Machino Plastics Ltd Management Discussions.

Industry Structure & Development

Your Company is mainly engaged in the manufacture of plastic injection moulded automotive components

i.e. bumpers, instruments panels, grills etc. as original equipments and for spare parts market primarily for Maruti Suzuki India Limited (MSIL). The company also manufactures various automotive components for others.

Your company can be classified as the automotive components manufacturer in view of the application of product made. Your company has 65 nos. injection molding machines, sizes ranging from 100 Ton to 3150 Ton clamping force. Your company has been dealing in all size plastic automotive components which can be supplied by setting production facility next door to automobile industries.

Opportunities & Threats

Growing market of India has already attracted all major automotive companies to start operation here. India is expected to be one of major auto hub in the world map soon.

The principal customer of the company is Maruti Suzuki India Limited (MSIL) and growth of the company currently depends on the growth of MSIL and its policy of inhouse production, share of business awarded to the company.

Your company is positively working towards expanding its operation to other customers.

Your company has got business for auto parts from M/s Mahle Anand Filter System Privates Ltd. For this purpose company has purchased one 200 Ton Injection Moulding Machine from Haitian, Gujarat.

The small to large size of machine range helps your company to cater to all types of customers part requirement. Moreover, the machines are versatile to process virtually all types of polymers and can make not only automotive but also other plastic goods by changing moulds. Thus, your company has immense capability to keep pace with the growing and diverse requirement of MSIL as well it has the possibilities for other business besides automotive.

The possible threats to the company can be:

• Fluctuating Market conditions

• Inhouse production by customers

• Share of business awarded

• Uncertain Monsoon Impacting Market Growth

• Uncertain Government policies

• Technological change

• Reduction in market share of main customer

• Competitions

• Interest rate Increase

Segment-wise or Product-wise Performance

Currently your company operates in to only one segment i.e. automotive injection moulding plastic components and is trying to diversify its product to include mould making and range of industry it caters to. Your company now also has capabilities in moulding smaller and intricate functional and aesthetic parts in automotive and other industries.


The year 2018-19 was marked by global uncertainties. Indian automobiles sales are expected flat in 2019-20 over 2018-19.

The Manesar Plant of the company is now the focus area for all future growth of the company.

Risks & concerns

Though India rides on some inherent strength, following risk factors exist which the auto component manufacturers may have to counter with:

• Economic slowdown can derail the prospects of the industry.

• Volatility in the prices of material and other inputs could erode the industrys cost competitiveness. Furthermore OEMs demand reduction in prices every year.

• Intense competition from counterparts may add further pressure on margin of manufacturers.

The overall trend is challenging, but remaining competitive in this changing scenario will be the toughest challenge. The combination of low manufacturing costs along with quality systems would give an edge to companies in terms of pricing and quality. Expansion and diversification will help break into new markets. It would be imperative for these companies, which are largely based on traditional management practices, to imbibe technology in a big way. The SMEs can exploit these opportunities through joint ventures, collaboration and technical tie-ups. Knowledge, specialization, innovation and networking will determine the success of the SMEs in this globally competitive environment.

Your company is power, manpower and capital intensive business unit. Power is obtained from Maruti from its co-shared power plant which runs on gas and DHBVN Ltd and DG Set. The increase in per unit cost of power supply will materially affect the cost of production. Company has installed about 813 K.W. Solar Power Plant at its Manesar (310KW) and Gurugram (503KW) Plants. This will help in power cost management.

Your company has availed net metering facility from UHBVN/DHBVNL/ HVPNL for both Gurugram & Manesar plant of the Company which in turn will save the energy bills.

Financial Performance

The turnover of your company has decreased by 1 % from Rs.30594.32 lacs in 2017-18 to Rs. 30287.20 lacs in current year. Your company has earned a pretax profit of Rs.11.59 lacs as compared to Rs.177.57 lacs in the last year. Return on Net worth decreased from 0.093% in 2017-18 to 0.008% in 2018-19 due to lower volumes.

Details of significant financial ratios:



# Particulars 2017-18 2018-19
1 Debtor Turnover Ratio (No. of Days) 47 49
2 Inventory Turnover Ratio (No. of Days) 14 19
3 Interest coverage ratio 3.87 3.99
4 Current Ratio 1.01 0.74
5 Debt Equity Ratio 1.33 1.29
6 Operating Profit Margin (%) 2.95 2.20
7 Net Profit Margin 1.57 0.13

During the financial year 2018-19, company has incurred capex in fixed assets and CWIP of Rs 3,926.60 lakhs in Tool Room and Solar Power Plant. This has reduced the Current Ratio. Net Profit Margin is lower due to tax affect and lower profit on account of lower turnover.

Internal Control System

Your company has adequate internal control systems commensurate with its size and operations, although not documented. The company regularly gets its accounts audited from the internal auditor.

Further internal audit has been out sourced to M/s Goel Garg & Co., Chartered Accountants. The Audit covers all the areas e.g. Finance, HR, Purchase, Statutory Compliance etc. and regular audits are conducted by Internal Auditors. The Audit observations are periodically reviewed by the Audit Committee of the Board of Directors and necessary directions are issued, wherever required.

Human Resources/industrial Resources

The company during the previous year continued its record of good industrial relations with its employees. During the year various initiatives had been taken to improve the performance and productivity levels in various departments of the company. The company has its own in-house technical centre in the plant to train the new recruits before their placement that helps in optimum utilization of resources as well as maintaining quality standards. It also indulges into and implements various HR initiatives and activities including employee welfare, special rewards, performance review system and various employee motivation activities.

The company has already undertaken KAIZEN with an aim to become a world class company. Your company has already adopted the suggestions scheme in the company which is increasing the employees participation in managing the company.

In addition to the above, several health checks such as a blood test, dental care and eye test was conducted for employees.

Cautionary Statement

Management Discussion and Analysis Report may be forward looking statement. Actual result may differ materially from those expressed or implied depending upon global and Indian regulations, tax regimes, and economic developments within India and overseas.