Plastiblends India Ltd Management Discussions

The Global economy is anticipated to continue navigating a period of transition, marked by steady growth despite facing certain challenges. According to the OECDs Economic Outlook, global GDP growth is projected to slightly moderate, with growth rates of 3.1% in 2025, supported by improving economic conditions across several key regions. While this is a slight slowdown from previous years, it reflects a stable recovery trajectory after the global disruptions of earlier years. (oecd.org)

Inflation rates are also expected to gradually ease, moving from 3.8% in 2025 to 3.2% in 2026 across G20 economies. This reflects improving supply chains and stabilization in commodity prices, which will provide some relief to both consumers and businesses globally. The global economy is likely to experience steady growth, driven by innovation, digital transformation and a more resilient services sector.

In the United States, there are positive signals from various sectors, especially in technology and services, despite some uncertainties around trade policies. Analysts remain cautiously optimistic, with expectations that innovation-driven growth will continue to mitigate the effects of short-term challenges.

Indias economy remains one of the strongest and most resilient globally, showcasing impressive growth despite global uncertainties. The International Monetary Fund (IMF) has projected Indias GDP to grow at 6.8% in FY25, reinforcing its position as a key driver of global growth. This robust growth is supported by continued demand in the services and manufacturing sectors, as well as strategic Government initiatives focused on improving infrastructure and streamlining policies.

In alignment with this outlook, the United Nations World Economic Situation and Prospects Report forecasts Indias economy to expand by 6.6% in 2025, with strong momentum in both domestic and export-driven industries. This growth will be further supported by Government reforms, especially in the manufacturing sector, which is benefiting from initiatives designed to enhance ease of doing business and boost exports.

While some programs, such as the Production-Linked Incentive (PLI) scheme, are evolving to maximize their impact, Indias growth trajectory remains positive. The PLI initiative continues to attract investment in key sectors, with further refinements to ensure long-term competitiveness.

Your Company remains a leader in the Masterbatch and Compound manufacturing sector, offering a broad range of products, including White, Black, Color, Additive, and Polywhite (filler) masterbatches. With a strong focus on innovation and sustainability, supported by our DSIR-recognized in-house R&D unit, we continue to set ourselves apart from competitors. Companys diverse product portfolio and commitment to quality ensure that we remain at the forefront of the industry, driving growth and meeting the evolving needs of the plastic processing market.

Masterbatches are concentrated mixtures of pigments, dyes or additives dispersed in a carrier polymer, designed to be mixed with raw plastic during the manufacturing process. These pre-compounded formulations are typically available in pellet or granule form, offering a convenient and efficient way to introduce specific colors or functional properties to plastic products. Masterbatches can include various additives such as UV stabilizers, flame retardants, anti-static agents and antioxidants, allowing manufacturers to tailor the performance of plastics for different applications. By ensuring consistent color and enhancing material properties, masterbatches simplify production processes and improve the quality and durability of the final plastic products.

The Indian plastics industry is experiencing significant growth, driven by rising domestic demand and government initiatives like the Production-Linked Incentive (PLI) scheme. Investment in PLI scheme has been scaled up in Budget 2025 to boost manufacturing sector. Budget 2025 has also extended Jal Jeevan Mission till 2028 with an outlay of Rs.67000 Cr which will significantly boost plastic pipe segment.The sector is also focusing on sustainability, with innovations like recycling plastic waste into industrial products. However, factors like fluctuations in raw material prices, depreciating rupee, intense competition, increasing regulatory compliance continue to pose challenges. Addressing these issues while capitalizing on growth opportunities will be crucial for the continued advancement of Indias plastics industry.

The brief highlights of operations for the Financial Year 2024-25 are as under :-

• The revenue from Operations of Rs.78,045 Lakhs was achieved in FY 24-25 as against Rs.80,216 Lakhs in FY 23-24.

• EBIDTA margin grew by 5 bps to 7.87% in FY 24-25 from 7.82% in FY 23-24.

• PBT margin was 5.76% in FY 24-25 as against 5.75% in FY 23-24.

• PAT margin was 4.28% in FY 24-25 as against 4.30% in FY 23-24.

• Other financial details are as given in the Directors Report.

Your Company operates in one segment only - Masterbatches.

The masterbatch and compound manufacturing industry is witnessing steady growth, with the global market projected to expand at a CAGR of 4% from 2025 to 2030. This growth is driven by increasing demand in sectors such as packaging, agriculture, consumer goods, automotive and construction. The burgeoning packaging industry, fueled by e-commerce growth and increasing consumer awareness, is a primary catalyst. Masterbatches enhance the aesthetic appeal, functionality, and sustainability of plastic packaging solutions. Growing demand for agricultural products like drip irrigation tubing, greenhouse films, and geomembranes contributes to the demand for masterbatches, particularly black masterbatches for UV resistance. Increased demand for aesthetically appealing and colored plastic products in consumer goods also drives the need for color masterbatches. The per capital plastic consumption in India is still in the range of 11-13 Kg per year which is much below the world average of 27-30 Kg per year. Indias increasing population, rising disposable incomes, rapid urbanization and growth in sectors like e-commerce, packaging, automotive, and construction are continuously driving up plastic consumption.In India, the market is expected to grow at a CAGR of 4.8% from 2024 to 2030, reaching significant value driven by demand for aesthetically appealing and colored plastic products.

Challenges such as raw material price volatility, increasing compliance burden, depreciation of currency and supply chain disruptions adversely impacted profit margins and production costs.

However, the shift towards high-quality plastic products in emerging markets, especially healthcare and electronics, presents significant growth opportunities. Investing in advanced materials and R&D, along with collaborations focused on packaging innovation, will further enhance competitive positioning and open new avenues for growth.

Risk management is an integral part of your Companys operational strategy. The Company is committed to managing risks effectively to ensure long-term value creation. Our approach to risk management includes a thorough and ongoing review of business risks, the implementation of mitigating controls, and a structured reporting mechanism. The risk management framework is periodically evaluated by the Board and the Risk Management Committee to ensure its continued effectiveness.

In line with the Companies Act 2013 and SEBI Regulations, the Board has delegated the responsibility of reviewing the Companys risk management system to the Risk Management Committee. Apart from the typical risks associated with business operations, manufacturing, and commercial activities, the key risks and areas of concern identified by the Company are outlined as follows:

The Company has long term raw material supply MOUs and majority suppliers of the Company are regular in nature.

The Company is committed to proactively managing its foreign exchange and interest rate risks to safeguard financial stability. It closely monitors currency fluctuations and implements strategies to mitigate any potential impact on international transactions and profitability. Additionally, the Company manages interest rate risk by maintaining a well-balanced portfolio of debt with varying interest rates and maturities, ensuring minimal exposure to market volatility and effectively managing financing costs.

The Company faces credit risk through its extended credit terms to customers, which may result in payment delays or defaults. To mitigate this risk, the Company employs a structured approach that includes regular monitoring of receivables, proactive follow-ups and timely collection actions. Additionally, all domestic and export sales are protected by a receivable insurance policy, providing further security against payment defaults and reducing overall credit exposure.

The Company is exposed to liquidity risk, which arises from the potential inability to meet short-term financial obligations due to insufficient cash flow or limited access to financing. To manage this risk, the Company ensures the availability of adequate liquidity through careful cash flow management, regular forecasting, and maintaining access to credit lines. Additionally, the Company focuses on optimizing working capital by effectively managing inventory, receivables and payables, ensuring sufficient liquidity to meet financial commitments and maintain smooth operations.

Strategic risk arises from factors that could impact the Companys long-term goals or market position. To manage this risk, the Company regularly reviews its strategy, monitors industry trends and adapts to changes in consumer demand and competition, ensuring alignment with its growth objectives and market opportunities.

The Company is exposed to risks arising from changes in statutes, laws and regulations that could affect its operations. To mitigate these risks, the Company conducts regular reviews of legal compliance and has implemented an enterprisewide compliance management system. This system effectively tracks and manages both regulatory and internal compliance requirements, ensuring adherence to applicable laws and minimizing potential legal disruptions.

Cyber risk refers to the potential threats posed by data breaches, cyberattacks or system failures that could compromise the Companys operations and sensitive information. To mitigate this risk, the Company has implemented a comprehensive data protection policy, advanced cybersecurity measures such as encryption and firewalls and robust tools and procedures for storing information across multiple secure locations. These measures ensure that the Companys data remains protected and accessible, even in the event of a cyber incident, safeguarding its operations from cyber threats.

For details of changes in financial ratios please refer to note no. 57 of the notes to accounts.

For details of changes in return on net worth please refer to note no.57 of the notes to accounts.

The Company has established a system of internal controls tailored to the size and nature of its operations. These controls are designed to safeguard assets, preventing unauthorized use or loss, and ensure that transactions are properly authorized, recorded and reported. Well-defined policies and procedures are implemented across the Company to maintain operational integrity.

The audit team, consisting of experienced professionals, regularly evaluates the control systems through a structured audit process. They conduct audits in accordance with detailed audit programs to assess the effectiveness of the controls. Additionally, the audit team reviews specific areas of concern in greater depth to ensure the continuous improvement and reliability of the control framework.

During FY 2024-2025, the Company continued to prioritize its employees, recognizing them as the cornerstone of its success. We celebrated key events such as monthly birthdays, Republic Day, Independence Day, Womens Day, Diwali, and other festivals, cultivating a sense of community, inclusion and team spirit. Health checkup camps were also organized to ensure the well-being of employees, reinforcing our commitment to their health and safety.

The Company also upheld its commitment to quality and safety by maintaining certifications for ISO 9001, ISO 14001 and ISO 45001. This not only reflects our dedication to operational excellence but also our focus on occupational health and safety standards. Furthermore, through regular feedback sessions and performance evaluations, the Company ensured that individual goals remained aligned with organizational objectives. Employee recognition programs were implemented throughout the year, creating an environment that fosters motivation, loyalty and continuous growth for all team members. The coverage under the policies like - Group Term Life Insurance, Group Mediclaim Insurance and Group Personal Accident Insurance have continued.

The number of people employed on the Rolls of the Company was 479.

Estimation and expectation made in the Report may differ from actual performance due to various Economic Conditions, Government Policies and other related factors.