Polyplex Corporation Ltd Management Discussions.

I. Corporate Overview

In this document, the terms ‘Company’, ‘Polyplex’ and ‘Group’ refer to the consolidated operations of Polyplex Corporation Ltd.

Polyplex offers a wide range of plastic films across various substrates like PET (thin & thick), BOPP, CPP and Blown PP/PE.

They are used in flexible packaging besides a variety of industrial applications like release liners, tapes, labels, thermal lamination, imaging and graphics, photovoltaic and optical applications.

Within the substrates, for its core business of thin polyester

(PET) films, Polyplex has the seventh largest global capacity. PET film, also known as polyester film in the industry, was invented in mid 1950s. It is a flexible, clear or translucent material produced from PET polymer, a linear, thermoplastic polyester resin. PET film is a high-performance film with a unique combination of qualities like high tensile strength, durability, high heat resistance, excellent gas-barrier properties, dimensional stability, chemical inertness, clarity and recyclability. PET film is known for its versatility with a wide and growing range of applications. These diverse applications and product versatility lead to a constant pipeline of new product variations and applications thus reducing dependence on any one application or product.

PET film is available commercially in varying thicknesses, widths and properties depending upon the needs of end users. It can be produced as a single layer (mono) or can be coextruded with other co-polymers into a multilayer film with various functional properties encompassing the desired characteristics of each material. Downstream businesses like metallizing, silicone coating, extrusion coating, holography and offline chemical coating have enabled Polyplex to offer products for a variety of applications

- general packaging, specialty packaging, electrical, liners, roofing and a whole gamut of other industrial applications. The Company also has a non-tearable polyester film in India designed especially for digital print media segments. Recently, the Company has introduced Transfer Metallized Film/Paper (TMP) and Direct Metallized Paper (DMP) which is commonly used for packaging of cosmetics, liquor, calendars, DVD inserts, pressure sensitive adhesive labels, gift wrapping etc. The plastic films business is quite different from a pure play commodity business like its precursor inputs like PTA, MEG, PP/

PET resins, due to a combination of several factors like:

a) The product is almost always "made to order" as contrasted with "made to stock"

b) Multiplicity of SKUs (based on unique combinations of length, width, thickness, surface treatment during process as well as downstream treatments and Core ID)

c) Fragmented customer base

d) Quality and customer service also form important differentiators

e) Differing buyer behavior across markets

f) Pricing is influenced by a host of factors as stated above besides import parity i.e. Logistics cost differentials and varying customs duties both normal and trade defense measures like anti-dumping, countervailing and safeguard duties.

The above factors can create significant price levels as well as between standard products and value added / specialty products.

The Company believes that its unique model of on-shore, offshore and near-shore business locations in combination with its other strengths like customer relationships, access & intimacy and wide offering of specialty, innovative, sustainable and value added products shall continue to be the key enablers for outperformance and earnings stability.

There is an increasing concern by all stakeholders & environmental groups on usage of plastics in general with the focus being primarily on single-use plastics. Flexible packaging is mostly multi-layered and it results in a number of sustainability benefits when compared with rigid forms of packaging. These include resource efficiency, reduced material to product to package ratio, lower carbon footprint throughout the life cycle of packaging etc. The Company continuously strives to work on providing sustainable solutions (products, processes) as a commitment towards sustainable environment. The Company differencesinregional is investing further in its recycling operation in Thailand which provides sustainable solutions for film-based process waste as well as post-consumer plastic waste.

PET filmis made from Polyester resin (chips), which in turn is produced from Purified Terephthalic Ethylene Glycol (MEG). The Company produces its own PET resin.

Production Capacities


Base Films

Value Added Films

Location PET Film Resin Recycled Resin PET Thin PET Thick BOPP CPP Blown PP Metallizer Holography Coating TMP (Mn Sqm)
(MT) (MT) (MT) (MT) (MT) (MT) (MT) (MT) (MT) (Mn Sqm)
India 77,600 - 55,000 - 35,000 - - 37,300 4,080 257 83
Thailand 1,06,050 43,000 42,000 28,800 - 10,000 13,645 21,700 960 985 -
Turkey 75,850 - 58,000 - - - 4,392 17,700 480 320 -
USA 86,000 - 81,000 - - - - 9,250 - - -
Indonesia 73,000 - 48,000 - 60,000 - - 18,000 - - -
Polyplex Group 4,18,500 43,000 2,84,000 28,800 95,000 10,000 18,037 1,03,950 5,520 1,562 83


1. Except Coated Films and Transfer Metallized Paper where the capacity is in Million SQM per annum, the capacity of all other product lines is in MT per annum.

2. Includes projects under implementation viz Offline Coater & Blown Film line in Turkey, BOPP Film Line & Metallizer in Indonesia, Batch Resin Plant in Thailand, new BOPET Film Line & Debottlenecking of Resin Plant in USA and Metallizer in India.

3. Recycled Resin comprises the capacity of Ecoblue, Thailand. It includes the on-going expansion into washing and recycling of post-consumer bottle flakes.

III. PET Film Industry Overview

The traditional segmentation of PET films has been thin and thick films based on distinct applications and lack of supply side substitutability. Thick films generally refer to films with a thickness range of 50-350 micron whereas films below 50 micron are characterized as thin film. In recent years, several intermediate thickness lines (with thickness ranging between 8-150 micron) have also been installed. The PET film industry has seen various structural changes over the years with Asia now dominating production and consumption. Film producers from Asia (mostly headquartered in India) have become major global players.

Polyplex has traditionally operated predominately in the area of thin PET films, which accounts for more than three-fourths of the overall global PET film demand. Higher growth in flexible packaging relative to other applications has gradually shifted the production and usage patterns of thin PET films. Packaging & Industrial (including electrical) segment constitute almost

100% of the Company’s thin film sales. The overall industry growth rate of PET Film has exceeded GDP growth in the past and is expected to continue so in the medium to long run.

Thin PET Film market

The largest application of thin PET films is flexible packaging, which accounts for 75% of the total thin film used. Flexible packaging plays a key role in source reduction based on the principle of ‘use less packaging material in the first place’. This has resulted in higher-than-GDP growth in the global flexible packaging industry. PET film, being a higher-end preferred substrate within packaging, has grown more rapidly than other substrates, averaging around 7% per annum. Packaging demand is resilient as it is driven by the consumption of food products and consumer staples, usage of which are non-discretionary in nature, as is also evident in the ongoing Covid-19 pandemic.

This packaging segment characteristic along with its attributes on safety, hygiene and integrity has resulted in steady demand growth, despite recurring economic turbulence.

An increase in purchasing power in developing countries has been accompanied by a rise in per capita packaging material consumption. However, when compared with mature markets, per capita packaging material consumption in developing countries is still low.

Asia is the largest market for thin PET films, accounting for more than three-fourths of global consumption. Faster growing Asian demand is the main driving force in the global markets. Within Asia,

India and China are the largest and fastest growing consumers.

A similar trend is also evident on the supply-side with most of the new capacities being installed in low-cost developing countries. A large proportion of the new capacity is focused on the packaging segment, with an emphasis on productivity and cost management. Some of these producers are now global leaders in terms of both volumes and pricing in the production of standard film. This has of PET film operating with high cost structures, who have chosen to concentrate on niche technology-oriented segments like films for Optical applications, high end release liners, solar panels and specificapplications within packaging and industrial segments. The high speed and productivity of the latest 10 meter+ wide lines (same as the Indonesia line & new US line of Polyplex) will bring more cost competitiveness and may result in closure of some old and inefficient lines. like anti-dumping and countervailing duties were invoked in the past, they were unable to address the problems of inefficient assets in developed countries producing standard films.

Global thin PET film growth is expected at about 5-6% for the next few years, with demand in India expected to continue growing at 8-10%. Demand growth is expected to remain largely unaffected from the ongoing Covid-19 pandemic. Some of the longer-term implications including de-globalization and preference for shorter supply chains, acceleration of loose to packaged sales of a range of products, importance of hygiene, higher home consumption etc. will be broadly positive for the industry. Companies with consistent quality products, diversified product portfolio, access to international customers and stronger supply chains stand a better chance of participating in market growth and delivering margins above the industry average.

Over the last few years, there has been a steady improvement in the capacity utilization factor (CUF) due to slowdown in the pace of new capacity additions whilst demand growth has been sustained. Over the last one year, several new lines have started up which have been quickly absorbed. Further, it is expected that approx. 1.79 million tons of new capacity (approx. 61% in China and 27% in India) will be added over the next few years. While the industry CUF is expected to be impacted in 2022 & 2023 before recovering gradually, deferment/delay in new capacity additions and expected closure/underutilization of older lines due to changing cost dynamics and impact of Covid-19 may positively impact the outlook on utilization rates. CUF levels between 80-85% can be considered high and close to the full producible capacity for the industry as a whole based on past experience. In practice, some producers produce lower than the nameplate capacity as the assets are older and inefficient while some produce with capacity utilization even higher than 100% using new and modern machinery and based on their expertise and experience.

Thick PET Film market

The demand for thick PET film is concentrated in Asia, which accounts for around 80% of global consumption. Electronics and electrical applications are the key end-use segments in the thick film industry. The demand of thick PET film is estimated to have declined by 4% in 2020 impacted by Covid-19 outbreak, resulting from lockdowns and demand deferment in sectors like electrical, electronic and other Industrial applications which are discretionary in nature. The most pronounced demand decline was seen in countries like Japan and South Korea. Average future growth in thick film demand is forecasted to be around 4-5% p.a., driven by increased consumption in China. Applications like Electronics, Photovoltaics (PV), etc. are the key growth drivers.

Source: Updated Company Estimates

Similar to the thin PET film business, the capacity addition for thick PET film in China has also been significant. China has become the global leader in the manufacture of PV modules and also remains a key global supplier of other electrical and electronics products. Producers in Japan, Europe and USA constitute only around 21% of world capacity in 2020.

Global Thick PET Film capacity by Region

Due to high quality standards required by optical thick film customers, manufacturers targeting this sector face higher levels of wastage due to defects, and therefore the saleable output of thick film lines is often poor thick film lines often operate at less than 75% utilization levels.

The Thick Film line in Thailand has enabled Polyplex to straddle the entire spectrum of end-uses for PET films by accessing the traditional industrial and electrical applications for thick films with significant progress in catering promising applications in release liner, optical, photovoltaic and relativetothinfilmlines.Asaresult, other industrial segments. The first film line in India which was revamped in 2011 and further upgraded in 2014 to produce intermediate thicknesses/specialties, also contributes to the Company’s growth/margins.

IV. BOPP Film Industry Overview

The global demand for BOPP is around 8,500 KMT and is expected to grow @ 4-5%. Packaging is the key segment constituting more than 80% of the total BOPP demand. China is about half of world’s demand and capacity. Unlike PET films, given the marked proliferation of BOPP capacities, regional demand supply balance and local competition have a larger influence on the market dynamics.

Feedstock of BOPP film is polypropylene (PP) resin which is a downstream product from crude oil and/or gas and is widely traded across the globe. BOPP may be preferred over BOPET in certain applications due to its high moisture resistance feature, sealing and other properties. Though BOPET and BOPP are sometimes considered as substitutes of each other, the two films have distinct individual features & are more often complimentary in a typical laminate structure.

Though the coronavirus pandemic had a positive impact on flexible packaging consumption for food items, the industrial end-uses such as textiles and construction took a hit, thus resulting in a stable CUF in 2020.

It may be noted that a CUF factor of around 75%-80% is typically close to full producible capacity as actual production is dependent on the product mix.

The ongoing brownfield expansion into a new BOPP line adjacent to the BOPET film line in Indonesia would help diversify the product offering and derive cost economies. The Company is well positioned due to the highly fragmented nature of the local market consisting of several players with small and inefficient lines besides significant duty protection on imports. Growth in demand, commonality of customers with BOPET films in flexible packaging, low cost of operations due to co-location and benefits of a high productivity line besides a global sales and distribution network provides further substance to this investment.

V. CPP and Blown PP/PE Films Business

CPP filmsare transparent cast polypropylene films designed to offer high performance and easy converting for flexible packaging and other applications.

CPP films are produced from a combination of various grades of PP polymer resin. Various types of CPP film are available (multilayer options) which are used to cater to several applications in general packaging. It is used as a sealant layer in conjunction with other plastic substrates for packaging of food products including snack foods like chips and biscuits, retort laminates for ready to eat food besides usage in medical segment like packaging of surgical equipments, etc. Given the relatively modest investment required for CPP lines, regional demand supply balances are more relevant.

Another variant of PP based film commissioned the first Blown line in October 2013. This new base film (PP) enabled better use of the silicone coating facility with a broadening of the product range (including the ‘Peel & Stick’ liner segment for the roofing market in North America and Europe). The second Blown line in Thailand was commissioned in June 2018 with a view to develop merchant markets and also produce Polyethylene (PE) based blown films. With continuous growth in these segments, the third Blown line was commissioned in Thailand in January 2021 which has helped the Company cater to new segments/new customers. The applications serviced include agriculture usage (mulch films), separator in manufacturing of air bag safety films, preferred sealing substrates for flexible laminates (Polyplex core business segment) and many more. Moreover, Blown PE/PP films are being considered for monolayer packaging to improve recyclability of used plastic pouches. The Company is in the process of adding another Blown Film line in Turkey.

Base Film constitutes PET (Thin + Thick) ,BOPP, Blown PP/PE & CPP Films

CUF - Capacity Utilization Factor

Even while industry wide CUF for PET films has ranged between 71%-82% over the past 5 years, Polyplex has displayed an industry leading capacity utilization record as depicted above due to unmatched market access and higher productivity / lower operational losses. Higher productivity is usually a function of ability to run at higher average / peak speeds, optimal downtime and better deckle (width) utilization besides other factors.

VII. Industry Outlook

In the next few years, several new lines (both PET & BOPP film) are expected to be added which is largely in proportion with the demand growth. Further, many of these new expansions are the latest 10 meters+ high productivity lines. The impact would vary significantly across be much more moderate and for a lower tenure. The Company believes that its well-distributed manufacturing operations, diversified and increasing value-added product portfolio, quality consistency, international customer base, customer relationships, access & intimacy, efficient supply chain and a conservative Balance Sheet will allow it to grow profitably and withstand industry volatilities much better.

VIII. Indian Flexible Packaging Market

Demand for PET film in India was slightly lower in the FY 2020 21 due to negative impact on overall demand especially certain industrial applications resulting from the Covid19 pandemic.

Demand is expected to rebound sharply in FY 2021-22 and is estimated to be around 585,000 tons per annum. Demand is expected to grow sustainably at about 10% p.a. in the medium to longer run. The total installed capacity for thin BOPET films in India is about 750,000 tons per annum with a large portion of the surplus being exported. The Indian BOPP market is currently estimated at about 513,000 tons per annum with a capacity base of 800,000 tons. Demand is expected to grow at around 10% annually.

IX. Other Businesses

Silicone coating and extrusion coating businesses

The silicone coating business produces release liner, which is used for carrying adhesive labels until these are removed from the release liner and are applied to the final surface. Other applications of siliconized films include release liner for adhesive tapes, cast polymer materials, electronic applications, roofing and other industrial uses. The Company has three offline siliconized coating lines one in India and two in Thailand.andoverallexpectedto The extrusion coating business involves a combination of PET/ BOPP/Nylon film with an extruded adhesive layer to produce thermal lamination film. Thermal lamination film is used for laminating offset/digital printed documents on one/both sides to improve durability and aesthetics of the printed documents. The principal uses comprise teaching aids, maps, certificates, posters, menu cards, ID security cards, book covers, carton board boxes, food packaging and reflective insulation. There is a shift in the global markets from offset print to Digital print lamination using special films for enhancing products appearance. Carton box packing segments are also growing due to change of food eating habits of customers. Overall, thermal films are estimated to grow at a rate of 3-5%, mainly in BOPP and its specialty thermal films segments.

Offline coating business

Polyplex has successfully commercialized various specialty offline coated products for both packaging and industrial segments. These include specialties like transparent barrier films, lidding films, digital print media etc.

Digitization is rapidly growing in various application segments like photo book, labels, shrink sleeves, flexible packaging, graphics, promotional & customized digital printing, commercial printing etc. Polyplex has developed various digital print media film products to provide solutions for graphics, display, label and packaging segments.

The Company has several offline coating lines across India, Thailand & Turkey to meet market demand and broaden the product portfolio. Another offline coater is under implementation in Turkey.

Metallized paper business

Polyplex has a laminating machine which was commissioned in FY 2019-20 to facilitate Transfer Metallized Paper (TMP) business.

TMP is Metallic Paper where the metal is deposited on it by transfer from release coated metallized PET film. Major segments for transfer metallized paper are:

1) Label face stock

2) Wet glue label

3) Gift Wrap

4) Flexible packaging

The market potential for Transfer Metallized Paper in India is approximately 10,000 tons and is growing at a CAGR of around 8 - 10%. During the year under review, the Company has made investment in a new Metallizer for Direct Metallized Paper (DMP).

DMP has a market size of around 3,000 tons in India.

Holography business

Holography is the process of making holograms which are usually intended for displaying three dimensional images, security text, different unique features and images. It is a physical structure embossed on plastic film that diffracts light into an image, text or patterns.

Holography is widely used in various flexible packaging applications that provide better aesthetics, protection from counterfeiting, fraud and brand protection besides hot stamping foil, security label, holography transfer paper and other packaging applications.

Holography is produced on a thin flexible plastic film (PET, BOPP, CPP or Nylon) which has been micro-embossed with patterns or even images. Patterns or an image are created by way of an embossing process which can provide a 3D effect and/or spectral (rainbow) coloring. In order to enhance holography effect & its suitability in packaging application, embossed film is metallized on the holographic side.

The market potential for Holographic Film in India is approximately 6,500 tons and is expected to grow at around 10% - 12%.

Polyplex has successfully commissioned six holography film production lines in India, one in Turkey and two in Thailand for flexible packaging applications and Carton lamination.

Recycling of plastic waste

The Company through its subsidiary in Thailand, Ecoblue Limited, which started operations in 2013, provides sustainable solutions for film-based process waste as well as post-consumer plastic waste for varied applications. Over the years, EcoBlue has been working with different post-consumer and industrial wastes (both PET and Polyolefin based) to develop and produce high quality recycled materials which can replace virgin resin in high end applications like Filament Yarn, Bottles, PET Film etc. The rPET range is FDA approved and Global Recycled Standard (GRS) certified. The Company is at an advanced a new state of the art recycling facility for post-consumer waste, for these applications to meet the ultimate demand of some Consumer Product Companies. This project demonstrates the Company’s commitment towards sustainability. With this project, Ecoblue would be positioned amongst the leading recycling companies in the region.

Population growth: The demand growth for plastic film is expected to be linear and directly proportional to population growth. As per UN, the world’s population is projected to grow from 7.7 billion in 2019 to 8.5 billion in 2030 (10% increase), and further to 9.7 billion in 2050 (26%) and to 10.9 billion in 2100 (42%). The population of sub-Saharan Africa is projected to double by 2050 (99%). Other regions will see varying rates of increase between 2019 and 2050 - Oceania excluding Australia/ New Zealand (56%), Northern Africa and Western Asia (46%), Australia/New Zealand (28%), Central and Southern Asia (25%), Latin America and the Caribbean (18%), Eastern and South-Eastern Asia (3%), and Europe and Northern America (2%). The global economy is expected to perform relatively well over the next decade, boosted by growth in the emerging economies. Rising life expectancy is expected to lead to an aging of the population especially in high income countries like Japan that will increase demand for healthcare and pharmaceutical products. Urbanization: As per the World Urbanization prospectus by United Nation, the urban population of the world has grown rapidly since 1950, having increased from 751 million to 4.2 billion in 2018. Asia, despite being less urbanized than most other regions today, is home to 54 % of the world’s urban population, followed by Europe and Africa (13% each). Growth in the urban population is driven by overall population increase and by the upward shift in the percentage living in urban areas.

Together, these two factors are projected to add 2.5 billion to the world’s urban population by 2050, with almost 90 % of this growth happening in Asia and Africa.

India, China and Nigeria together are expected to account for 35% of the growth in the world’s urban population between 2018 and 2050. This translates into increased disposal incomes and an aspiration among a burgeoning middle class to adopt global brands and modern shopping habits.

Improved quality of life: With growing life expectancy and quest for quality, consumers are expected to move towards packaged product consumption. During the current Covid 19 pandemic, there has been elevated demand for packaged foods due to its inherent properties of safety & hygiene thus mitigating the risk of contamination. Also, the move from unpackaged to packaged is expected to gather further momentum especially in Asia.

Increasing environmental awareness: Owing to increasing global environmental awareness, Plastics films are gaining popularity owing to lower environmental impact (emitting lower greenhouse gases and lighter in weight). Flexible packaging offers a number of sustainability benefits cycle of the package when compared to other packaging options, especially rigids

Increasing consumerism: Income growth has led to an increase in global consumer spends, influencing in turn the Plastic film industry. The projected growth for 2030 suggests world per capita GDP growing to around USD 14,000 from USD 11,464 in 2019.

E-Commerce: Transformation towards digitization has been growing at a rapid pace, more so due to Covid, across all age groups. As a result, there is an increasing number of people dependent on online shopping. Packaging plays an important role in case of E-commerce from aesthetics perspective as well as to ensure durability and quality of the product. In the era of social media marketing, many FMCG players are moving towards specialized, innovative and sophisticated packaging.

Retail Formats: Organized retail outlets have created a plethora of opportunities for the packaging sector as it increases the demand for retail ready packaging solutions which is space efficient and also helps in reducing supply chain cost. These formats lead to impulsive buying behavior through their visual merchandising strategies, efficient sales personnel, in-store sampling and promotions with discount offers.

XI. Strategy & Positioning

Polyplex seeks to maximize long-term returns following a differentiated approach that responds proactively to business and environmental changes. As it seeks sustained and profitable growth i.e. a judicious balance between revenue enhancement and benchmark return on capital employed, Polyplex has often been an industry trend setter with respect to the strategy choices made in the past. The key elements of this strategy are as under:

Geographical Diversification

Manufacturing and distribution presence in key regional markets (India, Thailand, Turkey, USA and Indonesia) supplemented with warehouses in Netherlands, Poland, Germany and Mexico and liaison and Japan have strengthened our global sales and delivery capabilities besides de-risking operations across a wider base of customers, currencies and products.

The Greenfield & ongoing brownfield expansion in Indonesia for PET&BOPPfilmline respectively supports the Company’s strategy of investment in large, productive & state of the art assets. This helps offer a better value proposition to the customers and diversifies risk without losing sight of cost and production efficiencies.

Ongoing brownfield expansion in USA with a new PET film line and debottlenecking of the existing PET Resin capacity would help the Company to serve growing demand for locally sourced PET film in North America, thereby improving market share besides bringing about cost efficiencies.

The Company has strong and deep customer relationships, access & intimacy which are backed by a combination of onshore and near-shore business model. Knowledge of local language, cultural affinity and physical presence play an important role in developing strong customer relationships and is a key differentiator for Polyplex in the competition landscape

In the current business environment (Covid-19 pandemic, heightened sea freight rates etc.), there is an increasing risk aversion towards concentrated supply chains and trend towards de-globalization with a preference for local/regional suppliers and shorter supply chains. Our value proposition of distributed manufacturing base has an advantage as compared to the other participants with concentrated capacities and has helped achieve status as a strategic supplier in several large / multi-national customers / groups.

Product Mix & Specialty Focus

Diversification into various substrates has helped the Company to establish itself as a complete packaging film provider. The Thick film line and the Blown film lines in Thailand as well as new Blown film line in Turkey seek to strengthen our presence in the diverse industrial end use segments also besides flexible packaging

The Company has accelerated investments in niche downstream products to exploit synergies, broad-base the portfolio and provide a scalable platform for further growth. The setting up of Extrusion Coating lines in Thailand, Silicone Coating lines in India and Thailand, Offline Coaters in India, Turkey & Thailand comprise such downstream investments. in Singapore, Korea

The investments in Holography machines in India, Thailand & Turkey besides paper metallizing business in India will further provide opportunities for enhancing the range of value added products.

Focus on increasing the share of speciality films (based on cost- effective R&D, open innovation, backward integration and multilevel customer collaboration) underlying which is a substantial base of standard films to position ourselves as Tier-1 supplier leading to increased margin with reduced volatility. Standard films are essential as most customers (especially in flexible packaging segment) buy both standard and speciality films. This also helps defray costs optimally through scale.

The Company offers unique value through differentiated products and applications leading to a healthy growth in mix of specialty, innovative and value added products in the portfolio.

Cost efficient operations & assets

Investment in vertical integration (both backward and forward) complemented with investments in versatile and high productivity assets would continue to protect cost competitiveness, drive innovation & value addition. Continuous improvements in productivity and cost optimization to maintain global cost leadership

In order to increase the sales of specialty film and enable economic usage of the older & less productive film lines, significant modifications have been done in Khatima, India and more upgrades have been recently completed or are under advanced stage of implementation in Thailand and Turkey.

R&D capability

Focus on innovation and collaborative application development helps the Company become a preferred supplier/partner with several large multinational customers.

Better Technical services and new products are being facilitated by leveraging in-house R&D capabilities and experience. Collaborative Research with government labs and educational institutions to drive innovation and new sustainability positive products

Systems have been created and strengthened to enhance cross-learning and sharing best practices/benchmarking across various units and businesses of the Group to enhance efficiency and synergy. The company has developed many products in the last few years and for relevant markets has filed patent applications. Currently company has been granted 27 patents across various products/ processes/ countries and has filed application for 6 more patents. Further, the Company also has registered several trademarks

Sustainability focused

The Company continually strives to develop sustainable products & processes and deliver more sustainable solutions for customers. There is a commitment towards sustainability with minimal environmental impact. Developed and optimized "chemical recycling" process for manufacturing Sarafil rPET Polyester film with Post-Consumer Recycled content upto 90%.

Promoted use of bio-based renewable raw materials and energy sources for the manufacture of polyester films

Company has been following best practices relating to the environment and health & safety of its employees and the society.

Recently added capacity to a facility in Thailand for recycling in-house and sourced plastic waste. The Company has ongoing investments for a new post-consumer bottle flake washing and recycling project which would further add impetus to its sustainability agenda.


i. Coater capacities and capacity for Transfer Paper Metallized has been converted into MT based on current product mix.

ii. Figures include the proposed investments (which are under implementation) - Offline Coater & Blown Film line in Turkey, Metallizer in Indonesia and India ,

Batch Resin Plant in Thailand & Recycled Resin capacity of Ecoblue.

iii. The investment in new BOPPfilmline in Indonesia, co-located with the new investment in a PET film line on existing surplus land and the new PET film line along with debottlenecking of Resin plant in US have also been considered.

iv. Figures have been restated & revised, wherever necessary for previous years.

Despite the challenging environment, the Company continues to identify further growth avenues and is poised to enhance long-term shareholder value.

XII. Business Process Excellence

To enhance our competitive advantage and differentiation, the Company has been continuously investing in Business Process Improvement and Excellence programs. A BPE (Business Process Excellence) team is continuously working to undertake several Group-Level initiatives to improve our business processes and optimizing cost through continuous improvement in the areas of freight, packing, inventory management, electrical and thermal energy consumption, indigenization of spares, waste reduction & reuse of waste material, CRM and customer complaint handling.

The benefitsfrom these BPE programs have been continuously accruing over the last several years and incremental benefits are expected in the future as well.

XIII. Projects

Summary of the various projects under Implementation is as below:

Project Details Location Capex Type Annual Capacity (TPA) Expected Start up
BOPP Film Line 12 Indonesia Brownfield Expansion 60,000 Later part of 2021
Metallizer-II Indonesia Forward Integration 12,000 Later part of 2021
Batch Plant-III Thailand Backward Integration 25,550 Q4 FY 2021-22
Post-Consumer Plastic Waste Recycling Ecoblue, Thailand Greenfield Expansion 25,000 Q3 FY 2021-22
Blown Film Line Turkey Greenfield Expansion 4,392 Q3 FY 2021-22
Offline Coater Turkey Forward Integration 2,400 Q3 FY 2021-22
BOPET Film Line 14 USA Brownfield Expansion 50,000 H2 FY 2022-23
Resin plant debottlenecking USA Brownfield Expansion 28,400 H2 FY 2022-23
Metallizer India Forward Integration 3,700 Q3 FY 2021-22
Total 2,11,442

- Brownfield BOPP Film line Project at Polyplex Indonesia

The BOPP Film with a capacity of 60,000 TPA is expected to be commissioned later this year. This will help Company to: o To tap the market potential in South East Asia o Leverage long experience in the market and customers as well as diversify business risk o To increase cost competitiveness through economies of scale

- Brownfield BOPET Film line Project at Polyplex USA LLC,

In September, 2020 the Board approved an investment in a BOPET (Biaxially Oriented Polyethylene Terephthalate Film) film project in USA, co-located with its existing facilities on the available surplus land.

Project Details

1. Total Capital investment is about 83 million USD

2. BOPET Thin Film Line of 10.6 meters width & design speed of 650 meters / minute with an annual installed capacity of 50,000 TPA

3. De-bottleneck the capacity of existing PET Resin line from 58,000 TPA to 86,000 TPA

4. Funding of the Project proposed primarily through internal accruals and Bank borrowings, as maybe required.

5. Project start up expected by H2 of FY 2022-23

Project Rationale:

By implementing the Brownfield BOPET Thin film project

• North America has a large domestic PET Film market which is highly dependent on imports.

There have been no major investments made in USA in this industry over the last 2-3 years and no known upcoming capacities. Hence, there is an attractive opportunity to capture the demand growth by being an on-shore supplier and increase our market share by leveraging on Polyplex’s existing marketing capabilities, customer relationships and long-term experience of servicing this market

Develop a competitive cost structure with an optimum combination of 2 BOPET lines along with backward integration into captive PET resin manufacture. The proposed new line being world’s highest output PET film line will significantly the overall cost competitiveness as compared to other domestic suppliers as well as Off-shore suppliers. Over the last few months, we have observed an increased propensity of customers looking to source locally arising from supply chain disruptions and logistics challenges due to Covid pandemic and other factors.

XIV. Performance during the year

All discussion here is in the context of the consolidated performance of the Company.

Sales and Operations

The Company has a large international presence with active sales in all major regional markets/countries (supplies to more than 75 countries) with an extensive base of about 1,950 customers and low customer concentration. Its top-10 customers contributed 27% of revenues in FY 2020-21. Almost 66% of the Company’s revenues were from PET films (Thin and Thick) in FY 2020-21. Of the total sales of the Group, 64% was accounted by ultimate end-users.

The breakup of the Company’s revenues from various regions, operating companies, business segments and applications is given below:


1. Other sales in the graph above comprise scrap sales and trading sales of third party non-manufactured products.

2. Other sales and Chips sales have not been considered in the application-wise breakup of sales.

Financial performance

A snapshot of the Income Statement for the last two years is given below:

2020-21 2019-20
Particulars (J in Lacs) % of Total Expenses (J in Lacs) % of Total Expenses Change (YoY)
Sales & Other Income 4,97,732 100% 4,54,850 100% 9%
Manufacturing Expenses 2,87,457 58% 72% 2,92,116 64% 72%
Operating and other Expenses 82,685 17% 21% 78,522 17% 19%
EBITDA 1,27,590 26% 84,212 19% 52%
Foreign exchange fluctuation loss / (gain) # (579) 0% 0% 10,175 2% 2%
Normalized EBITDA * 1,27,011 26% 94,387 21% 35%
Interest & Finance Charges 1,758 0% 0% 1,802 0% 0%
Depreciation and Amortization 27,980 6% 7% 25,333 6% 6%
Income Before Income Tax 97,852 20% 57,077 13% 71%
Exceptional Gain / (Loss) - 0% 6,941 2%
Provision for Income Tax 11,655 2% 14,636 3%
Net Income (Before Minority Interest) 86,197 17% 49,382 11% 75%
Minority Interest 35,016 7% 21,178 5%
Net Income (After Minority Interest) 51,181 10% 28,204 6% 81%

# Unrealized portion of foreign exchange loss / (gain) on foreign curency long term loan * Normalized EBITDA excludes impact of unrealized FX (gain)/ loss on long term loans

During the year under review, the sales and other income has increased by 9% due to increase in sales volume of PET films partly offset by fall in sales price due to lower raw material prices. The sales volume in FY 2020-21 has increased by 12%, significantly contributed by full as compared to five months of operations during previous year (start up during Q3 FY 2019-20) and also due to startup of new blown film line in Thailand during the year Normalized EBITDA is higher by 35%. This was mainly on account of higher sales volume and improved value addition as compared to previous year. Reported EBITDA increased by 52% mainly due to unrealized foreign exchange fluctuation loss amounting to H 10,175 lacs during the previous year, in comparison to unrealized foreign exchange fluctuation gain worth H 579 lacs during the current year. This was on account of foreign exchange difference arising as a result of reinstatement of long-term foreign currency loans charged to the Profit and Loss account as per applicable accounting regulation.

Exceptional item during the previous year represents a gain of H 7106 lacs due to reversal of the impairment loss on manufacturing assets of Polyplex USA LLC (PU) partially offset by a loss of H 165 lacs on account of provision for impairment on investment in subsidiary Company (PTSL, China). There was also an additional depreciation charge of H 1544 lacs resulting from the reversal of impairment loss. Inspite of higher profits, income tax is lower during the current year due to lower income tax rate in India partly offset by higher taxes in oversees locations. Additionally, there was a tax exemption on dividend received from subsidiary and lower deferred tax liability creation during the year.

Sales and other income

(H in Lacs)

Particulars 2020-21 2019-20 Change (YoY)
Sales 4,90,349 4,46,488 10%
Other Income 7,383 8,363 -12%
Total 4,97,732 4,54,850 9%

An increase in topline during the year under review was mainly due to increase in sales volume of PET Film and Blown Film which is partially set-off by decrease in selling price of PET Film. Fall in other income during the year was due to lower export benefit incentives, decline in interest income generated through deployment of surplus cash in low-risk market instruments & fixed deposits and lower insurance claims received. The interest rates are at its lowest due to quantitative easing by various

Central banks globally. Other income for the year also includes

H 567 lacs of net FX gain (as against net FX loss of H 6,826 lacs during the previous year reflected in other expenses). The break-up of sales and operational income reveals that 66% of Indonesia operations of the overall revenues are derived from thin/thick PET films (67% in FY 2019-20), 16% from Coating & other specialty business (14% in FY 2019-20), 8% from BOPP films . 2019-20), 7% from CPP films/Blown films/other sales (7% in FY 2019-20) and 3% from PET chips (3% in FY 2019-20).

Manufacturing expenses

(H in Lacs)

Particulars 2020-21 2019-20 Change (YoY)
Raw Materials Consumed (Incl. Stock Accretion/Decretion) 2,24,026 2,34,827 -5%
Power & Fuel 29,033 26,505 10%
Packing Material Consumed 18,666 16,173 15%
Stores & Spares Consumed 11,310 10,112 12%
Repairs and Maintenance 4,424 4,499 -2%
Total Manufacturing Expenses 2,87,457 2,92,116 -2%
as a % of Sales and Other Income 58% 64%

Even though sales volume increased during the period, raw material expenses reduced by 5% in absolute terms due to decline in raw material prices. Further, power & fuel as well as packing cost increased due to higher sales volume. Overall, manufacturing expenses have declined by 2% in absolute terms inspite of higher volumes.

Operating and other expenses

(H in Lacs)

Particulars 2020-21 2019-20 Change (YoY)
Personnel Expenses 42,449 38,722 10%
Administrative Expenses 11,409 12,305 -7%
Selling Expenses 27,866 20,473 36%
Other Expenses 961 7,023 -86%
Total Operating and other Expenses 82,685 78,522 5%
as a % of Sales and Other Income 17% 17%

During the year, personnel and selling expenses have increased reflecting the impact of inflation, full year operation at Indonesia and increase in sales volume. Another factor contributing to higher selling expenses was exorbitant freight rates resulting from shortage of containers leading to supply chain disruptions. As mentioned before, adjusted for FX losses of H 6826 lacs in the previous year, other expenses have increased mainly due to higher CSR expenditure. Administrative expenses have been lower mainly due to travelling restrictions resulting from Covid 19 partly offset by higher Insurance expense due to expanded scale of operations and also on account of general hardening of rates in the Insurance market.

Interest and finance charges

(H in Lacs)

Particulars 2020-21 2019-20 Change (YoY)
Interest Expense 1,655 1,723 -4%
Bank & Other Financial Charges 102 79 30%
Total Interest and Finance Charges 1,758 1,802 -2%
as a % of Sales and Other Income 0.4% 0.4%

Financial expenses are lower than the previous year due to repayment of term loans during the year under review partly offset by increased borrowings for new operations in Indonesia. Further lower working capital borrowing and decline in interest rates during the year also resulted in a lower interest cost.

Liquidity and capital resources

The Company ensures access to sufficientfunding at acceptable costs to meet its business needs and financial obligations at all times. The Company relies on cash from operations and short-term/long-term debt for meeting its requirements. It continues to maintain adequate liquidity for its operations with a close watch on the debt service and leveraging ratios. Cash and equivalents together with undrawn credit lines (excluding project financing) and liquid investments aggregated to around H 1,98,573 lacs (including unutilized working capital limits of H 74,358 lacs) as at the end of the reporting period.

FY (2017-18) FY (2018-19) FY (2019-20) FY (2020-21)
Net Cash flow from Operating activities 30,705 55,119 73,110 1,10,243
Net Cash flow from Investing activities (12,635) (29,626) (40,496) (43,614)
Net Cash flow from Financing activities (4,176) (31,153) (29,767) (65,964)
Exchange Difference on translation of Foreign Operation 2,023 3,096 8,172 (1,471)
Total Cash & Cash and Cash Equivalents 35,935 33,370 44,389 43,583
Total Cash & Bank Balance Including Investment 1,25,185 1,18,529 1,25,652 1,24,215

# Cash & Bank balance include investments and fixed deposits with maturity more than 12 months

Particulars As At March 31, 2021 As At March 31, 2020
Cash & Bank Balances 29,367 27,373
Fixed Deposit with Banks (less than 3 Months) 14,216 17,016
Cash & Cash Equivalent (A) 43,583 44,389
Fixed Deposit with Banks (less than 12 Months) 48,895 51,397
Other Balances with Bank 2,702 329
Bank Balances other than Cash & Cash Equivalent (B) 51,597 51,725
Fixed Deposit with Banks (More than 12 Months) 255 6,254
Investment in Bonds 26,955 16,065
Liquid Investment 1,825 7,218
Other Cash & Bank Balances (C) 29,035 29,538
Total Cash & Bank Balance Including investment (A + B + C) 1,24,215 1,25,652

Cash flow from operations

For the year under review, cash-flow from operating activities (before change in working capital) has increased to H 1,24,245 lacs as compared to H 91,667 lacs in previous year mainly due to expanded scale of operations and higher margins. This was partially offset by net working capital invested in business (Inventories, trade receivable, and other net current assets), thus resulting in net cash-flow from operating activities (after change in working capital) of H 1,10,242 lacs.

Cash flow from investing activities

The cash generated was used in investment in fixed assets to the tune of H 52,923 lacs in FY 2020-21 (H 47,228 lacs in FY 2019-20), mainly towards capital advance/ payments for BOPP project at Indonesia as well as multiple smaller investments across other locations. Around H 3,478 lacs of fixed income securities and bank term deposits were redeemed (net of new investments) during FY 2020-21 (net redemption of H 2,196 lacs in FY 2019-20). Interest received during the year is higher at H 4,628 lacs (H 3,816 lacs in FY 2019-20) on account of increased level of bank term deposit maturity/redemption during the year.

Cash flow from financing activities

During the year H 3,252 lacs (including Buyback Tax) was incurred towards the buyback of shares. There was a net decline in total debt (short term + long term) by H 7,120 lacs. This includes reduction in net term debt by H 4,423 lacs (net of fresh borrowings) due to repayments. Interest paid during the year was H 1,860 lacs (H 2,380 lacs in FY 2019-20). The Company paid dividend of H 54,207 lacs in FY 2020-21 (H 23,597 lacs in FY 2019-20). During the year, H 597 lacs were received from minority shareholder towards share subscription in a subsidiary.

Exchange Difference on translation of foreign operations

This is the exchange rate difference arising out of translation of assets & liabilities of overseas subsidiaries which are denominated in different currencies into INR on consolidation.

Debt profile

Total debt as on March 31, 2021 is H 69,069 lacs (H 75,800 lacs on March 31, 2020), a decline of H 6,731 lacs over the previous year. This is mainly due to the decrease in working capital borrowing and net payment of long term debt substantially offset by fresh borrowings in Indonesia.

XV. Sustainability

There is concern from all stakeholders and environmental groups on the usage of plastics.

The perceptions on plastics usage at a macro level are driven by images of plastic litter in oceans, impact on marine life and prevalence of microplastics in the food chain, etc. This is exacerbated by usage of certain Single Use Plastic (SUP) items which contribute to the increasing amount of plastic waste reaching the landfills in absence of a comprehensive recycling ecosystem.

Governments are becoming an active participant in setting out the expectations and defining rules. Industry is focusing on developing economical models for collection, sorting and reuse/ recycling of post-consumer plastic waste. The urgency and sensitivity on the sustainability agenda varies significantly across regions with Europe taking the lead and limited traction in USA and South East Asia. Regulatory measures / guidance across the world have focused on reducing / eliminating the usage of certain SUPs, imposing special taxes or other measures to promote recycling and usage of recycled content, setting out Extended Producer Responsibility (EPR) obligations, etc.

To put into perspective, out of a global plastics consumption of about 350 million tons, 35% approx. is packaging (both rigids and flexible). Of the same, about 30 million tons is used in consumer flexible packaging wherein Multi-Layer Packaging

(MLP) would be a significant subset. The consumption of thin PET film in flexible packaging / MLPs is about 3.2 million tons. Due to its superior performance, economics as well as benefits on the sustainability front, flexible plastic packaging has been gradually replacing rigid forms of packaging over the last several decades. The myriad benefits include lower environmental impact and carbon footprint, resource efficiency in term of lower wastages, pack to material ratio, energy usage and transport costs, better performance barrier, retort and other features besides flexibility and versatility to cater to various needs and convenience requirements. As a result, regulators and governments across the world have not come out with any measures to restrict the usage of MLPs in packaging and MLP has not been included in any SUP ban list. The focus is to encourage development of the recycling infrastructure and usage of recycled content.

The Ellen MacArthur Foundation (EMF) in collaboration with the UN Environment has come up with a New Plastics Economy Global Commitment vision document wherein one of six key pillars is that all plastic packaging is 100% reusable, recyclable, or compostable.

In light of the above, each industry participant is challenged with both threats as well as opportunities. The Company strives to partner with all stakeholders in the value chain on sustainability developments. It represents the polyester industry at various national and International Industry Associations, the details of which are as below:

Industry Associations Objective
PETCORE - Europe PET Sustainability & Recycling
CEFLEX - Europe Flexible packaging circular economy
EUPP - Europe Recyclability & Sustainability
BOPET FILM - Europe PET film
SPC - USA Sustainable Packaging
IFCA - India Flexible packaging and folding carton

The Sustainable Development Goals (SDGs), also known as the Global Goals, were adopted by the United Nations in 2015 as a universal call to action to end poverty, protect the planet, and ensure that by 2030 all people enjoy peace and prosperity.

Polyplex is aligning with the UN’s Sustainable Development Goals (SDGs) to better understand global challenges that need to be solved. We set a goal to align our innovation portfolio to meaningfully advance the UN SDGs and create value for our customers with minimal environmental impact and providing the highest standards of health and safety to the workforce.

Global consumer product companies have come out with their sustainability pledges mostly centered around usage of recycled content, reduction in usage of unnecessary plastics and drive projects around circularity besides other sustainability objectives like reduction in water / fossil fuel based energy usage, etc. Polyplex has successfully adopted the 5R (reduce, reuse, recycle, remove and renewable) concept while coming up with new-age packaging substrate solutions. It has taken various initiatives to recycle waste, save energy and use clean technology to reassert its environmental commitment and continually strives to manufacture sustainable products which can gain global acceptance.

Sustainable Products & Solutions

As an organisation, the Company continually strives to develop sustainable products and deliver more sustainable solutions to our customers. Polyplex has undertaken the following decisive initiatives in the realm of environmental conservation:

Developed and optimized "chemical recycling" process for manufacturing Sarafil rPET Polyester film with post-consumer recyclate content of upto 90% for packaging applications. The film has been made available commercially using post-consumer PET bottle flakes as input material. The rPET resin has properties same as that of virgin PET resin and the resultant PET film is compliant with all regulatory requirements including EC and US FDA compliances. Our

Thai subsidiary has recently got the RCS (Recycled Claim standard) certification for rPET resin and film.

Developed Monomeric PET film with high sealability for use in mono and multilayer packaging and other industrial applications. These monomeric range of PET films are recyclable and conform to the definition of circularity.

Developed various biodegradable films

PE, CPP) which meet the requirements of anaerobic biodegradation either in accelerated land fill or high solids anaerobic conditions complying to ASTM D5511 & D5526 standards

Introduction of transfer metallized films & paper and direct metallized paper for plastic free cartons which is 100% recyclable. Paper is considered more environment friendly substrate being Biodegradable and Recyclable solution for many packaging applications. Metallized paper offers dramatic benefits over the use of foils and metallic inks on reduction of carbon foot print and they are easily recyclable along with conventional paper or board. It is qualified as mono-material, so considered as environmentally sound compared to other available substrates for these applications.

Thermoformable Films developed by Polyplex are safer and environment friendly solution for replacement of PVC films in Pharma industry films

Through its R&D initiatives, Polyplex has promoted the use of bio-based renewable raw materials for the manufacture of polyester films

Successfully developed antimony free (heavy metal free) films

Developed high barrier metallized film for aluminum foil replacement suitable for milk, coffee segments Chlorine free transparent barrier PET film for see through and convenience packages.

Dedicated recycling unit in Thailand which provides sustainable solutions (mechanical recycling) for both Post-industrial film waste (difficult to coated, printed metallized etc.) and post-consumer waste (fibre waste, bottles). Additional investment is being made to significantly scale up the capacity to recycle post-consumer PET as well Polyolefinicwaste. A CircuLiner program for PET filmic liner waste has also been launched with some global companies to provide desired circular recycling solutions

Digital printing offers high-quality graphics without the usage of solvents unlike conventional printing techniques such as Flexo and Rotogravure. With a lot of technologies available for digital printing itself, Polyplex has been able to develop products for most segments suitable for different digital technologies such as inkjet, dry toner, liquid electro- (PET, Blown PP/ photography, etc.

Conversion of general packaging laminate structures from

3 layers to 2 layers, which basically contributes to both source reduction as well as CO2 footprint reduction. With this idea in mind, Company now has a high barrier PE which is successfully being used in shampoo and detergent packaging where it essentially converted a 3-layer structure to 2 layers.

Down-gauging of PET film has resulted in immediate environmental benefits through reduction of packaging weight

Sustainable Processes

• Operationalized latest technologies like Direct Melt

Extrusion, Twin screw extrusion systems etc. to save power across plant locations which resulted in substantial improvements in terms of energy efficiency.

Reduced greenhouse gas generation by using husk-fired heaters at its Indian facilities.

• Switched to LED lighting across plants.

Improve production and operational efficiencies to ensure optimal consumption of resources like electricity, water and raw materials.

Limiting the impact on the environment by reducing emission levels of industrial waste and effluents coupled with measures for waste treatment and water conservation.

Improve safety and health standards by continuously improving working conditions, minimizing workplace hazards and raising awareness through involvement, participation and continuous training of the shop floor materials like silicon workforce.

• Engaged with stakeholders to promote sustainable business practices.

• Measure & monitor carbon footprint through LCA studies

The Company has been following best practices relating to the environment, health and safety and has been diligently following the guidelines that have been set out as per the following certifications:

Management System International Standards PCL - Khatima

PCL - Bazpur


PE - Turkey

PU - USA PFI - Indonesia
Quality Management System (ISO 9001:2015) Certified since 1996

Certified since 2010

Certified since 2004

Certified since 2006

Certified since 2018 Certified since 2020
Environment Management system (ISO 14001:2015) Certified since 2002

Certified since 2010

Certified since 2004

Certified since 2009

Certified since 2018 Certified since 2020
Occupational health & safety management system (ISO 45001:2018)

Certified since 2004

Certified since 2012

Certified since 2008

Certified since 2009 Certified since 2020
Food Safety Management System (ISO 22000:2005 / BRC-IOP / FSSC-V5)

Certified since 2008 (ISO 22000)

Certified since 2012 (ISO 22000)

Certified since 2009 (ISO 22000)

Certified since 2006 (BRC-IOP) Certified since 2021 Certified since 2021
Energy Management System (ISO 50001:2011)

Certified since 2013

Under Implementation, (Certification expected by Q3 FY’ 2021-22)

Certified since 2014 Certified since 2021

The Company is in the process of publishing Sustainability report for the year 2018-20 as per the Global Reporting Initiative (GRI) standards (last published Sustainability report (for the FY 2017-18) is available on Company’s website). The objective of the Sustainability Report is to disclose its Environmental, Social and Governance (ESG) performance to the stakeholders and to set benchmarks for each sustainability indicator with improvement and intervention areas.

In recognition of its efforts, Polyplex Thailand has been recently awarded the esteemed title of "Green Innovation Award" at the prestigious Asia Corporate Excellence & Sustainability Awards 2021.

XVI. Corporate Social Responsibility

Corporate social responsibility has been an important part of the mission of the Company. The Company has been undertaking various initiatives to help communities in areas adjoining to its plants and improve the quality of life of its employees. In the ongoing Covid-19 pandemic, the Company, across all its locations, has made monetary contributions to NGO’s, Hospitals and Government relief funds. The Company has also donated sanitizers, necessary medical equipments and protective gear for healthcare workers. Various NGO’s have been supported by providing necessary food supplies to the communities around our locations. At our plant locations in Khatima & Bazpur various infrastructure facilities have been provided like hospital beds, mattress, hospital screen etc. Our Company has also supported the construction of ICU’s, CCU’s and other facilities in civil hospitals. The Company has been running a school at its Khatima plant for the past almost three decades. The school provides over 1,750 students with best-in-class educational facilities. Under a PPP model at Bazpur and Khatima, Polyplex has adopted two local schools and provides them with the necessary infrastructure.

Polyplex also offers a slew of sports and educational sponsorships as well as full scholarships to the school-going children of deceased employees and have made contributions to various other schools/educational institutes in order to promote education and help contributing to a better society. Polyplex promotes religious harmony through its even-handed support to local religious activities and celebrations. Polyplex has also contributed to the Rekhta Foundation, which is a non-profit organisation established to promote and disseminate literature and culture. In line with the requirements of Companies Act, 2013, the Company has also constituted a CSR Committee with a keen emphasis on delivering a positive impact across social, economic and environmental parameters. A detailed report on CSR expenditure is provided in the Directors’ Report section.

XVII. Innovation

Polyplex leverages the concept of co-creation while working on various innovation and sustainability programs with its stakeholders converters and brand owners from the value chain.

The Company owns 27 Patents spread across various products, processes and countries and additional 9 applications have been filed. Additionally, six trademarks have been registered and a few more have been applied for.

Consumers have become highly demanding and are looking for more and more convenience features in packaging formats. "Reclosability", "Easy to tear" and "Higher shelf life" have become regular concepts in the packaging market.

Sustainability Focused Innovative Products: rPET range of Sarafil Polyester filmsuitable for direct food contact packaging applications and with PCR recycling content upto 90% Cold and Hot thermo-formable films for replacement of Nylon and PVC in certain flexible and pharmaceutical segments

Monomeric range of PET films with high heat seal strength for construction of monomeric flexible packaging material which are recyclable and conforms to the definition of circularity for Inkjet, dry toner digital printing films meets the need for variable printing applications Specialty papers like

Transfer Metallized Paper and Direct Metallized Paper for labels for easy separation and recyclability of bottles Metalized PE Films for mono PE structures

Other innovative products and solutions for convenience, aesthetic, shelf life & high performance:

Holographic films for specialized applications like security & tamper evident applications have been commercialized

Inline siliconized films for liner applications

The Company has also come up with specialty coated products for aesthetically pleasing packaging structures. They are targeted to impart a more natural and paper-like look for a soft and subtle appearance. enhanced shelf life Highbarrier AlOx retort PET film and see-through packaging

High barrier metallized PET film for replacement of aluminum foil in coffee, milk powder packaging

High performance thermo-formable films for shallow draw lidding applications

High performance blown PP films for retort applications Specialized back sheet films for solar panels Anti-fog films for face shield application Films for LIB for automotive applications Specialty-coated PET/OPP thermal films VIF/TIF embossed PE films for agricultural applications

CPP Films for medical applications

XVIII. Human Resources

Polyplex Group employs over 2430 people across the globe including the recently added greenfield

The Company closely monitors employee performance and accordingly creates career progression paths. Greater emphasis has been given to the following initiatives:

Containment of Covid-19: Strict guidelines/protocol were put in practice at all the units to contain the spread of coronavirus. We could run all our facilities throughout the year at all the locations except around 15 days of plant stoppages at India operations both at Khatima and Bazpur to comply with Government mandated guidelines.

Management of Human Resources during Pandemic: During the current crisis, a robust health monitoring mechanism has been put in place including handling of emergency situations. Proactive communication and prevention have been the hallmark of these initiatives. All our operationssite continued Indonesia. without any disruption till date during these difficult times.

Internal Growth and Development: New greenfield expansion in Indonesia has provided growth opportunities to many who were ready to take expanded leadership roles. This also helped other employees at the middle and senior level to grow laterally at all the other units.

Retention of Key Employees: The leadership retention scheme has been broad based to include many future leaders. Over the last few years, there is zero attrition at the leadership level. Company strongly believes in managing operations through stable management team.

Localization: There is greater emphasis on developing and promoting local leaders having potential to deliver by providing more opportunities of learning and growth. This has positively impacted the morale and participation of local employees in improvement initiatives and programs. Attrition rate at managerial level at all the units is also minimal.

Performance Management System: Special emphasis has been given to improve the robustness of performance feedback across the hierarchy. Employee Welfare and engagement: Company believes in having strong institutionalized employee engagement schemes/programs specially designed to meet the aspiration of local environment, culture and social practices.

The attempt is to promote health of all employees holistically. Physical, mental, emotional and spiritual health of employees is monitored to ensure higher engagement. Employee engagement and employee welfare schemes continue to play its pivotal role in improving employee bonding. Polyplex has more than 50 structured and institutionalized employee engagement/welfare schemes covering employees at all plants and head

Opportunity of Learning and Growth to employees of all nationalities while setting up greenfieldoperations :

For Indonesia operations, we attempted to make best use of human resources from all the units globally. This has helped us experience best possible vertical start-up of our operation in Indonesia.

Healthy IR situation: Overall IR situation in all the plants are healthy. Employees participate in decision making process through employee welfare committees.

Employee Rationalization: Employee rationalization related initiatives continued to operate at all the units.

The emphasis was to use each opportunity of employee rationalization with minimal emotional distress to employees. The leadership team in our new operation in

Indonesia consists of employees from all the units without any additional hiring. Business growth opportunities provided additional space for manpower rationalization. Rationalization also involves lowering the grade at which a specific job is performed, integration of functions to reduce managers/supervisors, delayering of structuring.

Systems and Process Institutionalizations: Polyplex believes in institutionalized mechanism of managing all the benefits related to human resources. Employees have full access to these documents in HR portal (HRIS) for their ready reference.

HRIS: Human Resource Information System (HRIS) has been implemented at Indonesia operational from beginning.

This has helped manage all the HR processes digitally. With this India, Thailand, Turkey and Indonesia operations are integrated through HRIS.

Hiring of Future Leaders: The Company continues to employ graduates from various premier institutions of the country. This initiative, over the last five years, has helped young engineers and management professionals take up middle level leadership positions. Under this program, they . are given direct exposure through structured role change for faster and all-round growth. This has helped in improving the available talent pipeline and employee retention.

Caring Culture: Care is one of the four core values of Polyplex’s value system. Polyplex believes in holistic development of our employees.

Long serving employees: In order to appreciate the contribution of long serving employees, following initiatives have been taken during last financial year:

Direct family members of employees are given opportunity of employment

Employees at operating level are given growth to play larger role at the plants

XIX. Information Technology

During the year under review, the Company continued to implement IT enablement initiatives for improving and optimizing processes. The new application platform "Integrate" has been successfully running in two locations and the roll out is under progress for another.

In view of lockdown due to Covid-19 pandemic, the Company undertook additional measures and deployed new solutions to facilitate work from home while extending security measures to protect information processing and collaboration outside corporate networks.

The Company has also completed a major upgrade and improvements in the IT Disaster Recovery and Backup infrastructure to improve DR capability and availability of IT applications and infrastructure supporting the business operations.

During the year under review, the platform upgrade was done for web-based training and development portal for employees to improve their knowledge and skills in the areas relevant for their operations. The Company continues to invest in upgradation of older networks and infrastructure components to contemporary standards with secured infrastructure.

XX.Internal Control Systems

The Company has a strong internal control system comprising various levels of authorization, supervision, checks and balances and procedures through documented policy guidelines and manuals. The internal audit team conducts detailed audits to regularly monitor the efficacy of internal controls/ and compliances with Standard Operating Procedures and Manuals with an objective of providing to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance that all transactions are authorized, recorded and reported correctly.

The Company remains committed in ensuring an effective internal control environment that provides assurance to the Board of Directors, Audit Committee and the management that there is a structured system for:

• Ensuring statutory compliance framework and its effectiveness

Evaluating and managing risks on the basis of pre-defined risk control matrix as per Internal Financial Control (IFC) guidelines

Review of business plans and goals

• Safeguarding the Company’s assets against unauthorized usage

Prevention and detection of fraud and error

• Compliance of policies and delegation of authority

Validation of IT security controls

The Internal audit team develops a risk based annual audit programme which is aligned to the previous year’s observations, suggestions from the operating managers and statutory auditors.

The audit approach is based on review & update of risk matrices including sample selection and takes into consideration the generally accepted business practices. The internal audit reports are discussed by the Management Committee and subsequently placed before the Audit Committee of the Board of Directors along with the directions/ action plan recommended by the Management Committee. The company has in-built IT controls on all major business processes that ensure reliable and timely financialreporting. The Company continuously upgrades its internal control system by measures such as strengthening of IT infrastructure and use of external management assurance services.

XXI. Risk Management

Polyplex’s integrated risk management approach comprises compliance with prudential norms, structured reporting and effective controls. A combination lines which may not be economicallyof centrally-issued policies and locally-sensitized procedures has helped enhance process robustness, ensuring that business risks are effectively addressed.

Competition and business cycle risk

The industry margins in standard thin PET films hinge on Value Addition "VA" i.e. the difference between PET film prices and raw material (PTA and MEG) prices. Whenever the demand-supply balance favors the suppliers, VA usually widens and thereby encourages manufacturers to increase production by expanding capacities. On the contrary, if PET filmsupply exceeds market demand, prices drop, thereby narrowing the gap. This inevitably affects every producer’s revenues and profits, though the impact varies considerably depending upon the product mix, market positioning and other factors. The demand supply balance has been improving over the last few years with the slowdown in capacity additions and continued demand growth. The year 2020 witnessed start-up of some new lines, mostly by incumbent players in different parts of the world and was absorbed quickly without affecting the demand supply balance demand for thin PET film pandemic. There are several new lines which are slated to start in the next 2-3 years and margins could be under pressure for some time before recover. These lines are mostly by incumbent players and about 61% of these capacities are expected to be added in China and another 27% in India. The ongoing Covid-19 pandemic might cause some delays in the start-up of these capacities and even some cancellations. In a competitive market scenario, the industry may also see likely closure of some old andinefficient when compared to the high capacity contemporary lines.

The industry volatility for the standard products has also become somewhat damped over the last 4-5 years due to a host of factors including more rational behavior by industry participants, lenders, sponsors besides institutional changes, especially in Asia on new lending norms, bankruptcy laws, etc.

Risk mitigation

The Company’s business model is designed to moderate volatility in earnings and build long-term competitiveness.

Its multi-locational manufacturing assets lend it the ability to service key regional markets while minimizing logistics costs. A well-distributed manufacturing presence, diversified product portfolio and long-term customer relationships provide better access to global markets and allow it to maintain a more balanced salesprofileacross regions, products, customers and currencies. Every year the Company determines the proportion of High Value Added (HVA) film in the sales portfolio. HVA film sales usually are higher margin sales arising from differentiatedas productremainedstrong&resilientduringthe characteristics or application and/or a differentiated customer. HVA film helps the Company de-risk earnings. Over the past five years, the share of HVA in the total films sales turnover has increased from 24% in FY 2016-17 to 34% in FY 2020-21. If the impact of Indonesian start-up (product basket is mostly 100% essentials) is excluded, the share of HVA film would be much higher.

Price volatility risk

The basic raw material for production of PET film is PET resin, which in turn is produced from PTA and MEG. Being components of the petro-chemical chain, the prices of PTA & MEG are impacted by Global crude oil prices, apart from demand-supply within its own industry. The cost of resin is the single-largest component of the total production costs. Hence, any adverse fluctuations in the cost of PET resin can impact the Company’s operating margins depending upon the Company’s ability to pass on cost increases to its customers. As selling prices are usually negotiated on a monthly/quarterly basis, in a balanced demand supply situation, the Company is able to adjust the selling prices following any changes in PET resin costs and other operating costs, although this happens usually with a time lag varying between one to three months depending on the region and prevailing market conditions. The margins on the HVA products tend to be more stable and even counter-cyclical.

Risk mitigation

The graph below analyzes the correlation between crude oil prices and VA of PET films. Though any movement in the raw material prices is generally passed on to the end customers, albeit with some time lag, more importantly, with the diverse product mix and increasing proportion of HVA film sales, Polyplex has much better ability to maintain relatively stable overall VA across business cycles which is reflected in the consistently higher VA levels as compared to standard film VA prevailing in China over the period of time. In Q3 & Q4 FY 20-21, the China VA seems to be an aberration as demand for PET Film suddenly spiked early October due to pent up downstream demand arising out of impact of Covid further compounded by low inventory in the pipeline.

Also depicted in the above chart is the comparison of crude oil price with standard film VA in China and overall VA for the Company which clearly shows the lack of any significant correlation between them over an extended period.

The Company monitors global and local input price trends carefully and determines its procurement plans accordingly. Moreover, unpredictable price movements of raw materials affect all industry participants and thus does not put Polyplex in a materially advantageous or disadvantageous position vis-a-vis its competitors. The Company’s geographicalandproductdiversification helps in sustaining pricing / margins much better than other participants. The prices of downstream products like silicone-coating, extrusion-coating, holography and other specialty / HVA films are less susceptible to changes in raw material prices and thus reduce the Company’s vulnerability in the face of volatile resin costs.

Trade defense risk

Trade defense measures (Anti-dumping duties, countervailing duties, safeguard measures etc) are imposed to protect local producers against unfairly traded or subsidized imports. Anti-dumping duties are imposed on imports if the ex-factory prices of such imported products are proved to be lower than the local selling prices of similar products in the respective exporting country. Countervailing duties are tariffs levied on imported products to offset the impact of subsidies applicable for exporters in those nations. Such tariff measures increase prices of imported products, usually rendering exporters uncompetitive.

PET Film: International trade in PET film has been subject to trade defense measures for more than three decades through the imposition of anti-dumping duties and countervailing duties. The important markets adopting this measure are the EU, the US, Korea, Indonesia, Turkey and Brazil. In order to protect the domestic economy from Covid impact, Turkey had imposed additional custom duty of 40% till 31st Dec 2020 and 10% thereafter on all countries excluding those with FTA’s and Custom Union.

Risk mitigation

A summary of the AD/CVD duties applicable in the major export markets for PET Films (based on final determination) are as under:

Country of Import Polyplex Duty (AD+CVD) Other Indian Producer Duty Rates (AD+CVD) (Min-Max) Other Countries on whom AD/CVD applicable Other Countries Duty Rates (AD+CVD) except Polyplex Group (Min-Max)
USA 13.75%(PCL) 7.22% - 65.59% China 31.24% - 76.72%
Taiwan 0% - 4.48%
UAE 4.05% - 70.75%
Brazil 0.26($/Kg) (PCL) 0.09 ($/Kg) - 0.93($/Kg) Turkey 0.65($/Kg)
0.067($/Kg) (PE) UAE 0.44($/Kg) - 0.58($/Kg)
Egypt* 0.26 ($/Kg) - 0.48 ($/Kg)
China* 0.65 ($/Kg)
Mexico 1.01($/Kg)
Bahrain 0.48($/Kg)
Peru 0.12($/Kg)
Korea 34.90% (PCL) 34.90% Thailand 3.68% - 3.71%
3.19% (PTL) Taiwan 5.49%
UAE 7.98% - 60.95%
China 13.51% - 36.98%
Indonesia 8.5% (PCL) 4.00% - 8.50% China 2.60% - 10.60%
2.20% (PTL) Thailand 5.40% - 7.10%
Turkey 21.61%(PCL) 4.25% - 21.61%

* Currently Suspended


The following review is still ongoing:

CVD Expiry review by Turkey on India

The Company undertakes required steps to insulate itself against risks arising out of any such anti-dumping actions and other trade barriers imposed by importing countries. A well-diversifiedmanufacturing presence and an end-to-end product portfolio also helps mitigate fallout from such actions. As a local producer in many countries, it is also evaluating actions for protection against unfairly traded or subsidized imports from other countries.

BOPP Film: The key markets imposing trade defense measures on imports of BOPP films are Indonesia, Vietnam, Korea, Pakistan etc. Our existing operations in India for BOPP film are not subject to these trade defense measures. The brownfield expansion in Indonesia which is expected to start in Q2 of FY 2021-22 may experience some impact on exports to Korea. On the other hand, the Indonesian market is protected against imports from other key exporting countries like Thailand & Vietnam.

PET Film Resin: In case of PET Film Resin, there are not many trade defense measures across the globe except the safeguard duties imposed by Turkey on imports from all countries which is in force for three years effective Nov 2020.

PTA: There have been AD duties on imports of PTA in India from countries like Thailand, Korea, China, Indonesia, Malaysia, Taiwan & Iran but effective Feb’20, these duties have been revoked as PTA has been designated as a critical input for textile fibers & yarn.

MEG: In June 2021, a new AD Investigation was initiated by India on imports of MEG from Kuwait, Saudi Arabia & USA.

The earlier AD investigation which was initiated on imports of MEG from Kuwait, Oman, Saudi Arabia, UAE & Singapore was subsequently withdrawn and the Investigation terminated in Nov 2020. Effective June 2021, anti-dumping duties have been imposed on USA and Saudi Arabia origin MEG by the EU.

Liquidity and solvency risk

Liquidity implies the ability to meet debt obligations and finance future investments. Generally, if the cost of debt is lower than the return on investments, by increasing the financial a corporate can enhance return on equity. However, since there is an obligation to make fixed interest and principal repayments, volatile cash flows could strain the liquidity of a corporate. Also, higher debts could limit the ability to finance further investments.

Risk mitigation

The Company has sufficient cash reserves exceeding the level of debt. Cash and equivalents together with undrawn credit lines (excluding project financing) and liquid investments (current and non-current) aggregated to more than H 198,573 lacs. Free cash flows along with large unutilized credit lines available at Polyplex’s disposal are expected to be quite adequate to manage various ongoing expansions and to deal with any unforeseen contingences.

Exchange rate and interest rate risk

These risks arise on account of unanticipated changes in exchange rates. As the Company deals in multiple currencies due to its operations across different locations, the Company is exposed to risks on account of currency mismatches. Interest rate risk is the risk borne by interest bearing debt and investments due to variability in interest rates. In case of financing done at floating rates, as the interest rates change, cost of borrowing also changes, thus impacting cash flows.

Risk mitigation

Since the currency markets are highly volatile, the Company minimizes such risks by adopting a consistent hedging strategy. A natural hedge is created by choosing the right currencies for taking loans. Thus, the Company fixes the currency of the liability in order to match with the currency of operational surplus. The remaining mismatched exposures are optimized by the Company by carefully identifying, measuring, monitoring and hedging the net exposures by using simple instruments like forwards with a 3 month rolling time horizon. This ensures that the maximum potential loss remains within defined limits. As there is a natural hedge available for all long-term borrowings, the Company does not cover the exchange rate risk on these liabilities.

Therefore, the foreign exchange translation gain/ loss on these liabilities, as reported in the financial a corresponding impact on the cash flows of the Company as the payments for these loans are met via future receivables in the same currency. The forex risk is managed on a standalone basis as cash flows are not freely transferable between Group entities. The currencies used for external borrowing by the Company are US Dollar, Euro, INR & THB. Depending on the net FX surplus on standalone basis, the currency for external borrowings is chosen. As of 31st March 2021, majority of the long term external borrowings were in Polyplex Indonesia which is in Euro & USD. Any spike in EUR & USD value against the local currency (IDR) has a negative impact on loan liabilities but with majority of the Company’s exports are denominated in EUR and USD, the impact on the Company’s cash flow is minimized. Apart from this, there are related party borrowings too which are in Euros.

Hence, there is a significant impact of Euro movement in terms of foreign exchange reinstatement gain/loss as reported in the financial statements, which is partially hedged through Euro-leverage, denominated exports.

There are various reasons for interest rate changes like economic growth, inflation expectations and unemployment, among others. All these factors are external and uncontrollable. In order to have a more balanced loan portfolio and taking into account the cost benefit analysis, the Company continuously evaluates shifting some of its floating rate debt to fixed rate.

Credit risk

Credit risk refers to the risk of non-payment by debtors. This risk increases in case of unsecured or open payment terms.

Risk mitigation

The Company has a well-definedand robust internal credit management system to monitor unsecured sales. The Company also has a global credit insurance cover to secure non-payment risks of customers. During FY 2020-21, the Company had 1,950 customers and 27% of the total revenues were contributed by the top-10 customers. A strong internal credit risk management framework and credit insurance policy has enabled Polyplex to manage credit risk prudently. The average credit period during FY 2020-21 stood at 50 days as compared to 56 days in FY 2019-20. In a pandemic situation, the risk of default is high and delays in payments are expected but with strong credit risk management system and strong relationship with customers, Company has been able to mitigate the risk of default and is confident of doing so in the future as well.

Project implementation risk

Any delay in implementation, cost overrun, inability to stabilize production from the new investment and failure to meet the target investment objectives may significantly profitability. Although the Company takes into consideration various regulatory aspects at the project feasibility stage, subsequent changes during the implementation phase may lead to project delays.

Risk mitigation

The risks are mitigatedstatements, may not have by forming a dedicated project management team, corporate management oversight, management commitment and suitable protection clauses in contractual arrangements and appropriate insurance products.

The Company remains confident of successful implementation of new projects on time and within Budgeted costs except for unforeseen circumstances. There have been some minor delays in the startup of some of the smaller projects due to a variety of factors including Covid related.

Geographic risk

An over dependence on a particular geography may not bode well for the Company.

Risk mitigation

The installed capacity of base films as well as downstream units is quite evenly spread out among the five manufacturing country locations of India, Thailand, Turkey, Indonesia and the

US. Though some political and economic problems have been faced in Thailand and Turkey from time to time, there has not any significant effect on business activities. The Turkey operations are well placed to sustain any impact in the short term arising from its location in a Free Trade Zone, high export orientation, domestic sales being invoiced in Euro and other mitigating steps undertaken. However, no adverse long-term impact is envisaged.

Regulatory risk

Regulatory compliance is a key consideration for the PET industry. In order to ensure the safety of food that is packaged and consumed, extensive regulations have been put in place by various regulatory bodies like the USFDA, the EC, among others.

Risk mitigation

The Company stringently conforms to the relevant USFDA and EC directives for food packaging applications.

Environmental and sustainability risk (please see section on Sustainability also)

The Indian flexible packaging industry (like the global industry) is also exposed to certain environmental and sustainability related risks. The Plastic Waste Management Rules (PWMR), 2016 and Solid Waste Management Rules, 2016 define responsibilities and actions required by municipal authorities, manufacturers, producers, importers and brand owners. Amendments to these

Rules made in March, 2018 have relaxed the regulations on usage of MLPs, factoring in lack of alternatives. While further amendments made in 2021 specify ban on certain SUPs these are not applicable to MLPs for flexible packaging.

The current legislative framework has clarified that every producer or brand owner shall be responsible for safe disposal of plastic waste generated either in their premises or through post-consumer packaging material. They will have to register themselves with concerned authorities like SPCB/CPCB. They need to establish a system for collecting back the plastic waste generated due to their products and this plan of collection to be submitted to SPCB/CPCB while applying for Consent to Establish or Operate or Renewal.

The Ministry of Environment & Forests (MOEF) has also come out with Guidelines for a uniform framework for EPR implementation as per which the primary responsibility for collection of post- consumer waste and creating a recycling ecosystem vests with producers, importers and brand owners. It is important to note here that Polyplex is registered under the PWMR Rules as a "manufacturer" i.e. a supplier of raw material to the producer, whereas the "producer" isdefinedas manufacturer of carry bags or multi-layer packaging.

At Global level also, there are increasing concerns on the usage of plastics in general due to low rates of recycling of post-consumer waste and lack of efficient collection and sorting systems. The ongoing Covid-19 crises has resulted in a re-think on the benefits of plastics in general and may re-orient thinking on recycling strategies and solutions.

Risk mitigation

Flexible packaging is environment friendly compared to traditional rigid forms of packaging owing to its lower carbon footprint, light weight and lower requirement of landfill. The amendment to the Plastic Waste Management Rules in India has diluted the threat to multilayer flexible packaging as it provides for an exemption for material which is recyclable or provides for energy recovery or an alternative use. There is increasing recognition among policy makers and other stakeholders that the functional properties of flexible packaging are unmatched and alternative options are not suitable. Governments and Industry are focusing on developing economic models for collection, sorting and reuse/ recycling of post-consumer plastic waste. There is an increasing trend towards identifying EPR (Extended Producer Responsibility) measures to fund such initiatives and more emphasis is on alternate use of multilayer packaging waste

The Industry is also working on multiple fronts to provide sustainable solutions such as:

Higher rPET content in packaging

• Single substrate packaging solutions

Higher Bio content or Bio sourced solutions

Several alternative usages of plastic waste are being pursued like conversion to fuel oil, incineration, road construction etc.

Covid 19 related risk

The impact of the pandemic on the PET film industry stems from expected fall in disposable income worldwide due to reduction in economic activities/higher unemployment levels and lockdowns in some or other parts of the world. It was expected that it may result in a reduction in the demand in the packaging and industrial segments. These may include expensive snacks/ boutique products, white goods, mobile devices, LED/LCD devices, construction industry applications and automotive segment, thereby leading to a reduction in demand for the films used in these segments.

Risk mitigation

Given that Polyplex’s exposure to Industrial applications is only 28% of total sales, the impact of reduced demand for some industrial applications was limited. Additionally, the increased demand of health and personal protection/hygiene related products helped maintain overall demand levels. Plastic has proved to be much safer, affordable, long lasting and helps in disease containment during these tough times. Consumer staples, which make up bulk of Polyplex’s business, has seen stable to elevated demand. In developed economies such as Europe, US, Japan and Korea - there is some increase in demand for films going into flexible packaging, as consumers gravitate towards more home consumption. Even in developing economies like India people have become more health conscious and prefer to buy packed products rather than those which are sold loose.

During the Covid period, there has been an unexpected shortage of containers seen globally thus resulting in supply chain disruptions. Polyplex with its geographical manufacturing base spread across various countries has been minimally impacted though freight costs have risen significantly the year under review.

Cautionary statement

This report contains forward-looking statements which may be identified by their use of words like ‘plans,’ ‘expects,’ ‘will,’‘anticipates,’ ‘intends,’ ‘projects,’ ‘estimates’ or other words of similar meaning. All statements that address expectations or projections about the future, including statements about the Company’s strategy for growth, market position, expenditures and financial results are forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized.

in the second half of