Sadhana Nitro Chem Ltd Management Discussions

Digitalization and Supply Chain Resilience

Digitization in manufacturing and logistics is becoming imperative for supply chain visibility, predictive maintenance, and performance monitoring. Lagging digital infrastructure and limited talent pool may hamper competitiveness. Our Company is open to consider the strategies like Implementation of digital pilots in SCM, plant automation and to Upskill workforce in AI/IoT applications and to Establish end-to-end visibility of production and dispatch.

Operational Performance

The Companys operational performance over the past few years has been satisfactory, and we are continuously striving to enhance profitability. For the year ended March 31,2025, the total revenue from operations Rs.13599 Lakhs compared to the previous financial years Rs 19286 Lakhs.

Market and Outlook

Your company maintains a healthy order book, reflecting healthy demand for our products despite the continued slowdown in global economies.

A strategic focus on a better product mix, enhanced operational efficiency, and stringent cost controls has contributed to higher productivity, increased production capabilities, and helped support our operating margins. These positive trends, observed throughout the year, are expected to continue moving forward.

The company simultaneously faces an opportunity from the export markets due to China +1, along with pressures from dropping prices from China and tariffs from America. In the long term there is a trend of sustainably migrating product sourcing from China to India, however, in the present scenario the short-term challenges make it difficult to predict when this stable change will occur and settle.

The company remains committed to controlling costs at every level to enhance operational efficiency. Alongside increased operating levels and strategic product price adjustments, these efforts are expected to sustain our growth trajectory. Continuous improvements in energy and raw material consumption are being pursued to further optimize performance. The current order flow is encouraging, and production facilities have been realigned and are being expanded to meet the increasing demand. Barring unforeseen circumstances, your company anticipates further improvements in turnover and overall performance.

Risks and Concerns

Raw materials are a critical component of your companys value chain. Thus, fluctuations in foreign exchange rates, costs, and the availability of key raw materials-such as benzene, nitric acid, caustic potash, sulphur-based chemicals, and iron powder-pose potential risks. Additionally, the chemical industry is facing significant pressure from Chinese dumping practices, where products are being sold at historically low prices. This practice threatens market stability and could impact our margins. However, your companys vertically integrated manufacturing approach and continuous efforts in process optimization have positioned us well to mitigate these risks.

Internal Control System and Their Adequacy

The company has implemented a robust internal control system that is commensurate with the size and nature of its business. The design and documentation of the Policy on Internal Financial Control have been finalized and implemented, with periodic reviews and modifications to ensure continued effectiveness. The internal audit function is carried out by an independent firm of Chartered Accountants. Quarterly audit reports, including significant observations and corrective actions, are presented to the Chairman of the Audit Committee, ensuring strong governance and risk management practices

Discussion on Financial Performance with Respect to Operational Performance

The companys revenue from operations was Rs. 13599 Lakhs for the year ended March 31,2025, compared to Rs. 19286 Lakhs in the previous year. The net profit margin has been more or less stable at 3.92 % of turnover in the previous year and 3.91% this 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 other factors such as litigation and industrial relations.