sadhana nitro chem ltd share price Management discussions

Your company is engaged in manufacture of chemical intermediates, heavy organic chemicals and performance chemicals. India emerged as one of the major source for chemical intermediates.

Opportunities & Threats

Across the globe, we are witnessing a shift towards the China +1 strategy. Many developed nations are diversifying their material sourcing, often looking beyond China and showing a growing interest in India.

Products of the Company are in good demand, a testament to the increasing preference for Indian manufacturing. Historically, China led the supply chain, but now, India is rapidly becoming the first choice for many industries.

In light of this shift and the current challenges in the Chinese economy, especially within their export sector, there have been notable, and at times irrational, pricing fluctuations from Chinese suppliers in the past six months. We are addressing these challenges with our vertically integrated manufacturing approach and advanced process technology, ensuring to stay ahead of the curve.

In conclusion, there is a palpable momentum towards sourcing products from the Indian market. Rest assured, we are strategically positioned to seize these opportunities and amplify our growth.

Your company is in the industry since last 50 years. It has a very high degree of operating synergy, economies of scale and high-quality standards. The products of your company have diverse uses and applications in several industries ranging from paper, pharmaceutical, agro chemicals, thermal dyes, light stabilizer, aerospace, dyes and hair dyes etc. Your company has good clientele base, which is well diversified over the World.

Besides, the domestic market has shown growth.

Operational Performance

The Companys growth considering the past few years performance has been satisfactory. The Company is striving further increasing profits. The total revenue from the operations for the year ended March 31,2023 increased by Rs.2510.95 Lakhs as against in a previous financial year registering a Increase of 20.80%.

Market and Outlook

Your company has healthy order book position. Despite continued slowdown in the Global economies, the demand of your companys end products have increased globally and are expected to do so significantly over the coming years.

A better product mix, operational efficiency and stringent control on the cost have contributed towards increasing productivity, production and operating margins. These factors witnessed during the year are expected to continue going forward.

The Company continued to focus on cost control at every level to improve the operational efficiency which along with the increased operating level and upward revision of product prices is expected to maintain growth trend. Continuous efforts are being made for efficient energy and raw material consumption. The rate of flow of orders is encouraging. Production facilities are realigned and will be expanded to meet the demand. Your company, barring unforeseen circumstances, expects to further improve the turnover and performance.

Risks and Concerns

Since raw materials form an important component of your companys value chain, foreign exchange, cost and availability of some of the key raw materials like benzene, nitric acid, caustic potash, Sulphur based chemicals, iron powder are an area of concern.

Internal Control System and Their Adequacy

The Company has an adequate Internal Control System commensurate with the size and nature of its business. The preparation designing and documentation of Policy on Internal Financial Control has been finalized and implemented which will be reviewed periodically and modified suitably to ensure controls. The internal audit functions are carried out by a separate firm of Chartered Accountants. The quarterly audit reports, including significant audit observations and corrective actions thereon, are presented to the Chairman of the Audit Committee.

Discussion on Financial Performance with Respect to Operational Performance

The Companys revenue from operations has increased to Rs. 14,585 Lakhs as compared to the previous year of Rs. 12,074.21 Lakhs registering the increase of 20.80%. Operating profit margin has also been increased from 13.14% of the turnover as against the 10.45% of turnover of previous year.

Human Resources

Human Resource programs and initiatives in SNCL are aligned to meet the business needs. Your company believes in investing in people to develop and expand their capability. The Company has been able to create a favorable work environment that motivates performance, customer focus and innovation SNCLs strategies are based, inter alia, on processes of continuous learning and improvement.

Cautionary Statement

Statements in the Management Discussion & Analysis Report describing the Companys expectations, opinion, and predictions may please be considered as "forward looking statements" only. Actual results could differ from those expressed or implied. Important factors that could influence the Companys operations include global and domestic demand and supply, input costs, availability, changes in government regulations, tax laws, economic developments within the country and otherfactors such as litigation and industrial relations.

Key Financial Ratios

Sr. No Particulars of Ratio 31.03.2023 31.03.2022 Explanation for change in Ratios
1. Debtors Turnover 2.43 2.46 Due to increase in debtor
2. Inventory Turnover 0.89 1.06 Due to increase in Inventory
3. Interest Coverage Ratio 3.35 5.27 Increase in Borrowing due to expansion and Increase in Interest rate
4. Current Ratio 1.59 1.26 Increase in Current ratio is on account of increase in sales & Production in the last quarter of the current financial year which resulted in higher values of Inventory & trade receivables at the year end.
5. Debt Equity Ratio 0.58 0.64 Due to increase in Net Worth
6. Operating Profit Margin (%) 13.14% 10.45% Due to increase in turnover
7. Net Profit Margin (%) 3.14% 4.80% Company is in expansion phase resulting an increase in finance cost & depreciation charge during the year in spite of increase in EBIDTA vis a vis last year.

Details pertaining to Net-worth of the Company

Particulars 31.03.2023 (In Rs.) 31.03.2022 (In Rs.) Explanation for change in Net-worth
Net-worth 2,28,54,82,663 1,64,26,11,958 Infusion of issue price of Equity share warrant at premium and current years profit.
For and On Behalf of the Board of Directors SADHANANITRO CHEM LIMITED
Asit D Javeri Executive Chairman DIN: 00268114 Address: Ratnagar Palace, 37 Chowpatty Seaface, Mumbai-400 007.
Place: Mumbai Date: 7*" August, 2023