Yash Chemex Ltd Management Discussions.


Global economy has shown a bounce back in year 2021 after contraction and stress due to COVID-19 pandemic in 2020. According to International Monetary Fund (IMF), global real GDP growth rebounded to 6.6% in year 2021 from 3.1% contraction in year 2020. Wide vaccination coverage, accommodative fiscal policies and relaxation on restriction have helped in increased consumer spending and industrial activity picked up in most economies. The rise in fiscal spending and accommodative monetary policies globally further supported this recovery. Delta wave surge in Q2, 2021 in Asian countries resulted in dampening of mood and spending. However, United States and Europe have shown positive trend in recovery and economic activities are picking up momentum. China continues to adopt Zero tolerance to COVID-19 which continues to be a major challenge to normalisation. Further the supply chain continues to pose challenge as logistics globally struggles with under capacity and trade imbalances.

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 5 to 8 years backed by its strong democracy and partnerships.

The pace for the Chemical Industry?s 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 2021-22, India?s Gross Domestic Product shrank to 8.7% as compared to 6.6% in 2020-21. 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 2022-23, all these measures were anticipated to push the demand and supply side of Indian Economy. However, the Covid-19 outbreak lead to 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.


The COVID-19 and Russia Ukraine conflict are resulting into major realignment of economies across the world. World is learning to live with COVID and fastest ever discovery of Vaccine has reposed faith in science and innovation. The world?s eyes are tentatively set on the

Ukraine-Russia war and the potential economic and humanitarian fallout. The war has heightened fears of global slowdown, supply chain disruptions and rising inflation, and the IMF expects global growth to moderate to 3.6% in CY 2022. The consequent effect on various aspects of the global economy, such as commodities and financial markets, and trade and migration linkages, are evident. Emerging and developing markets are estimated to grow at slightly higher rate of 3.8% in 2022. Policy response is expected to be aggressive, Energy security and alternate supply chain will be focus area for major economies. Despite all these challenges, supply-demand imbalance is expected to get resolved and inflationary pressure will ease out. IMF projects reasonable growth over next 2 years.


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 Government?s 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 Bank?s 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.


The global agrochemical industry is dominated by China. Due to growing environmental concerns, many specialty chemical companies in China have ceased their activities, and industries that rely on specialty chemicals are diversifying to different countries. Consequently, Indian manufacturers are looking at expanding their portfolio with value-added products. Rising demand from domestic as well as overseas companies for Indian agrochemicals brings an immense opportunity for growth in the coming years.


The Indian Speciality Chemicals Industry is heavily dependent on imports. The government is nudging domestic producers to fulfil this demand. The situation has been exacerbated by the war impeding imports. This can push Indian producers to meet domestic demand.



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):

2021- 22 2020- 21 Reason for decline
Revenue from Operations 9977.87 5782.59 -Lower demand -Increase in Financial Cost and Depreciation -Fluctuations in Prices of Chemicals
EBITDA 458.95 360.73
Profit after Tax 341.23 251.44
Earnings Per Share (EPS in Rs.) 3.33 2.45


Statements in "Management Discussion and Analysis" describing the Company?s 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.