PG Foils Ltd Management Discussions

The management of P G Foils Limited presents the analysis of performance of the company for the year 2024-25 and its outlook for the future. The outlook is based on assessment of the current business environment. It may very due to future economic and other developments.

Aluminium Foil, Food Packaging Foil Manufacturing Plant, Detailed Project Report, Profile, Business Plan, Industry Trends, Market Research, Survey, Manufacturing Process, Machinery, Raw Materials, Feasibility Study, Investment Opportunities, Cost and Revenue, Plant Economics, Production Schedule, Working Capital Requirement, Plant Layout, Process Flow Sheet, Cost of Project, Projected Balance Sheets, Profitability Ratios, Break Even Analysis Aluminium plays a major role in the modern world through its innumerable forms of applications- from kitchen ware to electric conductors and from railway wagon to Appollo spacecraft. Because of its intrinsic and versatile properties of lightness, strength to weight ratio, corrosion resistance, electrical and thermal conductivity, non toxicity etc., a wide range of uses has opened up for this metal. Aluminium as a packaging material is unmatched owing to its light weight, hygienic and non-contamination which eventually results in longer shelf-life of end products.

Aluminium foil is a thin sheet of metal. As such it can be an absolute barrier to moisture, gases, odors, bacteria and moulds. The high reflectivity of aluminium ensures good protection against radiant heat, whilst its opacity is important in preventing deterioration of a very large range of foods and drinks which are affected by light. It is used for packaging and non-packaging uses. The growth of this industry has been in the recent past, owing to the growing application of foil in a variety of products India is one of the key producers of aluminium foil in the region. Over 70% of aluminium foil used in India is for packaging applications. Pharmaceuticals followed by beverages, personal care and a wide range of food and non-food products, semi rigid containers and house foil are the principal applications of aluminium foil in India in the packaging sector. India is the biggest aluminium foil manufacturer in the country. Other major manufacturers include India Foils, Emco, PG Foils and Flex Art. Holding on to the emerging indicators and the future prospects. As a whole it is a good project for new entrepreneurs to invest

Supply of Aluminium is in excess and any deficit can be imported at low rates of duty. Currently, the demand is stable while supply is in excess. Demand for aluminum is estimated to grow 6% - 8% per annum in view of the low per capita consumption in India. Competition is primarily on quality and price, as being a commodity, differentiation is difficult. However, the recent spate of consolidation has reduced the competitive pressure in the industry. Further increasing value addition to aluminum products has helped some companies protect themselves from high volatilities witnessed in this industry.

During the year, your company achieved a Gross turnover excluding trading turnover of Rs. 274.56 Crores as against Rs.260.16 Crores in the previous year and production for the 6285.407MT year as against last year 5868.769 MT.

Profit before tax for the year is Rs. 3166.04 Lacs compared to profit of Rs. 1935.33 Lacs in last year, Higher, mainly due to significantly lower LME prices of raw materials and an abnormal increase in the dollar-to-rupee exchange rate.

Company continues to maintain its conservative financial profile. Company Banked with IDBI Bank Limited and HDFC Bank Limited for their working capital needs. Company has sufficient working capital limits of Rs. 195 Crores from IDBI Bank Ltd and HDFC Bank Ltd. at concessional and extremely competitive interest rate. Presently Company is not availing any cash credit facility due to ample liquidity. Cash Flow for less than 2 years is adequate to extinguish its entire debts timely. Company made most of local purchases on cash basis at discounted rates but overseas purchases are on credit basis on cheaper interest rates under buyers credit facility.

Company has opportunity to increase production and sales turnover due to acceptance of product by most of the major Pharma Companies in India, Bangladesh and other countries.

Due to downfall in metal and grannual rates customers may ask for rate reduction and due to impose of Anti-Dumping duty on Foil Stock (raw material) on import from China the cost of raw material increase.

The Risk Management framework of your Company ensures regular review by management to proactively identify the emerging risks, to do risk evaluation and risk prioritization along with development of risk mitigation plans and action taken to minimize the impact of the risk. The framework requires that the Risk Management Committee be periodically informed about risk minimization procedures adopted by your Company. These processes are also periodically reviewed by management. The various risks, including the risks related to the economy, regulation, competition, technology etc., are documented, monitored and managed efficiently. Your company faces risk with similar to those faced by companies operating in the non-ferrous metal sector. The volatility of the primary metal LME linked price on account of fluctuation in t and LME continues to be a key issue and success or failure is linked on how effectively companies are able to manage their purchase to tide over these critical periods. The company is exposing to risk from fluctuations in foreign exchange as nearly 95% of foil stock purchase is linked with dollar rate. Profitability may also be affected on account of competition from existing and prospective manufactures of the same products and cheap import from China.

The companys contribution to foreign exchange earnings amounted to Rs. 5636.25 Lacs during the year under review and the total foreign exchange utilized by the company amounted to Rs. 24248.31 Lacs the details of which are provided in annexure to the directors report. Company is presently exporting to various countries and further trying to increase export to developed countries. Company already appointed a very senior professional for development of export market. Company is concentrating on Bangladesh foil market and expects to achieve almost 2/3rd foil market shares in years to come.

The Human Resource philosophy and strategy of your Company is to attract and retain the best talent, be an employer of choice and create a holistic workplace environment, where employees get opportunities to realize their potential. Companies are judged on career growth prospects, rewards, work life balance,Performance evaluation and stability. Our standing here is a reflection of not just our employees view but also of the larger Indian workforce which responded. Considering the long term business goals, your Company has ensured that the Human Resources strategy is in line with and complementary to the business strategy.

It is your companys belief that people are at the heart of corporate & constitute the primary source of sustainable competitive advantage. The trust of your companys human resource development efforts therefore is to create a responsive and market driven organization. Your company continues its focus on strengthening competitiveness in all its business. Your directors look forward to the future with confidence.

The company has followed a conscious policy of providing training to Management Staff through in-house and external programme, for upgrading personal and technical skills in relevant areas of functional disciplines.

The Companys internal control systems are commensurate with the nature of its business and the size and complexity of its operations. The internal controls cover operations, financial reporting, compliance with applicable laws and regulations, safeguarding assets from unauthorized use and ensure compliance of corporate policies.

The Audit Committee of the Board of Directors also periodically reviews audit plans, external auditor observations and recommendations, significant risk area assessments and adequacy of internal controls.

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may constitute a "forward-looking statement" within the meaning of applicable securities laws and regulations. Actual results could 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 markets in which the Company operates, changes in the Government Regulations, tax laws and other statutes and other incidental factors.