Nahar Polyfilms Ltd Management Discussions.


The Global economic activity is slowing down because of bruising trade War between U.S.A and China and other Geo Political uncertainty. The advance economies like U.S.A. and Europe etc., has shown either decelerated growth or moderate growth. In major emerging economy too, the economic activity remained weak due to slackness in global demand. During the financial year 2018-2019, India emerged as the fastest growing major world economy despite of increased global vulnerabilities. Indias economy gained momentum as a result of the stabilization of Goods and Services Tax (GST) and more investment by foreign investors. During the year, India climbed another 23 points in the World Banks ease of doing business index to the 77th position, for the first time. According to Reserve Bank of India (RBI) Monetary Policy, Indias GDP growth for Financial Year 2019 was 6.9% and expected growth for Financial Year 2020 is 7%.


Biaxially Oriented polypropylene Films (BOPP), a part of flexible packaging industry has emerged as one of the most popular packaging films in the world over a period of time. Originally developed in 1960s as a replacement for cellulose films, it has since grown far beyond this niche driving the development of new applications in packaging and industrial products. Various technical and economic factors have made the BOPP film industry one of the most dynamic sector of plastics packaging. BOPP offers various advantages such as film stiffness, transparency, salability, recyclability, good printing and coating surface which makes it highly suitable for the packaging of various products which includes biscuits, drugs, medicines, snack foods, processed and semi-processed foods, vegetables, edible oils, textile packaging etc and also for the wrapping of perfume cartoons, ready-made garment bags, adhesive tapes and print lamination. The global BOPP films for packaging market are expected to witness a CAGR of 6.0% from 2017 to 2025. In 2017, the market was worth US$ 13,669.4 Mn and is expected to touch a valuation of US$ 21,736.5 Mn by the end of 2025 (Source: Persistence Market Research Report).

Your Company is having an ultra modern BOPP Film Project with a capacity of 30000 TPA, in the state of Madhya Pradesh and is selling its products in domestic as well as export markets and has established its brand in the market.


The growing demand for packaged food across the globe has propelled the need for BOPP films for packaging. As consumers across the globe are constantly gaining awareness regarding the way food products are packed, the demand for cost-effective and advanced packaging is increasing at a rapid pace. Growing consumer awareness regarding packaging, coupled with a shift in the preference for flexible packaging solutions is anticipated to catapult the development of the global BOPP films for packaging market. BOPP films have equivalent density that of Polypropylene. It is a preferred material in packaging that generates high yield and more cost effective than other substrates of packaging. Additionally, the rising demand for an enhanced shelf life of food products has resulted in a greater demand for high moisture barriers in packaging films. This is further projected to boost sales of BOPP films for packaging in the coming years.

Apart from conventional Tape/Textile and food packaging market, the new applications of BOPP films are emerging which will further improve the prospectus of the industry. The enormous untapped market for BOPP Films in emerging economies is also expected to offer growth opportunities to BOPP film Industry.

Though the BOPP Films industry continues to witness a reasonable growth on account of favorable factors but it is not immune from normal business threats and challenges. Because of the competitive plastic films, Industry faces stiff competition both from international as well as domestic manufactures. The Company has identified certain risks which may affect the performance of the Company. These include operational risks such as fluctuation in the prices of the raw materials which include petrol, fluctuation in foreign exchange rates, Labour problems, regulatory risks, Government Policy etc. We are of the opinion that none of identified risk is such that which may threaten the existence of the Company.


The disclosure requirements of Ind AS-108, issued by the Institute of Chartered Accountants of India are not applicable on the company as the main business activity of the company fall under single segment.


We anticipate that in coming years the BOPP Films industry seems to show reasonably good growth in comparison to the previous years. The phenomenal growth of retail segment coupled with economic growth of the Country is expected to influence the flexible packaging industry favorably. With the coming of new segment of liquid packing which includes flexible pouches, tetra packs, coated products etc, the company finds new business opportunities to grow. Your company is looking at the future with optimism and shall be expanding its business activities into new areas, in due course of time so that it can make use of available opportunities and emerge as fully integrated flexible packaging company. Around 50% of the worlds production of BOPP is consumed in food packaging. In India, the consumption of BOPP in food packaging is only one third of its production. This gap is rapidly being bridged as the customers are increasingly displaying a strong preference for hygienically packed foods products. In addition to the above, the application of the BOPP Films in other Non-food packaging is also gaining strength which will further boost the demand for BOPP Films. Numerous grades of BOPP films are under development for various applications in different parts of the world which should give good volumes to the Industry. Thus, it is evident that BOPP films are going to be one of the high-growth segments in the global plastic films and sheet industry.


The major component of cost involved in the making of flexible packaging is raw material "Polypropylene". Any changes in the raw material prices and decrease in finished good product prices may affect the performance of the company. Though the Company has endeavored to monitor and mitigate these risks. The companys main source of income will be from selling of BOPP film, a substrate in packaging material in plain and metalized form to further converters. Any adverse impact on the operations of the packaging converters may impact the companys revenues and its profitability. The increase in demand for newer options in packaging is also affecting the growth of BOPP films industry.


The companys Internal Control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with procedures, laws and regulations. It commensurate with the size and nature of business. In order to further strengthen the Internal Control system and to automate the various processes of the business, company is making use of Enterprises Resource Planning (ERP). Pursuant to the provisions of section 138 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, the Company has also appointed an Internal Auditor who is a qualified Chartered Accountant. The details relating to Internal Financial Control system have been given in Directors Report and forms part of this Annual Report.


(In Lacs)

Profit Before Tax 1292.27 715.71 1193.10 616.54
Profit for the year 910.72 509.52 1222.78* 1147.37*
Add: Other comprehensive Income (465.85) (4430.87) (1008.36) (3926.08)
Total Comprehensive income for the year 444.87 (3921.35) 214.42 (2778.71)

*Consolidated profit for the year includes Share of profit from Associates under equity method for the amount of Rs. 411.23 Lacs in Current Year and Rs. 737.02 lacs in the Previous Year.

The Company is operating in single segment i.e. BOPP Films. The company has showed impressive financial performance over the period of one year. There is an increase of 78.74% in net profits of the company for the year ended 31st March, 2019 as compared to the net profits for the year ended 31st March, 2018. The detailed financial performance (Standalone as well as Consolidated) have been given in the Directors report and forms part of this Annual Report


Your company considers people as its biggest asset. The human resources development function of the Company is guided by a strong set of values and policies. Your Company maintains a work environment that is free from any harassment. Company enjoys excellent relationship with its personnel and considers them as an essential part of the organization. Your company maintained healthy, cordial and harmonious industrial relations at all levels. In Financial Year 2018-19, industrial relations across the Company were cordial with no labor unrests or strikes during the year. The total permanent employees strength of the company was 181 as on 31st March, 2019.


Ratio 31.03.2019 31.03.2018
Gross Profit Ratio 11.02 8.70
Net Profit Ratio 4.86 2.85
Interest Coverage Ratio 17.22 9.21
Current Ratio 4.30 2.06
Debt Equity Ratio 0.00 0.04
Return on Net Worth 6.61 3.71

The Gross Profit ratio, Net Profit ratio and Return on Net Worth have been increased. The price of commodity in which the company is dealing is based on international crude prices. Since, the price of crude is volatile. It is normal for the company to have a variance in Gross profit or net profit margin as sometimes the effect of increase / reduction of prices of inputs are not fully transferred to the customers due to prevailing market conditions. The company has repaid its loans during the financial year 2018-19, Therefore, Debt Equity Ratio of the company has variance. Company has earned profits which are mainly used for reduction of short term liabilities & increase in current assets, which leads to an improvement in current ratio. The company repaid its term loans during the financial year 2018-19 leading to reduction of the amount of interest paid during the year leading to improving in the interest coverage ratio.


Statements in this report on Management discussion and analysis relating to the Companys objectives, opportunities, estimates, expectations or predictions may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based upon certain assumptions and expectations of future events. Actual results may however differ materially from those expressed or implied.


DATED: 13TH AUGUST, 2019 DIN: 00463866