Polychem Ltd Management Discussions

A. Overview:

Company is operating in the manufacturing of Specialty Chemicals and development of property / land.

Opportunities:

Our customers for the specialty polymers are in investment casting Industry. The major end user segment for investment cast products is automotive, aerospace industry, valves & instruments. Export market is growing fast particularly for one of our newly developed grades of Cross Linked Polystyrene.

The second specialty product is used as filler in cement for structural repair of columns & beam in the old buildings. The demand for this product is stable.

Threats:

The basic raw material for the majority of our products is Styrene Monomer & Di-vinyl Benzene. The styrene price is highly volatile. Availability of Di-vinyl benzene is worrisome as China is the major supplier.

We have direct threat from two competitors for Cross Linked Polystyrene in India.

Risks & concerns:

Due to price fluctuation in the main raw material i.e. styrene monomer and no corresponding increase in the price of our finished products the margin on our finished products in the domestic market as well as exports is a major area of concern.

Outlook:

Substantial part of Companys sales consists of Exports. Our product has been accepted by all major overseas Filled wax manufacturers. Currently the export market is growing, but the competition from two other exporters forces us to lower our price, thereby realization.

Financial Performance:

1) Share Capital:

The issued and paid-up share capital of the Company is Rs. 40.40 lakhs consisting of 4,04,045 equity shares of Rs.10 each as on 31^st March, 2024.

2) Reserves and Surplus:

As on 31^st March, 2024, the reserves and surplus are Rs 3,148.09 lakhs.

3) Secured Loans:

There are no secured loans outstanding as on 31^st March, 2024.

4) Results of Operation:

Revenue for the current year including other income amounts to Rs.3,818.68 lakhs compared to Rs. 3,571.41 lakhs in the previous year. Profit before tax is Rs.770.80 Lakhs compared to Profit before tax of Rs. 460.06 Lakhs during the previous year. Provisions for tax including deferred tax during the year is Rs. 167.10 Lakhs compared to Rs. 87.92 Lakhs during the previous year. Profit after tax amounts to Rs. 603.70 Lakhs during the year compared to profit of Rs. 372.14 Lakhs during the previous year.

Industry Structure & Development:

Our Company is manufacturing and selling Specialty Chemicals.

Segment wise Performance:

There are two income generating segments. Segment-wise revenue for the year ended 31^st March, 2024 is as follows. viz. (1) Property / Land Rs. NIL (2) Specialty Chemicals Rs. 3,686.79 Lakhs. The sale of Specialty Chemicals has gone up.

Internal Control System:

Company has adequate internal control procedures commensurate with the size of the Company and nature of its business for the purchase of raw materials and fixed assets and for the sale of goods.

Human Resources:

The Company has good relation with its employees.

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key financial ratios.

The Company has identified the following ratios as key financial ratios:

The details of return on net worth are given below:

Detailed Reason for change of 25% or more in Key Financial Ratios is given in point no. 4.16 on page no. 84.