Yash Chemex Ltd Management Discussions.


India has become the fastest-growing major economy in the world according to the Central Statistics Organization (CSO) and International Monetary Fund (IMF). India is expected to be one of the most powerful economies of the world in a period of 08 to 10 years backed by its strong democracy and partnerships.

The pace for the Chemical Industrys adoption of technology will continue to rise. More companies will invest money in the research, development and technology for the betterment of services and product quality. There will be more demand for eco-friendly chemicals and sustainability with the circular economy in the coming year. The Government of India has taken significant initiatives to strengthen the economic credentials of the country and make it one of the strongest economies in the world. To revive the consumption and demand, the Indian Government decreased Corporate Tax Rate from 30% to 25%. This lower tax rate is expected to benefit Yash Chemex limited through increase in its profitability in terms of value as well as margin. Growth was supported by sectors such as construction, financial services, real estate and utility services. However, agriculture and mining grew at a much lower rate.

During the Financial Year 2020-21, Indias Gross Domestic Product shrank to 7.3% as compared to 4.2% in 2019-20. This slowdown can be attributed to governance issues, falling government expenditure, subdued demand, rising NPAs, trade deficit and debt level. Responding to these, the Indian Government took various measures like opting out of RCEP deal, introducing Competition Commission Of India (CCI 2.0) bill, decision to privatise few public companies, slashing down the corporate, GST and income tax rates. Even RBI reduced repo rate on various occasions to boost liquidity. Going into 2021-22, all these measures were anticipated to push the demand and supply side of Indian Economy. However, the Covid-19 outbreak lead to a nationwide lockdown, severely affecting the labourers, vendors and MSMEs. Right before we were struck by this health emergency, the Government and RBI had intervened to bring in some relief through various measures in the form of monetary policy, fiscal stimulus, reforms and easing of lockdown.


Emerging countries such as Africa, Middle East, and Asia-Pacific offer a golden opportunity for the Indian Chemical Industry. These countries are developing at a faster pace as compared to the developed countries of North America and Europe, providing more opportunities for export to the big as well as small chemical businesses in India. At present, the chemical export share of India in the Global market is just 2%. The increasing growth in these emerging markets would open newer export opportunities for India.


The company has adequate systems of internal control in place, which is commensurate with its size and the nature of its operations. The IT system and infrastructure are continuously examined and improved with appropriate and timely upgradation.

Internal Audit function plays a key role in providing to both the operating management and to the Audit Committee of the Board, an objective view and reassurance of the overall control systems and effectiveness of the Risk Management processes across the Company and its subsidiary. Internal Audit also assesses opportunities for improvement in business processes, systems and controls and provides recommendations designed to add value to the operations.

The Audit Committee meets on a quarterly basis to review and discuss effectiveness of the internal control system. The Audit Committee also meets the Statutory Auditors separately to ascertain their views on the adequacy and efficiency of the internal control systems.


Chemicals industry occupies a pivotal position in meeting basic needs and improving quality of life. The industry is a key enabler for industrial and agricultural development of the country and provides building blocks for several downstream industries, such as textiles, papers, paints, varnishes, soaps, detergents, and pharmaceuticals. It is also among the most diversified industrial sectors and covers over 80,000 commercial products.

The government permits 100% foreign direct investment (FDI) in this sector under the automatic approval route. Manufacturing of most chemical products inter-alia covering organic/inorganic, dyestuff and pesticides is de-licensed. Factors such as boost to speciality and agrochemicals chemicals due to rapid development in construction and agricultural sector, inadequate per capita consumption and strong demand from paints, textiles and diversified manufacturing base shall aid towards the development of Indian chemicals sector, the same is expected to grow at around 9% per annum and touch US$ 304 billion by 2025.

Government of India has launched several schemes and initiatives to encourage growth of the sector which include:

Petroleum, Chemical and Petrochemical Investment Region (PCPIR) scheme: concept of PCPIR is acluster approach to promote petroleum, chemicals and petrochemical sectors in an integrated and environmental friendly manner on a large scale. PCPIRs have already received investments worth US$ 24.68 billion till now, these PCPIRs are expected to attract investment in the tune of US$ 117.42 billion approximately. PCPIRs are being developed in Andhra Pradesh, Gujarat, Odisha and Tamil Nadu and have already generated direct and indirect employment for 0.2 million people with total potential of 3.4 million.

The Indian chemical industry has received the much needed boost in the past 4 to 5 years. The Government is taking strict measures to cut down on the challenges that the industry is facing. It is also coming up with new projects and plants to leverage all the opportunities to the maximum. In fact, the Governments new "Make In India" initiative would also play a pivotal role in boosting the growth of the Indian chemical industry. Other favourable

Government initiatives such as "Aatmanirbhar Bharat and the Production-Linked Incentive Scheme", are likely to boost the manufacturing sector, and thereby indirectly benefit the industry and the Company.


India moved up from 77th position in 2018 to 63rd position in 2020 on the World Banks ease of doing business index, riding the back of various favourable reforms and friendly policies. This is expected to attract more overseas end-user industries to set up a manufacturing base in the country. Yash Chemex Limited is bound to take benefit from such shift of preference.


As a step towards reducing the emissions and managing waste properly, the Chienese Government laid down various stringent measures. This has led to an increase in the compliance cost. The Chinese Government also declared some areas of Yangtze river as a protected zone, mandating no factories to be built within 1 Kilometre of the river. These measures are expected to eliminate smaller companies from China. And the decreasing chemical production from Chienese Companies is anticipated to shift the demand to other countries. These developments augur well for the Indian quality products, high volumes and strategic locations, compared to its peers, are some of the factors that places the Company in a better position to face this Competition.



Despite having a favourable demographic profile, labour and skill shortage continues to be one of the key concerns for the Indian chemical industry. The Government along with Industry bodies are putting their best foot forward to have education and vocational training institution arming the manpower with appropriate skill set.


Structural shifts in the Chinese market arising from over capacity coupled with weakening prices are threatening the Indian players. As China threat was partly getting managed through the anti dumping duty route, we now have Russian problem. Russia is a key producer of steel and as its currency has hit rock bottom, the Indian market can see cheap imports.


Our Government has allowed 100% FDI in Chemical Sector. This has resulted in domestic players facing stiff competition from Foreign multinationals, capable of exerting strong price pressure on local markets. Yash Chemex Limited views this as a health indicator of further thriving and leveraging on its attributes. Better pricing, quality products, high volumes and strategic locations, compared to its peers are some of the factors that places the Company in a better position to face this competition.


The employee strength of the Company as on 31st March, 2021 was 9. The relations with the employees of the Company remained cordial and harmonious.

The Company encourages the employees to upgrade their knowledge and skills. The training sessions on various working parameters are conducted in routine apart from allowing employees for outside specialized training, wherever required.


Audited Financial Statements for the year ended 31st March, 2021 are in compliance with the Indian Accounting Standards (Ind-AS) prescribed under section 133 of the Companies Act, 2013.


(Rs. In Lacs):

2020 21 2019 20 Reason for decline
Revenue from Operations 5782.59 7941.56 -Lower demand -Increase in Financial Cost and Depreciation -Fluctuations in Prices of Chemicals
EBITDA 360.73 402.04
Profit after Tax 251.44 295.26
Earnings Per Share (EPS in Rs.) 2.45 2.88


Statements in "Management Discussion and Analysis" describing the Companys objectives, projections, estimates, expectations or predictions are forward looking statements within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and expectations of future events. The actual results might differ materially from those expressed or implied depending upon factors such as climatic conditions, global and domestic demand-supply conditions, finished goods prices, raw materials cost and availability, foreign exchange market movements, changes in Governmental regulations and tax structure, economic and political developments within India and the countries with which the Company has business.

Therefore, the Company assumes no responsibility in respect of forward looking statements herein which may undergo change in future on the basis of subsequent developments, information or events.