Dynemic Products Ltd Management Discussions

Industry Structure & Development

During the year, the Company witnessed pricing pressures across segments on account of declining input costs, resulting in lower reali -zation. The benefit of lower input costs was not reflected in the margins due to the consumption of high-cost inventory from the earlier period. There are signs that the global outlook has started to brighten, though growth remains modest. The global food colors market size was valued at USD 4.6 billion in 2023. It is expected to reach USD 6.0 billion by 2028, growing at a CAGR of 5.4% during the forecast period (2023-2028). With the advent of food technology, a wide range of synthetic food colors as available for use in processed food and beverage products. Synthetic food colors imparts vibrant hues to processed food and beverage products and make them look more appetizing. Some of the common synthetic food colors are blue, red, green, yellow.

Synthetic colors are usually preferred by food & beverage manufacturers as they are less expensive and are also effective in giving an intense and uniform color to the final processed product. They can also be blended easily to give a variety of hues to manufacture a wide range of bakery, confectionary and beverage products. The major purpose of adding colorants to food products is to develop the finished products in a way that is appealing to consumers and creates a perception of colors that match the flavor during consumption. The purpose of food coloring is to replace the color lost during food processing as well as to enhance the inherent color, minimize vari -ations, and color uncolored food.

Opportunities and Threats

The increasing popularity of processed and packaged food products has contributed to the growth of the food colors market. Processed foods often require the addition of food colors to enhance their appearance, as they may lose color during processing or lack visual ap -peal. As consumers continue to seek convenience and a wide variety of food options, the demand for food colors to improve the visual appeal of processed foods remains high. As soon as the price pressure overhang in the Global markets begins to ease, the Companys capacity utilization, realizations and surplus should rebound, enhancing stakeholders value.

Synthetic food colors market is projected to witness a CAGR of 5.7% from 2024 to 2030.Synthetic colors are often more cost-effective and readily available, making them a preferred choice for many companies seeking vibrant and consistent color options. With the increasing demand for vibrant and appealing food products, the availability of synthetic food colors in the required quantities and at the right time is crucial for the food industry.

Regulatory bodies such as the European Union, the FDA, and other associations have implemented guidelines and restrictions on the use of synthetic food colors in consumables. These regulations aim to control the application and quantity of artificial colors in food prod -ucts to safeguard public health and ensure the safety of consumers, particularly children, who may be more susceptible to the potential adverse effects of these additives.

Risks and Concerns

Volatility in Currency rates of USD.

Global Raw Material Prices and Demand.

Stringent environmental regulations & conditions imposed.

End users for food colors mainly include individuals and restaurants & food joints. Consumers are increasingly seeking

food products made with recognizable ingredients, Consumers are more inclined towards natural food colors owing to the

growing clean label trend in food industry.

Financial and Operational Performance

(a) Net Sales and Other Income

Sales during the year ended March 31, 2024 were Rs. 27958 Lakhs as against Rs. 28813 Lakhs in the previous year, an decrease of Rs. 855 Lakhs in comparison over the previous year. During the year Operating Income was Rs. 420 Lakhs and other income increased from Rs. 34.34 Lakhs to Rs. 64.03 Lakhs.

(b) Expenditure

The total expenditure decreased from Rs. 29969 Lakhs to Rs. 28140 Lakhs for the year under review showing a decrease of Rs. 1829 Lakhs over the previous financial year.

(c) Profit

There was a Net Profit of Rs. 406 Lakhs during the year under review.

(d) Significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios -

Name of Ratio	Numerator	Denominator	31st March 2024	31st March 2023	% changes over previous year	Reasons for more than 25% changes
(a) Current Ratio	Current assets	Current Liabilities			(0.14%)	NA
			0.87	0.87
(b) Debt-Equity Ratio	Total Debt	Total Equity			22.86%	NA
			0.98	1.27
(c) Debt Service	PAT + Depreciation +	Term Loan Interest + Term
					3.47%	NA
Coverage Ratio	Term Loan Interest	Loan Repayment	0.70	0.68
(d) Return on Equity Ratio	PAT	Average Equity	2.12%	(2.06%)	203.24%	See Note #
(e) Inventory turnover	Total Revenue from
		Average Inventory			(14.04%)	NA
Operation		4.33	5.04
(f) Trade Receivables turn-	Total Revenue from
		Average Trade Receivables			(11.24%)	NA
over			5.37	6.04
(g) Trade payables turno-
	Total Purchases	Average Trade Payables			(21.90%)	NA
ver			2.45	3.13
(h) Net capital turnover	Total Revenue from
		Net Working Capital	(14.71%)	(15.70%)	6.34%	NA
Operation
		Total Revenue from Op-
(i) Net profit ratio	Net Profit ( PAT)		1.43%	(1.22%)	217.24%	See Note #
		eration
		Capital
		Employed = Tangible Net
(j) Return on Capital em-	Earnings Before Inter-
		Worth + Total Debt +	6.56%	4.67%	40.48%	See Note #
ployed	est and Taxes (EBIT)
		Deferred Tax
		Liability
	Income generated	Average of Investment &
(k) Return on investment			14.97%	10.30%	45.33%	See Note #
	from invested funds	Fixed Deposits

Note:- #

With increase in utilisation of Production capacity of Unit-3, profit in FY 2023-24 increased in comparison with FY 2022-23.

Segment wise or Product wise performance

The Company is engaged in manufacturing and marketing of Dyes & Intermediates. There is only one reportable segment i.e. "Dyes & Dyes Intermediates". So the segment wise or product wise performance report is not given in the report.

Outlook

One of the key drivers is the increasing importance of visual appeal in the food industry. Food colors are used to make food and beverages more attractive to consumers. The vibrant and visually appealing food products tend to have a higher perceived value and are more likely to be purchased. The market is expected to exhibit a low threat of new entrants on account of extensive portfolio offered and distribution network operated by existing players, which results in a high entry barrier for the new entrants. Besides, the high switching cost for the buyers makes it difficultfor new players to gain a significant market share, thereby lowering the threat of new entrants.

The Indian and Global food colorants market is projected to witness a CAGR of 5 to 6% over the forecast period (2022- 2032).

Environmental & Hazardous Safety And Quality Assurance

In pursuit of excellence & meetingthe changes that happen timeto time & also to fulfill the requirements received from customers, your Company continued to integrate its ISO 9001:2015, ISO:14001, FSSC:22000, HACCP and other certification. Your Company is committed to ensuring the highest standards of environment management and strict compliance with regulatory requirements at all times. All the products manufactured by Dynemic meet theregulatoryrequirementunderFSSAI,EU,USFDAandalsofulfillcriteria of Kosher & Halal, & WHO-GMP Certification. Your company is committed to socio-environmental aspects and go beyond compliance norms of competitive authorities.

Internal Control Systems And its Adequacy

Your Company has a comprehensive system of internal controls to safeguard the Companys assets against loss from unauthorized use and ensure proper authorization of financial transactions. The Company has an exhaustive budgetary control system to monitor-proved budgets on an ongoing basis. The Company maintains a system of internal controls designed to provide assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with applicable laws and regulations as applicable in the various jurisdictions in which the Company operates.

Human Resources

Our employees are our most precious assets and we value their commitment. Relations with the employees at all levels remained cordial during the year. Your Company has 446 permanent employees as on March 31, 2024.

Disclosure of Accounting Treatment

The Financial Statements are prepared in accordancewithIndianAccountingStandards (Ind AS) as per the Companies (Indian Accounting Standards)

Rules, 2015 and the Companies (Indian Accounting Standards) (Amendment) Rules, 2016 notified under Section 133 of the Companies Act, 2013 (the ‘Act) and other relevant provisions of the Act. The previous year figures have been regrouped/reclassified or restated, comparable with the figures of current year. The significant Accounting Policies which are consistently applied have been set out in the Notes to the Financial Statements.

Cautionary Statement

Certain statements under "Management Discussion & Analysis" may be forward looking statement within the meaning of applicable securities laws and regulations. The forward looking statements are based on certain assumptions and expectations of future events. Actual results may differ materially from those expressed or implied from the statement since the Companys operations are influenced by many external and internal factors beyond the control of the Company.

	For and on Behalf of the Board of Directors
Ahmedabad	Bhagwandas K. Patel	Dixitbhai B. Patel
August 13, 2024	Managing Director	Director
	DIN : 00045845	DIN : 00045883