resonance specialities ltd share price Management discussions

Financial Performance and Operations Review

Sales and other income for the financial year under report amounted to Rs.7187.29 lacs as compared with Rs.5803.14 lacs for the previous year, a growth of 23.85%.

The operations of the Company have resulted in a net profit of 1052.41 lacs as compared to a net profit of Rs.550.77 lacs in the previous financial year, growth of 91.08%.

INTRODUCTION

The global pyridine and pyridine derivatives market is growing at a significant pace owing to driving factors such as increasing demand from the pharmaceutical industry. Additionally, increasing demand for chemicals like symtet, chlorphyrifos, etc. from the agrochemical industry is also likely to drive the demand for pyridine and pyridine derivatives in the coming years. Likewise, high use of beta picoline in agrochemical industries may provide a lucrative opportunity for the market players.

However, high regulation by governments on use of other agrochemicals related to pyridine derivatives and restrictions by China and some European countries on use of paraquat may impact the growth of pyridine and pyridine derivatives market.

The Company enjoys a special pride and privilege in manufacturing and marketing of specialty chemicals based on Pyridine chemistry such as Lutidine, Cyano Pyridines, Picoline, Collidines, nutritional product, feed supplements, APIs, vitamins, etc. Few of Companys advantages in this business are quality of products, dependable supply and competitive cost.

BUSINESS STRATEGY

The Companys business module is export oriented, although the Company has many local valued customers. Our core business strategy is our positioning as an integrated Product Development Company. Resonance has proven capabilities in integrated product development. The Company has successfully researched test batches at the laboratory, at pilot plant and finally at commercial scales at its manufacturing facility. Our knowledge of organic chemistry and our expertise in catalysis are key strengths that have stood by us through time. We have achieved successful results from R&D in our Plant processes in terms of better yields and resulting cost reduction.

The Company has a strong and established business relationship with its clients across Pharmaceuticals, Agrochemicals and Specialty Ingredients industries. The Companys manufacturing facility continue to adhere to cGMP and is ISO 9000:2015 certified. The Companys products are also Kosher, Halal and FSSC certified.

MANUFACTURING

The Company has achieved higher yields than in the past in many key products which played a crucial role in contributing to the Companys business growth during the year. The Company has successfully reduced time cycles of larger columns by in-house methods and capabilities in many key products. Upgradation of the Ammoxidation unit has also benefited the company largely and has enabled the Company to commission the reaction at improved conversion.

Your Companys manufacturing facility has taken a huge EHS improvement drive during the financial year under report and has successfully become a zero liquid discharging unit.

During the year, following key capacity/capability enhancement projects were undertaken:

a. Scrubber addition to improve efficiencies

b. DG Capacity enhancement

c. Finished Goods Godown Extension

d. Power savings by Motor optimization

e. Ammonia Recovery Project

RESEARCH & DEVELOPMENT

The Company takes pride in innovation and excellence covering the different plant processes for reaction and distillation. The Companys in-house R&D Center is continuously working in the field of catalysis for fluidized bed and fixed bed catalytic reactions.

The Companys R&D Center at Tarapur is recognized by Department of Scientific and Industrial Research, Government of India. The Company is undertaking major projects to develop alternate and efficient process for making pyridine based products. The R & D center is having collaboration with emeritus scientists from reputed research laboratories in India.

Key Financial Ratios

	Financial Ratios	March 31,2021	March 31,2020
1.	Debtors Turnover Ratio	7.46	9.15
2.	Inventory Turnover Ratio	4.24	4.19
3.	Interest Coverage Ratio	51.15	24.66
4.	Current Ratio	3.13	2.78
5.	Debt Equity Ratio	0.01	0
6.	Operating Profit Margin (%)	20.67%	15.06%
7.	Net Profit Margin (%)	14.64%	9.49%
8.	Return on Net Worth (%)	30.25%	18.21%

The improvised business and profitability has resultant in improvement in the several key financial ratios.

2. Opportunities, Threats, Risk and Concerns

Demand for specialty chemicals is growing rapidly worldwide. The Company is making all the efforts to develop new applications for its products and is also confident of substantially expanding the market for its products in future.

During the year the Company experienced large fluctuations in foreign exchange rates and import prices. Some of the raw materials which your Company uses were also in short supply due to pandemic and environmental regulations being tightened on Pyridine residues. Our capability and inbuilt flexibility in the plant operations helped us in facing this adverse market situation during the year.

Currency fluctuations, regulatory and environmental issues, inflation and all round increase in input costs are a few causes of concern.

3. Human Resource Management

At Resonance, we believe that our success is the end result of the achievement of our team. The Companys performance metrics are clearly defined and for real achievers the Company offers an accelerated career growth unhindered by any hierarchy. Resonance offers a merit led environment where talent is respected and achievements are rewarded. Our management structure allows genuine appreciation of good work and the Company believes in delegating responsibilities.

We continually empower our team members to better themselves and offer clear career paths for advancement. The Company takes extreme pride in its greatest resource and asset - the employees. Our constant endeavors have been towards encouraging a culture of employee recognition and motivation and we are able to achieve this through well designed policies and processes like rewards and recognition and other various employee benefit schemes. We ensure that there is full adherence to the code of business conduct and fair business practices by all our employees.

All safety and protective apparels are provided to the employees working in our manufacturing set-up. Regular safety training is also provided to all employees. External professional experts were hired to work with managers to create easy-to understand safety procedures, protocols and training.

4. Internal Control Systems And Risk Management Strategy

The Company has an adequate internal control system including suitable monitoring procedures commensurate with its size and the nature of the business. The internal control systems provide for all documented policies, guidelines, authorisation and approval procedures. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board.

5. Cautionary Statement

The statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations may be ‘Forward looking statements within the meaning of the applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference of the Companys operations include economic demand/supply and price conditions in the domestic and overseas markets for Company products, changes in the Government regulations, tax laws, other statutes and incidental factors.