Refnol Resins & Chemicals Ltd Management Discussions.

A. Industry Structure and Developments

India continues to be one of the faster growing economies of the world. However recent quarters point to a slow-down. More effort will be required to maintain and grow the business in this environment in the current year.

Your Company manufactures Polyester Resins, Laundry & Cleaning Chemicals, Textile Sizing Chemicals, Auxiliaries and Garment Wash Chemicals at its facility at Plot No 23, Phase III, Naroda, GIDC, Ahmedabad-30. Sales are promoted to both Domestics and Export markets.

Resins and Polymer business has shown steady growth in the export markets while the other businesses have grown domestically.

B. Opportunity and Threats

Your Company manufactures Resins and Polymers for the textile, plastic and coatings industry-all of which should show reasonable growth and expansion in all economies and regions.

At the same time, your Company has to take note of and adapt to operate with increasing regulatory mechanisms for the chemical industry and also continued and sustained pressure on input costs due to firming up of petroleum prices resulting in squeeze in margins and profitability.

C. Product wise Performance (Rs. in Lakhs)
Product wise Performance 2017-2018 2018-2019 % of changes
Sales-Domestics
Textile Sizing Chemicals & Textile Auxiliaries 615.34 631.63 2.65
Laundry Chemicals 517.08 527.52 2.02
Resins 145.24 223.19 53.67
Garment wash Chemicals 345.22 270.60 (21.62)
Miscellaneous 55.14 41.97 (23.88)
1,677.24 1694.20 1.01
Sales -Export
Textile Sizing Chemicals & Textile Auxiliaries 1060.92 1213.03 14.34
Garment wash Chemicals 87.19 125.83 44.32
Resins 17.18 55.03 220.31
Administrative Charges collected (Export of service) - 67.58 -
1157.79 1461.47 26.23
Total Sales 2842.53 3155.67 11.02

D. Outlook

Demand both in the domestic and export markets for all products continue to be reasonable and your Company is making efforts to sustain the business.

Challenges continue in terms of pressure on margins due to rise in input costs and relieving this will be one of the major objectives in the medium to long-term.

E. Risks and Concerns

To ensure sustainable and consistent growth, Company has developed a sound risk management framework so that the risks assumed by the Company are properly assessed and monitored continuously. The Risk Management and Control Systems are considered to be in balance with Refnols risk profile and appetite, although such systems can never provide absolute assurance. Refnols Risk Management and Control Systems are subject to continuous review and adaptations in order to remain in balance with its growing business size and changes in its risk profile. Necessary insurance policies are in place to take care of all the important machineries to minimize losses if any during operation.

F. Internal Control System and Their Adequacy

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

G. Discussion on financial performance with respect to operational performance

Your Company generated income from the operations of Rs. 3155.67 Lakhs in FY 2018-2019 which was higher as compared to Rs. 2842.53 Lakhs generated last year. The Profit after tax and exceptional items stood at as Rs. 87.43 Lakhs against a profit of Rs. 25.72 Lakhs last year.

Your Company has continued to publish consolidated accounts of its Subsidiaries in line with last year.

H. Material Developments in Human Resources/ Industrial Relations front, including number of people employed

We started a systematic performance appraisal system. Competitive incentive plans were laid down. The number of persons employed by your Company was Seventy Four.

Your Company has valued both experience and fresh talent, and takes pride in the commitment, competence and dedication shown by its employees in all areas of business and is conscious of the importance of environmentally clean and safe operations. Up gradation of technical skills training is periodically given to employees.

I. Details of significant changes (i.e. Change of 25% or more as compared to the immediately previous financial year) in key financial ratios

• Debtors Turnover
2017-18 3.59
2018-19 4.85
Improvement 35.12%

A high receivables turnover ratio indicates that a companys collection of accounts receivable is efficient and that the company has a high proportion of quality customers that pay their debts quickly.

• Net Profit Margin (%)
2017-18 1.18%
2018-19 2.77%
Improvement 1.59%
• Return on Assets
2017-18 1.14%
2018-19 2.97%
Improvement 1.83%
• Return on Investment
2017-18 2.73%
2018-19 6.68%
Improvement 3.94%

Safe Harbour Clause

Statements in the Management Discussion and Analysis describing the Companys objectives and expectations may be "forward looking statement" within the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and reasonable expectation of future events. Actual results could however differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include, among others, economic conditions affecting demand/ supply, price conditions in the domestic and overseas market in which the Company operates, changes in the Government regulations and tax structure, economic developments within India and the countries with which the Company has business contacts and other factors such as litigation and industrial relations.

Conclusion

Though the company cannot assess its success on short term profits and financial performance is the main factor to overall success, we with entire system are keen in improving our performance of every individual employee just as much as we are doing for improving our every product.