Prima Plastics Ltd Management Discussions.


While India remain one of the fastest growing economy in the world. The rate of growth of industrial sector has come down in recent past GDP growth too decline to around 7%. The present government initiative on Swachh Bharat, Small cities affordable housing etc. are also taking its own time. It is expected that with the stability of political certainty, the overall economy and other scheme of the present Government will pick up the pace over a period of time.

On positive side, the RBI has done reasonable good job by keeping inflation under control and 50 bps rate cut in in leading rates. The crude oil has also stabilized after initial heat up, and GST collection has gone up in recent months. These are sign of growth momentum.

Against the backdrop of the mixed conditions, your company witness consistent growth in existing business and initiative to expand the product line with positive growth in business in coming years.


The Indian plastics industry has made significant progress since beginning and the industry has grown and diversified rapidly. The industry spans the country and hosts more than 2,000 exporters. It employs about 4 million people and comprises more than 30,000 processing units, 85-90 percent of which are small and medium-sized enterprises.

During April-October 2018, plastics export from India stood at US$ 3.47 billion out of which exports of raw plastic material stood at US$ 2.62 billion. The Indian plastics industry offers excellent potential in terms of capacity, infrastructure and skilled manpower. It is supported by a large number of polymer producers, and plastic process machinery and mould manufacturers in the country.

Among the industrys major strengths is the availability of raw materials in the country. Thus, plastic processors do not have to depend on imports. These raw materials, including polypropylene, high-density polyethylene, low-density polyethylene and PVC, are manufactured domestically.

India is ready to have 18 plastic parks and Government will be investing र 43.40 crore to increase the domestic production of plastics. This will achieve environmentally sustainable growth and increase employment.

The Company maintains its view that there is ample growth opportunity for plastic business due to continued focus of the government on Swachh Bharat Abhiyan, infrastructure development and ease of doing business in the country.

The Company invested in last year in machineries to increase its production capacities and this year invested in mould to add newer products range such as cylindrical containers, Pallet containers, Battery Tub and Tray, Ice Box, Cup Boards, Kids Study Table, Step Stool and few new models of Chairs. The Company recognise the opportunity and take appropriate steps. The Company is also expanding its territory and focusing on Pan India and International presence. The Management is confident that the efforts taken by the Company will fetch good results.


Revenue from Operation:

The Company deals in only one segment i.e. Plastic Moulded Articles segment and serving its customers from their manufacturing units in Daman, Cochin Ongole, and other three in central America & South Africa. The Company focus is on expanding its customer base in new territories and to add newer product lines to tap additional business.

Prices of Raw material were on increasing trend from the beginning of the year till mid of November 2018 thereafter it came down in December 2018 again picked up in the rest of the months. The Profit margin were also under pressure due to capital expansion undertaken in last year and fluctuation in raw material prices during the year. Exports of the company was marginally effected due to growth of local players in exporting countries

The turnover of the company has gone up to र 11,140 lakhs from र 9,638 lakh in last year registering a growth of 15.58 %. This was happened due to new product range offered by the company.

Operating Profit:

The Company registered operating profit of र 1,421.68 Lakhs in comparison to र 1,683.15 Lakhs in last year, due to fluctuation in raw material prices and other operating cost.


The interest cost has substantially increased to 247.88 Lakhs in comparison to 145.77 Lakhs in previous year. The cost of borrowing may be considered partially set off from the interest of र 87.08 lakhs earning from Subsidiary Company.


Your Company has registered a lower Profit before Tax of र 687.16 Lakhs as against र 1046.12 Lakhs in the previous year and net profit after tax of र 546.59 Lakhs against र 753.70 Lakhs in previous year.

Changes in Key Financial Ratios:

Pursuant to provisions of Regulation 34(3) of SEBI (LODR) Regulations 2015 read with Schedule V Part B(i) details of the change in key financial ratios is given hereunder:

Name Category

Year Ended

31/03/2019 31/03/2018 in %
Debtors Turnover in Days 86 80 7.5
Inventory Turnover in Days 76.42 83.85 (8.86)
Interest Coverage Ratio Times 3.77 8.13 (53.62)
Current Ratio Times 1.83 1.85 (1.08)
Debt Equity Ratio Times 0.51 0.38 34.20
Operating Profit Margin % 12.76 17.46 (26.92)
Net Profit Margin % 4.91 7.75 (36.64)
Return on Net Worth % 20.71 30.04 (45.05)


With the reduction in GST rate from 28% to 18%, the Plastics Industry is relived from higher taxes to level playing platform. The Government has also relaxed certain provisions and relief from some complex provisions. This has helped out in ease of doing business.

The government has committed to revisit GST rates on growth of GST collection and the plastics industry expecting lower tax rate. On the other hand, it was widely expected that with the implementation of GST regime and e-way bill, the unorganised sector will fall in compliance regime for its very survival. However, it has yet to give in result.

The company remains committed to boost the overall business and added many range of new products to cater industry and government agencies. Efforts are also on to bring back export business on growth path.

The Company has made several investments in past two years within India and overseas units and also planning in current year. The Management foresees a reasonable growth in these new business avenues inspite of Competition from established business houses. The Company also added new range of plastic furnitures with modern design in line with consumer preferences and useful utilities.

With the formation of new government at centre the Political Stability is expected to settle for next 5 years and the new government may focus in growth and upliftment of overall economy. The management expects a steady growth in its top and bottom line in coming years.


Plastics Industry has a big scope in various government schemes such as infrastructure development and Swachh Bharat Abhiyan and we foresee higher consumption with boost in economy. The Company also focussing to add new products for industrial sector and determine to emerge as a major player with in quality products and good corporate governance.


As plastic is derived mainly from crude oil and natural gas, price and availability of plastic depends on the price of these products. Manufacturers may have to pass on the price fluctuations resulting from the volatility of crude oil prices. Manufacturers are subject to growing regulations that govern the production, disposal, and cleanup of hazardous chemicals, as plastic products usage contributes to environmental pollution. In addition, Product lifecycle has decreased from years to months, affecting the entire supply chain of plastic goods. Quick turnaround on customer choices is critical for plastic companies to stay competitive.

Any major upward movement in the Crude Prices could change the inflationary scenario impacting on input prices and the margin of the Company. Further the frequent changes in regulatory laws specially the steep penal provisions, may create additional compliance burden on the Company. Further Weak Global outlook can make it difficult for the country to continue on a growth plan, especially after the stiff stand by American Government on Import from China and India.


The Company has adequate internal financial control procedures commensurate with its size and nature of business. The Company has appointed Internal Auditors comprising professional Chartered Accountants who periodically audit the adequacy and effectiveness of the internal controls laid down by the management and suggest improvements. Based on the audit observation and recommendations, follow ups and remedial measures are being taken including review and increase in scope, if necessary. The Audit Committee of the Board of Directors periodically reviews the audit plans, internal audit reports and adequacy of internal controls.

As a matter of proactive planning, the Board has also constituted an Audit Committee which meets periodically to review the financial performance and the accuracy of financial records. The management duly considers and takes appropriate action on the recommendations made by the Internal Auditors, Statutory Auditors and the Audit Committee of the Board of Directors.


The Company has a well-documented risk management Policy, which is reviewed by the management periodically. The volatile movement in exchange rates caused by major global developments undoubtedly have an impact on the Company, since the Company is exposed to foreign currency loans and makes payment in foreign currency for import of machinery and raw materials and transactions with overseas JV and Subsidiary. The Company many times dont hedge the currency exposure and takes advantage of its natural hedge by exports of moulded articles and return on investment from Subsidiary / Joint Venture Company (JV) to full extent. The Company does not deal in derivative transaction(s) as a matter of policy.

Your Company is also exposed to business risk which may be internal or external risk, requiring quick adaptability to tackle different business risks. To ensure our long term corporate success, it is essential to identify, analyse and mitigate risk by appropriate control measures.

Apart from the risks on account of foreign exchange and commodity price, the business of the Company is exposed to certain operating business risk which may be internal or external risk, requiring quick identify, analyse and mitigation of risk by appropriate control measures and collective actions.


Your Company recognizes the importance of a motivated and skilled human resource. Your Company endeavors to create a challenging and favorable work environment that encourages entrepreneurial behavior, innovation and the drive towards business excellence. Several skilled based training programs were conducted during the year with the help of external consultants, especially for the staff in Sales and Marketing functions. Your Company is also in the process of revamping its hiring and appraisal processes in line with benchmarked practices in industry


Certain statements in the reports of the Board of Directors and Managements Discussions and Analysis may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied since Companys operations are influence by many external and internal factors beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any of these statements on the basis of any subsequent developments, information or events.

For and on behalf of the Board of Directors
Bhaskar M. Parekh
(DIN - 00166520)
Executive Chairman
Date : May 22, 2019
Place : Mumbai