dutron polymers ltd Management discussions

INTRODUCTION

Dutron Polymers Ltd. was formed to manufacture Plastic Pipes and Fittings, as an organized supplier to the industry at Dist. Kheda, Gujarat. The company had a technical license from world leaders in the field M/s. Wavin Overseas, The Netherlands for manufacture of HDPE, PVC pipes till 2006. Today, the Company has been recognised as one of the most reliable quality plastic pipes & fittings manufacturers in India. Its products HDPE, PVC & CPVC pipes and fittings cater to several market areas- agriculture, industries, building & construction and infrastructure projects. The Company is ISO 9001:2015 certified and has established as a quality brand in all parts of the country, especially in Gujarat and neighbouring states.

ECONOMIC REVIEW

The global economy showed signs of slowed down during 2022-23 by growth rate falling to 2.7% But the Indian economy showed growth rate of around 6.4% from the previous year. In spite of this, Global Polymers demand showed marginal growth. Indias Polymers demand remained stagnant. High prices of Polymers during the year, particularly of PVC, affected the demand. Infrastucture Projects from the government will help boost the demand. Overall, polymer demand is likely to grow in near future.

INDIAfS PLASTIC PIPE INDUSTRY

Pipes are used for transportation of oil, water, liquids, air, gases, semi-solids etc. in segments such as Agriculture, Building & Construction, Industries and Infrastructure. Plastic pipes are made from different polymers like HDPE, PVC, CPVC and PP. PVC raw material prices steadily reduced throughout the year. The demand of HDPE, PVC & CPVC Pipes witnessed healthy growth during the year. With situation back to normal after recovering from pandemic, country is going in for economic growth. This will help Plastic Pipe industry in India.

INDUSTRY STRUCTURE AND DEVELOPMENTS

Easy availability of polymer raw materials and processing machinery, well-known manufacturing methods, moderate investment requirements have made plastic pipe manufacturing an easy proposition for small scale entrepreneurs in India. With large domestic production capacities along with good quantity of imports of plastic raw materials make it a commodity business in India.

The global plastic pipe industry is growing at about 2-3% annually. In recent years, government schemes such as affordable housing for all, water supply for every village, and now, plans for piped water for every household are helping and contributing the growth of plastic pipes in India.

BUSINESS OUTLOOK

Your company had healthy growth in demand of plastic pipes during the year. In addition, the government boost for implementation of various water supply schemes and its maintenance resulted in robust growth of Plastic Pipes market. The country witnessed volume growth of 13% in PVC Pipes & Fittings during the year.

Dutron has been one of the early users of Japans Sekisui CPVC compound - ‘Durastream in India, and these CPVC pipes are established as quality products for the hot and cold-water plumbing system. The imposition of tariff on import of CPVC from countries like China has helped quality manufacturers of CPVC Pipes. HDPE pipe market growth largely depends on Agriculture season and Industrial projects. A good Agriculture season and momentum in industrial growth will be critical to Dutrons growth in the current year.

OPPORTUNITIES AND THREATS

The Governments various welfare schemes in irrigation, drinking water, affordable housing and Smart City projects will give an excellent opportunity to increase the business of your company in the coming years. Replacement of metal plumbing pipes with plastic pipes is already taking place in India. Significant risks and threats to your company are related to threat of third Covid wave, Global Economic Situation, volatile plastic raw material prices, uncertain import transit time to India. The situation of economic downturn, if it comes, may affect building and construction, farming and industrial sectors; and these may affect the demand of your companys products.

BUSINESS, OPERATIONAL AND FINANCIAL RISKS

The significant risks and concerns which may have an impact on the Companys business are as follows:

1. Indian Economy and International Economic trends

2. Foreign Currency rate fluctuations

3. Interest rate fluctuations and high rates on inflation

4. Unforeseen circumstances like natural calamities- pandemic, floods, earthquakes, closure due to violence

5. Delay in government spending on infrastructure and welfare schemes

Since the company is 100% dependent on import of raw material for CPVC pipes, fluctuations of foreign currency rate affect the most in profitability on CPVC pipes sales. However, it is expected that this fluctuation will decrease due to actions by RBI. Further, Plastic Pipes manufacturing industry is a competitive industry. It reflects with demand-supply chain, trusted quality, and customer confidence is directly linked with economic factors like consumer reliance, technology and its up-gradation etc.

INTERNAL CONTROL SYSTEMS

The Company has built adequate systems of internal controls towards achieving efficiency and effectiveness in operation, optimum utilization of resources, and effective monitoring thereof as well as compliance with all applicable laws. The internal control mechanism comprises of well-defined organization structure, documented policy guidelines, pre-determined authority levels and processes commensurate with the level of responsibility.

FINANCIAL PERFORMANCE

The highlight of financial performance is discussed in the Directors Report. The Audit Committee also reviews the financial performance of the Company from time to time.

HUMAN RESOURCES MANAGEMENT

Dutrons belief in trust, transparency and teamwork has yielded improvement in employee efficiency at all levels. The

Companys commitment to harmonious industrial relations resulted in enhancing the effectiveness of operations and enabled the achievement of benchmarks in industry. The Companys ongoing objective is to create an inspirational work climate where talented employees engage in creating sustained value for the stakeholders. The Company has developed an environment of harmonious and cordial relations with its employees.

CAUTION STATEMENT

Statements in this Management Discussion and Analysis Report describing the Companys objectives, estimates etc. may be "forward-looking statements" within the applicable laws and regulations. Actual results may vary from those expressed or implied; several factors that may affect Companys operations include Dependency on telecommunication and information technology system, Government policy and several other factors. The Company takes no responsibility for any consequences of the decisions made, based on such statement and holds no obligation to update these in future.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIO

During the year, there is no material change in the following rations

Debtors Turnover	Debt Equity Ratio
? Interest Coverage Ratio	? Operating Profit Margin
? Current Ratio	? Net Profit Margin
? Inventory Turnover Ratio

 

	FOR DUTRON POLYMERS LIMITED
Place: Ahmedabad	S. B. PATEL
Date: 5th June, 2023	Chairman
	DIN: 00226676