INDUSTRY STRUCTURE AND DEVELOPMENTS
1) Global Industry Review (i) Introduction
There are two types of colorants – pigments and dyes. Pigments are
insoluble substances and could either be in powdered or granular form. They impart color
by reflecting only certain light rays. Their major end use industries are paints, inks,
plastics, textiles, rubber. Pigments can be broadly classified as organic (AZO),
Phthalocyanines (Blue & Greens) and inorganic (including specialty pigments). Dyes are
soluble substances used to pass color to the substrate and find applications primarily in
textiles, paper and leather. There are several types of dyes -Reactive, VAT, Direct dyes,
Basic dyes, Acid dyes and Food dyes.
(ii) Global Market Insight
The global synthetic dye and pigment market is expected to grow from
$53.95 billion in 2020 to $58.61 billion in 2021 at a compound annual growth rate (CAGR)
of 8.6%. The growth is mainly due to the companies rearranging their operations and
recovering from the COVID-19 impact, which had earlier led to restrictive containment
measures involving social distancing, remote working, and the closure of commercial
activities that resulted in operational challenges. The market is expected to reach $68.35
billion in 2025 at a CAGR of 4%.
Asia Pacific was the largest region in the global synthetic dye and
pigment market, accounting for 32% of the market in 2020. Western Europe was the second
largest region accounting for 31% of the global synthetic dye and pigment market. Africa
was the smallest region in the global synthetic dye and pigment market.
Many textiles companies are adopting eco-friendly dyes for producing
textiles and fabrics. These companies do not use harmful dyes as they cause extensive
damage to the environment and are known to cause skin allergies and respiratory diseases.
Due to the positive environmental characteristics and low toxicity of eco-friendly dyes,
many companies are moving toward eco-friendly organic dyes, though they are priced higher
than inorganic dyes.
The synthetic dyes and pigments market is expected to be driven by the
rapidly growing packaging industry. This is mainly due to increased demand from the
toiletries, food & beverages, healthcare, and other industries, particularly in
emerging economies. Going forward, the market for synthetic dyes and pigments is expected
to grow with the launch of high-quality digital printing applications on flexible
packaging and labelling. Growing demand for digital printing due to the need for high
quality printing will lead to an increase in the demand for packaging printing, driving
the synthetic dyes and pigments market.
(2) Indian Economy
Pigment manufacturers in India are expanding their production lines and
upgrading their technology infrastructure to prepare for the upcoming market demand.
Export opportunities are pushing Indian businesses to strengthen their distribution
network in different countries. International brands are investing in India to expand
their facilities and to manufacture high quality products for fulfilling demand in
domestic and international markets. Strategic partnerships between companies and reliable
manufacturers will push the growth of the global markets.
The dyes and Pigment industry in India is expected to witness a steady
growth in the coming years due to environmental crackdowns in China, resulting in a
shutdown of several domestic dye companies. India is better placed due to the availability
of the ecosystem, feedstock, technology, and compliance required for the industry. Thus,
the consumer base of China is likely to shift to India due to these reasons in the coming
years.
With the Indian economy consistently delivering a growth rate of
approximately 7% every quarter on the back of structural reforms that simplify operating a
business in India. It is safe to retain a widely positive outlook when it comes to the
economic growth of the Indian subcontinent.
According to a report by Federation of Indian Chambers of Commerce and
Industry (FICCI), the chemical industry in India has a market size of nearly $163 Billion
and is expected to grow with a CAGR of 9% for the next five years.
The Indian Dye and Dyestuffs Industry is an important aspect of the
Indian Chemical Industry that significantly contributes to the growth. According to a
recent survey, the Indian dyes market is poised to generate a revenue of Rs. 48,000 crores
by 2022.
(3) Overview
The organic pigments market is fragmented with the presence of several
domestic and international players. Hence, companies need to adopt advanced technologies
and marketing strategies to remain competitive in the market. Though the accelerating
growth momentum will offer immense growth opportunities, the high cost of organic pigments
will challenge the growth of the market participants. To make the most of the
opportunities, market vendors should focus more on the growth prospects in the
fast-growing segments, while maintaining their position in the slow-growing segments.
Whereas, the dyestuff and pigment production volume in India is
projected to reach 572.2 thousand tonnes in 2024, increasing at a CAGR of 9.11%, during
2020-2024. The factors such as, growth of textile industry in India, increasing titanium
dioxide production capacity, accelerating paper production, rising plastic consumption and
rapid urbanization are expected to drive the market. However, growth of the market would
be challenged by price volatility of raw materials and concerns associated with rising
environmental problems. A few notable trends include expansion of paint and coating
industry and upsurge in leather production.
(4) Business of the company
The Company is a globally renowned player in Dyes & Pigment
Industry. The Company is among leading manufacturing and exporting entity among top Dyes
& Manufactures in India. The Company is manufacturing Dyestuffs for Textile and
Apparel, Ink, Leather and paper Industries etc. Company is also
producing Organic Azo Pigments. The production facilities are presently at Palghar,
Tarapur and Ambernath in the State of Maharashtra.
(5) Future Outlook and Opportunities
The COVID-19 pandemic has taken a huge toll on the textile dyes and
pigments industry because of the strict lockdown measure implemented by governments in
major manufacturing countries, such as Bangladesh, China, Brazil, and India. It further
resulted in the halt of production processes. Despite this gloomy outlook, the Company
plans to diversify further with the addition of new specialty pigments, mono pigments,
thereby meeting the requirement of digital printing market with the finest particle size
of pigment dispersions. The Company is having an integral facility with the manufacturing
of Intermediates for Dyestuffs & Pigments. Almost the entire capacity of Intermediates
is utilized in active consumption for Pigment manufacturing.
The organic pigments market is expected to witness growth on account of
its use in various end-use industries, including printing inks, paints and coatings,
plastics, rubber and textiles. Urbanization, coupled with rise in infrastructure spending,
is likely to boost the paints market which, in turn, is anticipated to fuel the organic
pigments market over the forecast period. Furthermore, use of organic pigments as
colorants in textile and plastic industries is expected to contribute to growth. Moreover,
rising demand for value added, high-quality organic pigments in the cosmetic industry is
likely to drive growth in the next few years.
The market is anticipated to receive a boost as major companies are
aiming at designing and developing products in sync with continuously changing
requirements for evolving technologies. However, volatility in raw material prices is
likely to be a major constraint in the growth of the organic pigment market. Numerous
North American and European organic pigment manufacturers have been shifting their
manufacturing bases to low-cost countries in Asia Pacific on account of absence of
stringent environmental compliance issues and lower production costs at the latter
locations.
(6) Growth Plan
An Industrial Land is acquired at Dhahej - Gujarat for next phase of
expansion, wherein with the implementation of production, the Company will have a very
strong position as top five pigment producer in India. With this expansion, the company
will mitigate the risk of importing the raw materials and further strengthening the
backward- forward integration. We have successfully installed and are operating one of the
largest water recycling plant at one of our unit which has given us a huge confidence in
implementing sustainable manufacturing processes in our new projects as well.
Presently, we are exporting to more than 52 countries and our quality
is accepted Worldwide. It is our earnest desire to explore the new market to increase
revenue. Our marketing team is on toes by way of making frequent Overseas Visits and
finalizing the distributors / dealers Globally.
The company is also increasing its presence in Pan India basis.
Distributors and Dealers are appointed in key areas of printing inks, plastics, and paint
industry in addition to Textile Printing. We are positive that company will continue to
deliver profitable growth, led by enhanced capacity utilization, increased contribution of
value-added products and higher demand in the market.
The Unprecedented challenges and opportunities which lie ahead require
it to be more proactive and responsible to the everchanging business functions and
practices, so that it can adjust to the force of transformation which are taking place
speedily. Effective strategies and approaches in Chemical Sector, India can make the world
its playground.
(7) Segment wise or product wise performance
The Company operates in one segment i.e. Dyestuffs Organic Pigments and
Organic Intermediates.
(8) Risks Concerns & Threats
The Company mitigates its key risks across all levels of business
operations by identifying and assessing risk keeping business objectives in mind. It also
helps to monitor the effectiveness and efficiency of risk responses against strategic,
operational, financial and compliances risk. However, there remains a big threat of
uncertainties due to Covid-19 along with cross border tension, global trade war,
fluctuations in commodities prices and volatile forex movement. Additionally, due to
internal and external competition, the margin of profits in the Dyes industries is rapidly
being squeezed. The consequence is that there is low expenditure incurred for R&D. We
continue to work on cost optimization across our new projects to improve efficiencies and
optimize and utilize recourses, yielding long term results.
Fluctuating and volatile prices of key raw materials, including
Naphthalene derivatives, coupled with an increasingly stringent regulatory environment,
are critical challenges to the growth of this industry. Effective management of these
risks is essential for the achievement of our long-term goals. Our success as an
organization also depends on our ability to identify and leverage the opportunities while
managing the risks.
(9) Financials and compliance risk
The company also focuses on existing and emerging threats that could
materially impact overall risk exposure. It helps us to calibrate these risks from
materiality standpoint and evolve mitigation mechanism as and when required. Market risk,
credit risk, liquidity risk is overseen by the ERM team, who advise management for to
adopt appropriate policies and procedures. The company fulfils its legal requirements
concerning emission, waste water and effluent disposal. The company aims to set exemplary
and sustainable standards, not only through products, services and performance, but also
through integrity and behaviour.
(10) Internal Control Systems and their accuracy
The Company believes that Internal Control is one of the key pillars of
governance, which provides freedom to the management within a framework of appropriate
checks and balances. The Company has a robust internal control framework, which has been
developed considering the nature, size and risks that could hinder the Company from
achieving its objectives. The Company has well-placed, proper and adequate internal
controls environment, commensurate with its size, scale and complexities of its
operations. Internal control systems comprising of policies and procedures are designed to
ensure reliability of financial reporting, compliance with policies, procedures,
applicable laws and regulations and that all assets and resources are acquired
economically used efficiently and are adequately protected. All the company processes are
carried out on the SAP system. The internal auditors along with finance team plan yearly
schedule in consultation with Chief a Financial Officer and Audit committee. The Audit
committee reviews the major findings of the internal audit.
The periodic report prepared by internal audit team, creates the basis
of certification provided by Managing Director and Chief a Financial Officer for financial
reporting.
(11) Financial & Operational Performance
Aggressive growth and focus on export, research & development,
marketing alliances, upgradation of manufacturing facility, contract manufacturing have
established new markets, new areas, environmental consciousness, cost reduction, etc. in
order to achieve new global standards. Reactive Dyes and Disperse Dyes have been most in
demand due to Cotton & Polyester Dyeing/ Printing Industry. With GST implementation,
industry is benefitted. This provided the competitiveness of Indian goods and services in
the international market and gave boost to Indian exports. The uniformity in tax rates and
procedures across the country will also go a long way in reducing compliance cost.
(12) Key Financial Ratios
In accordance with the SEBI (Listing Obligations and Disclosures
Requirements) (Amendment) Regulations, 2018, the Company is required to give details of
significant changes (change of 25% or more as compared to the immediately previous
financial year) in Key sector-specific financial ratios.
|
Standalone |
Consolidated |
| Ratios |
2020-21 |
2019-20 |
2020-21 |
2019-20 |
| Debtors Turnover Ratio |
3.91 |
4.09 |
3.85 |
4.12 |
| Inventory Turnover Ratio |
6.77 |
8.87 |
6.71 |
8.87 |
| Interest Coverage Ratio |
8.11 |
8.64 |
8.11 |
8.91 |
| Current Ratio |
1.79 |
1.05 |
1.80 |
1.06 |
| Debt Equity Ratio |
0.63 |
0.61 |
0.63 |
0.62 |
| Operating Margin Ratio |
9.07% |
7.31% |
9.13% |
7.37% |
| Net Profit Margin |
5.71% |
4.92% |
5.75% |
4.94% |
| Return on Net Worth |
16.88% |
14.33% |
16.96% |
14.47% |
Return on Networth for financial year is 16.88% as compared to 14.33%
for previous year.
(13) Human Resource Management
The thrust of the Companys human resource development is to
create a responsive and market-driven organization with emphasis on performance.
Continuous appraisal of personnel competence in line with job requirements, are carried
out to provide for necessary training to personnel thereby facilitating higher levels of
output and productivity. Overall Industrial Relations climate of the Company continue to
remain harmonious with a focus on productivity, quality, and safety. During AY 2021 under
review, there were no labour issues outstanding or remained unsettled during 2020-21. Our
employees have been very cordial and delivered the superior performance during the year.
Salient features have been to recruit the best talent available, nurture and empower them.
As on 31st March, 2021, the Company has a strength of 105 permanent employees.
The Board records their appreciation of the commitment and support of the employees and
look forward the same in future.
(14) Cautionary Statement
Some of the Statements made in the Management Discussions &
Analysis mentioning the Companys objective, estimates, projections, expectations and
predictions may be forward looking statements within the meaning of applicable securities
laws and regulations. The expectations are based on reasonable assumptions, the actual
results may differ from implied. The companys operations are dependent by many
external and internal factors beyond the control of the company. The Company assumes no
responsibility to publicly amend, modify or revise any forward-looking statements, on the
basis of any subsequent events or information.
|
For and on behalf of the
Board of Directors |
|
|
of Vipul Organics Limited |
| Place : Mumbai |
Vipul P. Shah |
Mihir V. Shah |
| Date : 8th June, 2021 |
Managing Director |
Whole Time Director |
|
DIN: 00181636 |
DIN: 05126125 |
+91-9892691696
