I. Global Economy
The global economys growth forecast has been slowed from 6.1% in 2021 to 3.2% in 2022.
According to International Monetary Fund – World Economic Outlook Update, April 2023
(IMF – WEO, April 2023) global slowdown, tightening financial conditions due to
higher inflation in most of the major economies and prolonged after-effects Russia-Ukraine
war has led to weakest growth profile. The global growth forecast is pegged at 2.8% in
2023 and 3.0% in 2024 with easing of supply chain and inflation moving back to the Central
banks target for most of the economies.
Advanced Economies (AEs) is estimated to grow by 2.7% in 2022 slowing from 5.2% in 2021
owing to stress in financial sector. AEs growth is expected to slow down registering
growth of 1.3% in 2023 and 1.4% 2024 weighed by slowdown in the Euro area and the United
States due to weaking of economy due to a sharp deterioration in financial conditions,
higher borrowing cost and lower growth prospects.
Emerging Markets and Developing Economies (EMDEs) continue to be the engine for the
global growth outperforming AEs despite of 4.0% growth in 2022 as against 6.8% growth in
2021. EMDEs growth is expected to be 3.9% in 2023 and 4.2% in 2024 led by reopening and
recovery in China and prudent monetary policy support estimated to propel Indias growth.
The global slowdown reflects slow pace of policy reforms, rising trade tensions due to
geoeconomics fragmentation, drying direct investment and slow pace of innovation and
technology. The policymakers need to implement and communicate a tighter monetary policy
allowing interest rates to return to normalcy along with fiscal buffer for financial
stability. Additionally, policymakers need to design a faster and cost effective
decarbonisation push on carbon pricing and equivalent policies. The conscious adoption
towards clean energy investment spurs consistent energy supply thereby achieving
decarbonisation goals.
II. Indian Economy
According to Economic Survey 2022-23, India continues to prove its economic resilience
by reducing external imbalances caused by the Russian invasion to Ukraine coupled with
global inflationary trend. India is ranked as the 3rd largest economy in the world in PPP
terms (Purchasing Power Parity) and the 5th largest in terms of exchange rate.
Indian economy has staged a strong comeback in FY23 with an upward pre-pandemic growth
path navigating adverse macroeconomic challenges including turbulence in the banking
sector of some advanced economies and currency depreciation hindering to slow global
recovery.
As per Bloombergs recession meter report ‘Recession Probability Worldwide 2023,
India is the only economy in the globe zero percent chance to experience a recession in
2023. India continues to be the bright spot in the world economy backed by adoption of
digitalization to combat pandemic woes, prudent fiscal policies and spur in capital
investments to fillip sustainable growth. According to IMF WEO, April 2023 India is
projected to grow 5.9% in 2023, contributing to 15% of the global growth in 2023.
Indias Union Budget 2023-24 focused on array of measures including higher capital
expenditure spending linked to priorities such as green growth, empowering youth and
inclusive development. The total capital expenditure is pegged at ~INR 10 trillion in
2023-23, an increase of 37.4% over Revised Estimates 2022-23 signalling a strong
commitment of the Union Government to boost economic growth with focused infrastructure
investments. Despite of an increase in capital expenditure plan for supporting growth, the
Governments targets a positive roadmap fiscal deficit roadmap of 5.9% for 2023-24 as
against 6.4% budgeted for 2022-23.
The Reserve Bank of India (RBI) has hiked the benchmark repurchase rate (repo rate) by
250 basis points (bps) cumulative since May 2022 to keep the inflationary trends under
check. According to RBI, the average annual retail inflation was projected at 6.5% in
FY23. The Monetary Policy Committee (MPC) has kept the repo rate unchanged at 6.5% in
April 2023 for accessing the impact of previous cumulative price hikes of 250 bps in FY23.
The RBI estimate 5.2% retail inflation for FY24 considering adverse climatic conditions
and rising uncertainty in international financial markets as key risks.
Indias economic growth in FY23 is attributed to private consumption and capital
formation leading to new employment generation. It has helped the corporates to strengthen
their balance sheets. The public sector banks are geared to increase credit supply to
Micro, Small and Medium Enterprises (MSMEs) and other sectors. Additionally, the
Government initiative like PM Gati Shakti, the National Logistics Policy and the
Production-Linked Incentive schemes (PLI Schemes) is expected to boost manufacturing
output and support economic growth in the coming years.
III. Industry Overviews a. Plastic Extrusion Machines Overview*
The market for plastic extrusion machines stood at US$ 6.4 billion in 2022. It is
estimated that plastic extrusion machines industry will surpass US$ 8.5 billion in 2028,
growing at 4.6% CAGR during 2023-28 period.
Extrusion process is implemented for creating fixed cross-sectional profiles by using
plastic or thermoplastic materials pressed through a die of desired shape and
cross-section. Plastic extrusion manufacturing process uses high volumes of plastic
material for manufacturing and producing plastic products including weather-stripping
lines, pipes, tubes, deck railings, plastic films, window frames, plastic sheets, wire
insulations and thermoplastic coatings.
The Plastic extrusion machine market is gaining traction owing to innovation processing
technologies and the introduction of new plastic products in piping industries and
manufacturing products, rising awareness about benefits of plastic extrusion machines and
increasing awareness amongst the consumer for environment-friendly equipment. The
manufacturers are continuously looking forward to launching innovative plastic products
which are fuel efficient and high on performance with lighter weight.
*Source: IMARC Group, ‘Global Plastic Extrusion Machines Market Size, Share,
Growth, Industry Trends, Opportunity and Forecast 2023-2028 Union Budget 2023-24: Key
Announcements for Plastics Extrusion Machine Manufacturers
The Union Budgets 2023-24 emphasis on sustainable agriculture and economic growth. The
record-high goal for agriculture credit of INR 20 trillion would enable Indian farmers to
enhance their output with the assistance of smart machines and techniques.
The Government allocation towards the Pradhan Mantri Awas Yojana grew by 66% to INR 790
billion.
The plastic pipes manufacturers and infrastructure industry is likely to benefit from
the Government flagship drinking water project ‘Jal se Nal Yojana with 700 billion
allocation for FY24.
The Central Governments effective capital expenditure is estimated at 10 trillion
crores in 2023-24 translating to 3.3% of GDP. b. Electric Vehicles and Allied
Industries
India is gradually transitioning toward e-mobility to trim its oil imports, increasing
pollution and to honour its international commitments to combat global climate change.
India aims to be a 100% electric vehicle nation by 2030 as per NITI Aayog. In terms of
volume, India eyes to be the third largest automotive market in 2030.
As per CEEW Centre for Energy Finance (CEEW-CEF), Indias EV market translates to a
US$206 billion opportunity by 2030 as the nation makes conscious efforts to achieve its
ambitious vision.
Snapshot: EV Sales Trend from FY18-23
| Category |
FY18 |
FY19 |
FY20 |
FY21 |
FY22 |
FY23 |
YoY Change |
CAGR % (FY18-23) |
| E-2 Wheelers |
2,004 |
28,006 |
26,829 |
44,798 |
2,52,550 |
7,27,370 |
188.0% |
225.1% |
| E-3 Wheelers |
91,970 |
1,16,031 |
1,43,051 |
90,989 |
1,72,543 |
4,01,882 |
132.9% |
34.3% |
| E-4 Wheelers |
2,242 |
2,407 |
2,404 |
5,201 |
19,782 |
48,105 |
143.2% |
84.6% |
| E-Buses |
149 |
745 |
928 |
373 |
1,611 |
8,988 |
457.9% |
127.0% |
| Total |
96,365 |
1,47,189 |
1,73,212 |
1,41,361 |
4,46,486 |
11,86,345 |
165.7% |
65.2% |
Source: Society of Manufacturers of Electric Vehicles (SMEV)
The EV sales in India hit the 1 million annual sales to 11,86,345 units, growing 165.7%
YoY in FY23 demonstrating higher consumer demand for EVs due to rising petrol, diesel and
CNG prices. The E-2 Wheelers sales grew by 188.0% YoY to 7,27,370 units in FY23. The E-2
Wheelers share in total EV sales expanded by 475 bps YoY to 61.3% in FY23. The E-3
Wheelers sales surged by 132.9% YoY to 4,01,882 units in FY23. The E-3 Wheelers share in
total EV sales stood at 33.9% in FY23 as compared to 38.6% in FY22. The E-4 Wheelers sales
grew exponentially by 143.2% YoY to 48,105 units in FY23. The E-4 Wheelers share in total
EV sales was pegged at 4.1% in FY23 as compared to 4.4% in FY22. E-Buses Wheelers sales
grew by 457.9% YoY to 8,988 units in FY23. E-Buses share in total EV sales doubled in FY23
to 0.4%.
Union Budget 2023-24: Key Announcements for EV Industry
The Union Budget 2023-24 has allotted ~INR 882 billion towards climate-related measures
favouring EV startups, Original Equipment Manufacturers (OEMs) and battery makers for
driving India towards green growth promoting clean energy.
The ministry of Ministry of Petroleum and Natural Gas has committed a capital
investment of INR 350 billion towards energy transition, net zero goals and energy
security.
The government eyes green hydrogen production of 5 MMT by 2030.
The launch of the Green Credit Program under the Environment (Protection) Act will
encourage behavioural change amongst individuals.
The Union Budget 2023-24 has allocated investment of INR 207 billion towards creation
of an inter-state transmission system for the evacuation of 13 GW of renewable energy from
Ladakh.
The National Green Hydrogen Mission has a provision of INR 197 billion, reducing
Indias carbon intensity and dependency on fossil fuels.
The Government aims to handle battery energy storage systems with 4,000 MWH capacity
with viability gap funding.
The custom duty on imported EVs and luxury cars has been raised from 10% to 70%. The
removal of customs duty on capital goods imported for manufacturing lithium-ion cells will
be beneficial for the EV industry in the coming years.
The Union Budget 2023-34 reduced the custom duty on lithium-ion batteries to 13% from
21%. The EV batteries subsidies were extended till FY24.
The scrappage of old polluting vehicles will fuel the automobile industry benefiting
the EV and EV component industry.
Additionally, the Indian government took a clarion call with amendments to the existing
safety norms following several following several EV fire incidents. The ministry under the
Central Motor Vehicle Rules introduced new AIS – 038 (for E-4 Wheelers) and AIS
– 156 (for E-2 Wheelers and E-3 Wheelers) standards including additional safety
requirements related to EV battery cells, Battery Management System, battery pack design,
etc. The amended testing norms was implemented in two phases, with phase 1 effective from
December 1, 2022 and phase 2 from March 31, 2023. According to Arthur D Littles report
titled Unlocking Indias electric mobility potential, India will require approximately
800 GWh of batteries by 2030 for attaining over 30% EV adoption. In order to cater the
surging demand, India is accelerating plans to manufacture Lithium-ion cells within the
country, anticipating USD 2.3 billion in government subsidies and more than USD 7.5
billion in investment potential. The EV Industry is a sunrise industry. The governments
indirect tax proposal coupled with focus on green energy and mobility, thrust on domestic
manufacturing, encourage exports and push towards adoption of electric vehicles augurs
well towards the growth of EV and allied industries in the coming years.
IV. Company Overview
Kabra Extrusiontechnik (KET) is Indias premier manufacturer & exporter of Plastic
extrusion plants. KET is a part of renowned Kolsite Group having over 6 decades of
experience, more than 15,000 installations and presence in more than100 countries across
the world. KET enjoys leadership position in the extrusion market. KET constantly
endeavours to offer better solutions to plastics processors across the globe. Kabra
Extrusiontechnik has set benchmarks in plastics extrusion industry by modern R&D
techniques and various processes to cater the market requirements. Battrixx is the future
technologies division of KET. It is dedicated to developing and producing green energy
systems and solutions that will power the growth of Indias transition into green energy
storage and electric transportation. The brand stands tall with state-of-the-art
facilities for design, development and production in Chakan, Pune. The noble objectives
are epitomised by the brands flagship product – advanced lithium-ion battery packs
and modules for e-vehicles.
Key Business Highlights of FY23
Hero Electric Partnership: Battrixx has inked a strategic partnership for
developing ‘Made in India Ultra Safe Lithium-ion batteries for Hero Electrics
e-scooter range. The batteries are embedded with latest technologies conceptualized and
designed in-house in collaboration with Hero Electric team.
Industry First AIS 156 Amendment III Phase 2 Certification: Battrixx received ARAI
certification under AIS 156 Amendment III Phase 2 for its batteries, conceptualized and
designed in-house strategically with Hero Electrics R&D team before 31st March
deadline. Battrixx latest batteries offers enhanced performance maintaining the highest
safety standards.
Credit Rating: CRISIL upgraded long term credit rating of Kabra ExtrusionTechniks
to A+/Stable from ‘A Positive in FY23. Additionally, the Companys short term bank
facilities ratings was reaffirmed at ‘A1.
A. Key Strengths
1. Strong Parentage: KET is a part of Kolsite group which enjoys a legacy
of 60 years. Customi Kolsite group has 8 state-of-art manufacturing plants across the
nation. It has annual turnover of approximate 1,500 crores led by ~2,000 skilled
professionals.
2. Competitive Market Position: KETs competitive positioning lies in its
understanding KETs Edge of the indigenous markets with strong client relationship, coupled
with continuous efforts towards enhancing its technological expertise. KET enjoys market
leadership status in the extrusion market The Company has a strong brand loyalty and wide
customer base in the 1000+ export markets.
3. Technical Collaboration: KET believes in continuous innovation with
strong technical partnership.
| Company |
Purpose |
| Battenfeld-Cincinnati |
Technical tie-up with Battenfeld-Cincinnati since 1983 for pipe and profile machinery |
| Extron Mecanor |
JV with Extron Mecanor, Finland to provide an integrated approach to pipe producers by |
|
offering pipe socketing and belling solutions |
| Penta |
A 50:50 JV with Penta SRL, Italy for auto-feeding systems for the plastics and food |
|
processing industry |
| Unicor |
Technology partnership with Unicor GmbH to make corrugated pipe machines |
4. R&D Focussed Approach: KET has one of the largest R & D team in
the Plastics Machinery Industry with qualified engineers working in different areas of
processing, manufacturing, application development, design, controls and automation. KET
has added new range of Pipe and Film plants and other new products, like drip lines have
widened the range of products.
5. Battery Management System (BMS): Battrixx, KETs Battery Division offers
advanced lithium-ion battery packs with smart BMS both for electric vehicles and other
energy storage applications. Additionally, Battrixx acquired 100% stake in Pune-based
Varos Technology to develop end-to-end battery management systems by leveraging
cloud-based Artificial Intelligence (AI)-driven analytic tools to help predict battery
life and monitor battery performance.
6. Battrixx Technical Edge: Battrixx infrastructure can handle both
cylindrical and prismatic cells to manufacture modules and packs with in-house built
advanced BMS integration.
Battrixxs Capabilities in EV Landscape
Battrixx facilitates EV charging operators to manage & control assets with dynamic
end-to-end EV Charging Management Solutions in the electric 2 Wheelers & 3 Wheeler
space.
7. Staying ahead of the Curve: Battrixx culture to constantly innovate and
the ability to partner with global innovators is helping the Company to stay ahead of the
curve. Battrixx innovation remains relevant making their product market ready, thereby
providing differentiation our esteemed consumers. Battrixx commitment towards constant
innovation and thrust for end-customer delight makes us the preferred supply of choice
from EV OEMs.
B. Financial Performance Snapshot
| Particulars (in Cr) |
FY22 |
FY23 |
Growth |
| Revenue |
406 |
670 |
65.1% |
| Gross Profit |
132 |
184 |
38.9% |
| Gross Profit margin % |
32.6% |
37.4 % |
(516 bps) |
| EBITDA |
55 |
74 |
34.9% |
| EBITDA margin % |
13.5% |
11.1% |
(240 Bps) |
| EBIT |
46 |
63 |
37.17% |
| PAT |
30 |
38 |
23.97 |
| PAT margin % |
7.5% |
5.6% |
(190 bps) |
KETs revenues grew by 65.1% YoY to 670 crores owing to growth in both extrusion and
Battery business. The revenue mix of Extrusion Business: Battery Division stood at 48:52
in FY23 as against 73:27 in FY22.
The Companys EBITDA grew by 34.9% YoY to 74crores. EBITDA margin stood at 11.1% in
FY23. KETs PAT grew by 23.9% YoY to 38 crores. PAT margin stood at 5.6% during FY23.
C. Key Financial Ratios
In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018)
(Amendment) Regulations, 2018, the Company is required to give details of significant
changes (change of 25% or more) as compared to the immediately previous financial year) in
key sector-specific financial ratios.
Sr. Particulars |
% Change |
Reasons for Variation |
No. |
|
|
| 1. Debtors Turnover |
-21.78% |
|
| 2. Inventory Turnover |
26.79% |
Due to increase in sales |
| 3. Interest Coverage Ratio |
-31.31% |
Due to higher interest cost and Repayment |
| 4. Current Ratio |
9.90% |
|
| 5. Debt Equity Ratio |
8.56% |
|
| 6. Operating Profit Margin |
-17.78 % |
|
| 7. Net Profit Margin |
-25.41% |
Due to increase in sales of Battrixx Division |
| 8. Return on Capital Employed |
18.97% |
|
D. Business Outlook
Extrusion Business: The Company is making continuous efforts to develop a wide
range of extrusion lines and allied products. Effective implementation of key strategies
will enable us to achieve long-term sustainable growth. The Companys focus is on
investing more in technology and increasing reach in the promising markets. With a wider
and more innovative product portfolio, the Company shall be better equipped to withstand
the challenges in the short to medium term.
BMS/ESS Business: Battrixx plans to add 5 additional Cylinderical and 4
Prismatic battery pack production lines. Battrixx has already started its capacity
expansion, taking annual capacity to 2GWH by end of FY 2024 in gradual manner by investing
Rs.100 Crores.
E. Risk and Challenges
The Companys business operations may fluctuate due to a variety of factors such as
Technology obsolescence, unforeseen contingencies such as Covid-19, market conditions,
growing competition, including imports and unorganized sector that may have adverse effect
on Companys business and its margin in future. A risk identification and mitigation
framework has been adopted by the Company. Major risks have been identified by the
businesses and functions and the Company will adopt various measures at different points
in time to counter these risks successfully on a continuing basis. The Company is geared
up to provide a technological solution to face the upcoming challenges to process
reusable, recyclable or compostable Plastic as well as Lead-Free stabilizers by upgrading
the existing set up of its customers. The Company has diversified its business into a
segment of Energy Storage Systems (ESS), to reduce the dependency on single segment
business. The Company will leverage its ability to adapt new technologies to manufacture
advance Lithium-ion Battery Packs equipped with Battery Management Systems (BMS) under the
brand name "BATTRIXX" to power the growth of Indias transition to green energy
storage and electric transportation.
V. Internal Control Systems and Their Adequacy
The Companys internal audit system is geared towards ensuring adequate internal
controls commensurate with the size complexity and needs of the business, with the
objective of efficient conduct of operations through adherence to the
Companys policies, identifying areas of improvement, evaluating the reliability of
financial statements, ensuring compliance with applicable laws and regulations and
safeguarding of assets from unauthorized use. The Company has appointed a firm of
Chartered Accountants as Internal Auditors in compliance of Section 138 of the Companies
Act, 2013 to conduct internal audit of functions and activities of the Company. They
report on quarterly basis to the Company on their findings. The Report is reviewed by the
Audit Committee Members and Statutory Auditors.
VI. Human Capital
The Company continues to maintain cordial and peaceful industrial relations
facilitating smooth manufacturing activities. The programmes aiming at leadership
development and upgradation with advancing technology on all fronts were conducted during
the year. Our human capital strength stood at 532 including Workers, Staff and Executives
as on 31st March 2023.
Cautionary Statement:
Actual performance may differ from projections made, as the Companys operations are
subject to various economic conditions, government regulations, natural calamities and
other incidental factors over which the Company may not have any direct / indirect
control.
|
For and on behalf of the Board |
| Place : Mumbai |
|
| Date: May 10, 2023 |
|
|
S. V. Kabra |
|
Executive Chairman |
|
(DIN: 00015415) |
+91-9892691696
