sen pet india ltd Management discussions

INDUSTRY STRUCTURE & DEVELOPMENTS

The Company is engaged in the manufacturing of PET Resin. PET resin demand witnessed robust growth over the last ten years on account of an increasing use in various end-user industries. Increased PET resin demand was also driven by the replacement of traditional packaging materials (glass, aluminium, paper and metal). The Indian PET resin market was highly consolidated and dominated by a few major players.

OVERVIEW AND FUTURE OUTLOOK

The global PET resin industry is passing through an extended downtrend, which continued in 2016-17. This downtrend was marked by diverse challenges related to oversupply and volatility in the petrochemical products linked to the dynamics of crude oil price movements.

As the demand for PET Resin is increasing worldwide, the management of the company is putting all its effort to reopen its plant during the current financial year. However, with an increase in manufacturing capacities in various countries, profit margin of PET is likely to remain under pressure. However, due to increase in prices of furnace oil, your Company is planning to run the unit on grid power, we hope to get the grid power connection, which will have direct impact on the bottom-line of your Company through cost reduction. Further areas of cost reduction are being identified. This will enable the Company to reduce the Power and Fuel cost even further.

OPPORTUNITIES & THREATS

Due to its strength, transparency and lightweight PET bottle industry is growing day by day which provides ample opportunity and scope for our Company. The main threats to our industry are the volatility of prices of raw materials such as PTA and MEG mainly due to unstable PX-ACP in Asian commodity trading. This problem is further complicated with the increase in production capacity of PET resin within the country and abroad.

COMPANYS PERFORMANCE

Please refer the Directors Report on performance review.

SEGMENT WISE REPORTING

Your Company operates only in one business segment i.e. PET Resin.

BIFR STATUS

The company has been declared as Sick Industry on 13th January 2000 under section 3(1)(o) of the Sick Industrial Companys (Special Provision) Act, 1985. With the repletion of the SICA Act, 1985, the status of the company remains same as it was on or before 13th January 2000.

INTERNAL CONTROL SYSTEM

The Company has adequate system of internal controls and checks and balances to ensure that its assets are safeguarded and protected against loss from unauthorized use. The strength of these systems is continuously being monitored by the internal audit systems.

RISKS AND CONCERNS

In any business, risks and prospects are inseparable. As a responsible management, the Companys principal endeavour is to maximize returns. The Company continues to take all steps necessary to minimise its expenses through detailed studies and interaction with experts.

HUMAN RESOURCES

The enthusiasm of staff members continued to be high in sustaining positive growth of disbursements and in maintaining healthy recoveries. With the high level of commitment and loyalty by staff members, SPIL is confident to face the challenges of the tougher market conditions.

FORWARD-LOOKING STATEMENT

This report contains forward-looking statements based on certain assumptions and expectations of future events. The Company, therefore, cannot guarantee that these assumptions and expectations are accurate or will be realised. The Companys actual results, performance or achievements can thus differ materially from those projected in any such forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.