<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>
This section contains certain forward-looking statements which
are based on certain assumptions and expectations of certain future events.
Overall Review
The Company is engaged mainly in production of Cuprous Chloride,
Cupric Chloride and Copper Sulphate at its factory situated at 1133, Near GIDC Phase-4
Chhatral, AT & P.O. Chhatral, Ta. Kalol, Gandhinagar (Gujarat) with the optimum total
producing capacity. In addition, our Company has also undertaken production of various
other chemical products.
The Company installed manufacturing capacity of following three
major products viz. Cuprous Chloride, Copper Sulphate and Cupric Chloride & Other
Products as 6,000 MT / P.A., 5,400 MT / P.A. and 800 MT / P.A. respectively. These
products are widely used in dyes and pigment industries, paint industries, pharmaceuticals
industries, electroplating industries, metal extraction industries and ink, Carbon paper,
PVC pipe coating industries etc.
The Company is currently located and supplying the products in
India including supply to Merchant Exporter. However, since last year the Company on low
key basis started export its products.
Industry Structure and developments
Chemical industry is one of the oldest industries in India. It
does not only play a crucial role in meeting the daily needs of the common man, but which
are required in almost all walks of life. Over the last decade, the Indian Chemical
industry has evolved from being a basic chemical producer to becoming an innovative
industry. With investments in R&D, the industry is registering significant growth in
the knowledge sector comprising of specialty chemicals, fine chemicals and
pharmaceuticals. With Asia’s growing contribution to the global chemical industry,
India emerges as one of the focus destinations for chemical Companies worldwide. With the
current size of approximately $108 billion, the Indian chemical industry accounts for 3%
of the global chemical industry. Two distinct scenarios for the future emerge, based on
how effectively the industry leverages its strengths and manages challenges. Specialty
chemical segment in India is poised for substantial growth and offers immense potential
for investment as well as employment generation.
Financial Performance with respect to Operational Performance
The Gross revenue from operations of the Company for the year
2022-23 has decreased from Rs. 19806.82 Lakhs to Rs. 14856.41 Lakhs. The Profitability of
the Company was increased by 19.57% and reached to 41.61 Lakhs (PAT) from 34.80 Lakhs.
Financial Performance:
Particulars |
Current Year Ended 31.03.2023 |
Previous Year Ended 31.03.2022 |
Revenue from Operations(Gross) |
14856.41 |
19806.82 |
Add: Other Operating Income |
- |
- |
Less: Total Expenditure |
14856.41 |
19806.82 |
Profit before other income, interest, depreciation & tax |
303.83 |
273.97 |
Add: Other Income |
56.67 |
36.98 |
Profit before Interest Depreciation & Tax [PBIDT] |
360.50 |
310.95 |
Add: Interest Income |
- |
- |
Earnings before Interest, Tax and Depreciation (EBITDA) |
360.50 |
310.95 |
Less: Interest Expense |
249.97 |
206.58 |
Less: Depreciation |
55.32 |
57.83 |
Profit before tax |
55.21 |
46.54 |
Less: Tax Expenses |
13.60 |
11.74 |
Profit for the year |
41.61 |
34.80 |
Details of significant changes in key financial ratios are as
given below:
Sr. No. PARTICULARS |
UOM |
F.Y. 2021-22 |
F.Y.2022-23 |
GrowthYOY |
1 Contribution to Exchequer |
Lakhs |
3588.73 |
2698.59 |
(24.82%) |
2 Revenue Growth |
% |
20.29% |
(24.99%) |
(45.28%) |
3 EBITDA |
Lakhs |
310.95 |
360.50 |
15.84% |
4 EBITDA MARGIN |
% |
1.57% |
2.43% |
- |
5 PBT |
Lakhs |
46.54 |
55.21 |
18.63% |
6 PAT |
soNormal align=right
style=margin-top:3.0pt;margin-right:0in;
margin-bottom:3.0pt;margin-left:0in;text-align:right;mso-pagination:none>Lakhs |
34.80 |
41.61 |
19.57% |
7 Net Worth |
Lakhs |
3972.07 |
4013.68 |
1.05% |
8 ROE % |
% |
0.88 |
1.04 |
18.18% |
9 NET DEBT |
Lakhs |
3451.37 |
2858.00 |
(17.19%) |
10 Debt |
Weight |
2.00 |
1.66 |
- |
Equity |
|
1.00 |
1.00 |
- |
11 Working Capital Ratio |
Times |
2.09 |
1.89 |
(10.58%) |
12 Fixed Assets Turnover Ratio |
Times |
54.15 |
38.72 |
(28.49%) |
13 Debt Service Coverage Ratio |
Times |
0.75 |
1.41 |
80.00% |
14 Inventory Turnover Ratio |
Times |
8.66 |
5.89 |
(31.99%) |
15 Debtors Turnover Ratio |
Times |
8.69 |
7.16 |
(17.61%) |
16 Interest Coverage Ratio |
Times |
1.51 |
1.44 |
(4.64%) |
There has been some improvement in the profitability of the
Company during the financial year 2022-23 as the Company is recovering from the adverse
effects of COVID-19 which also resulted into improvement in EBIDTA, PBT, PAT. In view of
decrease in turnover, inventory turnover and debtors turnover have been affected
adversely. Debt service coverage ratio has improved due to increase in profitability.
Internal Control Systems and their adequacy
The Company practices an internal control system which ensures
proper handling and management of its assets. The internal control system of the Company
is geared towards achieving efficiency in operations, effective monitoring and compliances
with all applicable laws and regulations. The Company regularly conducts internal audit
programs. The internal control department of the Company functions under the guidelines of
the Audit Committee of the Company.
The Company regularly reviews the adequacy and effectiveness of
the internal control system and suggests improvement for strengthening them.
Opportunities and threats
While the domestic and International economic conditions
continue to remain challenging and are expected to remain for some more time, we expect
that with wide range of products, quality standards and team efforts, your Company will be
in a position to wither this situation. Your Company has continued to be the preferred
supplier of many leading Companies and has been successful in expanding its approval base,
adding leading players from the industry. Therefore, we expect that Your Company will
continue to be in a position to gradually expand its market reach and market share as per
opportunities.
The Company regularly insures all its assets to enable itself in
case of any mis-happening. The Company has framed a risk management team which constantly
monitors the Indian and international markets and guides the management of any sort of
prevailing risk to the company. The commodities prices being internationally traded are
affected by the global market demand and supply forces and the dollar rate. The risk
management team plays a major role here. Moreover, the industry is labour oriented and
business operations of the Company may be materially affected by strikes, lock outs or
work stoppage.
Material Developments in Human Resources and Industrial
Relations Front:
As the Company continues to grow, the focus has been on
enhancing morale and capabilities of employees. The staff and workers are provided
orientation and training for the development of soft and hard skills on a regular basis.
Human Resource is a precious as set of your Company. Efforts are made to improve the
performance, providing work satisfaction and performance based increments, safety and
social status. The Industrial relations remained cordial at all organizational levels and
work places. The Company makes regular efforts to maintain relation with Stakeholders by
transparency, good governance, regular communication and effective transactions.
Outlook and Opportunities
Indian chemical industry is expected to register a growth of
8-9% in the next decade and is expected to double its share in global chemical industry to
5-6% by 2023. Indian Chemical industry has the potential to grow significantly provided
some of the key growth imperatives are taken care of. Securing Feedstock, Right Product
Mix, M&A opportunities are currently the key imperatives for chemical industry in
India. Few investment opportunities can be highlighted as:
- Chemical companies in India can either explore alternate
feedstock or invest in setting up plants in resource rich nations to secure feedstock.
- Companies need to invest in exploring the right product mix to
be competitive and profitable using the available feedstock in India i.e. Naphtha and its
derivatives.
- Indian companies can explore possible Merger, JV opportunities
for technology, capital or access to international market by taking advantage of
increasing expansion of western companies in India.
- Chemical companies can invest in exploring strategic energy
management and strategic water management to cut down their energy costs and contain water
availability concerns.
- Companies can invest in upcoming PCPIRs in India and overcome
challenges related to infrastructure, power and water availability.
- There are good opportunities in segments such as Specialty
Chemicals, Specialty Polymers, for catering to huge emerging domestic demand as also as a
manufacturing hub.
Risks and Concerns
The Company regularly insures all its assets to enable itself in
case of any mishappening. The Company has framed a risk management division which
constantly monitors the Indian and international markets and guides the management of any
sort of prevailing risk to the Company.
Environment and Safety
The Company is committed to comply with the statutory
requirements related to environment, health, safety and to prevent pollution through
continuous improvement in processes, practices and EHS awareness. Your Company not only
cares for compliances is this aspect but also contributes towards society health, safety
and green environment.
Material Developments in Human Resources and Industrial
Relations Front, including number of people employed
The Company has continued to give special attention to Human
Resources/Industrial Relations development. Industrial relations remained cordial
throughout the year and there was no incidence of strike, lock out etc.
Cautionary Statement
Statement in this Management Discussion and Analysis Report,
describing the Company’s objectives, estimates and expectations may constitute ‘Forward
Looking Statements’ within the meaning of applicable laws or regulations. Actual
results might differ materially from those either expressed or implied.
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