Vinyl Chemicals (I) Ltd Management Discussions.

The Company’s 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 f luctuations. Similarly, there are f luctuations in foreign currency rates. Hence, there is an inherent risk in trading activities.

Impact of Covid-19 Pandemic:

The nationwide lockdown which was imposed due to outbreak of Covid-19 pandemic last year had severely impacted the Companys trading operations during the first quarter of the Financial Year 2020-2021. As per Company’s expectations, the market demand improved in the remaining quarters and the Company was able to achieve a modest growth in turnover during the previous year.

However, due to resurgence of the pandemic in the country and subsequent lockdown like restrictions imposed by several State Governments since mid-April 2021, the normal operations of the Company were severely impacted. Performance of the Company during the current year will depend on the pandemic situation as well as the prevailing market conditions.

Segment-wise Performance:

The Company’s 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 the 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, 2021 were 13.

Changes in Key Financial Ratios:

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

Ratio As on 31.03.2021 As on 31.03.2020
1 Debtors Turnover Ratio 5.06 6.60
2 Inventory Turnover Ratio 6.53 6.33
3 Debt Equity Ratio 0.01 0.01
4 Current Ratio 1.34 1.65
5 Operating Profit Margin 4.57 5.24
6 Net Profit Margin 3.86 2.77
7 Return on Networth 17.57 12.41

The Return on Networth as on 31.03.2021 has improved due to favourable movement of global VAM prices, higher sales due to reduction in adverse impact of Covid-19 pandemic and lower fluctuations in foreign exchange rates.