Cool Caps Industries Ltd Management Discussions

The Management of Cool Caps Industries Limited Presenting Management Discussion and Analysis Report covering the operational and financial performance of the company for the year 2024-25, the core business of the company is manufacturing of plastic caps & closures and trading of other allied products.

BUSINESS 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.

OUR PRODUCTS

? Caps & Closures - Tighten your Brands Grip with Caps that Click, Lock& Stay Put.

? Pet Performs Form Potential to vessel, perform shaped by your vision. ? Handle - Handles that support your product and elevate your brand.

? Shrink Films - Heat Shrinkable plastic films for a cost effective and study packaging. ? RPET - Post Consumer Food Grade Recycled PET flakes for Sustainability.

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.

SWOT ANALYSIS Strengths

? Diverse Product Portfolio: Strong presence in bottle caps, PET preforms, handles, shrink films, and RPET flakes, making the Company a one-stop solution for beverage packaging. ? Established Client Base: Trusted by reputed brands such as Bisleri, Kingfisher, Patanjali, and IRCTC, ensuring stable demand. ? Geographically Diversified Manufacturing Units: Multiple production facilities across Howrah and Kotdwar with a combined high-capacity output, ensuring timely supply and business continuity. ? Focus on Sustainability: Investment in recycling and production of RPET flakes positions the Company well in the eco-friendly packaging segment. ? Consistent Growth: Robust CAGR in revenue and profitability supported by operational efficiencies and market demand.

Weaknesses

? Dependence on Beverage Sector: Significant reliance on the packaged drinking water and beverage industry may lead to sector-specific risks. ? High Working Capital Requirement: Raw material procurement and large-scale operations require substantial working capital management. ? Limited Global Presence: Current operations are largely India-focused, with minimal penetration in international markets. ? Volatility in Raw Material Prices: Reliance on polymers and PET exposes the Company to price fluctuations in crude oil derivatives.

Opportunities

? Growing Packaged Beverage Market: Rising demand for bottled water, juices, and carbonated drinks creates opportunities for increased sales. ? Expansion in Sustainable Packaging: Increasing focus on recycling and eco-friendly packaging materials presents growth avenues through RPET and bottle-to-bottle initiatives. ? Export Potential: Scope to explore international markets, particularly in South Asia, Africa, and Middle East, where demand for packaged beverages is rising. ? Product Diversification: Potential to expand into allied packaging solutions such as biodegradable closures and specialty films. ? Government Push for Recycling: Regulatory emphasis on Extended Producer Responsibility (EPR) and circular economy supports the Companys sustainability initiatives.

Threats

? Intense Competition: Presence of organized and unorganized players in the packaging sector may impact pricing power and margins. ? Regulatory Changes: Stringent environmental norms and plastic usage restrictions may require continuous compliance and adaptation. ? Economic Slowdown: Any decline in FMCG and beverage consumption may directly impact demand for Companys products.

? Technological Disruption: Rapid changes in packaging technology and consumer preferences could pose a challenge if not adopted timely. ? Currency Fluctuations: In case of import of raw materials or future expansion into exports, forex volatility may affect profitability.

INTERNAL CONTROL SYSTEM AND 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.

FINANCIAL PERFORMANCE

The summarized financial performance of the Company as compared to last year is shown as under:

(Amount in Lakhs)

Particulars	2024-25	2023-24	% change
Revenue from operations	10,062.55	9,974.65	0.88%
Other Income	1,856.29	774.09	139.80%
Profit before tax	1457.89	647.43	125.18%
Net Profit after tax	1090.04	467.72	133.05%
Payment of Dividend (including	NA	NA	NA
Interim and DDT) EPS	9.43	4.05	132.83%

Key ratios:

Particulars		2024-25	FY 2023-24			Change (%)
Operating profit margin (%)		14.4	10.44			38.46%
Net profit margin (%)		10.83	4.69			131.02%
Debt-equity ratio		1.46	1.57			-6.98 %
Return on equity (%)		22.84	12.13			88.31%
Return on capital employed (%)		24.53	14.77			66.09%
Trade Receivables turnover ratio		4.16	6.17			-32.46%
Trade Payables turnover Ratio		9.94	7.84			26.71%
Inventory turnover ratio		4.43	5.66			-21.66%
Interest coverage ratio		3.36	2.31			45.45%
Current ratio		1.02	1.09			-7.10%
Debt service coverage ratio		2.04	1.58			29.13%
Return on Investment	0.35			2.09	-83.10 %
Net Capital Turnover Ratio	108.27			26.22	312.97

Reason for change of mare than 25% During the Financial Year:

? Operating Profit Margin (%)

The Operating Profit Margin of the Company has improved during the year under review, reflecting enhanced operational efficiency and better cost management.

? Net Profit Ratio (In %)

Net Profit Ratio improved from 4.69% to 10.83% due to significant increase in revenue from operations from Rs. 9,974.65 Lakhs to Rs. 10,062.55 Lakhs during the year and Net Profit from 467.72 to 1090.04 Lakhs as compared to previous year.

? Return on Equity Ratio (in %)

Return on Equity Improved due to increase in net profit after tax from Rs. 467.72 Lakhs to Rs. 1090.04 Lakhs of the Company and Average Shareholders Equity from 3856.21 Lakhs to 4772.59 Lakhs during the year as compared to Previous Year.

? Return on Capital Employed (In %)

Companys Earnings increased from Rs. 1140.87 lakhs to Rs. 2074.88 lakhs, on account of this return on Capital Employed Ratio improved from 14.77% to 24.53%.

? Trade Receivables Turnover Ratio (In times)

Although Companys Revenue increased from Rs. 9974.65 lakhs to Rs. 10062.55 lakhs and Average Receivables Increased from Rs. 1617.48 Lakhs to Rs. 2416.06 Lakhs, The Trade Receivables Turnover ratio decreased from 6.17 times to 4.16 times.

? Trade Payables Turnover Ratio (In times)

Trade payables turnover ratio is increased from 7.84 to 13.15 due to a proportionally higher increase in credit purchases compared to the rise in average trade payables.

? Interest Coverage Ratio (%)

The Interest Coverage Ratio of the Company has improved during the year under review, indicating better debt-servicing capacity and enhanced financial strength.

? Debt Service Coverage Ratio (In times)

Companys Earnings increased from Rs. 1200.61 lakhs to Rs. 2205.87 lakhs and Principle + Interest increase from 761.11 to 1082.93 because of this return on Debt Service Coverage Ratio Improved from 1.58 to 2.04 times.

? Return on Investment (In %)

Return on Investment Improved due to increase in net profit after tax from Rs. 467.72 Lakhs to Rs. 1090.04 Lakhs of the Company and Shareholders Fund from 4227.56 Lakhs to 5317.62 Lakhs during the year as compared to Previous Year.

? Net Capital Turnover Ratio (In times)

The movement in the net capital turnover ratio from 26.22 to 108.27 is a result of proportionally higher increase in Revenue from operations compared to working capital.

HUMAN RESOURCE

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 170 as on 31st March 2025.

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.

For Cool Caps Industries Limited

Sd/-

Rajeev Goenka

Chairman and Managing Director

DIN: 00181693

 

Place: Kolkata

Date: 21.08.2025