Purity Flex Pack Ltd Management Discussions

Overview

Purity Flexpack Limited is engaged in the field of Flexible Packaging. Our vision is to be preferred supplier for flexible packaging to Customers across India and Overseas maximizing value for all stakeholders.

This Management Discussion & Analysis Report presents the key performance highlights of the year 2023-24 pertaining to the Companys business. This review should be read in conjunction with the Integrated Report presented in the earlier sections of this Annual Report, the Companys financial statements, the schedules and notes thereto and the other information included elsewhere in this Annual Report. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS), complying with the requirements of the Companies Act 2013 and the guidelines issued by Securities and Exchange Board of India (SEBI).

Our ultimate objective is to meet Customers dynamic packaging needs and to achieve excellence in all concerned areas to produce cost effective flexible packaging with highest quality & standards for our esteemed Customers.

Industry structure and developments

The packaging industry in India is moderately fragmented, with several players competing to improve their market share. The packaging industry in India is characterized by

- High fragmentation, with numerous small and medium-sized players

- Increasing competition from unorganized players

- Growing demand for sustainable and innovative packaging solutions

- Rising raw material costs and fluctuating prices

- Stringent regulations and quality standards.

The flexible packaging industry continues to grow, driven by demand for sustainable and convenient packaging solutions. Key trends include:

- Increasing adoption of flexible packaging in e-commerce and retail

- Growing demand for sustainable and recyclable packaging materials

- Advancements in technology and machinery

Outlook

The outlook for the packaging industry in India remains positive, driven by the factors like growing demand for sustainable and innovative packaging solutions. Further, rising popularity of digital printing and smart packaging technologies has also lead to enhance the revenue for packaging industries.

The market is expected to grow at a CAGR of 11.06% from 2024 to 2029, driven by the food and beverage, retail and e- commerce, and pharmaceutical industries. However, the industry also faces challenges such as fluctuating raw material prices, regulatory changes and environmental concerns. The management is now poised to take our business to the next level by exploring opportunities in international markets with the kind of infrastructure, the Company will be able to get better volumes and better profitability. Expanding into international markets allows us to diversify our revenue streams, reducing dependence on the domestic market and mitigating risks.

Risks & Concerns

The purpose of risk management is to identify potential events that may affect achievement of organizational strategy, business objectives and management of associated risks within the Companys risk appetite. The Board periodically assesses all facets of risks in the Companys operating landscape.

The key risks, as a packaging industry in the market are, volatility in raw material prices, intense competition from established players and new entrants, stricter regulations on packaging materials, waste management, and environmental impact, ensuring product quality and safety to avoid recalls and reputational damage, staying up-to-date with evolving packaging technologies and innovations. The Company has been facing disturbances due to uncertainty from shipping industries on delivery schedules as well as exorbitant freight for more than a year. Therefore, air freight has gone high considerably with the increase of export from India as compared to China. Hence, servicing exports might become prohibitive for India in international market.

To meet up the threats and tap into opportunities, we execute involve cross-functional and cross-segment collaboration and active dialogue with the customers to develop ways to increase value and understand our competitive position. We are confident that our focus on sustainability, innovation, and customer satisfaction will enable us to navigate these challenges and achieve our goals.

Internal Control Systems

The Company has a proper and adequate Internal Financial Control System, to ensure that all its assets are safeguarded and protected against loss from unauthorized use or disposition. The Control System enables the management to focus on growth and achieve excellence in all aspects of operations. The Company has an internal audit system, which carries out independent periodic reviews. The prime objective of such audit is to evaluate the functioning and quality of internal controls and provide assurance of its adequacy and effectiveness. The scope of internal audit covers a wide variety of operational and financial matters and includes a follow-up review of corrective actions agreed for implementation. During the year under review, no material or serious observation has been received from the Statutory Auditors and the Internal Auditors of the Company on the inefficiency or inadequacy of such controls.

Further, one of the most important aspects in business growth is customer retention. Maintaining brand loyalty and reputation through a strong cyber security position is paramount for customers today. Our strong policies on data privacy and cyber security ensures protection against internal and external threats.

Financial performance with respect to operational performance

The summarized financial results are given hereunder:

Highlights of results:

(Rs. in lakhs)

Particulars	2023-24	2022-23
Total Income	10802.24	11568.37
Profit Before Financial Cost, Depreciation & Tax	705.54	699.31
Interest and Finance expenses	205.39	212.35
Depreciation and Amortization expenses	378.56	366.70
Profit Before Tax	121.59	120.26
Profit For the Year	93.47	96.66

Total Income

Sales/ Income from operation decreased by 6.62% from Rs. 11568.37 Lakhs in 2023 to Rs. 10802.24 Lakhs in 2024.

Interest and Finance charges

The financial expenses has decreased to Rs. 205.39 Lakhs in 2024 from Rs. 212.35 Lakhs in 2023.

Depreciation and amortization expenses

The depreciation charged to revenue has increased to Rs. 378.56 Lakhs in 2024 as against Rs. 366.70 in 2023.

Profit Before Tax

Your Company has made a profit of Rs. 121.59 Lakhs for the year 2023-24 as against the previous years Profit Before Tax of Rs. 120.26 Lakhs.

Profit After Tax

The Companys profit during the year under review is Rs. 93.47 lakhs as compared to last year profit of Rs. 96.66 lakhs. In spite of reduction in sales merely by 6.5%, our company could achieve the profit of Rs. 93.47 lakhs.

As always, your Company looks forward to do well in the year ahead and is optimistic of its abilities to address the set of opportunities and challenges that the coming year will present.

Threats and Opportunities

The Company is in the business of manufacturing of customized packaging materials. Flexible packaging is one of the rapidly growing segments of the packaging industry. Flexible packaging is becoming more popular due to its convenience, light weight and cost-effectiveness. For sustainable packaging to grow demand in the market, it is required to increase consumer awareness about environmental issues creates a demand for eco-friendly packaging solutions. One of the important factors driving the growth of flexible packaging market is the growing inclination of consumers towards convenience products.

Being flexible packaging company, there is always threat of competition, fluctuating market prices and regulatory changes at intervals which impacts the profitability of company. These threats can have a significant impact on our business, and we are taking proactive steps to mitigate them, such as diversifying our product offerings, investing in sustainable technologies, and building strong relationships with our customers and suppliers.

Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-specific financial ratios. The same has been mentioned under the table given below:

Particulars	2023-24	2022-23
Debt Equity Ratio (times)	0.21	0.31
Net Capital Turnover Ratio (times)	199.94	78.32
Operating Profit Margin	6.55%	6.14%
Net Profit Margin	0.87%	0.84%
Return on net worth	2.79%	2.98%
Return on investments	7.25%	2.94%

Environment, Occupational Health & Safety

Your Company is committed to conducting its operations with utmost concern towards the environment and ensuring a safe and healthy workplace for all employees. The collective endeavor of the Companys employees at all levels is directed towards sustaining and continuously improving standards of environment management, and occupational health & safety in an endeavor to meet and exceed international benchmarks.

Developments in Human Resources /Industrial Relations

The Company continues to lay emphasis on qualitative growth of its human resources by providing congenial and constructive work environment, in consonance with its strong belief that the real strength of its organization lies in its employees. In addition to this, formal training through external & internal faculty is also conducted from time to time in acquiring domain knowledge and imbibing the corporate quality culture. None of the Senior Management Personnel have any material, financial and/or commercial transaction, where they have personal interest that may have potential conflict with the interest of the Company at large.

Capital Investment

Our company has invested heavily in capital expenditures to enhance our capabilities, increase efficiency and reduce costs. The capital investments made by the Company are expected to generate returns through increased revenue, cost savings, and improved efficiency. These investments demonstrate our commitment to growth, innovation and sustainability, positioning us for long-term success in the packaging industry.

Cautionary Statement

The statements in the "Management Discussion and Analysis Report" section describes the Companys objectives, projections, estimates, expectations and predictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending upon the economic and climatic conditions, Government policies and other incidental factors. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized.

For and on behalf of the Board For Purity Flexpack Limited

	Anil Patel
Place: Vanseti	Chairman & Managing Director
Date: 27th May, 2024	DIN : 00006904