of various sectors in the Indian economy.
INDUSTRY TRENDS:
The market for dyes and pigments was valued at USD 38.2 billion in 2022, and from 2023
to 2030, it is anticipated to grow at a CAGR of 5.3%. The demand for these products is
expected to rise across a number of application industries, including plastics, paints and
coatings, textiles, and construction. The use of cutting-edge technologies for the
effective removal of hazardous pollutants during the manufacturing process is a
proactive effort by major producers to improve their products. With the swings in the
cost of raw materials like benzene, manufacturers are likely to experience a range in
production costs. Both physical stores and online retailing help to create a broad
distribution network in the market.
With a market share of over 62% in terms of revenue in 2022, the textiles segment
dominated. The industry segment for printing ink is anticipated to experience the fastest
CAGR between 2023 and 2030. The demand for dyes in printing ink applications is
anticipated to increase as the digital printing market expands. India and China, two major
producers of dyes, are likely to offer favorable opportunities for printing ink
applications throughout the Asia Pacific region. In order to achieve the desired color and
density, dyes are used in inks. In terms of color and density per unit of mass, dyes are
superior to pigments. The dye-based inks may react chemically with other ingredients. In
conjunction with optical brighteners and other additives, they produce prints that are
superior to pigment-based inks. The demand for products in the printing ink application
segment is expected to increase as a result of these factors.
(Source:https://www.grandviewresearch.com/industry- analysis/ dyes-and-pigments-market)
OUTLOOK:
An integration of micro and macro factors appear to be cruising the Mahickra Chemicals
outlook in a positive direction. The CompanyRs.s multi-site prowess, manufacturing
emphasis, procurement strategies, and balanced approach to enhancing profitability are all
contributing to its growing market share. Your company is developing cutting-edge,
environmentally responsible products. These groundbreaking goods are anticipated to draw
in a larger customer base and support the companyRs.s overall expansion. Furthermore, your
companyRs.s dedication to sustainability is in line with the rising demand for
environmentally friendly solutions around the world, positioning the business for market
success over the long term. By outstripping Rs. 100 Crore in revenue generation from
exports in the following years, your company is establishing a high standard.
Mahickra Chemicals is well positioned to deliver profitable growth in the future thanks
to its strong market position, a diverse product line, extensive end-user industries, and
a dynamic distribution network with top-tier clients. In addition, we have a strong
commitment to research and development, consistently innovating and launching new products
to meet the changing needs of its clients. As a result of its commitment to staying ahead
of market trends, the company is able to
maintain its competitiveness and draw in new business opportunities.
COMPANY OVERVIEW:
Mahickra Chemicals Limited is a leading domestic dyestuff manufacturer in Ahmedabad,
with production facilities strategically located in the chemical industrial zone. This
strategic location offers easy access to the Common Effluent Treatment Plant, fostering
innovation and knowledge sharing. The companyRs.s proximity to the treatment plant allows
for efficient disposal of waste and adherence to environmental regulations. Additionally,
being in close proximity to other chemical manufacturers promotes collaboration and the
exchange of ideas within the industry.
Aside from lowering costs and improving supply chain management, the companyRs.s
extensive industry knowledge and expertise enable efficient transportation of raw
materials and finished goods. Your Company is renowned for producing premium dyestuffs and
seeks to improve its position in the market. We promote initiatives for waste management
and environmentally friendly manufacturing techniques and place a high priority on quality
control measures, customer satisfaction, and sustainability. We make investments in new
product development, R&D, and partnerships with important stakeholders.
Mahickra Chemicals Limited benefits from the rising demand for environmentally friendly
and sustainable dye solutions by making investments in cutting-edge technology, which
improves its standing in the market. These efforts have not only allowed us to stay ahead
of its competitors but also contribute to a greener and more sustainable future. Our
commitment towards innovation and sustainability has earned it recognition as a leader in
the industry, attracting environmentally conscious customers and forging long-term
partnerships.
Independent AuditorRs.s Report
To
The Members of
MAHICKRA CHEMICALS LIMITED
Report on the Audit of the Standalone Financial Statements
Qualified Opinion
We have audited the Standalone Financial Statements of MAHICKRA CHEMICALS LIMITED
("the Company"), which comprises the Balance Sheet as at 31st March,
2023, and the Statement of Profit and Loss, Cash Flow Statement and Notes to the
Standalone Financial Statements, including a summary of significant accounting policies
and other explanatory information.
In our opinion and to the best of our information and according to the explanations
given to us, the aforesaid Standalone Financial Statements give the information required
by the Act in the manner so required and give a true and fair view in conformity with the
accounting principles generally accepted in India, of the state of affairs of the Company
as at 31st March, 2023 and its Profit and its Cash Flows for the year ended on that date except
for the matter stated in Basis of Qualified Opinion paragraph below
Basis for Qualified Opinion
1. Company has filed an application with Authorised dealer seeking permission to
"write off" Export Receivable of Rs. 57.29 lakhs from one of the
party. However, such receivable is neither "written off" nor "Provision for
Doubtful recovery" is done in the books for the same. The trade receivable and profit
(loss) for the year is overstated / understated to the extent of such outstanding.
We conducted our audit of the Standalone Financial Statements in accordance with the
Standards on Auditing (SAs) specified under section 143(10) of the Companies Act, 2013.
Our responsibilities under those Standards are further described in the AuditorRs.s
Responsibilities for the Audit of the Standalone Financial Statements section of our
report. We are independent of the Company in accordance with the Code of Ethics issued by
the Institute of Chartered Accountants of India together with the ethical requirements
that are relevant to our audit of the Standalone Financial Statements under the provisions
of the Companies Act, 2013 and the Rules thereunder, and we have fulfilled our other
ethical responsibilities in accordance with these requirements and the Code of Ethics. We
believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion on the
Standalone Financial Statement.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most
significance in our audit of the Standalone Financial Statements of the current period.
These matters were addressed in the context of our audit of the Standalone Financial
Statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters except for the matters described in "Basis for
Qualified Opinion" section. We have determined that there are no other key audit
matters to communicate in our report.
Responsibility of Management and Those Charged with the Governance for the Standalone
Financial Statements
The CompanyRs.s Board of Directors is responsible for the matters stated in Section
134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation of
these Standalone Financial Statements that give a true and fair view of the financial
position, financial performance, (changes in equity) and cash flows of the Company in
accordance with the accounting principles generally accepted in India, including the
accounting Standards specified under Section 133 of the Act. This responsibility also
includes maintenance of adequate accounting records in accordance with the provisions of
the Act for safeguarding of the assets of the Company and for preventing and detecting
frauds and other irregularities; selection and application of appropriate accounting
policies; making judgments and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls, that were
operating effectively for ensuring the accuracy and completeness of the accounting
records, relevant to the preparation and presentation of the Standalone Financial
Statements that give a true and fair view and are free from material misstatement, whether
due to fraud or error.
In preparing the Standalone Financial Statements, management is responsible for
assessing the CompanyRs.s ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so.
The Board of Directors is also responsible for overseeing the companyRs.s financial
reporting process.
AuditorRs.s Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone
Financial Statements as a whole are free from material misstatement, whether due to fraud
or error, and to issue an auditorRs.s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with As will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions
of users taken on the basis of these Standalone financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the Standalone
Financial Statements, whether due to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence that is sufficient and appropriate to
provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal
control.
• Obtain an understanding of internal financial controls relevant to the audit in
order to design audit procedures that are appropriate in the circumstances. Under section
143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the
Company has adequate internal financial controls system in place and the operating
effectiveness of such controls.
• Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
• Conclude on the appropriateness of managementRs.s use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the CompanyRs.s
ability to continue as a going concern. If we conclude that a material uncertainty exists,
we are required to draw attention in our auditorRs.s report to the related disclosures in
the Standalone Financial Statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based on the
audit evidence obtained up to the date of our auditorRs.s report. However, future events
or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the Standalone
Financial Statements, including the disclosures, and whether the Standalone Financial
Statements represent the underlying transactions and events in a manner that achieves fair
presentation.
Materiality is the magnitude of misstatements in the Standalone Financial Statements
that, individually or in aggregate, makes it probable that the economic decisions of a
reasonably knowledgeable user of the Standalone Financial Statements may be influenced. We
consider quantitative materiality and qualitative factors in (i) planning the scope of our
audit work and in evaluating the results of our work; and (ii) to evaluate the effect of
any identified misstatements in the Standalone Financial Statements.
We communicate with those charged with governance regarding, among other matters, the
planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied
with relevant ethical requirements regarding independence, and to communicate with them
all relationships and other matters that may reasonably be thought to bear on our
independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those
matters that were of most significance in the audit of the Standalone Financial Statements
of the current period and are therefore the key audit matters. We describe these matters
in our auditorRs.s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably
be expected to outweigh the public interest benefits of such communication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (AuditorRs.s Report) Order, 2020 ("the
Order"), issued by the Central Government
of India in terms of sub-Section (11) of Section 143 of
the Companies Act, 2013, We give in the "Annexure A"
statement on the matters specified in paragraphs 3 and
4 of the Order, to the extent applicable.
2. As required by Section 143 (3) of the Act, we report that:
a) We have sought and obtained all the information and explanations which to the best
of our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion, proper books of account as required by law have been kept by the
Company so far as it appears from our examination of those books.
c) The Balance Sheet and Statement of Profit & Loss and Cash Flow Statement dealt
with by this Report are in agreement with the books of account.
d) In our opinion, the aforesaid Standalone Financial Statements comply with the
Accounting Standards specified under Section 133 of the Act, read with Rule Rs. of the
Companies (Accounts) Rules, 2014.
e) On the basis of the written representations received from the directors as on 31st
March, 2023 taken on record by the Board of Directors, none of the directors is
disqualified as on 31st March, 2023 from being appointed as a director in terms
of Section 164 (2) of the Act.
f) With respect to the adequacy of the Internal financial control over financial
reporting of the Company and the operating effectiveness of such controls, refer to our
separate report in "Annexure B". Our reports express an unmodified opinion on
the adequacy and reporting effectiveness of the CompanyRs.s internal financial controls
over financial reporting.
g) With respect to the other matters to be included in the AuditorRs.s Report in
accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion
and to the best of our information and according to the explanations given to us:
i. The Company does not have any pending litigations which would impact its Financial
Position.
ii. The Company did not have any material foreseeable losses on long-term contracts
including derivative contracts.
iii. The Company is not required to transfer any amounts to the Investors Education and
Protection Fund.
iv. (i) The management has represented
that, to the best of itRs.s knowledge and belief, other than as disclosed in the notes
to the accounts, no funds have been advanced or loaned or invested (either from borrowed
funds or share premium or any other sources or kind of funds) by the company to or in any
other person(s) or entity(ies), including foreign entities ("Intermediaries"),
with the understanding, whether recorded in writing or otherwise, that the Intermediary
shall, whether, directly or indirectly lend or invest in other persons or entities
identified in any manner whatsoever by or on behalf of the company ("Ultimate
Beneficiaries") or provide any guarantee, security or the like on behalf of the
Ultimate Beneficiaries;
(ii) The management has represented, that, to the best of itRs.s knowledge and belief,
other than as disclosed in the notes to the accounts, no funds have been received by the
company from any person(s) or entity(ies), including foreign entities ("Funding
Parties"), with the understanding, whether recorded in writing or otherwise, that the
company shall, whether, directly or indirectly, lend or invest in other persons or
entities identified in any manner whatsoever by or on behalf of the Funding Party
("Ultimate Beneficiaries") or provide any guarantee, security or the like on
behalf of the Ultimate Beneficiaries; and
(iii) Based on audit procedures which we considered reasonable and appropriate in the
circumstances, nothing has come to their notice that has caused them to believe that the
representations under
sub-clause (i) and (ii) contain any material mis-statement.
v. The dividend declared or paid during the year by the company are in compliance with
section 123 of the Companies Act, 2013.
vi. With respect to the matter to be included in the AuditorsRs. Report under Section
197(16) of the Act, in our opinion and according to the information and explanations given
to us, the remuneration paid during the current year by the company to its director is not
in excess of the limit laid down under section 197 of the Act. The Ministry of Corporate
Affairs has not
prescribed other details under Section 197 of the Act which are required to be
commented upon by us.
For, SINGHI & CO. Chartered Accountants FRN NO: 302049E
SUNIL C BOHARA Partner
Membership No. 103395 UDIN: 23103395BGXTNH6875
Ahmedabad, 15th May 2023
+91-9892691696
