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Food color gives consumers an almost immediate impression about the freshness, flavor and quality of a product and is thus a very important constituent of any food item.

Dynemic Products is one of the largest manufacturer and exporter of food colors in the world and today we will briefly look at this company.

In fact, we recommended Dynemic to our Alpha and Alpha + members in Mar’16 around 47 odd levels and also closed it with 200% gain in Jun’17.

The stock did quite well after that and went up to 700. But after touching 700 in Oct’21, the stock is down 55% since then.

Looking at the correction, we decided to dig deeper and it’s interesting to note that in FY 22 company completed a major capacity expansion for food colors and Dye intermediates (raw material for food colors).

Below, we have shared details from the Investor presentation and Annual Report of the company:


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Dynemic Products – Notes from Investors presentation and Annual Report


– General Points

  • 1998 – diversified in food colors industry
  • 2000 – Acquired Saffron Dyestuff and Established 2nd manufacturing facility for Food Colors
  • 2008 – Completed Expansion at Unit 1& 2
  • 2014 – Acquired land at Dahej for new manufacturing facility
  • 2021 – Completed Dahej plant

– Product overview

  • Food colors – Water Soluble Color, use in Beverages, Animal Feeds, Dairy Products, Toothpaste etc.
  • Lake colors – Water Insoluble Color, use in Pharmaceuticals, Cosmetic & Personal Care Products, Bakery Products etc.
  • FD&C colors – US FDA Certified Colors, Use in Food, Pharmaceutical and Cosmetics products
  • Salt free dyes – Special dyes Inkjet Industry, Use in Cartridge Ink, Roller Ball point Ink etc.
  • Dye intermediates – Chemicals / raw material for Food Colors, Paper Dyes, Textile Dyes etc.

– Backward and Forward integration

  • Dye intermediate – By backward integration, at Plant 3 we are going to produce major raw material of Food Colors by our own
  • Food colors – Producing Complete range of Synthetic Food Colors in Powder, Granular and in Liquid Form
  • Lake colors – Forward Integration : By using Food Colors, we are making Lake Colors

– Core strengths

  • Presence Over 74 Countries (including USA and UK)
  • Making more than 160 Colors
  • One of the largest manufacturers of Synthetic Food Colors in the World
  • 3 Manufacturing Facilities with Production capacity 22,644 MT p.a.

– Capacity expansion

  • Till FY 21, the company had food colors production capacity of ~3,000 MTPA
  • With the commissioning of Dahej Plant the production capacity of Food colors is 6,120 MTPA and Dye intermediates 16,524 MTPA

– Management view on performance going forward

  • After China reopening, we have noticed some positive movement in demand which will improve performance in coming quarters
  • We expect full benefit of our expansion program to unfold in FY24 and FY25 as we anticipate demand recovery from Q4 of the current fiscal year
  • Further, with the volume ramp-up for the new capacities coming in significantly in FY24 and FY25, while fixed costs will generally not increase significantly, the Gross profit to EBITDA conversion will improve in FY24 and beyond



Disclaimer: This is not a recommendation to buy/sell Dynemic Products. The securities quoted are for illustration only and are not recommendatory.


Best Regards,

Ekansh Mittal
Research Analyst
Web: https://www.katalystwealth.com/


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