vivid global Management discussions

A. Industry Structure and Development

The Company is engaged in the business of production of dye intermediates particularly in N-Methyl J. Acid, derivatives of J. Acid, Tobias Acid, Tobias Acid purified Grade & Sulpho Tobias Acid. Further the Company undertakes job work of various dye industries. The main raw material J.Acid is imported from China.

B. Opportunities and Threats

Due to the ongoing Russia – Ukraine war, the Tourism, Hospitality & Fashion Industries have been severely impacted and the consumer spending has gone down by 80%, which adversely effected the Dye Intermediate industry which has come under head winds. Also Due to the China deflation, they are offering low prices and dumping their products in India and giving unhealthy competition and due to this many Dye Intermediates plants have closed down. This will compel us to start new products. We have started R&D for the new product in our Plant and we anticipate some demand for this new product in the future.

C. Segment-wise Performance

The Company has only one business segment viz dye intermediates and dyes and hence product-wise performance is not provided.

D. Outlook

The F.Y. 2023-2024 is one of the challenging years for dye and dye intermediate industry. This scenario has not been seen in the last 2 decades and is going to continue for the following reasons.

1. Our end consumer of Dye intermediates are Textile mills which use cotton and silk. Cotton prices in Q1 of 2022 were Rs 35,000/- per candy (339 kgs per candy) which has increased to Rs 60,000/- per candy in the month of June/July 2023. Moreover, the slump in demand due to inflation has reduced the capacity of dyeing and printing of processing houses of cotton. In turn , this has reduced dye intermediates demand by 60 to 70 percent.

2. The War in Ukraine continues to be a challenge for us due to rise in prices Oil and Gas prices by 40% which in turn raises the basic chemical raw materials prices to the tune of 50% to 60%.

3. Due to high levels of inflation and energy crises in USA , Europe and Far east countries, the consumers spending power has decreased. The rise of food prices has in turn made people spend on their needs more than their wants.

4. As our industry is known to be cyclical and being in the period of the cyclical phase , inflation and reversionary pressures also hit us making us bear more losses and face a very big slump in demand.

5. China is the biggest economy in the world and is facing deflation is one very big challenge for us. As China faces deflation , chinese companies are proving to be unhealthy competition for India as they are dumping their products at such low prices that India cannot compete with them in a competitive point of view.

At the moment there are many dye and dye intermediates plants shut down due to a slump in demand and unhealthy competition from China which has come into affect and in most cases all the plants are running to the tune of 30% to 40% capacity only.

So, Looking at the above scenario, the F.Y.2023-2024 has almost gone into unhealthy competition, Inflationary pressure and recession which has affected our revenue and profit and we feel it will continue to be so till the second quarter of F.Y.2024-2025.

E. Risk and Concerns

Since the price of our main raw material namely J. Acid is cheaper in the local & International market, the Company feels it is more viable to import rather than manufacturing at our Plant.

F. Internal Control Systems and their Adequacy

The Company has satisfactory internal control system, the adequacy of which has been mentioned in the Auditors Report.

G. Human Resources

In the field of Human Resources, the Company has developed speedily water/air/land pollution control departments and hired qualified people for the same.