Kkalpana Plastick Ltd Management Discussions.

Global Overview:

World growth strengthened in 2017 to 3.8%, with a notable rebound in global trade. It was primarily driven by investment recovery in advanced economies, continued strong growth in emerging Asia, a notable upswing in emerging Europe and signs of recovery in several commodity exporters. The partial recovery in the commodity prices should allow conditions in commodity exporters to gradually improve. At 3.8%, global growth last year was 0.5% point faster than in 2016 and the strongest since 2011. Two-third of countries accounting for about three-fourths of global output experienced faster growth in 2017 than in previous year.

Resurgent investment spending in advanced economies and an end to the investment decline in some commodity-exporting emerging market and developing economies were important drivers of the uptick in global GDP growth and manufacturing activity. The upsurge in global trade was mainly pronounced in Emerging Market and Developing Economies (EMDEs) (with trade growth rising from 2.2% in 2016 to 6.4% in 2017), reflecting higher investments in stressed commodity exporters as well as investment recovery in advanced economies.

Growth in EMDEs in 2017 was 4.8%. Among the EMDEs, the rebound in export growth was particularly strong in emerging Asia, especially China. Growth in Advanced Economies in 2017 was 2.3%. Among advanced economies, larger exporters, such as Germany, Japan, the United Kingdom, and the United States, contributed strongly to the recovery in exports, while recovery in import was broad based, except in the United Kingdom. IMF has forecasted the EMDEs to grow at 4.9% in 2018 and the Advanced Economies to grow at 2.5% in 2018

Global growth is projected to strengthen from 3.8 percent in 2017 to 3.9 percent in 2018 and 2019, driven by a projected pickup in growth in emerging market and developing economies and resilient growth in advanced economies.

Indian Scenario:

The year 2017 observed some major structural reforms with an aim to strengthen Indian economic growth. The most significant reform was introduction of Goods and Service Tax (GST) w.e.f 1.7.2017. The economy, in early 2017 suffered a setback due to the short-term challenges faced by the implementation of GST leading to a GDP growth of 6.7% in FY 2017-18. However, the economy started recovering as 2018 set in. Resultantly, the GDP reached an impressive 7.7% in the fourth quarter of FY 2017-18.

According to Central Statistics Office (CSO) and International Monetary Fund (IMF), Indias position as one of the fastest growing economies in the world continues to be led by strong democracy and partnerships. Indias Index of Industrial Production (IIP) grew by 7.5% in January 2018 while retail inflation stood at 4.4% in February 2018. The upgradation of Indias credit rating to Baa2 by Moodys Investor Services, jump in World Banks Ease of Doing Business Report by 30 ranks to reach the 100th position and other factors contribute to the growth trajectory of the Indian economy.

Favorable indicators such as moderate inflation levels, on-going structural reforms and growth of industrial sector are all expected to stimulate Indias growth potential. Organization for Economic Cooperation and Development (OECD) has forecasted the countrys GDP at 7.4% in FY 2018-19 and 7.8% in FY 2019-20. The IMF has speculated the countrys GDP at 7.4% in FY 2018-19 and 7.8% in FY 2019-20 in its World Economic Outlook Report.

Industry Overview:

The Indian cable industry is highly fragmented with a large number of producers. The market for cables and wires is mainly dominated by the unorganized sector controlling about 70% of the domestic demand for wires and cables. However, with the introduction of GST the scenario is changing. The units operating on unorganized sector are now finding difficulty in marketing their products because of GST.

Also with the slew of advertising and the publicity campaigns targeted at this segment, companies are getting more and more aware about the quality of products in this category too and making queries before deciding on the purchase of cables and wiring. The government has announced ambitious plans for infrastructure development including power which has significant demand for various types of cable.

Industry Structure and Developments:

The companys polymer compound business is directly intertwined with the fortunes of cable industry, packaging industry and footwear industry. If there is demand push in these segments, the topline and bottomline of your company will significantly increase.

India will need to generate 0.5 KW of electricity per person to provide reasonable level of opportunity to its population. Based on current population projection for 2025, India needs to increase its generation capacity at least 2.5 times roughly, i.e. from 280 GW to 710GW. The energy requirement of 0.5KW per person is roughly half of the European average and a quarter of US average.

The increased generation of electricity will require a total revamping of infrastructure for distribution of electricity, which will be mainly through cables, which in turn will lead to generation of immense opportunities in the cable industry.

Companys Performance:

Financial Performance for 2017-18 is summarized below:-

Particulars 2017-18 2016-17
Sales & other Income 46.43 43.74
Profit/ (Loss) before Depreciation , Interest & Tax 16.79 (52.45)
Less : Depreciation 0.00 0.27
Interest 0.01 0.17
Profit/ (Loss) before Tax 16.78 (52.89)
Less : Provision for Tax
Current Tax 4.83 0.00
Deferred Tax 0.00 0.00
Tax Expense for earlier years 0.00 0.12
Profit/ (Loss) After Tax 11.94 (53.01)
Add: Profit brought forward from previous year. 74.98 127.99
Balance Carried to B/S 86.92 74.98

Future Outlook:

The Companys turnover during the year comprises mainly interest income. However, your directors are planning to undertake new projects in near future and consequent arrangement with Banks / Financial Institutions are in process.

Opportunity and Threats:

Opportunity

The use of plastic made products has gained considerable response from the customers. In number of items of Retail and Industrial consumption, it is found that the use of Plastic made products has replaced many other products as the best substitute product. This increase, in the use of plastic Products, will open many new areas for the Industry in the years to come.

India will need to increase the generation of electricity from 280GW to 710GW. This will enhance the growth prospect of cable industry and accordingly your company.

Further, the likely growth in Indian economy will increase the disposable income of Indians and the purchasing power will get enhanced.

Threat

As already mentioned above, the main threat is from unorganized sector which is, however, gradually receding due to introduction of GST.

India will not be able to remain immune to recession in world economy, if it does happen. There is fear that the ongoing import tariff trade war and currency war will push the world economy to recession and unemployment

Segment wise or Product wise Performance:

The Company operates in single business segment of plastic compounds. However, the company has not undertaken any operation during the Financial Year 2017-18.

Risks and Concerns:

Based on operations of the Company, new risks, if any, are identified and steps are taken to mitigate the same. At KkalpanaPlastick, management ensures that risks are adequately measured, estimated and enrolled to enhance shareholders value.

Internal Control System:

The Company has a well established internal control systems and procedures covering all functional areas. It provides, among others, a reasonable assurance that transactions are executed with management authorization and ensures preparation of financial statements in conformity with established accounting principles and that the assets of the Company are adequately safeguarded against significant misuse or losses.

The Audit Committee of the Board periodically reviews the terms of reference and the adequacy of internal control system, significant observations and their disposals and remedies if any.

Human Resources and Industrial Relations:

The Company appreciates performance of the employees for the year and anticipate the much more for the years to come. Your Company believes in employee empowerment across the entire organization in order to achieve organizational effectiveness. The Industrial relations of the Company was cordial and there were no instances of employee disputes arising during the year.

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.

Registered Office: By Order of the Board of Directors
2B Pretoria Street,
Kolkata 700 071 Deo Kishan Kalwnai (DIN: 03363450)
Whole Time Director
Date: 29 May, 2018. Rama Kant Mishra (DIN: 06882372)
Director