GLOBAL ECONOMY
In 2022, the global economy witnessed a remarkable resurgence, fuelled
by a strong surge in consumer demand and the relaxation of COVID-19 restrictions, along
with a reduction in geopolitical tensions compared to the previous year. This positive the
worlds economies. However, advance men marked a significant the year posed its own
set of challenges, which were effectively addressed by proactive measures taken by various
stakeholders.
The persistently high inflation, which reached its highest point in
several decades at 9% in 2022, presents additional challenges for achieving sustainable
development. The chemical industry continues to face challenges, including volatile raw
material prices, geopolitical tensions, and evolving regulatory requirements. However, the
rapidly developing economies in Asia, Latin America, and Africa offer significant growth
opportunities for various sub-sectors in the industry.
The global economy showcased outstanding resilience and attained
noteworthy growth rates across major economies, despite encountering numerous challenges.
The this hurdle United States economy demonstrated a growth rate of 1.6%, while
Chinas economy exhibited a growth rate of 5.2%, and Indias economy expanded by
5.9%. a sluggish US These statistics underscore the concerted and sustained efforts made
by Governments and organizations worldwide to overcome obstacles and promote economic
growth.
Source -
https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/ADVEC/WEOWORLD
OUTLOOK
According to the World Economic Outlook, published in April 2023, the
forecasted global growth rate for 2023 is 2.8%, with an anticipated increase to 3.0% in
2024. Additionally, the report suggests that global headline inflation 2022 to 7.0% in
2023. This decline will primarily be driven by the projected decrease in commodity prices.
Given the expectation of significant decline in inflation, central banks at that
time may consider adjusting their monetary policies by ceasing the ongoing cycle of
interest rate hikes.
INDIAN ECONOMY
In spite of numerous global obstacles, Indias economy has
exhibited exceptional resilience, emphasizing its significance has been acknowledged as
one of the fastest-growing economies in the world. As of
March 2023, India currently holds the fifth spot in terms of size, with
a gross domestic product of around US$ 3.5 trillion.
During the financial year 2022-23, the GDP growth rate stood at 6.8% as
per the Survey 2022-23. The capital expenditure of Central Government and crowding in the
private Capex, led by strengthening of the balance sheets of the corporate, is one of the
growth drivers of the Indian economy in the current year. The growth was also driven by
private consumption and investment, facilitated by Governmental policies aimed at
enhancing the transportation infrastructure, logistics, and overall business ecosystem.
These measures established a more favorable environment for businesses to operate, hence
making a substantial contribution to Indias consistent economic progress. in the
form of inflation On the challenges front, India faced a significant year, and its rise
has been attributed to multiple factors, including the ongoing Russia-Ukraine conflict, a
worldwide banking crisis, and the resulting escalation in global commodity prices. India
has made strides in controlling inflation, with the latest report indicating a 16-month
low of 5.66%.
Source - https://pib.gov.in/PressReleasePage.aspx?PRID=1894932
OUTLOOK
According to the April 2023 World Economic Outlook published by the
International Monetary Fund (IMF), the Indian economy is anticipated to experience a
deceleration in the upcoming fiscal year as a result of the global economic downturn. The
growth is expected to decrease from 8.7%in projection has been reduced to 5.4% for 2023,
although Indias economy is expected to be comparatively less affected than other
nations due to its resilient domestic demand. However, the economy is projected to recover
and achieve a grow rate of 6.8% in 2024.
INDUSTRY OVERVIEW Plastic & Packaging Industry
Plastic packaging finds widespread application across various
industries, including food & beverages, and oil, owing to its durability,
cost-effectiveness, and excellent performance. With a favourable demographic profile,
factors, such as increasing disposable income levels, rising consumer awareness, demand
for processed food, and multinational giants taking rapid strides in the food &
beverages, cosmetics, toiletries and pharmaceuticals space are key drivers for the
packaging industry growth. These factors are compelling both packaging suppliers and
end-user industries to shift from bulk packaging to retail, unit-level and small-sized
packaging. The retail sectors significant in retail and other sectors are likely to
bring favorable conditions bode well for the packaging industry. As a result, the plastic
packaging industry is growing rapidly, and stands as one of the fastest-growing sectors
with great product diversification. It holds significant importance in the modern economy,
providing essential products for a variety of sectors, such as food & beverage,
pharmaceuticals, and electronics among others.
However, the rapid growth of the plastic packaging industry has led to
a substantial environmental impact. This has prompted the need for sustainable packaging
solutions. To tackle this issue, manufacturers are increasingly turning to recycled
plastic resins.
Despite some difficulties and restrictions, this strategy is crucial in
the direction of lowering the environmental impact of plastic manufacturing and advancing
towards a more sustainable future. The Indian plastic packaging industry is one of the
leading sectors in the countrys economy, providing direct or indirect employment to
over 3 million people.
RIGID PLASTIC PACKAGING
Rigid plastic packaging is a popular type of container comprising
durable and inflexible plastic materials and is used to protect and store products during
transportation, storage, and distribution. It comes in various shapes and sizes and is
widely used in industries, such as food & beverage, pharmaceuticals, cosmetics,
personal care, and household chemicals. The most commonly used plastics for rigid plastic
packaging are polyethylene (PE), polypropylene (PP), polystyrene (PS), and polyethylene
terephthalate (PET), chosen based on their properties, such as stiffness, clarity, and
resistance to temperature changes and chemicals. The growing demand for sustainable and
eco-friendly packaging solutions is a key driver of the rigid plastic packaging market.
Health care plays significant role as it seeks reliable packaging solutions to
ensure the integrity and safety of pharmaceutical products. The qualities of rigid
plastic, including durability, lightweight nature, cleanliness, and transparency, make it
an ideal choice for various applications. These applications range from medicine bottles
and bottle caps to closures and containers for products like ketchup and syrups.
Polypropylene, a type of rigid plastic, is increasingly used in these applications.
OUTLOOK
The Indian plastic packaging industry is expected to experience robust
growth, with a projected CAGR of 8.01% from 2022 to 2027. challenge is the heightened
awareness overThe overall packaging industry is also anticipated to reach US$ 200 billion
by 2024-25, primarily driven by the food & beverage, and consumer goods sectors.
Additionally, the increasing interest in health and well-being, coupled with growing
awareness of waterborne diseases, is fuelling the global demand for packaged drinking
water, especially single-serve consumer packaging. To meet this demand and provide
effective storage and transportation options, plastic packaging manufacturers are
focussing on developing innovative packaging solutions. However, the industry faces
sustainability challenges, with plastic waste causing negative impacts on the environment.
The growing demand for sustainable and environmentally friendly packaging solutions is
driving the rigid plastic packaging market. Despite these challenges, the plastic
packaging market worldwide is predicted to continue to expand, with a projected CAGR of
3.6% from 2023 to 2030, driven by high demand from end-user industries and major markets,
such as India and China.
Source -
https://www.techsciresearch.com/report/india-rigid-plastic-packaging-market/3885.html
Source - https://www.grandviewresearch.com/press-release/global-plastic-packaging-market
OPPORTUNITIES
The industry, with its evolving nature, presents is continuously
evolving, and there continuous demand for innovative packaging materials, designs, and
technologies. As Indias healthcare investment increases, resulting in the
establishment and improvement of hospitals, there is now a market for hospital furniture
suppliers, driven by patients seeking more appealing and comfortable furnishings.
Furthermore, companies can seize the to develop sustainable packaging solutions that are
biodegradable, compost able, and recyclable. This shift towards sustainable packaging
offers an opportunity for companies to stand out from competitors and meet the increasing
demand for eco-friendly products. Automation, digital technologies, also present
possibilities for enhancing efficiency, reducing costs, and improving quality control in
manufacturing processes. Furthermore, the industry also offers prospects for customization
and personalization in response to the surge in e-commerce, which demands unique packaging
solutions. By incorporating technology and innovation into manufacturing processes,
companies can create distinctive and personalized packaging options for their customers,
thus enhancing their experience and building brand loyalty, and capitalize on these
opportunities.
CHALLENGES
The plastic industry encounters several challenges, both internally and
externally. One the environmental impact of significant plastic waste, leading to a
growing demand for more sustainable and eco-friendly alternatives. This transition to
sustainability can result in higher production costs, impacting profit margins.
Additionally, the industry is grappling with ongoing supply chain issues, including
disruptions in transportation and raw material shortages. These challenges can cause
production delays, increased costs, and difficulty in meeting demand promptly.
Furthermore, the industry faces regulatory challenges, with Governments
worldwide introducing measures to reduce plastic waste and promote recycling. Further, the
escalating costs of raw materials and energy intensify the pressure, requiring companies
to constantly adapt and innovate to remain competitive in a global market. All these
factors collectively contribute to the complexity of the plastic industry.
COMPANY OVERVIEW
Mitsu Chem Plast Limited (also referred to as ‘Mitsu Chem
Plast or ‘The Company) is a leading manufacturer of high-quality plastic
products, offering blow moulding, injection moulding, and customized molding solutions.
Even with the Companys growth since its establishment in 1990, it remains committed
to its core philosophy of customer success as the driving force behind everything it does.
Today the, Mitsu Chem Plast has more than 500 plus SKUs and caters to more than 30
plus Fortune (India) 500 customers in India. The Company has a strong R&D team that
has developed many sustainable, unique and import substitute products and helped in the
Make in India initiative.
The Company has expanded its capacity with manufacturing units in
Tarapur and Khalapur, which has enabled it to cater to niche products and deliver
exceptional value to clients. It takes pride in its ‘Made in India products,
with an installed capacity of
24,000+ MTPA spread over 1,52,000 sq. ft. across three certified
manufacturing units.
Mitsu Chem Plast has become a renowned entity, due to its well-equipped
operating units, advanced technologies, and skilled team, while remaining dedicated to
providing superior-quality solutions.
PRODUCT VERTICALS
Mitsu Chem Plasts product offerings can be classified into the
following verticals:
Verticals |
Products |
Molded Industrial Packaging |
Blow-moulded and
injection-moulded articles, such as containers, bottles, jars carboy, full open top drums
from 100 ml to 250 litres and injection molded pails from 500 grams to 20 kgs. |
Hospital Furniture Parts
Others |
Hospital bed parts, hospital
bed accessories, side trolleys, over bed tables, and spine boards, among others Plastic
parts of chairs used in school, bus and sports stadiums, medical devices, such as
pregnancy kits, malaria kit, HIV kit, inhalers and automotive components |
MOLDED INDUSTRIAL PACKAGING:
Mitsu Chem Plast offers a wide range of molded industrial packaging
products customised to cater to the unique needs of its clients. The Company creates
packaging solutions by molding top-quality materials, including plastics and composites,
into various sizes and shapes that are suitable for industrial use. Its product portfolio
comprises blow molding products like drums (wide mouth, narrow mouth, open top), bottles,
jars (ranging from 100 ml to 250 litres), jerry cans, and barrels. It also includes
injection molded products, such as caps, lids, closures, handles, , measuring cups and
pails from 500 grams to 20 kgs.
HOSPITAL FURNITURE PARTS:
Mitsu Chem Plast is a manufacturer and supplier of hospital furniture
parts, known for their high-quality and durability. The Companys wide product
spectrum includes bed side locker parts, spine boards, CPR boards, bed head panels,
footboards, side rails, and IV stands, all among others. All of these products are made
from robust materials, such as ABS plastic and stainless steel. These products known for
their reliability, safety, and ergonomic design, are popular choices for healthcare
facilities due to their ease of installation and maintenance.
OTHERS:
Mitsu Chem Plast specialises in manufacturing plastic parts to meet the
polymer-based product needs of various industries, such as the automobile and
infrastructure sectors. These plastic parts are used in various areas, including school
chairs, bus seating, sports stadium seating, and medical devices, such as pregnancy kits,
malaria kits, HIV kits, and inhalers. In addition, the Company also produces automotive
components.
Products |
Revenue (in lakhs) |
% |
| Molded Industrial Packaging |
26,135.57 |
84.59% |
| Hospital Furniture Parts |
2,700.77 |
8.74% |
| Others |
2,061.11 |
6.67% |
KEY RATIOS
Year |
2021-22 |
2022-23 |
% Change Reason for Change |
Return on Net Worth |
22.59 |
18.90 |
(16%) Margin drop due to |
|
|
|
rising input cost. |
RISK MANAGEMENT
Mitsu Chem Plast acknowledges the significance of proactive risk
management to secure its operations and promote sustainable growth. Companys action
of a comprehensive risk management framework helps it remain vigilant in the dynamic
business environment, enabling it to identify and address potential uncertainties that may
affect its overall performance. Its firm dedication to effective risk management empowers
it to mitigate potential threats and capitalise on opportunities for the benefit of the
organisation and its stakeholders.
To safeguard Mitsu Chem Plasts business from potential risks that
may impact its operations and revenue, it has proactively identified several such risks.
In order to effectively mitigate these risks, the Company has taken specific actions
designed to minimize their plausible consequences. These actions are outlined below: Supply
Chain Risks: Mitsu Chem Plast has implemented mitigation strategies, such as
diversifying the supplier base, using advanced forecasting tools, maintaining buffer
stocks, and ensuring transparency and communication with suppliers. These measures enable
the Company to reduce the probable downsides of the supply chain disruptions. Concentration
Risk: Concentration risk refers to the dependence on a limited number of customers or
suppliers. Mitsu Chem Plast, with a presence across various industries, caters to more
than 30 customers with its high-quality products. Further, with the Companys
upcoming product launches and go-to-market strategy, it plans to acquire new customers,
retain existing clients, and strengthen its supplier network.
Quality Risk: Quality risk pertains to the possibility of defects,
recalls, or safety issues associated with the manufactured products. Mitsu Chem Plast
places paramount importance on delivering premium products and has implemented stringent
quality control processes, regular testing, and industry standard adherence to ensure that
its reputation remains intact. The Companys risk mitigation strategies include
obtaining ISO certifications, continuous monitoring, and feedback from customers.
Human Resource Risk: Human resource risk refers to the potential
challenges related to workforce management, such as skills shortages, employee turnover,
or labour disputes. Mitsu Chem Plast recognises the crucial role of employees in its
success and aims to retain key management personnel to avoid any adverse effects on its
business, financial condition, and results. To accomplish this, the Company implements
effective recruitment, retention practices, competitive compensation strategies, and
recognition programmes to retain and motivate top talent.
Compliance Risk: Compliance risk relates to the failure to adhere
to relevant laws, regulations, and industry standards. Mitsu Chem Plasts
non-compliance with these rules can result in legal penalties, reputational damage, and
operational disruptions. To mitigate this risk, the Company has established a
comprehensive compliance programme that regularly monitors and updates policies and
procedures, conducts internal audits, and provides appropriate training to employees. It
also engages with legal and regulatory experts to ensure compliance with applicable
regulations. Environmental, Health & Safety Risk: Environmental risks encompass
the potential impact of manufacturing processes on the environment, such as pollution,
waste generation, and carbon emissions. Mitsu Chem Plast is well-aware of environmental
risks and is committed to protecting the environment in which it operates. To address this
risk, the Company has adopted sustainable manufacturing practices, minimised waste and
emissions, complied with environmental regulations, and is exploring eco-friendly
alternatives and technologies.
HUMAN RESOURCE
Mitsu Chem Plast prioritises investing in human capital as a vital
aspect of its business strategy. To achieve this goal, the Company utilises various
approaches, such as intellectual nurturing, motivational and inspirational nurturing, and
emotional nurturing, to develop and enhance this valuable asset. The objective of
implementing these approaches is to foster a motivated, inspired, and emotionally
intelligent workforce capable of driving the organisations success. The Company
organises training and development programmes to constantly enhance work practices,
technological advancements, technical skills, and employee productivity. These initiatives
aim to bring about continuous improvement and growth. In addition, the Company has
established an HR department to provide structured support for addressing queries and
implementing suggestions. This department serves as a resource to facilitate effective
communication and foster a collaborative work environment. The Company adheres to
7 core values: Employee welfare, Quality Consciousness, Customer
Delight, Innovations, Cost Cutting Without Cutting Corners, Value Engineering, and
Environment Friendliness.
These values are instilled in every member of the organisation and
serve as a driving force for enhancing the performance of employees across all operational
levels. 391 - Total number of employees associated with Mitsu Chem Plast. (Figures as of
March 31, 2023)
INTERNAL CONTROL SYSTEM
Mitsu Chem Plast has implemented a robust system of internal controls.
The
Companys objective with this system is to ensure that its
operations run efficiently and effectively, its financial reporting is reliable, and it is
compliant with applicable laws and regulations. It is a comprehensive system that
encompasses all divisions, functions, and departments of the organisation. Mitsu Chem
Plast has established clear policies and procedures for all financial transactions, which
include segregation of duties, proper authorisation and approval processes, and continuous
monitoring and reporting of financial activities. Moreover, the access controls and
regular system backups, to protect against unauthorised access and data loss. The Company
regularly reviews and conducts assessments to ensure the internal controls
effectiveness and preserve stakeholders trust and confidence.
CAUTIONARY STATEMENT
Statements in this Management Discussion and Analysis Report describing
the Companys objectives and estimates, among others, may be
‘forward-looking statements within the meaning of applicable laws and
regulations. The statements in this Management Discussion and Analysis Report could differ
materially from those expressed or implied. Important factors that could make a difference
to the Companys operations include raw material availability and prices, cyclical
demand and pricing in the Companys principal markets, changes in Government
regulations, tax regimes, forex markets, economic developments within India and the
countries with which the
Company conducts business, and other incidental factors. The Company
takes no responsibility for any consequences of the decisions made based on such
statements and is under no obligation to update is equipped with robust IT controls, such
as them in the future.
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