1. COMPANY OVERVIEW -
MOLD-TEK PACKAGNG LIMITED started in 1986, has been credited as the
first company to introduce
IML Technology in India. Today, the Company is the Indias largest
producer of Plastic Packaging Pails. The Companys commitment to research and
development is evident through its advanced R&D center in Hyderabad, where it has
registered three patents and four currently being applied for. MOLD-TEK believes in
practicing excellent corporate governance and maintaining a culture of professional
management, which provides the Company with a competitive advantage in the marketplace in
the long run. The Company has a well-diversified business model in terms of markets and
products to meet the evolving needs of customers, customized innovation, agility in job
execution, scale, global reach and warehousing facilities. By remaining focused on its
strategy and unique value proposition for customers, with a capable and experienced team
and a people-first approach, MOLD-TEK will continue to drive long-term value creation for
shareholders and other stakeholders.
2. GLOBAL ECONOMY-
At first glance, there are indications that the worldwide economy is on
track for a steady revival after being hit hard by the pandemic and Russia Ukraine war.
China has made a strong comeback following the reopening of its economy, and the supply
chain disruptions are gradually resolving. Additionally, the disruptions caused by the war
on energy and food markets are diminishing. At the same time, the coordinated and
significant tightening of monetary policies by most central banks is expected to yield
results, with inflation moving back towards its targets. Potential downside risks would
include sticky inflation (especially in advanced economies), the fallout of bank collapses
in the US spreading to the wider global economy and an escalation of the war in Ukraine
which has now entered its second year. According to the latest projections from the IMF,
the global growth rate is expected to reach its lowest point at 2.8% in 2023 and then
increase slightly to 3.0% in 2024. Meanwhile, global inflation is expected to decrease,
albeit at a slower rate than previously anticipated, from 8.7% in 2022 to 7.0% this year
and further down to 4.9% in 2024. In many cases, emerging markets and developing economies
are experiencing strong growth, with growth rates (Q4 over Q4) increasing from 2.8% in
2022 to 4.5% this year.
However, advanced economies, particularly the Euro area and the United
Kingdom, are facing a slowdown with expected growth rates (also Q4 over Q4) of 0.7% and
-0.4%, respectively, this year before rebounding to 1.8% and 2.0% in 2024.
3. INDIAN ECONOMY-
The Indian economy is now widely seen as the bright spot in an
otherwise gloomy global economic outlook, as per IMF Chief Kristalina Georgieva. Staying
with the IMFs data points in its April 2023 world economic outlook, the Indian
economy saw a growth rate of 6.8% in 2022, and 5.9% in 2023, and is estimated to grow at a
rate of 6-6.3% in 2024.
Despite, global headwinds, the Russia-Ukraine war and associated price
volatility in crude oil, fertilizer and food prices India finds enter a phase of sustained
rapid growth going forward. This is further reinforced by Deloittes India economic
outlook, April 2023, which suggests that to ensure India attains sustained
non-inflationary growth, an increase in private investments on manufacturing capacity
building is necessary in addition to the country capitalizing on its comparative services
advantage.
There is data to back Indias potential meteoric rise. For
instance, India breached record exports in F.Y 23 with $ 770 Billion with a surge in
services exports, thanks to greater acceptance among multinationals (MNCs) to run
operations remotely. More importantly, service exports were not limited to traditional
sectors such as IT, but also so an increase in the share of business and professional
services such as accounting, audit, research and development, quality assurance and
aftersales services.
In the manufacturing sector (and associated exports of goods and
products), India is seen to be on the cusp of becoming the next big manufacturer in the
world. From an increase in electronics exports such as mobile phones to visible signs of
the country improving its capacity building in pharmaceuticals and FMCG –
Indias future looks bright. This has been supported by multiple government
initiatives such as the National Infrastructure Pipeline, PM Gati Shakti and National
Logistics Policy, among others, that will help reduce the cost of logistics while
improving the ease of doing business. Similarly, the agriculture sector of the Indian
economy grew at 3.5% in F.Y 23 with agriculture exports touching $ 50.2 Billion in the
fiscal year, as per the Press Information Bureau.
4. INDUSTRY OVERVIEW-
MOLD-TEK PACKAGING LIMITED, a leading player in the rigid packaging
industry, has built a strong presence in the industry. With its extensive product
portfolio of IML, HTL, decorated containers, the Company caters to the diverse packaging
needs of Paint, Lubes and Food & FMCG industries. Further, with a focus on innovation,
a customer-centric approach and sustainability, MOLD-TEK continues to drive growth and
create value for its stakeholders across these industries.
The global packaging industry has experienced robust growth over the
past few decades, driven by demographic factors like population growth and rapid
urbanization, increased trade, and greater demand for packaging. Sustainability and
digitalization are increasingly popular trends that present challenges and opportunities
for the industry. Other factors such as changing consumer preferences, margin compression
and food safety have also impacted the industry and driven demand for new packaging
products and innovations.
The global packaging industry in F.Y 21 was approximately $ 1,002.4
Billion and is expected to reach $ 1,275 Billion by 2027. The global rigid packaging
market is expected to grow at a CAGR of 4.7% from $ 207.8 Billion in 2022 to $ 262.5
Billion in 2027. The growth of the Rigid plastic packaging market is attributed towards
growing of food, beverages, healthcare, cosmetics, Industrial and others. Rigid plastic
packaging is widely used in the food & beverage industries as it increases the shelf
life of the products, thus preventing food loss. The market for rigid plastic packaging in
the healthcare segment is also projected to grow at a high rate, owing to the increase in
consumption of pharmaceutical products due to the aging population and growth in incidence
rates of chronic diseases. Rigid plastic packaging offers aesthetic appeal and durability
to the product, which increases its marketability; hence, it is used in the cosmetics
& toiletries industry. The growth of the rigid plastic packaging market is majorly
driven by rapid expansion of the Paint, Lubes and food & beverage industry.
5. BUSINESS SEGMENTS AND PERFORMANCE-
During F.Y. 23 the Food and FMCG-pack business continued to grow at
32.62% and Lube-pack business recorded 30.71% volume growth and Paint-pack business
registered a 5.64% growth in volume. During F.Y. 23, Paint Pails constitute 49.13% share
of our company revenue, Lubes-Packs business is 24.62% and Food & FMCG is 26.26%. The
revenues from new projects are expected to flow from next financial year.
Overall, our Company achieved historically highest volume growth of 16%
during the reporting period and recorded highest profits and poised to maintain similar or
better volume growth in the near future.
6. DISCUSSION ON FINANCIAL PERFORMANCE- We are pleased to report
another year of spectacular performance. For the Twelve months ended March 31, 2023,
revenue from operations increased by 16% to 730 crores from 631.47 crores. Though revenues
are inflated by steep increase in RM, Company achieved an impressive 16% volume growth.
EBDIT for the period increased by 12% to 136.82 crores from 122.25 crores. Net Profit
increased by 26.35% to 80.43 crores as compared to 63.66 crores in the previous
corresponding period. During the year, despite tremendous price volatility of key raw
materials, the EBITDA margin has been maintained at a healthy 18.75%.
FINANCIAL AND OPERATIONAL PERFORMANCE - OVERVIEW
lakhs except EPS
| Particulars |
2022-23 |
2021-22 |
2020-21 |
2019-20 |
2018-19 |
| Revenue |
72,992 |
63,147 |
47,893 |
43,744 |
39,409 |
| EBITDA |
13,682 |
12,225 |
9,656 |
8,120 |
7,328 |
| Exceptional items |
- |
- |
108 |
286 |
1,150 |
| PBT |
10,272 |
8,651 |
6,405 |
4,908 |
3,996 |
| Net Profit |
8,043 |
6,366 |
4,808 |
3,819 |
2,410 |
| BEPS (Face Value of 5) |
24.40 |
22.12 |
16.86 |
13.78 |
8.70 |
The Company has 10 state of the art manufacturing facilities spread
across India, with a total installed capacity of 45,290 MT per annum. In addition to being
a market leader in the Rigid Plastic Packaging sector, Mold-Tek has emerged as a complete
packaging solutions provider with wider range of products and value added services.
7. KEY FINANCIAL INDICATORS-
In accordance with the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 ("Listing Regulations") the Company is required
to give details of significant changes (i.e. change of 25% or more as compared to the
immediately previous financial year) in key financial ratios. There is no significant
change (i.e. 25% or more) in key financial ratios viz. Current Ratio, Debt Equity Ratio,
Inventory Turnover, Operating Profit Margin & Net Profit Margin.
| Ratio |
FY 2022-23 |
FY 2021-22 |
% Change |
Explanation |
| Current Ratio |
2.43 |
3.72 |
(34.07) |
Decreased due to increased in debt on account of increase in
current liabilities which primarily comprises of borrowings. |
|
|
|
|
There has been an increase in working capital loans availed
during the period. |
| Debt Service Coverage Ratio |
7.54 |
5.37 |
40.55 |
Increased due to lower finance cost and principal repayments
of loans during the year |
| Net working Capital Turnover Ratio |
5.16 |
3.18 |
62.15 |
Increased primarily due to decrease in inventory & trade
receivables and increase of current liabilities |
| Return on Investment |
2.01 |
16.73 |
(88.00) |
Decreased due to receipt of dividend during the year |
8. FUTURE OUTLOOK-
Your Company plans to change the packaging landscape by creating
sustainable and innovative packaging solutions. The F.Y. 2022-23 has continued to see
bouts of uncertainty that have tested the growth conditions across the world.
Headline inflation continues to remain elevated, exceeding the comfort
zone of the monetary authorities and it would result in continued uncertainties in the
financial markets and a carry-on impact on the economic conditions. These
interdependencies were clearly at play during the recent upheaval in the banking sector in
the US and Europe. While the turmoil appears to be contained for now, risk indicators
continue to remain a matter of concern. Multi-lateral agencies have already cautioned
about the slowdown in global growth with geopolitical tensions adding another layer of
ambiguity to the existing uncertainties. Amidst these uncertainties, the Indian economy is
expected to be an oasis of stability, offering continued growth momentum. While this
momentum may not be entirely impervious to global developments, domestic anchors are
firmly in place to propel the economy forward. Businesses, across geographies, would need
to be vigilant and exhibit flexibility, working with dynamic operating models to adapt to
the evolving conditions while simultaneously building resiliency in their business models
to ensure sustained performance.
9. NEW PRODUCTS & DEVELOPMENTS:
Mold-Tek has progressed considerably in the last few years with its
products, technological and engineering capabilities, keeping in mind the evolving needs
of the packaging industry, along with environmental concerns.
Sultanpur Commercial Supplies: Construction of Sultanpur, Hyderabad
plant (Block-A) has been completed (78,000 sq. ft.) and started commercial supplies with
effect from 27 March, 2023.
New Products & developments: At Sultanpur Hyderabad, Company
started Food and FMCG products manufacturing. However, the pharma division will start
operations around October/November, 2023 onwards.
Status of New Plants for Aditya Birla Group: Company has acquired
land of 11,210 Square Meters at Cheyyar and 7875 Square Meters at Panipat for setting up
of 2 new manufacturing plants for Aditya Birla Group. The Panipat plant will be ready in
December, 2023 and Cheyyar plant will be operational by January, 2024. Company has applied
for land for another plant for ABG at Mahad, Maharashtra.
Capex on new Plants and additional Capacities: As announced
earlier, Company has spent 148 crores during the year on the new projects/manufacturing
facility at Sultanpur, lands at Daman, Cheyyar and Panipat and additional capacities were
added at Unit-1, Unit-8 and Unit-9 and enhanced Unit-6 printing capacity. This is
historically highest annual investment by the Company. Company expects to invest similar
amount during the F.Y. 23-24 on 3 plants for ABG, Pharma division at Sultanpur, Hyderabad,
Daman-II and Sandila-UP projects.
10. ENTERPRISE RISK MANAGEMENT-
The Companys business is subject to risks and uncertainties
that could have both short-term and long-term implications. In a rapidly changing business
environment with dynamic customer requirements, business risks are constantly evolving. As
a result, there are many emerging risks landscape across businesses. The Company
constantly monitors external environment to identify potential emerging risks and their
impact on its business.
The following factors, could adversely affect the Companys
financial position, results of operations or cash flows.
1. Gap between Market Demand and Supply: Strategic risks can be in
form of changes in consumer demand, loss of market share on account of increased
competition, intellectual property challenges and Shift of end-consumers/ dealers due to a
higher number of choices. Our risk mitigation activities include staying ahead in the new
product development curve, relying on the patent, trademark, copyright and trade secret
laws of the countries in which we operate and launch of differentiated products, new
variants in our existing portfolio, focus on ease of use as well as differentiated
features. Our Key Account Team works with the purpose to maintain good customer
relationships and keep the attrition at manageable level.
2. Operational Risks:
Operations risks encompass various factors such as attracting and
retaining key personnel, global health outbreaks, and information technology
vulnerabilities. The Company prioritizes creating a supportive work environment that
promotes personal and professional growth to attract and retain key talent. Recognizing
the potential impact of information technology disruptions, Mold-Tek has implemented
measures to mitigate risks, although its systems and networks remain susceptible to
advanced and persistent threats that could disrupt operations and compromise sensitive
data of customers, employees, and vendors.
3. Financial Risks:
Financial risks encompass exchange rate risks, interest rate risks,
and internal control risks. To mitigate exchange rate risks, the company utilises various
derivative contracts, such as foreign exchange forward contracts. These instruments are
employed to effectively manage and hedge against foreign currency exchange risks and
interest rate fluctuations. In terms of interest rate cash flow risk, the Company follows
a policy to minimize exposure on long-term financing.
While the Company is exposed to market interest rate changes through
variable interest rate bank borrowings, it maintains adequate internal financial controls
that comply with the criteria established by the Company, considering the essential
components of internal control outlined in the guidance note issued by the ICAI (Institute
of Chartered Accountants of India).
4. Legal and Compliance Risks:
In response to concerns surrounding safety, Greenhouse Gas
Emissions, climate change, and plastic recycling, various countries have enacted and are
expected to enact regulations and legislations. Mold-Tek is proactive in taking necessary
measures to ensure its operations and products fully comply with safety, health, and
environmental regulations. The Companys legal and R&D functions work diligently
to protect its patents and proprietary technology across different geographical regions.
The Company has implemented robust systems and processes within and in line with the size
and scope of its operations, to monitor and ensure compliance with relevant laws, rules,
regulations, and guidelines. By doing so, Mold-Tek strives to uphold legal and regulatory
compliance at all levels of the organization.
5. Risk of injury or occupational hazard:
The manufacturing operations of the Company require employees to
interact with machinery and material handling equipment which carry an inherent risk of
injury and potential exposure to hazardous material/waste. Adherence to standards
pertaining to Occupation Health & Safety, the Companys Environment Health and
Safety policy, ESG Policy and highest operational standards for handling hazardous
materials, if any. Periodic risk assessments using quantitative risk assessment and
closure of action plans arising out of such assessments; Continuous progress in the
Behavior Based Safety journey by all plants will mitigate these kinds of risks.
6. Information Risk:
Loss of sensitive and confidential information and impact on the
reputation of the Company. The risk can be mitigated by continuous protection of
confidential information across the IT landscape; by investment in contemporary IT tools
to ensure adequate protection of underlying data; by periodic audits to ensure adherence
to the processes.
11. OPPORTUNITIES:
1. Innovative packages: Marketers are acutely aware of the
significant value and perception associated with brands. In the FMCG industry, many
companies are embracing the idea of refreshing their packaging designs to align with the
core values their brands represent. It is crucial to recognize that packaging not only
safeguards the product but also safeguards the brand itself. MOLD-TEK First is fully
committed to creating inventive packaging solutions that entice customers and boost sales.
The Companys focus is on developing packages that captivate consumers and
effectively communicate the essence of its brands.
2. E-commerce: The growth of e-commerce, which was already on an
upward trajectory, received a significant boost during the pandemic as consumers
prioritise hygienic packaging when making their purchases. This surge in e-commerce
activity has heightened the demand for packaging, especially for new products, and has
also led to innovations in last-mile delivery solutions to meet these evolving
requirements.
3. Digitization and Internet of Things (IoT): Companies are
harnessing digital initiatives not only to reduce expenses but also to gain a competitive
advantage among consumers. One such example is the integration of technology in packaging,
which enhances customer value and service. With the rise of IoT (Internet of Things),
packaging is becoming more intuitive and capable of providing instant information to
consumers about the products they purchase. This evolution positions packaging as an
enabler, facilitating seamless communication and interaction between products and
consumers.
4. Sustainable packaging solutions: Mold-Tek first recognizes
that sustainable packaging solutions present the most significant opportunity for the
Company, and it is committed to achieving that goal. As the awareness of sustainable
packaging requirementscontinuestogrow,the Companyviews it as an opportunity to meet these
demands rough its products and manufacturing processes. The Company understands that
consumers increasingly seek more sustainable packaging options, and it collaborates
closely with its customers to ensure its products meet their sustainability needs. Through
partnerships with leading global brands, Mold-Tek First offers structure rationalization
and recyclability solutions in various categories such as biscuits, noodles, tea and
coffee sachets, and soap wrappers, among others. In its pursuit of a better tomorrow,
Mold-Tek First invests in research and development to expand its specialty film portfolio,
providing sustainable solutions. The Companys initiatives include the development of
Biodegradable containers etc.
12. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has designed and implemented robust internal control
systems in line with the nature, size, geographical spread and complexities of business
operations. Internal control policies and procedures are designed to provide reasonable
assurance towards the effectiveness and efficiency of its operations, reliability of
financial reporting, compliance with applicable laws and regulations, prevention and
detection of frauds & errors and Safeguarding of its assets. The Company has a strong
governance structure with related authorities and responsibilities assigned to the
Committees of the Board, function heads and various process owners. The established policy
framework is reviewed periodically to keep them contemporary and relevant to the changing
business environment. Detailed procedures, SOPs, work instructions and controls are well
documented, digitized and embedded in business processes to ensure the mitigation of risks
in operations, reporting and compliance. Such internal controls are regularly tested for
adequacy of design and operating effectiveness. Compliance with policies and procedures is
an integral part of the management review process. The Companys ERP, system
infrastructure and checks are integral parts of the internal control system. The Company
has been leveraging data analytics, predictive and visualization tools to identify data
exceptions and trends for minimizing errors and avenues to improve the processes. The
Company has a strong compliance management system to monitor the compliance status online
and to update compliance requirements with the latest changes in statutes and business
operations.
MTPL has received certification for quality management systems aligned
with ISO 9001:2015 for manufacture, marketing and purchase functions related to supply of
injection moulded plastic packaging containers/pails, closures, pharmaceutical & food
packaging containers and components and Certification scheme for food safety management
systems consisting of the following elements: ISO 22000:2018, ISO/TS 22002-4:2013 and
additional FSSC 22000 requirements [version 5.1 for Manufacturing (Mixing of Polypropylene
Resin with Master Batches, Impregnation of Labels, Injection Moulding) of In-mould
Labelled Plastic Containers, Lids and Dispensing Pumps for Packaging in Food Industry].
Regular communication and awareness towards the Code of Conduct, whistle blower process
and various policies and procedures are done to ensure common understanding on these
leveraging e-modules and online training sessions. The Company has strong Internal Audit
governance to assure the adequacy and effectiveness of internal controls. This Committee
periodically reviews the adequacy and effectiveness of the Companys internal
financial controls and the implementation of audit recommendations.
13. HUMAN RESOURCES:
Mold-Tek recognizes that its people are its greatest assets, and
the belief in people is central to its human resource strategy. The Company places a
strong emphasis on talent management, succession planning, performance management, and
learning and development initiatives to foster inspiring, strong, and trustworthy
leadership. By promoting knowledge, entrepreneurship, and creativity, Mold-Tek utilizes
its human capital to drive competitiveness. The Company also embraces workforce diversity
and strives to build its employees careers through targeted interventions. Learning
opportunities enhance employee engagement, boost productivity, reduce turnover, and
cultivate a positive culture. Labor relations in all India operations remained favorable.
The Companys plants in India provided various opportunities to encourage an open and
supportive work environment, promoting participative decision-making. The Company
continued to provide its workers with team-building and collaboration training to
strengthen team cohesiveness. The total employee strength as of 31st March 2023
was 627.
14. CAUTIONARY STATEMENT:
This report will include ‘Forward-Looking Statements,
such as statements about the implementation of strategic plans and other statements about
Mold- Teks potential business developments and financial results. Although these
Forward-Looking Statements reflect the Companys current evaluation and potential
expectations for the development of the Companys business, a variety of risks,
uncertainties, and other unknown factors could cause actual developments and outcomes to
vary materially from those expected. General market, macroeconomic, governmental, and
regulatory patterns, changes in currency exchange and interest rates, competitive
pressures, technical advances, changes in the financial conditions of third parties doing
business with the Company, regulatory developments, and other main factors that may have
an effect on the Companys business and financial results. Mold-Tek disclaims any
duty to update or amend any forward-looking statements to represent events or
circumstances that might occur in the future.
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