AHIMSA INDUSTRIES LIMITED AHMEDABAD ECONOMIC REVIEW
The plastics industry in India has developed and diversified significantly since its inception in 1996. The Indian plastics industry market has now grown to become one of the leading sectors in the country’s economy, employing more than 4 million people. India is also one of the world’s top exporters of plastics products. The industry manufactures and exports goods.
India has increasingly adopted free market principles and liberalized its economy to international trade after a fiscal pricing in 1991. The reforms largely favored industrial growth in country. Hence, the country’s economic growth progressed at a rapid pace with relatively large increases in per capita incomes.
At present the plastic industry is around Rs 2.25 lakh crore, according to the All-India Plastics Manufacturers Association which expects with the right kind of government support it can double to Rs 5 lakh crore over the next five years. The application of plastics can be found in almost every sector.
The Industry is driven by key factors like rising population, increase in income levels and changing lifestyles. Demand from rural sector for packaged products is being fuelled by increasing media penetration through the means of internet and television.
India is a growing market for plastics and consumes about 12.8 million tons of plastics annually against the global consumption of 285 million tons per year.
The sentiment of Indian Industry was positive due to change in Government. The economy was showing the sign of returning to growth path and fiscal & current account deficit were lower. Effects of demonetization and Goods & Service Tax (GST) have highly shown in the whole Indian Economy. The manufacturing sector was benefited from lower interest rates, stable commodity prices & falling oil prices. However, there was a need of Government focus on infrastructure and require greater attention for overall growth of manufacturing & economy of India.
It is expected that the Indian economy is poised for higher growth beating growth rate of China in coming year. There are positive signs for such expectation like inflation are in control, oil prices are stable at lower level, interest rates expecting to fall further, stable commodity prices and positive expectation from present Government on reform & policy matters. Ahimsa is continually researching ways to further improve quality, to increase and develop the barrier qualities of PET, and to renew and optimize the preform and bottle Designs.
INDUSTRY STRUCTUREAND DEVELOPMENT
Indian plastic and beverages market is highly competitive. Your company had focused on quality product to sustain its business and performed satisfactory on Indian market & done reasonably well on export front.
The Company has tried its best to lower the impact of high price inventory of first half and take advantage of lower prices by timing the purchase of raw materials.
The Company is also judging the consumer taste in timely manner and introduced few new designs of Pet Preform articles. The company has developed market for its products in domestic as well as international geographies.
OPPORTUNITIES AND THREATS
The use of PET packaging products is increasing day by day. Changing life style, urbanization are pushing FMCG sector to use PET Packaging products in new innovative and trending ways to increase the sales by attracting the end users of the final products. Keeping in view the increased demand in PET packaging products, the Company continuously work on developing the products in trending ways to attract the more and more customers.
However, despite having a good growth potential, the plastic packaging industry faces many threats in terms of health hazards, government bans, fluctuating raw material prices and competition. Some of the players present in the industry follow unethical practices to increase the revenue by selling poor quality products which may look similar but are hazardous to the environment.
To overcome these challenges, significant efforts will have to be made by all the stakeholders to realize the real potential of this industry.
In a recent report of Council of Scientific and Industrial Research (CSIR), it has declared PET material to be safe for storage of water and packaging of food products.
SEGMENT WISE PERFORMANCE
Total revenue of our company is derived from Plastic & beverages segment, Textile and Export. Indian plastic & beverage and textile market is highly competitive. But our company has always put great emphasis to sustain satisfactory performance by focusing on quality product to its customers and by performing reasonably well on export front.
RECENT TREND AND FUTURE OUTLOOK
In recent years’ Indian economy under the new government has gathered strong momentum. The company is optimistic about the recovery of Indian economy and the capital market. The country has to grow economically to with stand any international pressures from foreign countries. The way to economic growth begins with capital market development. The capital market industry in other words is backbone to economic growth in country.
Since its foundation, the production of PET packaging in the form of preforms and bottles has been the core business of Ahimsa. The preforms are blown into bottles by Ahimsa or by the customer, and then filled with water, soft drinks, edible oils, ketchup, milk, fruit juices, etc.
RISKS AND CONCERNS
Our industry is mainly dependent on economic growth of country. The industrial growth is very sensitive which is dependent on many factors which may be social, financial, economic or political and also natural climatic conditions in the country. However, with the positive attitude of country which can mitigate the avoidable risks.
Ahimsa endeavors to achieve a global spread of risk and maximum flexibility. The strong position of Ahimsa is the result of very high productivity, its technological leadership whereby quality and innovation come first, and its extensive geographic distribution. The production is highly automated and the production technology has to a large extent been optimized in-house.
DETAILS OF KEY FINANCIAL RATIOS
|1||EBIDTA/Turnover||0.06||0.08||Due to decrease in net earnings in FY 2021-22 in compare to 2020-21, there is decrease in EBIDTA ratio.|
|2||Debtors Turnover Ratio||4.54||3.55||There is increase in Debtors Turnover as total debtors to sales improves in FY 2021-22.|
|3||Inventory Turnover Ratio||2.93||2.64||It is almost constant comparing with last year, due to strong purchasing pattern.|
|4||Interest Coverage Ratio||1.21||1.25||This year by managing working capital well, we ended up with saving in interest cost.|
|5||Current Ratio||2.21||1.77||Improving purchasing pattern as well as working capital management.|
|6||Debt Equity Ratio||0.56||0.79||Better utilization of operation fund lead to underutilization of CC limit, and hence better debt/equity ratio.|
|7||Operating Profit Margin (%)||-0.12%||0.10%||Due to decrease in operating earnings in FY 2021-22 in compare to 2020-21, there is decrease in operating margin ratio.|
|8||Net Profit Margin (%)||1.28%||0.42%||Due to the effect of deferred tax asset, net profit margin is higher than last year.|
|9||Return on net worth (%)||2.07%||0.69%||Return on equity has increased approx. 300% this year.|
|10||Book Value per share (Rs)||10||10||-|
|11||Earnings Per Share (Rs) Basic||0.52||0.17||By increased profit in FY 21-22 EPS to equity holders has improved.|
|12||Earnings Per Share (Rs) Diluted||0.52||0.17||By increased profit in FY 21-22 EPS to equity holders has improved.|
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The company has implemented proper system for safeguarding the operations/business of the company, through which the assets are verified and frauds, errors are reduced and accounts, information connected to it are maintained such, so as to timely completion of the statements. The Company has adequate systems of Internal Controls commensurate with its size and operations to ensure orderly and efficient conduct of business. These controls ensure safeguarding of assets, reduction and detection of fraud and error, adequacy and completeness of the accounting records and timely preparation of reliable financial information.
The company gets internal audit and verification done at regular intervals. The requirement of having internal auditor compulsory by statue in case of listed and other classes of companies as prescribed shall further strengthen the internal control measures of company.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS FRONT
Your Company has undertaken employee’s development initiatives, which have very positive impact on the morale and team spirit of the employees. The company has continued to give special attention to human resources and overall development.
Certain statements in the reports of the Board of Directors and Management’s discussions and analysis may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied since Company’s operations are influence by many external and internal factors beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any of these statements on the basis of any subsequent developments, information or events.
|By Order of the Board of Directors|
|AHIMSA INDUSTRIES LIMITED|
|Ashutosh Damubhai Gandhi|
|Place: Ahmedabad||Managing Director|
|Date: 05/08/2022||DIN: 00654563|
|Sneha Ashutosh Gandhi|
|Place: Ahmedabad||Whole time Director|
|Date: 05/08/2022||DIN: 00654675|