Vinyl Chemicals (I) Ltd Management Discussions.

The Companys current business activity is trading in Chemicals.

Industry Structure and Developments:

Large number of companies are active in trading of chemicals. About 10 12 importers are regularly importing Vinyl Acetate Monomer for trading into India.

Opportunities, Threats, Outlook, Risks and Concerns:

The Company is currently engaged mainly in trading of Vinyl Acetate Monomer. The Company has so far not deemed it appropriate to add other chemicals to its trading activity.

The price and demand of various chemicals undergo fluctuations. Similarly, there are fluctuations in foreign currency rates. Hence, there is an inherent risk in trading activities.

Impact of Covid-19 Pandemic:

The nationwide lockdown imposed due to Covid-19 pandemic has severely impacted the Companys trading operations during the first quarter of the current year. While the market demand is expected to improve in the subsequent quarters, the turnover of the Company is expected to be lower than the previous year.

Segment-wise Performance:

The Companys current business activity has only one primary reportable segment, namely trading in chemicals.

Internal Control Systems and their adequacy:

The Company has adequate internal control procedures commensurate with size and nature of its business. The internal control systems provide for policies, guidelines, authorisations and approval procedures.

The Audit Committee of the Board of Directors periodically reviews the internal audit reports, significant risk area assessment and adequacy of internal controls for ensuring checks and balances. The Company has appointed Internal Auditors who regularly check the adequacy and effectiveness of all internal controls and suggest improvements.

Financial Performance:

The financial results and performance for the year are elaborated in the Directors Report.

Human Resources:

Harmonious relations continued to prevail with the employees. The total number of employees as on 31st March, 2020 were 15.

Changes in Key Financial Ratio:

The details of changes in Key Financial Ratios are as under:

Sr No. Ratio As on 31.03.2020 As on 31.03.2019
1 Debtors Turnover Ratio 6.60 6.59
2 Inventory Turnover Ratio 6.33 7.66
3 Debt Equity Ratio 0.01 0.01
4 Current Ratio 1.65 1.70
5 Operating Profit Margin 5.24 5.20
6 Net Profit Margin 2.77 3.01
7 Return on Networth 12.41 15.47

The Return on Networth was lower mainly due to adverse movement of global VAM prices, lower sales due to adverse impact of Covid-19 pandemic and fluctuation in foreign exchange rates.