GLOBAL OVERVIEW:
The global plastic market size was valued at USD 609.01 billion in 2022. It is expected
to expand at a compound annual growth rate (CAGR) of 4% from 2023 to 2030. The increasing
plastic consumption in the construction, automotive, and electrical & electronics
industries is projected to support market growth during the forecast period. Regulations
to decrease gross vehicle weight to improve fuel efficiency and eventually reduce carbon
emissions are driving plastic consumption as a substitute for metals, including aluminum
and steel, for manufacturing automotive components.
Stringent regulations regarding the depletion and recyclability of conventional
materials such as metal and wood are anticipated to drive greater plastic demand from
construction industries in insulation, pipes, cables, floorings, windows, storage tanks,
and others. Polymer fittings are also generally quite simple and easy to install, compared
to metals or wood, with a wide range of color combinations, adding to their aesthetic
appeal. Plastic has 85% less specific gravity compared to metals. When used in the
automotive and construction industries, they enable approximately 80% weight savings and
30% to 50% cost savings in individual components.
The global recycled plastic market is valued at USD 69.4 billion in 2023 and is
projected to reach USD 120.0 billion by 2030, growing at CAGR 8.1% from 2023 to 2030. The
market has observed stable growth throughout the period and is expected to continue the
same trend during the forecast period. Growing awareness among individuals regarding
energy savings and government initiatives are expected to drive the growth of the market
in the upcoming years.
INDIAN ECONOMY
India continues to be a bright spot in the global landscape with regard to economic
growth. Indian plastic industry market is one of the leading sectors in the countrys
economy. The history of the plastic industry in India dates to 1957 with the production of
polystyrene. Since then, the industry has made substantial progress and has grown rapidly.
The industry is present across the country and has more than 2,000 exporters. It employs
more than 4 million people in the country and constitutes 30,000 processing units; among
these, 85-90% belong to small and medium enterprises. India manufactures various products
such as plastics and linoleum, houseware products, cordage, fishnets, floorcoverings,
medical items, packaging items, plastic films, pipes, raw material, etc. The country
majorly exports plastic raw materials, films, sheets, woven sacks, fabrics, and tarpaulin.
The Government of India intends to take the plastic industry from a current level of Rs. 3
lakh crore (US$ 37.8 billion) of economic activity to Rs. 10 lakh crore (US$ 126 billion)
in four-five years.
Indias economy has been resilient in 2022. Income has increased fast in recent years
and millions of Indians have been lifted out of poverty. Indias broad range of fiscal,
monetary and health responses to the crisis supported its recovery and, along with
economic reforms, are helping to mitigate a longer-lasting adverse impact of the crisis.
India has also become a key player in the global economy. The implementation of an
ambitious set of reforms has supported economic activity and helped put a break on
inflation and on both fiscal and current account deficits.
Industry Overview
The contribution of the plastic sector in making India a developed nation will be
unparalleled and invaluable. The plastic sector has the potential to add business
opportunities, jobs for the young generation and opportunities in the world. The plastic
industry should have the mindset to give the best to its consumers. The plastic sector
contributes to a circular economy and supports recycling of plastic waste, reuse of
plastic raw material and make the disposal of plastic waste more effectively and
efficiently. The Government aims to boost and make in India movement in plastic sector.
The plastic recycling average of 13% surpasses the global average of 9% and even
outperforms some developed economies with only 4%.
The India waste plastic recycling market size reached 8.5 Million Tons in 2023. Looking
forward, The International Market Analysis Research and Consulting Group (IMARC Group)
expects the market to reach 18.5 Million Tons by 2028, exhibiting a growth rate (CAGR) of
5.84% during 2023-2028. The increasing use of recycled plastic in the packaging industry,
rising focus on sustainable lifestyle, and favorable initiatives by the Government for
recycling waste plastic represent some of the key factors driving the market. The
Packaging industry is dominating the Plastic Recycling market with about 37% of the market
share in FY2023 and is anticipated to dominate the market even in the forecast period. The
plastic consumption in India has grown at a significant pace over the past five years, and
so has its waste output. India produces 3.4 million
tonnes of plastic waste in a year, only 30 per cent of it is recycled and hence the
plastic recycling industry has great scope.
Industry Structure and Developments
The plastics industry is currently home to about 50,000 industries, most of which are
micro, small, and medium-sized enterprises (MSMEs). These enterprises contribute Rs. 3.5
lakh crore (US$ 42.89 billion) to Indias economy and employ large number of people. The
country recycles plastic at a rate of 60%, which is higher than that of developed nations.
The "Make in India," "Skill India," "Swachh Bharat," and
"Digital India" initiatives of the government are increasing plastic production,
and by 2027, it is expected that the plastics industry will generate Rs. 10 lakh billion
(US$ 122.54 billion) annual revenue, with two lakh tons of exports.
During FY 2022-23, Indias plastic exports stood approximately at US$ 10.9 billion.
During this time period, the exports of writing instruments and stationery, medical items,
and plastic pipes and fittings increased by 25.0%, 19.1%, and 2.8% over the same time last
year, respectively.
Companys Performance:
Critical financial figures for 2022-23 are as under: -
• Gross turnover for the year is Rs. 272.21 Crore against Rs. 46.47 Crore in
2021-22.
• PBIDT for the year Rs. 10.45 Crore as against Rs. 6.16 Crore in 2021-22.
• Profit before Tax for the year Rs. 2.41 Crore against Rs. 2.88 Crore in 2021-22.
• Capital Structure of the Company as at 31st March 2023 is Rs. 18.81 Cr
comprising 94072930 nos. of equity shares of Rs. 2/- each.
Product wise operational performance: -
Product wise, your company is engaged in manufacturing of the following products, the
performance of which is discussed below-
Polyethylene
Turnover from Polyethylene is Rs. 21,132.45 lacs in the year under review year as
against Rs. 3,978.55 lacs in the previous year.
Agglomerates, Reprocessed Granules, Scraps & Others
Turnover from these items is Rs. 6,088.19 lacs as against Rs. 37.60 lacs in the
previous year.
Important Ratios in respect of the year ended 31st March 2023 are as below:
a) Debt Equity Ratio is 1.29 in FY 2022-23 (It was 0.56 in FY 2021-22)
b) Current Ratio is 4.04 in FY 2022-23 (It was 1.61 in FY 2021-22)
c) Interest Coverage Ratio is 1.43 in FY 2022-23 (It was 9.57 in FY 2021-22)
d) Debt Service Coverage Ratio is 1.57 in FY 2022-23 (It was 1.97 in FY 2021-22)
e) Stock Turnover Ratio is 34.70 in FY 2022-23 (It was 2.22 in FY 2021-22)
f) Return on Equity (RoE) is 5.32% in FY 2022-23 (It was 16% in FY 2021-22)
Note: Due to the demerger, ratios for the current year not comparable with previous
year.
Future Outlook
The pressure to recycle plastic grows stronger- plastic is a global environmental
problem once it is left in nature. If sustainable plastic recycling and the use of
plastics are not intensified, the oceans are estimated to contain more plastic than fish
by 2050, and 15% of all greenhouse emissions will come from the production of virgin
plastic. The European Union is the most advanced plastic recycler in the world, and one of
its goals is to create a circular economy for plastics. The goal of the plastics strategy
of the EU is to have all plastic packaging made from reusable and recyclable materials by
2030.
Society encourages people to recycle and take part in the circular economy, but the
most important thing is that the consumers have a demand for recyclable products. They can
also put pressure on companies that respond to the demand for more ecological materials.
Recycled plastic must be considered as appealing, sterling, and durable as virgin plastic
that we are accustomed to using. The efficiency of the recycling process affects the
quality of the end product. The smoothest end result is achieved when the recyclable
plastic waste is sorted, and different types of plastics are separated from one another.
Indian Government is also boosting such industries and industry reforms.
SWOT Analysis
Strength
• Capability of large-scale operation allowing economies of scale of production.
• Strong financial base
• Proper mix of workforce (skilled, semiskilled, and diversified)
• Availability of Raw Materials Weakness
• The main weakness will flow from deceleration in Indian Economy
• The supply chain will definitely affect the production line Threat
• Borrowing from Bank will be difficult because of mounting NPAs (Non-Performing
Assets) of Banks
• Unorganised Sectors will also eat into the demand segment of the Company
• Growing regulatory restrictions in the use of plastics Opportunities
• The ongoing trade conflicts among major countries may be a boon for developing
country like India and especially KKIL
• KKIL has established digital technology as a lever to enhance efficiency and
productivity. This will expand the profit margins
• Increasing awareness towards need for recycled plastics
Risks and Concerns:
Although the Company has comprehensive risk management in place, there is concern
about: -
a) Supply Chain
b) Fall in Demand
c) Securing Finance at competitive rates.
The company has comprehensive risk management framework in place, which consists of
a) Process to identity, prioritize and formulate mitigation plans for risks and
b) A framework of rules and regulations for various officials/ employees and the Board,
in discharging the risk management process, periodicity of reporting risk management.
As a part of this risk management framework, the company has identified for each
conceivable risk and corresponding mitigation plan to ensure continuous risk monitoring
and risk mitigation.
Internal Control System
The Company always strives to strengthen Internal Control Systems and processes for
smooth and efficient conduct of business and complies with applicable relevant laws and
regulations. A comprehensive delegation of power exists for smooth decision making.
Elaborate guidelines for preparation of accounts are followed for uniform compliance.
Further, all the key functional areas are governed by respective operating manuals. In
order to ensure that all checks and balances are
in place and all Internal Control Systems are in work, regular and exhaustive internal
audits are conducted by experienced firm of accountants in close co-ordination with the
companys concerned accredited officials.
The Internal Financial Control are reviewed periodically and in particular the Internal
Auditors ensure that the company as in all material aspects, laid down Internal Financial
Controls including operational controls and that such controls are adequate and operating
efficiently.
Human Resources and Industrial Relations
The Company appreciates the performance of the employees for the year and anticipates
much more for the years to come. Your Company believes in employee empowerment across the
entire organization in order to achieve organizational effectiveness. The Human Resource
policies are soundly drafted for all levels of employees to serve them motivation,
transfer & promotions and to retain the skills. Over a period of time, your company
has built and nurtured a dedicated and excellent workforce which consists of engineers,
CAs, CSs, MBAs, and advance degree holders like PHDs having a big business portfolio. The
Industrial relations of the Company were cordial and there were no instances of employee
disputes arising during the year.
Your company has a sufficient pool of talents in various operational fields. The Human
Resource environment has been very smooth throughout the year under review.
The company takes special care about safety, which is core value of the company, and
all necessary actions are taken in the company to keep safety as priority.
Cautionary Statement
Certain statements made in the Management Discussion and Analysis Report relating to
the Companys objectives, projections, estimates, and expectations and others may
constitute forward looking statements within the meaning of applicable laws and
regulations. Actual results may differ materially from those expressed or implied.
Important factors that could make a difference to the Companys operations include
economic conditions affecting demand/supply and price conditions in the domestic and
overseas markets in which the Company operates, changes in the Government regulations, tax
laws, natural calamities and so on over which the company does not have any direct
control.
| Place: Kolkata |
For and on behalf of the Board of Directors |
| Date: 19.05.2023 |
Narrindra Suranna |
|
(DIN:00060127) |
|
Chairman and Managing Director |
+91-9892691696
