Yash Chemex Ltd Management Discussions.

GLOBAL ECONOMY

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 10 to 12 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 2019-20, Indias Gross Domestic Product shrank to 4.2% as compared to 6.1% in 2018-19. 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 2020-21, 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.

INDUSTRY TRENDS AND OUTLOOK

The world landscape of the Chemical Industry is rapidly changing. Indias Gross Domestic Product (GDP) is expected to keep growing at a rapid pace and achieve upper middle-income status on the back of digitization, globalization, favourable demographics, and reforms. India has made progress on structural changes in the recent past. The corporate debt overhang and associated banking sectors credit-quality concerns have exerted a drag on investment in India. The massive bank recapitalization programme will improve the banking sectors ability to support growth.