MANAGEMENTS DISCUSSION AND ANALYSIS REPORT
GLOBAL OUTLOOK
The recovery of global trade was astonishingly quick post the upliftment of
restrictions and lockdown(s) imposed to curtail the spread of COVID 19. The recovery was
neither delayed or slowed down if such recovery was to be compared with other global
recessions or global financial crises. However, the recovery of global trade could not be
stable due to further disruptions like the war in Ukraine. The disruptions in seaborne
trade remained elevated and the overall trade was sluggish. The IMF has further reported
that a tentative recovery in 2021 has been followed by increasingly gloomy developments in
2022 as the risks began to materialize.
According to IMF, the baseline forecast is for growth to slow from 6.1 percent last
year to 3.2 percent in 2022, 0.4 percentage point lower than in the April 2022. The
"World Economic Outlook" issued by the International Monetary Fund has depicted
that Inflations shall remain elevated for longer, driven by war-induced commodity price
increases and broadening price pressures. For 2022, inflation is projected at 5.7 percent
in advanced economies and 8.7 percent in emerging market and developing economies—1.8
and 2.8 percentage points higher than projected in January. However, considering the
long-term goals and the immediate challenges, it shall be necessary to prepare for
tomorrows economy. COVID 19 has highlighted productive ways to execute the task and
challenges we face embracing the digital transformation and retooling and reskilling
workers. Governments and World Forums have thrived to implement positive structural
changes to have a fulfilling economy and market transformation(s).
INDIA:
The faith and unity India depicted during the crises after the outburst of COVID 19 and
to deal with its aftermath has let India out of a sluggish economy and has been on the
path of recovery during the Financial Year 2021-2022. The responses and policies imposed
during such crises has supported its recovery along-with other government reforms that
motivated a positive outcome and helped to mitigate probable adverse impact.
India, with its tremendous skilled human resource, is a fast-growing economy, having
its footprint on various other major economies in this planet. With an optimistic approach
India was looking forward to a strong economic recovery. Forums like the International
Monetary Fund had forecasted growth to exceed 9% this financial Year. However, the Omicron
Virus had an impact throughout the country sparing less time to recovery as it was
followed by an international crisis, wherein there was a war in Ukraine. Surging commodity
prices, disruption in trade and financial transactions, surging inflation and supply
shortage were some of the challenges that disturbed the basics of economics. However, it
is believed that India shall emerge through these crises and its risks taken shall be
positively materialized. The policies and the regulatory framework enabling India to focus
on being a domestic demand driven nation shall play an important role in strengthening the
Indian Economy.
Multinational forums have expected India to grow by 7.1% to 7.6% in Financial Year
2022-2023 and 6% to 6.7% in the Financial Year 2023-2024. According to the Reserve Bank of
India (RBI) analysis of 10,000 listed companies, businesses have seen a steady net
profit-to-sales growth over the past year and are cash rich in nature. It cant be denied
that the supply chain has been disrupted due to occurrence of international events and the
return to investments are affected for companies heavily relying on international
logistics.
A recovery towards the expansionary zone can be categorically seen in the Purchase
Managers Index as reported by the Centre for Monitoring Indian Economy. The upliftment of
mobility restriction is improving the consumers confidence.
It has been observed that there has been decline in Government Revenue expenditures
which has enabled the government to invest and incur capital expenditures. Higher capital
spending on infrastructure and asset-building projects is likely to boost growth
multipliers in the medium term.
COMPANY OUTLOOK AND PERFORMANCE
The financial year 2021-2022 has started with an optimistic approach with the markets
opening up and the upliftments of the lockdowns. The company has seen an increased demand
during the first six months of the financial year which was depicted in the half yearly
financial Results as compared to the previous half year March 2021 or the corresponding
previous half year i.e., September 2020 such surge in demand was further observed by the
Company until the end of the Financial Year 2022.
Due to Covid-19 and the Ukraine-Russia war, fluctuation in crude oil prices was
persistent throughout the year. It impacted the import prices of raw materials for India.
Our company follows a practice for maintaining a safety stock for approximately 2 months
over and above the minimum stock of raw material quantity which is required for smooth
functioning thus minimizing the market risk. This gave our company an edge over the
competitors as we were able to meet the market demands on time. During such challenging
times our company was able to maintain a constant output ratio by balancing its market
position.
OPPORTUNITIES AND THREATS
With the Global and Indian market projected to rise until 2029 an optimistic approach
was seen in the industry. However various factors including COVID 19 had been unprecedent
and staggering, affecting the plastic industry globally. Plastic is used to manufacture a
wide variety of products with applicability of such products in various sectors and
different industries. However, the trade of plastics was disturbed because of the
disrupted flow of and hinderances in the supply chain management.
The plastic industry in India will further be disturbed because of the ban introduced
by the Government of India. The government has been proactive in introducing and
implementing legislation which shall curb the application of single use of plastic which
were in use in multiple industries and such industries substituting plastics with the
available alternatives.
Starting June 2022, the government of India has imposed a ban on (production/sale) of
single use plastic items like straws, carry bags etc. Our company is engaged in
manufacturing and supply of granules, plastic sheets to manufacturers who are engaged in
further production of plastic items which arent banned by the Government of India. Hence
we do not suffer from negative impact of plastic ban.
Our demand size has improved after the import of machine for production in August 2022.
The machine was put to use by September 2022 which accelerated our production. The machine
proved to be a boon as it has helped us in seizing opportunities in new markets with new
clientele. Due to increase in our productivity, we have been able to match the pace of
competitive market rates as a result the clients have started to prefer us over our
competitors.
Certain countries have started preferring Indian market over foreign markets for
importing plastic due to lower cost advantage. Since we have purchased the machine of
foreign technology the quality of our products has improved. Despite of hindering market
conditions we are able to attract large base of customers as we are supplying the products
at constant prices amid fluctuating rates but with improved quality.
RISKS AND CONCERNS
The financial year 2021-2022 had observed a slowdown due to disruptions in
International Markets caused by War in Ukraine and the supply chain management. The cost
of credit was at a higher rate. The COVID 19 disturbing the economy worldwide and
affecting liquidity at large, increased finance cost and credits not being made easily
available, the reduced customer demand and allied factors were observed. Also, the
disruption in supply chain management has widely affected the Imports and Exports and the
International Trade at large. Though after the overwhelming response of the markets post
COVID 19, international trade and supply chain was bothered by the war in Ukraine. With
the ban on plastics introduced by the Government of India, the use of alternatives to
plastics shall get an overwhelming response and increase in demand of such products can be
observed. Competitive products substituting plastics can experience massive growth in
market share compromising the position of plastic industry
With fluctuation in crude oil prices round-the-clock its predicted that raw material
prices will also fluctuate. Our companys operations largely depend upon the import of raw
materials. If this continues there is a high possibility of dollar rates getting affected
which will also affect foreign currencies. Thus upsetting our import prices.
With rich experience and expertise of the team the company has gained trust in the
International Market and have made way to become a world class supplier with high quality
products. The Company is committed to work with the highest effort and satisfy the very
needs of its valuable clients. The Company searches and embraces different ways to improve
quality and productivity. It welcomes new technology for manufacturing products practicing
environmental policy. It also gives high priority to maximize the shareholder profits by
practicing responsible management strategies and making the best use of available
resources.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has a documented internal control policy. In line with the Internal Control
policy, the Company prepares annual business plan and detailed budgets for revenue and the
capital for each quarter is determined. The actual performance is reviewed in comparison
with the budget and deviations, if any, are addressed adequately. The Company has
appointed a firm of Independent Chartered Accountants who conducts internal audit. The
internal audit program covers all the functions and activities of the Company. The
Internal Audit Reports are submitted every half yearly to the Audit Committee of the Board
of directors for review and ensuring compliance.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The Directors confirm that there have been no events or circumstances since the date of
the last financial statements which materially or adversely affect or are likely to affect
the profitability of our Company, or the value of our assets, or our ability to pay
liabilities within next twelve months except as below: The company achieved Net revenues
for the year 2021-22 at Rs. 73.86 crores 2020-21 at crores as against Rs. 52.14 during the
previous year.
The company has sold 1262.29 tonnes of plastic sheets and rolls and 1128.92 tonnes of
plastic granules as against 4,240 tonnes and 819.34 tonnes respectively in previous year,
reflecting a de-growth in product turnover by volume. The Profits before interest,
depreciation, exceptional items and taxes during the year under review have been at Rs.
6.91 crores as against 5.76 crores in previous year. Net Profit, after setting aside
aggregate Tax provisions of Rs. 1.40 crore (previous year 1.37 crores) stood at Rs. 4.19
Crores in 2021-22 as against Rs. 3.51 crores in 2020-21. The Board of directors had
earlier recommended and the Company had paid an interim dividend during the year @10% i.e.
Re.1/- per share. The same will be considered as final dividend. Total dividend payout for
2021-22 amounts to Rs.19.22 lacs
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER
OF PEOPLE EMPLOYED
The Company believes that its intellectual capital represents its most valuable asset.
The Companys knowledge enhancement focus has helped create an organisation which is
recognised as a centre of learning and excellence. The Company has consistently worked
on not only increasing its workforce but ensuring that its people competencies are
enhanced in line with changing business needs. As a result, the Company enjoys the support
of a committed and well satisfied human capital. Compensation packages offered by the
Company, best-of-class methods in recruitment, training, motivation, and performance
appraisal, attract and retain the best talents. Thus, there are 50 employees in our
Company as on March 31, 2022.
Details of Significant Changes in key financial ratios, along with detailed
explanations therefore, including:
There are no significant changes in the following ratio during the year under review
(i) Debtors Turnover - 4.80
(ii) Inventory Turnover - 10.16
(iii) Interest Coverage Ratio - 12.9%
(iv) Debt Service Coverage Ratio - 15
(iv) Current Ratio - 1.70
(v) Debt Equity Ratio - 0.01
(vi) Operating Profit Margin (%) - 8.17%
(vii) Net Profit Margin (%) - 5.61%
Details of any change in Return on Net Worth as compared to the immediately previous
financial year along with a detailed explanation thereof
- Current year RONW is 28.87% as compared to previous year 29.98%.
Cautionary Statement
Statement in the Management Discussion and Analysis and Boards Report describing the
Companies Strengths strategies projection and estimate are forward looking and progressive
within the meaning of all applicable laws and regulation. Actual results may vary
depending upon the various aspects of the economic such as Government policies Rules and
Regulations economic conditions and other incidental factors. Important factors that could
make a difference to our Companys operations include raw material availability and prices
cyclical demand and pricing in our principal markets changes in government regulations,
tax regimes, economic developments within India and other incidental factors Management
will not be in any way responsible for the actions taken based on such statements.
| For and on behalf of the Board of Directors |
| G M Polyplast Limited |
| (Formerly known as G M Polyplast Private Limited) |
| Dinesh Sharma |
Sarita Sharma |
| Managing Director |
Director |
| DIN:00418667 |
DIN:00128337 |
| Date: Mumbai |
|
| Place: August 12, 2022 |
|
+91-9892691696
