Paushak Ltd Management Discussions

The Companys management provides its own perspective on the operating and financial performance of the Company during financial year 2023-24 and an outlook of the business performance in the coming years as follows:

Indian Chemical Industry is witnessing a rapid growth since last 5 years as industry has grown at an average rate of 15% during this period. Supply Chain disruptions in last couple of years have forced the world to have China plus one strategy, where India is playing a critical role of reliable partner with sustainability at its core. Majority of the Indian chemical companies are investing to increase their capacities to meet such global demand in coming years.

Indian chemicals industry is bracing up for not only meeting the global demand but fostering self-reliance by creating capacities to address growing domestic demand also. To cater this growing demand from Indias chemical sector, especially Pharma APIs, Agro Intermediates and other polymers, Paushak Limited had started expansion to build global scale capacities of select speciality phosgene derivatives. With Phase-I of this expansion onstream, FY24 witnessed better utilisation of its plant capacities as compared to FY23 and increased sales volume by becoming domestic leader in some of the Phosgene derivatives with global scale capacities. Our range of products have reduced the import dependencies of domestic Pharma and Agro Intermediates companies.

During FY24, apart from geo-political uncertainties, global agrochemical companies had faced the excess inventory build up issues across the world and were forced to intermittently curtail their operations on account of subdued consumption post normalisation of COVID-19 across the world. This resulted in continuous and significant price erosion of various chemicals across value chain throughout the year. Such price correction had put pressure on margins of almost all chemical companies in India and the World. China had been the central reason for this over supply as they have built up huge capacities across segments. This trend may continue for another couple of quarters in FY25 and will continue to put pressure on margins for chemical players across the segments. While Paushak is also impacted with this global over supply scenario but with effective product portfolio management, your Company will make its best effort to remain competitive in this challenging scenario.

Having strengthened our presence in Indias fine chemicals market segment during FY24 and envisaging the growth opportunities in coming years, your Company had begun its Phase-II expansion to establish global scale plants for few more products. This will further strengthen our commitment towards our stakeholders with improved reliability of products and to reduce import dependencies. Your Companys balanced presence in various intermediate segments will drive this new plants capacity utilisation in better way in coming years.

Indian Pharmaceuticals industry have stabilized their production levels and is likely to drive the demand in coming years. However, the Agrochemicals market is expected to continue experiencing slow down on account of destocking of inventories by major global players across regions. This will intensify competition and lead to further price erosion, which may result in margin pressure in near future, until global supply situation normalises. However, the new downstream plants have catalysed our growth while demonstrating our technical capabilities, commitment and our vision to become a global technology leader in Phosgene and its derivatives whilst creating a niche for us. We are establishing new technology platforms and will continue to invest in our capabilities along with infrastructure upgradation to provide sustainable product solutions to our key stakeholders across the globe.

The gross total income of the Company is Rs 22,675.20 Lacs for the year under review as compared to Rs 22,139.67 Lacs for the previous year. The Company registered a net profit of Rs 5,435.38 Lacs for the year under review as compared to net profit of Rs 5,400.55 Lacs for the previous year.

Kindly refer to the ratios disclosed under note no. 31(W) to the financial statements.

The Company believes that Internal Control is a necessary concomitant of the principle of Governance. It remains committed to ensure an effective Internal Control environment that provides assurance to the Board of Directors, Audit Committee and the management while ensuring reliability of financial and operational reporting and legal and regulatory compliance.

Interrelated control systems, covering all financial and operating functions, assure fulfilment of these objectives. The Company uses Enterprise Resource Planning (ERP) supported by in-built controls that ensures reliable and timely financial reporting.

As we are expanding our downstream assets and replacing old assets with advanced capabilities, we have strengthened our core management teams and are committed to investing in our employees skills and capabilities. While price erosion has impacted our top line for the year, we believe that building a strong team is crucial for our future success. Therefore, we continue to prioritize strategic hires and employee development, ensuring that we have the right talent to drive our growth.

On behalf of the Board of Directors,