HCP Plastene Bulkpack Ltd Management Discussions

Global Economic Overview

Global growth is projected at 3.3 percent both in 2025 and 2026, below the historical (2000 19) average of 3.7 percent. The forecast for 2025 is broadly unchanged from that in the October 2024 World Economic Outlook (WEO), primarily on account of an upward revision in the United States offsetting downward revisions in other major economies. Global headline inflation is expected to decline to 4.2 percent in 2025 and to 3.5 percent in 2026, converging back to target earlier in advanced economies than in emerging market and developing economies.

Global growth is projected at 3.3 percent both in 2025 and 2026, broadly unchanged from the October 2024 World Economic Outlook (WEO) forecast with an upward revision in the United States offsetting downward revisions elsewhere. The near-term outlook is characterized by divergent paths, while medium-term risks to growth are tilted to the downside. Renewed inflationary pressures could interrupt the monetary policy pivot, with implications for fiscal sustainability and financial stability. The policy mix should balance trade-offs and rebuild buffers. The baseline forecast is for the world economy to continue growing at 3.2 percent during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies where growth is expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025 will be offset by a modest slowdown in emerging market and developing economies from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025. The forecast for global growth five years from now at 3.1 percent is at its lowest in decades. Global inflation is forecast to decline steadily from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025 with advanced economies returning to their inflation targets sooner than emerging market and developing economies. Core inflation is generally projected to decline more gradually. The global economy has been surprisingly resilient, despite significant central bank interest rate hikes to restore price stability. (Source: IMF World Economic Outlook July, 2024, April, 2025 and January, 2025).

Indian Economy Overview

India s economy carried forward the momentum it built in FY23 into FY24 despite a gamut of global and external challenges. The focus on maintaining macroeconomic stability ensured that these challenges had minimal impact on India s economy. As a result, India s real GDP grew by 8.2 per cent in FY24, posting growth of over 7 per cent for a third consecutive year, driven by stable consumption demand and steadily improving investment demand. On the supply side, gross value added (GVA) at 2011-12 prices grew by 7.2 per cent in FY24, with growth remaining broad-based. Net taxes at constant (2011-12) prices grew by 19.1 per cent in FY24, aided by reasonably strong tax growth, both at the centre and state levels and rationalisation of subsidy expenditure. This led to the difference between GDP and GVA growth in FY24.

The Indian economy recovered swiftly from the pandemic, with its real GDP in FY24 being 20 per cent higher than the pre-COVID, FY20 levels. This meant a CAGR of 4.6 per cent from FY20, despite a 5.8 per cent decline in FY21 inflicted by the pandemic. Analysis in this chapter shows that the current GDP level is close to the pre-pandemic trajectory in Q4FY24. During the decade ending FY20, India grew at an average annual rate of 6.6 per cent, more or less reflecting the long run growth prospects of the economy. This is the background against which we can see the prospects for FY25.

The structural reforms undertaken by the Government of India over the course of the last decade have put the economy firmly on a growth path, India is soon set to become the third largest economy in the world, following the US and China. In April 2024 World Economic Outlook, the IMF has raised Indias growth forecast for 2024-25 to 6.8 per cent from 6.5 per cent on the back of strong domestic demand and a rising working-age population, making India the fastest-growing G20 economy. It is in line with expectations for economic growth, India has graduated from being a low-income country to a low-middle-income country. (Source: Economic Survey 2023-24).

Plastic Industry

The plastic industry is a major contributor to the Indian economy. For decades now, plastic has played a vital role in industries as diverse as Agriculture, Healthcare, Packaging, Construction, Electronics, Transportation, and Machinery. Plastic s popularity can be attributed to its remarkable properties like lightweight, durability, chemically stable, and capability of being molded into a variety of shapes and sizes. Additionally, plastics are also cheap.

The domestic plastic sector in the country has done well in the recent years and it has tremendous potential to grow further. The contribution of the plastic sector in making India a developed nation will be unparalleled and invaluable. the export of the country was stalled at around 500 million dollars till 2020 but the scenario has been changed in the last two years and the country has managed to touch the 776 million dollars mark in the export sector. Plastic industry s contribution was of 12 billion dollars and it has the potential to grow. Plastic sector has the potential to add business opportunities, jobs for young generation, opportunities in the world and it can help the government to grow the entire ecosystem of the plastic sector over the next few years.

FIBC Space

Indian manufacturers prefer to lower the total weight of bulk packaging that flexible intermediate bulk containers (FIBC) can provide. Their load-carrying capacity, versatility, reusability, cost-effectiveness and eco-friendly material are increasing the demand. There are four main types of FIBC bags - A,B,C, and D. D is the safest option if one is working with flammable solvents and gases or other combustible substances.

Domestically, the utilization of bulk packaging (FIBC S) is less compared to European and American markets. The demand in these countries is primarily due to the pharmaceutical industry, whereas in emerging economies agriculture and food processing are responsible for the demand. Persistent growth in these industries across the world is positively impacting the demand for FIBC. India is the largest exporter of FIBC jumbo bags in the World. The top three exporters of FIBC jumbo bags are India, followed by Turkey and China.

As of July 17, 2024, FIBC jumbo bags export shipments from India stood at 7.4K, most of which goes to the Spain, United Kingdom and United States. This shipment number is enormously higher than both China and Turkey.

The bulk packaging market is growing steadily in India and in this sector, flexible bulk packaging is the fastest growing segment. But mostly in India, overall awareness about the usage of FIBC products is inadequate among the consumers. Hence, it presents a significant opportunity to grow awareness and generate interest in the Indian market.

With increasing awareness about FIBC and growing investment in R&D to improve the efficiency of the product to stay competitive, the market is likely to grow further with different segments like food, pharma, chemical, dairy (milk powder) etc. Going forward, the North American region is expected to be the dominant position in the bulk bag market worldwide owing to the high use of packaging materials by end-use industries and the growth of the fertilizer and chemical industry in this region. Europe is expected to grow at a substantial rate as well due to the involvement of bulk bags in the mining and pharmaceutical sectors in this region.

The global FIBC market is anticipated to touch a valuation of US $12.6 billion by 2033, with a CAGR of 5.4%.

India holds a substantial market share for FIBCs in the US and Europe markets. As per an industry expert, India has a 75% share in the European FIBC imports and a 72% share in the US import market and is now looking at the Japan and South Korea markets to drive the growth.

Polypropylene Woven Sacks

The demand for polypropylene woven sacks is increasing as it is a suitable alternative to PE (polyethene) considering environmental risks associated with this material. The global polypropylene woven sacks market is expected to surpass US $ 6.1 billion by 2034 growing at a CAGR of 4.2% from 2024 to 2034.

The interest in polypropylene packs and sacks from the concrete business has expanded altogether over the most recent couple of years, because of an expansion in urbanization and development in the modern area. Worldwide organizations are peering toward fully expecting expanded requests from the structure and development industry.

Developing economies, the rising population and the subsequent disposable income of people boost the market. Additionally, polypropylene is on the surge as they are used for packaging a range of products like fertilizers, sugar, chemicals, and various other products.

Polypropylene woven bags and sacks will see an increase in demand as the cement industry continues to expand. During shipping and transportation, polypropylene woven bags and sacks provide excellent material handling and superior strength. Lately, it has been seen that the quantity of polypropylene woven packs and sacks makers for modern applications has expanded decisively.

OUR COMPANY OVERVIEW

HCP Plastene Bulkpack Limited (HPBL) is a forty year old Company that specializes in manufacturing plastic packaging solutions with an expansive product portfolio comprising FIBCs, small bags and AD star bags.

In the year 2001, it started manufacturing woven bags. The Company s target markets are the EU and the US, which have stringent quality requirements.

In 2019, Gopala Polyplast Limited was admitted to CIRP under the provision of IBC, 2016 due to default in payment by its erstwhile promoters to Financial and Operational Creditors. Subsequently, M/s Plastene India Limited submitted a Resolution Plan and the same was approved by Hon ble National Company Law Tribunal at Ahmedabad Bench. Under the new ownership and management of Plastene India Limited Group, Gopala Polyplast Limited was renamed as HCP Plastene Bulkpack Limited (HPBL). Presently HPBL is a part of Plastene Group, a reputed FIBC manufacturer and exporter with a robust product portfolio range.

OUR BUSINESS OVERVIEW

The Company produces PP fabric which is sold in the international and domestic markets. The major product portfolio is small PP Woven Bags, FIBC Bags, AD Start Bags. Major consumption of these bags is by Cement, Sugar, Food grains and Fertilizer industries.

During the Year FY 25, Revenue from operations stood at Rs. 118.08 Crore as compared to Rs. 45.55 Crore for FY 24 showing increasing performance during the year.

OPPORTUNITIES & THREATS

OPPORTUNITIES

FIBC is an important product which could provide interesting growth opportunities in the domestic market and exports. Our new subsidiary in Malaysia promises to strengthen our international exposure.

THREATS

Spike in raw material prices could impact business profitability. Global economic slowdown could impact the demand for our products.

OUR HUMAN RESOURCE DEVELOPMENT

Our priority has always been to create a future-ready workforce. We believe that our Company can maintain sustainable and pro-table growth by focusing on performance culture. Therefore, we encourage our people at every step so that they can achieve organizational goals.

Our business places a strong emphasis on its people development processes and works to update skill sets. Training is crucial for organizational development and success. Our training programs are created to mould the intellect of our employees so that it leads to quality performance of employees.

FINANCIAL PERFORMANCE

(INR in Lakhs)

Particulars	FY 2024-25	FY 2023-24
Income (including other income)	11957.50	4681.44
Total expenses other than finance cost and depreciation	10454.31	4427.40
Profit for the year before exceptional items and tax	762.18	(372.42)
Exceptional items	0.00	0.00
Profit for the year before tax	762.18	(372.42)
Total tax expenses	187.81	(96.07)
Net profit for the year after tax	574.37	(276.38)
Total Comprehensive Income for the year	0	13.41
Gross block		10749.39

INTERNAL CONTROL SYSTEM

For any Business entity to achieve its goals and objectives, internal control mechanisms are crucial. According to the size and nature of its operations, the Company has suitable internal control mechanisms. In order to ensure Company s integrity and foster operational efficiency, there must be well-documented policies, guidelines, and procedures in place to track business and operational performance. Financial and other data are reliable for preparing financial information and other data, for maintaining accountability of assets and for preventing loss from transactions that are not authorized, recorded or reported correctly. All assets are safeguarded and protected against loss from unauthorized use or disposition. A comprehensive programme of internal audits and management review supplements internal control. The system has been created to guarantee the accuracy of financial and other records for the preparation of financial information and for maintaining asset accountability.

Accounting Treatment

Company adopted same accounting treatment as in previous year. In preparation of financial statement, there are not any treatment different from that prescribed in an Accounting Standard.

RISKS & CONCERNS

The Company has a robust risk management strategy to identify the various risks and opportunities across our operations. Periodic reviews are conducted and the summary is presented to the Board Committee. It oversees the processes and mitigation actions wherever necessary. The risk landscape includes long-term strategic risks, short to medium-term risks as well as single events.

Senior Executive s work to achieve KPIs and targets, including the financial and non-financial performance of the Company to mitigate associated risks.

Details of significant changes

There are not any significant change other than sales and profit.

Details of change in return on net-worth as compared to previous financial year-

There is not any significant change other than sales and profit.