Cool Caps Management Discussions

Global economy


The global economy was estimated to have grown at a slower 3.2% in 2022, compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect). The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic- induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades. US consumer prices decreased about 6.5% in 2022, the highest in four decades. The Federal Reserve raised its benchmark interest rate to its highest in 15 years. The result is that the world ended in 2022 concerned that the following year would be slower.

The global equities, bonds, and crypto assets reported an aggregated value drawdown of USD 26 Trillion from peak, equivalent to 26% of the global gross domestic product (GDP). In 2022, there was a concurrently unique decline in bond and equity markets; 2022 was the only year when the S&P 500 and 10-year US treasuries delivered negative returns of more than 10%.

Gross FDI inflows - equity, reinvested earnings and other capital - declined 8.4% to USD 55.3 Billion in April-December. The decline was even sharper in the case of FDI inflows as equity - these fell 15% to USD 36.75 Billion between April and December 2022. Global trade expanded by 2.7% in 2022 (expected to slow to 1.7% in 2023).

There was a sharp decline in crude oil, natural gas, coal, lithium, lumber, cobalt, nickel and urea realisations. Brent crude oil dropped from a peak of around USD 120 per barrel in June 2022 to USD 80 per barrel at the end of the calendar year following the enhanced availability of low-cost Russian oil.

Regional growth (%) 2022 2021
World output 3.2 6.1
Advanced economies 2.5 5
Emerging and developing economies 3.8 6.3

Performance of major economies


The global economy is expected to grow by 2.8% in 2023, primarily influenced by the ongoing Russia-Ukraine conflict. Concurrently, global inflation is projected to fall marginally to 7% during the same year. Despite these challenges, there are positive elements within the global economic landscape. Notably, the largest economies such as China, the US, the European Union,

India, Japan, the UK, and South Korea are not in a recession. Approximately 70% of the global economy demonstrates resilience, with no major financial distress observed in large emerging economies.

The energy shock in Europe did not result in a recession, and significant developments, including Chinas progressive departure from its strict zero- Covid policy and the resolution of the European energy crisis, fostered optimism for improved global trade performance.

Also despite high inflation US economy demonstrated a robust consumer demand in 2022. Driven by these positive factors, global inflation is further expected to decline to 4.9% in 2024. Interestingly, even as the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half the global growth.

Indian economy Overview

Even as the global conflict remained geographically distant from India, ripples comprised increased oil import bills, inflation, cautious government and a sluggish equity market. Indias economic growth is estimated to be 7.2%in FY 2022-23. India emerged as the second fastest-growing G20 economy in FY 2022-23. India has overtaken the UK to become the fifth-largest global economy and is being seen as a principal driver of the global economy (with China). India has also surpassed China to become the worlds most populous nation with a 1.43 Billion population

Growth of the Indian economy

FY 20 FY 21 FY 22 FY 23
Real GDP growth(%) 3.7 -6.6% 8.7 7,2

Growth of the Indian economy quarter by quarter, FY 2022-23

Q1FY 23 Q2 FY 23 Q3 FY 23 Q4 FY 23
Real GDP growth (%) 13.1 6.3 4.4 6.1

Source: Budget FY24; Economy Projections, RBI projections

According to the India Meteorological Department, the year 2022 delivered 8% higher rainfall than the long-period average. Due to unseasonal rains, Indias wheat harvest was expected to fall to around 102 Million metric tonnes (MMT) in FY 2022-23 from 107 MMT in the preceding year.

Rice production at 132 Million metric tonnes (MMT) almost at par with the previous years yield. Pulses acreage grew to 31 Million hectares from 28. Due to a renewed focus, the oilseed area increased by 7.31% from 102.36 Lakh hectares in FY 2021-22 to 109.84 Lakh hectares in FY 2022-23.

Indias auto industry grew 21% in FY 2022-23; passenger vehicles (UVs, cars and vans) reported impressive growth with retail sales hitting a record high of 3.9 Million units in FY 202223, crossing the previous high of 3.2 Million units in FY 201819. The commercial vehicles segment grew by 33%. Twowheeler sales fell to a seven- year low; the three-wheeler category grew 84%.

Till the end of Q3 FY 2022-23, total gross non-performing assets(NPAs) of the banking system fell to 4.5% from 6.5% a year ago. According to CRISIL, the total Gross NPA for FY 202223 is expected to be 4.2% and further predicted to drop to 3.8% during FY 2023-24.

As Indias domestic demand remained steady amidst a global slowdown, imports in FY 2022-23 were estimated to have grown 16.5% to USD 714 Billion as against USD 613 Billion in FY 2021-22. Indias exports of merchandise are up 6% to USD 447 Billion in FY 2022-23, up from USD 442 Billion in FY 2021-22. Indias total exports (merchandise and services) in FY 2022-23 have grown 14% over the same period of the previous year, to reach a record of USD 775 Billion in FY 2022-23 from USD 676 Billion in FY 2021-22 and is further expected to touch USD 900 Billion in FY 202324. Till Q3, FY 2022-23, Indias current account deficit, a crucial indicator of the countrys balance of payments position, decreased to USD 18.2 Billion, or 2.2% of GDP from USD 22.2 Billion (2.7% of GDP in Q3 FY 2021-22) a year ago. Indias fiscal deficit was estimated in nominal terms at ~ RS. 17.55 Lakh Crore and 6.4% of GDP for the year ending 31st March 2023. (Source: Ministry of Trade & Commerce)

Indias headline foreign direct investment (FDI) numbers rose from USD 74.01 Billion in 2021 to a record USD 84.8 Billion in FY 2021-22, a 14% Y-o-Y increase, also till Q3 FY 202223, India recorded a robust USD 36.75 Billion of FDI. All due to 100% FDI approval via automatic route in the Insurance sector, civil aviation, coal sector, telecom, pharma and infrastructure. In FY 2022-23, the government was estimated to have addressed 77% of its disinvestment target (RS. 50,000 Crore against a target of RS. 65,000 Crore).

Indias foreign exchange reserves, which had witnessed three consecutive years of growth, experienced a decline of approximately USD 70 Billion in 2022, primarily influenced by rising inflation and interest rates. Starting from USD 606.47 Billion on 1st April 2022, the reserves decreased to USD 578.44 Billion by 31st March 2023. The Indian currency also weakened during this period, with the exchange rate shifting from RS. 75.91 to a US dollar to RS. 82.34 by 31st March 2023, driven by a stronger dollar and an increasing current account deficit. However, despite these factors, global interest in India remained strong. While foreign direct investment decreased due to global economic weakness, India continued to attract investable capital from around the world. The decline in foreign exchange reserves must be viewed positively as it reflects the enduring global interest in India, which is undergoing rapid transformation.

The countrys retail inflation, measured by the consumer price index (CPI), eased to 5.66% in March 2023. Inflation data on the wholesale Price Index, WPI(which calculates the overall prices of goods before selling at retail prices) eased to 1.3% during the period.

In 2022, CPI hit its highest of 7.79% in April 2022; WPI reached its highest of 15.88% in May 2022.

Indias total industrial output for FY 2022-23, as measured by the Index of Industrial Production or IIP, has grown by 5.1% year on year as against a growth of 11.4% in FY 2021-22.

India moved up in the Ease of Doing Business (EoDB) rankings from 100th in 2017 to 63rd in 2022. As of March 2023, Indias unemployment rate was 7.8%.

In FY 2022-23, total receipts (other than borrowings) were estimated at 6.5% higher than the Budget estimates. Tax-GDP ratio was estimated to have improved by 11.1% Y-o-Y in RE 2022-23.

The total gross collection for FY 2022-23 was RS. 18.10 Lakh Crore, an average of RS. 1.51 Lakh a month and up 22% from FY 2021-22, Indias monthly goods and services tax (GST) collections hit the second highest ever in March 2023 to RS. 1.6 Lakh Crore.

For FY 2022-23, the government collected RS. 16.61 Lakh Crore in direct taxes, according to data from the Finance Ministry. This amount is 17.6% more than what was collected in the previous fiscal.

Per capita income almost doubled in nine years to RS. 172,000 during the year under review, a rise of 15.8% over the previous year. Indias GDP per capita was USD 2,320 (March 2023), close to the magic figure of USD 2500 when consumption spikes across countries. Despite headline inflation, private consumption in India witnessed continued momentum and is estimated to have grown 7.3% in FY 2022-23.


There are green shoots of economic revival, marked by an increase in rural growth during the last quarter and appreciable decline in consumer price index inflation to less than 5% in April 2023. India is expected to grow around 6-6.5% (as per various sources) in FY 202324, catalysed in no small measure by the governments 35% capital expenditure growth by the government. The growth could also be driven by broad-based credit expansion, better capacity utilisation and improving trade deficit. Headline and core inflation could trend down. Private sector investments could revive. What provides optimism is that even as the global structural shifts are creating a wider berth for Indias exports, the country is making its largest infrastructure investment. This unprecedented investment is expected to translate into a robust building block that, going ahead, moderates logistics costs, facilitates a quicker transfer of products and empowers the country to become increasingly competitive. This can benefit Indias exports in general, benefiting several sectors.

The construction of national highways in FY 2022-23 was 10,993 km; the Ministry of Road Transport and Highways awarded highway contracts of 12,375 km in the last financial year (Source: IMF).

The global landscape favours India: Europe is moving towards a probable recession, the US economy is slowing, Chinas GDP growth forecast of 4.4% is less than Indias GDP estimate of 6.8% and America and Europe are experiencing its highest inflation in 40 years.

Indias production-linked incentive appears to catalyse the downstream sectors.

Inflation is steady. India is at the cusp of making significant investments in renewable energy and other sectors and emerging as a suitable industrial supplement to China. India is poised to outpace Germany and Japan and emerge as the third-largest economy by the end of the decade. The outlook for private business investment remains positive despite an increase in interest rates. India is less exposed to Chinese economic weakness, with much less direct trade with China than many Asian peers.

Broad-based credit growth, improving capacity utilisation, governments thrust on capital spending and infrastructure should bolster investment activity. According to our surveys, manufacturing, services and infrastructure sector firms are optimistic about the business outlook. The downside risks are protracted geopolitical tensions, tightening global financial conditions, and slowing external demand.

Union Budget FY 2023-24 provisions

The Budget FY 2022-23 sought to lay the foundation for the future of the Indian economy by raising capital investment outlay by 33% to RS. 10 Lakh Crore, equivalent to 3.3% of GDP and almost three times the FY 201920 outlay, through various projects like PM Gatishakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities, Energy Transition and Climate Action, as well as Financing of Investments. An outlay of RS. 5.94 Lakh Crore was made to the Ministry of Defence (13.18% of the total Budget outlay). An announcement of nearly RS. 20,000 Crore was made for the PM Gati Shakti National Master Plan to catalyse the infrastructure sector. An outlay of RS. 1.97 Lakh Crore was announced for Production Linked Incentive schemes across 13 sectors. The Indian government intends to accelerate road construction in FY 2023-24 by 16-21% to 12,000-12,500 km. The overall road construction project pipeline remains robust at 55,000 km across various execution stages. These realities indicate that a structural shift is underway that could strengthen Indias positioning as a longterm provider of manufactured products and its emergence as a credible global supplier of goods and services

Indian packaging sector review

India is a major player in the global packaging materials market due to growing exports. Indias export of packaging materials enhanced at a CAGR of 9.9% to USD 1,119 Million in FY 2021-22 from USD 844 Million in FY 2018-19. United States remained the major export destination for the Indian packaging industry, followed by United Kingdom, United Arab Emirates, Netherlands and Germany. The Indian packaging industry has been fueled by a growth in e-commerce, food processing, pharmaceuticals, FMCG, manufacturing and healthcare sectors.

The Indian plastic packaging market is expected to grow at a 2.5% CAGR between 2023 and 2028. The growing preference for convenience and portability packaging continues to be a major driver of rigid plastics in food packaging. Indian rigid plastic packaging market review was worth USD 10.72 Billion in 2021 and is expected to reach USD 21.35 Billion by 2028, registering a CAGR growth of 10.7% during 2022-2028. The rapid expansion of the market is mainly on account of increased demand for bulky plastic items, food and beverages and personal care products. The increased demand for bottles, jars, fruit juice containers, food package containers and gastronomic bags will drive sectorial growth.

Source:,, Mordor Intelligence, bLue weave consulting

Indian recycled PET bottles market review

Indian recycled polyethylene terephthalate (PET) bottles market was valued at US USD 320.72 Million in 2020 and is expected to reach USD 556.8 Million by 2027, growing at a CAGR of 7.89%. PET has become a primary preference in the packaging sector on account of its rigidity, eco-friendly and recyclable nature. The demand for PET in the food packaging and beverages sector witnessed a sharp growth since the outbreak of the pandemic. The growth is fuelled by improving hygiene awareness which is influenced by increased procurement of disposable and packaged items to eliminate the incidences of infection. Besides, growing preference of PET bottles in the Indian pharmaceutical sector due to its quality standard and safety is expected to drive the sectorial growth in the coming years.

A majority of Indias PET demand is catered by domestic production; cheap imports from other countries have resulted in abrupt material injury to the Indian production in the last few years. Besides, the immense production capacity of PET in the country is sufficient to cater to the export requirements from countries like Algeria, Bangladesh, Egypt e.t.c. A sudden increase in the demand for PET from food, beverages and healthcare sectors have made Indian manufacturers operate at more than 60 per cent efficiency to cater to the domestic and international demand.

Source: chemanalyst

Growth drivers Improved hygiene: Consumers have become more hygiene conscious. Most restaurants, hotels, hospitals and corporate offices are seeking to offer a safe, clean, hygienic and healthy experience to their consumer which is expected to drive the demand for plastic packaging.

Increased consumption of carbonated beverages: The

Indian carbonated soft drinks segment is expected to register a volume growth of 4.7% in 2024. The growth in soft drink demand is expected to drive the demand for PET bottles.

Convenience: The increased preference of packaged drinking water is driven by increased demand for convenience.

People would like to save their time and effort to purchase plastic bottle containers rather than fetching water from nearby sources.

Shift towards organised market:

Due to growing demands for hygiene and safety coupled, the share of the organised market for PET bottles is expected to surpass the share of the unorganised market.

Demographic advantage: Indias youth (18-29 years) account for 22% of Indias population - more than 261 Million people or larger than the population of a number of countries. In 2020, around 900 Million people (67% of total population) were in the working age group of 1564 in India, expected to increase by 100 Million by 2030.

Company overview

Incorporated in 2015, Cool Caps Industries Limited is engaged in manufacturing a broad range of plastic bottle caps and closures which includes plastic soda bottle caps, plastic soft drink bottle caps, plastic mineral water bottle caps and plastic juice bottle caps from units situated in Howrah, West Bengal and Kotdwar, Uttarakhand. The Company also manufactures embossed, debossed and printed closures as per client specifications. Besides, the Company also trades in shrink film as an additional service to its existing customers.

Financial overview

Analysis of the profit and loss statement

Revenues: Revenues from operations reported a 173.26% growth from RS. 46.91 Crore in FY 2021-22 to reach RS. 128.19 Crore in FY 2022-23. Other income of the Company reported a 85.78% growth and accounted for a 1.51% share of the Companys revenues, reflecting the Companys dependence on its core business operations.

Expenses: Total expenses increased by 183.89% from RS. 43.44 Crore in FY 2021-22 to RS. 123.32 Crore in FY 2022-23. Raw material costs, accounting for a 32.02% share of the Companys revenue from operations increased by 100.74% from RS. 20.45 Crore in FY 2021-22 to RS. 41.05 Crore in FY 2022-23. Employees expenses accounting for a 0.90% share of the Companys revenues from operations increased by 13.62% from RS. 1.01 Crore in FY 2021-22 to RS. 1.15 Crore in FY 2022-23.

Analysis of the Balance Sheet

Sources of funds

The capital employed by the Company increased 5.60% to RS. 57.30 Crore as on 31st March 2023 from RS. 54.28 Crore as on 31st March 2022 owing to increased accruals. Return on capital employed, a measurement of returns derived from every rupee invested in the business, improved by 6.47% from 12.22 % in FY 2021-22 to 18.69% in FY 2022-23.

The net worth of the Company increased by 16.39% from RS. 29.94 Crore as on 31st March 2022 to RS. 34.84 Crore as on 31st March 2023 owing plough back of profits. The Companys equity share capital comprised 11560000 equity shares of RS. 10 each.

Long-term debt of the Company reduced by 7.8% to RS. 22.45 Crore as on 31st March 2023 owing to scheduled repayment. The long-term debt-equity ratio of the Company stood at 0.64 in FY 2022-23 compared to 0.81 in FY 2021-22 owing to scheduled repayments during the year.

Finance costs of the Company increased by 84.5% from RS. 2.12 Crore in FY 2021-22 to RS. 3.91Crore in FY 2022-23 owing to increase in borrowings, especially to fund working capital. The Companys gross debt (including working capital) / equity ratio was a comfortable 1.32 at the close of FY 2022-23 (1.15 at the close of FY 202122).

Applications of funds

Fixed assets (net block) of the Company increased by 80.01% from RS. 23.78 Crore as on 31st March 2022 to RS. 42.81 Crore as on 31st March 2023 owing to an increase in capex during the year. Depreciation on assets increased by 55.68% from RS. 1.82 Crore in FY 2021-22 to RS. 2.84 Crore in FY 2022-23 owing to an increase in fixed assets during the year under review.


Non-current investments of the Company increased from RS. 0.21 Crore as on 31st March 2022 to RS. 2.36 Crore as on 31st March 2023 owing to investment in Purv Technoplast Pvt. Ltd., a wholly owned subsidiary of the Company.

Working capital management

Current assets of the Company increased by 33.07% from RS. 33.78 Crore as on 31st March 2022 to RS. 44.95 Crore as on 31st March 2023 owing to increased inventory and debtors. The current and quick ratios of the Company stood at 1.05 and 0.67, respectively at the close of FY 2022-23 compared to 2.76 and 2.19, respectively at the close of FY 2021-22.

Inventories including raw materials, work-in-progress and finished goods among others increased by Rs. 131.99% from RS. 6.94 Crore as on 31st March 2022 to RS. 16.10 Crore as on 31st March 2023 owing to higher inventory. The inventory turnover ratio improved from 5.52 in FY 2021-22 to 9.63 in FY 2022-23.

Trade receivables increased by 36.36% from RS. 9.31 Crore as on 31st March 2022 to RS. 12.70 Crore as on 31st March 2023. Trade receivable turnover ratio stood at 11.65 as on 31st March 2023


The EBITDA margin of the Company reduced by 7.45% from 18.02% in FY 202122 to 10.57% and the net profit margin of the Company decreased by 3.01%.

Key ratios

Particulars 2022-23 2021-22
Operating profit margin (%) 11.24 18.23
Net profit margin (%) 3.83 6.84
Debt-equity ratio 1.32 1.15
Return on equity (%) 15.15 13.83
Return on capital employed (%) 18.69 12.22
Book value per share (H) 30.15 25.90
Earnings per share (H) 4.25 3.73
Debtors turnover ratio 11.65 4.99
Inventory turnover ratio 9.63 5.52
Interest coverage ratio 2.74 3.13
Current ratio 1.05 2.76
Debt service coverage ratio 1.29 1.21
Return on networth 14.09 10.72

Risk management

Liquidity risk The Company might not have the ability to meet short-term financial obligations without incurring major losses. Mitigation: The Company mitigates its liquidity risks by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring forecast and actual cash flows and by matching the maturity profiles of financial assets and liabilities.
Competition risk The Company might face challenges to retain its market share due to increased competition from larger players. Mitigation: The Company created a network of distributors who remained with the Company since its inception.
Quality risk The Companys inability to maintain the required product quality standards might affect its market share. Mitigation: The Company overcame quality risks through process-driven systems, training, certifications and sampling.
Financial risk Increase in debt might pose a risk for the Company. Mitigation: The Company regularly repays its debt, strengthening its Balance Sheet and credit rating. Going ahead, the Company expects to grow through its accruals.
Human capital risk Inability to attract and retain talent could impact prospects Mitigation: The Companys structured human resource policy attracts and retains talent. The Company has developed the prospect of a company that is professional and yet humane, strengthening talent retention
Information technology risk Incompatible information technology approach could lead to financial, process or reputation loss Mitigation: The Company ensures data security by having identity and access control, authorisation matrix and all critical business data (user data and application data) are backed to ensure information security
Regulatory risk The Companys operations might be impacted due to change in regulatory operations. Mitigation: The Company complies with all the regulatory measures announced by the government.

Internal control systems and their adequacy

The Companys internal audit system has been continuously monitoring and updating to ensure that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. The audit committee reviews reports presented by the independent internal auditors on a routine basis. The committee makes note of the audit observations and takes corrective actions, if necessary. It maintains constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively

Human resources

The Company believes that the quality of the employees is the key to its success and is committed to equip them with skills, enabling them to seamlessly evolve with ongoing technological advancements. During the year, the Company organised training programmes in different areas such as technical skills, behavioural skills, business excellence, general management, advanced management, leadership skills, safety, values and code of conduct. The Companys employee strength stood at 73 as on 31st March 2023.

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be forward-looking statements within the meaning of applicable securities laws and regulations.