Polymechplast Machines Ltd Management Discussions.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian economy grew by 4.2% in FY 2019-20 still remaining one of the fastest growing major economies in the world. Industrial activity remained healthy in the beginning of the year, but saw some weakness later. Thrust on policy initiatives continued. FY 2019-20 saw consolidation of Public Sector Banks, which should strengthen the banking sector. Non-performing loans in the banking sector have come down to 9.3% from >10% before FY 2019-20. Resolution under the Insolvency and Bankruptcy Code(IBC) is bringing procedural predictability with higher recovery rates (43% in 2019 vs 14% in 2017). With continued policy initiatives, India further continued its climb in the Ease of Doing Business rankings climbing up 14 places to reach the 63rdrank. India is the only major country to have moved up by 67 places in just 4 years. FY2019-20 also saw corporate tax cut being announced, further easing business environment. Government also announced significant rebates for new manufacturing units to attract global supply chains.

Outbreak of COVID-19 would make growth environment challenging in first half of FY 2020-21 but liquidity measures announced by the government should help provide support. Domestic data usage and use of digital platforms continue to gain traction in India The extra-ordinary circumstances unfolding in 2020 has underscored the need for strong data networks.

Supply Chain :Due to nationwide lockdown the supply chain has been disrupted in the months of March, April and May 2020. Since There was no transportation facility available during lockdown the supply of raw material, finished products were lying at the factory.

But now as the transportation facility has started and situations are returning to normal. we expect that now our supply chain would be improving keeping in mind the state laws for the same.

Demand for its products/services:

There has been some loss of demand of goods in the market as the Company manufactures capital good items. However, we expect that the demand of goods would gear up and accordingly within 3-4 months we expect that we would be at our targets.

OPPORTUNITIES

As against per capita consumption of 28 kg in the world, per capita consumption of plastic in India is 11 kg only. Thus india has big potential to grow. Slowly, but steadily plastic consumption is increasing in India. Your Company is presently manufacturing plastic processing machinery up to 450T capacity and the Company has developed 650T machine and successfully launched this year. Higher capacity machines have better margin and marketing prospects. It would add to the goodwill of the Company also.

THREATS

Globally and domestically, plastic processing machineries industry is prone to cut throat competition. China poses competition to the Indian Plastic Processing Machineries Industry with lower cost and good quality. Overseas countries like Taiwan, Korea and other European countries equipped with latest technology pose the competition on quality front with variety of features.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

The Company has been operating mainly in the one segment of plastic processing machines engaged in manufacturing and trading.

OUTLOOK

Over 30,000 plastic processing units, 85.90% of them being small and medium sized enterprises, employ about 4million people. Govt. of India also encourages MSME as it helps in generation of employment. Your Company is also poised for constant up gradation in the quality of its products in order to offer the quality products at par with international standard.

RISK & CONCERNS

Weakening rupee against dollar and volatility in the cost of raw materials have made imports costlier. increasing cost also blocks export in view of availability of products in the overseas market at competitive prices. Ban on using plastic in some states as well as natural calamities like bad monsoon are also risk factor on which the Company has no control. it would also exert pressure on margin.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has an adequate system of internal Control and checks supported and monitored by well developed Management information System to ensure and every business transaction is carried out effectively and efficiently as per laid down procedure and appropriately delegated authority.

The Company also has a system of Annual Business Plan including budged and signification variation for the annual plan and budget are reported on quarterly basis to the Board through the Audit Committee.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year under review, down turn total income of Rs. 4420.38 lacs as against Rs. 5480.91 lacs in the previous year as well as. Net profit of Rs.171.78 lacs as against Rs 219.42 lacs in the previous year has down by 77.41%which can be mainly attributed to changes in inventory and subdued prevailing market conditions.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company has been organizing various seminars & workshops on Personality development for increasing productive efficiency of the workers. These seminars have helped the employees of the Company in achieving the higher efficiency leading to achievement of organizational goals of the Company as a whole. it has also created an environment of proximity and mutual understanding among the employees in the Company a part from morale boosting. Resultantly, industrial relations remained cordial throughout the year. The Company had 116 employees including apprentice during the period under review.

KEY FINANCIAL RATIOS

Particulars March 31, 2020 March 31,2019
1 Debtors Turnover Ratio 19.24 17.67
2 inventory Turnover Ratio 2.74 4.29
3 Current Ratio 1.06 1.15
4 Long Term Debt Equity Ratio 0.46 0.50
5 Return on Net Worth 12.44 17.46
6 Operating Profit (EBiTDA)% 6.99 7.04
7 interest Coverage Ratio 6.89 9.21