Rajoo Engineers Ltd Management Discussions.

Statements in this Management Discussion and Analysis of Financial Condition and Results of Operations of the Company describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities laws and regulations. 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. The Company undertaken responsibility to publicly amend, modify or revise forward looking statements, on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in the statement. Important factors that could influence the Companys operations include changes in government regulations, tax laws, economic developments within the country and such other factors globally.

The financial statements are prepared under historical cost convention, on accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the Act) and comply with the indian accounting standards [IND AS notified under the Companies (Indian Accounting Standards) rules 2015. The management of Rajoo Engineers Limited has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements, reflect in a true and fair manner, the state of affairs and profit for the year.

The following discussions on our financial condition and result of operations should be read together with our audited financial statements and the notes to these statements included in the annual report. Unless otherwise specified or the context otherwise requires, all references herein to “we”, “us”, “our”, “the Company”, “Rajoo” are to Rajoo Engineers Ltd.


Global Industry

Global plastics volume was estimated at 281,047.96 kilotons in 2016. Over the past years, there has been considerable demand for plastics as replacement for metals and alloys across various industries such as automotive, industrial machinery, packaging and consumer goods. The industrys criticality lies on technology, since ever-increasing requirement of end-user in terms of product specification and versatility gradually tend to overshadow consumption dynamics. Other factors such as feedstock availability, its volatility in prices, production process and social - political events have a significant impact on industry trends.

Packaging, automotive, electrical & electronics, medical devices, agriculture, infrastructure are prime growth application segments for plastics market. On the automotive front, regulations regarding vehicular weight reduction and fuel efficiency have been instrumental in driving plastics demand.

The packaging sector, which is booming at a tremendous rate, is also expected to provide scope for plastics, particularly PE, PP and PET. Advancements in packaging technologies and subsequent development in specifications for plastics in packaging applications shall be a crucial determinant over the future.

The overall industrys growth rate depends upon high potential region such as Asia Pacific, where industrial output is above global average. Due to considerable rise in consumerism that is driven by economic growth, favorable credit landscape, and increased disposable income, countries in Asia particularly India and China have witnessed exponential rise in manufacturing activities. Plastics, which are consumed in the manufacturing of almost every tangible good, are scheduled to gain traction in terms of demand over the future, thus affecting plastics industry Source : https://www.grandviewresearch.com/industry-analysis/leather-goods-market

Indian Industry

The global plastic processing machinery market size will grow by USD 2.92 billion during 2018-2022. The increasing adoption of automated machines is driving the plastic processing machinery market. By automating a part of the production process, industrial plants can enhance their performance by reducing the scope of human error and minimizing human resource requirement. Several end-user industries are using automated machines in their production line to enhance plastic processing.

End-user industries are increasingly demanding personalization in automated machines along with optimized flexibility in terms of precision and design. To cater to this growing demand, several companies are offering automated plastic processing machines which can be easily integrated into the production line. These automated machines are equipped with controllers and PLCs which allow easy control through communication protocols in the human-machine interface. Thus, the increasing adoption of automated machines is driving the plastic processing machinery market growth at a CAGR of more than 3% during the forecast period.

Today Indian Plastic processing sector comprises of over 30,000 units involved in producing a variety of items through injection moulding, blow moulding, extrusion and calendaring. The industry has taken great strides and in the past few decades, the industry has grown to the status of a leading sector in the country with a sizable base.

Despite the fact that India has one of the highest plastics recycling rates in the world (an estimated 47% of all plastics is recycled) the demand for recycled plastics is huge, especially for commodity plastics such as PP, PET, PS, LDPE and HDPE.

The polymers are processed through various types of techniques namely extrusion, injection moulding and blow moulding in order to manufacture the finished products of which extrusion is the most commonly used process. Extrusion process is the most commonly used process in India and accounts for ~65% of total processed output by downstream plastic processing companies. This process is followed mainly to produce Films & Sheets, Fibers & Filaments Pipe and other miscellaneous applications.

Injection molding is the second most popular process accounting for ~30% of the processed output and is used for Industrial Injection Moulding, Household Injection Moulding and Thermoware / Mould edluggage. Blow molding process, used for manufacturing Bottles, containers, Toys and Housewares, and Rotomoulding, used for manufacturing large circular tanks such as water tanks, both accounts for the remaining ~5% of the processed output. The industry produces and exports a wide range of plastic products and raw materials like, plastic moulded extruded goods, polyester films, moulded / soft luggage items, writing instruments, plastic woven sacks and bags, polyvinyl chloride (PVC), packaging, consumer goods, sanitary fittings, electrical accessories, laboratory/medical surgical ware, tarpaulins, laminates, fishnets, travel ware, and others.

The Indian plastics industry made a promising beginning in 1957 with the production of polystyrene. Thereafter, significant progress has been made, 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.

- During April-October 2018, top five importers of Indian plastic products were China (US$ 553.42 million), US (US$ 234.76 million), Italy (US$ 188.31 million), Bangladesh PR (US$ 168.33 million) and UAE (US$ 159.02 million).

- The Indian plastics industry produces and exports a wide range of raw materials, plastic-moulded extruded goods, polyester films, moulded / soft luggage items, writing instruments, plastic woven sacks and bags, polyvinyl chloride (PVC), leather cloth and sheeting, packaging, consumer goods, sanitary fittings, electrical accessories, laboratory / medical surgical ware, tarpaulins, laminates, fishnets, travel ware, and others.

- 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.

During the year, certain states in India implemented a ban on single use plastic products that affected the entire plastic industry at large. This ban resulted in an overall negative sentiment across the industry that caused a significant decline across entire value chain.

Source:http://ficci.in/spdocument/20872/report-Plastic-infrastructure-2017-ficci.pdf,http://www.bpf.co.uk/article/the-plastics-industry-in india-an overview-446.aspx https://www.ibef.org/exports/plastic-industry-india.aspx,https://www.technavio.com/report/global-plastic-processing-machinery-market analysis share-2018, https://toxicslink.org/docs/Full-Report-Plastic-and-the-Environment.pdf

About Rajoo Engineers Limited

Based in Rajkot, Rajoo Engineers Limited, having made a modest beginning in 1986, has today emerged as an undisputed global player in blown film and sheet extrusion lines. Owing to its focused efforts in blown film and sheet extrusion lines, the Company enjoys premium market position in this segment. Being a technology driven Company, product innovations, world-class quality, state-of-the-art workmanship, increased energy efficiency and high levels of sophistication and automation have become the hallmark of Rajoo products during all these years, positioning the Companys products on a global platform, competing with the established world leaders. With representations in many countries of the world and customers in over 60 countries, the Companys exports have multiplied after its debut in the international market in 1990.

Strong & Diverse Product Portfolio

FOILEX Monolayer Blown Film Lines

AQUAFLEX - Downward Extrusion Blown Film Lines

LABEX - Lab Equipment

MULTIFOIL- Multilayer Blown Film Lines

LAMINA - Mono & multilayer sheet lines

HEPTAFOIL - Seven-layer Co-Extruded Blown Film Line

LAMEX - Extrusion Coating & Lamination Line

DISPOCON - Thermoforming, Foam Vacuum Forming

MULTIFOIL X - Cross lamination machines

Strategic Partnerships

- Kohli Industries Alliance between Rajoo Engineers and Kohli Industries has changed the market dynamics for Extrusion Coating and Lamination Machines

- MEAF - Technical collaboration with MEAF Machines B.V. of Netherlands, globally acclaimed Company in business of sheet extrusion with inline offline thermoforming equipment and thermoforming machinery since 1947

- Tekni-Plex, Inc. (Commodore LLC., USA) - Technical collaboration with leading world player Tekni-Plex, Incformally known as

Commodore LLC., USA since 2007 and is the first Indian Company to introduce XPS foamed sheet lines and Thermoformers in India

- Bausano&Figli, Italy - Joint Venture with Bausano&Figli, Italy for plastic pipe manufacturing machines, granulation machines and WPC extrusion machines in India since 2011 - Wonderpack, India Merger of Wonderpack with Rajoo. A unified approach for benefit of thermoforming industry since 2010


The financial performance of the Company for the year ended March 31st, 2019, is as follows:

Total revenue from operations at Rs. 122.46crore for the year ended March 31, 2019, as against Rs.146.51crore for the corresponding previous period, a decline of 16.41%.A decline in sales was witnessed in the second half of the year due to some of the orders being put on hold by clients on account of ban on single use plastics by some state governments, which resulted in poor market sentiments. This reduced the order flow also as compared to previous year.

The EBIDTA (earnings before interest, depreciation and tax, excluding other income) was Rs. 14.22crore for the year ended March 31, 2019, as against Rs. 21.11 crore for the corresponding previous period, a decrease of 32.66%.This was mainly due to revenue drop and increase in percentage of low value machines which increased material cost.

EBITDA margin decreased to 11.61% in FY19 from 14.41% in FY18.

Net Profit was at Rs. 7.62 crore in FY19 as against Rs. 11.89 crore in FY 18, YoY drop of 35.91%. The interest cost increased due to higher working capital utilization on account of some high value-added machines were manufactured but delayed in lifting due to lack of readiness from the customers side.

Net Profit margin decreased to 6.22% in FY19 from 8.11% in FY18

EPS declined by 36.95% to Rs. 1.28 in FY19 from Rs. 2.03 in FY18

The Board of Directors has recommended, subject to the shareholders approval, a final dividend at 10% i.e. Rs. 0.10 per equity share for the financial year ended March 31, 2019


As on March 31, 2019, the standalone Networth stood at Rs. 66.05 crore and the total debt was at Rs. 17.46 crore.

The cash and cash equivalents at the end of March 31, 2019 were Rs. 1.57 crore. The net debt to equity ratio of the Company stood at 0.24 as on March 31, 2019.

Segment wise Business Performance

The Company is operating in one segment only i.e. Plastic extrusion machines specifically film and sheet extrusion. As compared to other players in this segment, your Company continues to be among the top performers in terms of growth in sales and profits and market share.


The alliance created between Rajoo Engineer and Kohli Industries (leaders in rotogravure printing and laminating machines) for the flexible packaging industry, has comprehended the industry need and both companies joined hands to create a formidable alliance to build and maintain one of the most advanced and versatile Extrusion Coating and Lamination machines.

The Company unveiled Extrusion Coating and Lamination machine as post extrusion process to substitute conventional adhesive lamination process for producing laminate for various packaging applications.

Participated at Indiaplast: Rajoo demonstrated four technologically advanced machines live at Indiaplast event. These machines are expected to have deep ramifications in the extrusion and thermoforming market.

Rajoo Innovation Centre (RIC) provides access to newer technologies incubated inside the center, it offers additional resource to those who may have exhausted their existing capacities and offers customers an opportunity to conduct trials and develop newer products.

Rajoo raises the bar of workmanship performance and quality with adding four new 5 axis machines which are technologically advanced machine tools that employ precise machining technology to produce extremely high-quality components with precision and repeatability. The digitally designed complex components are seamlessly transposed to these machine tools directly, eliminating the need for human intervention and related errors.

The Company launched Twin-screw sheet extrusion system with focus on using PET bottle flakes for producing PET sheet for a host of established and proven packaging applications. The concept of using Pet bottle flex for semi rigid packaging is also in line with the objective of Swatchh Bharat Abhiyan and sustainability.


Like every business, the company faces risks, both internal and external, in the undertaking of its day-to-day operations and in pursuit of its longer-term objectives. A detailed policy drawn up and dedicated risk workshops are conducted for each business vertical and key support functions wherein risks are identified, assessed, analyzed and accepted / mitigated to an acceptable level within the risk appetite of the organization. The risk registers are also reviewed from time to time.

The Company faces the following Risks and Concerns:

Credit Risk

To manage its credit exposure, Rajoo has determined a credit policy with credit limit requests and approval procedures. Company does its own research of clients financial health and project prospects before bidding for a project. Timely and rigorous process is followed up with clients for payments as per schedule. The company has suitably streamlined the process to develop a focused and aggressive receivables management system to ensure timely collections.

Interest Rate Risk

The Company has judiciously managed the debt-equity ratio. It has been using a mix of loans and internal cash accruals. The Company has well managed the working capital to control overall interest cost.

Competition Risk

This risk arises from more players wanting a share in the same pie. Like in most other industries, opportunity brings with itself competition. We face different levels of competition in each segment, from domestic as well as multinational companies. The Company has created strong differentiators in project execution, quality and delivery which make it resilient to competition. Furthermore, the Company continues to invest in technology and its people to remain ahead of the curve. A strong, stable client base consisting of large and mid-sized corporations further helps to insulate the Company from this risk. We counter this risk with the quality of our infrastructure, our customer-centric approach and our ability to innovate customer specific solutions, focusing on pricing and aggressive marketing strategy, disciplined project executions, coupled with prudent financial and human resources management and better control over costs. Thus, we do not expect to be significantly affected by this risk.

Input Cost Risk

Our profitability and cost effectiveness may be affected due to change in the prices of raw materials, power and other input costs. Some of the risks that are potentially significant in nature and need careful monitoring are Raw Materials prices, availability of Power etc.

Liability Risk

This risk refers to our liability arising from any damage to cargo, equipment, life and third parties which may adversely affect our business. The Company attempts to mitigate this risk through contractual obligations and insurance policies.


Technology Trends

Innovation in raw materials such as Nano-composite reinforcing agents and bio-de-gradable polymers

Plastics are replacing wood, metals, natural rubber and other expensive engineered plastics

Regulatory Trends

Increasing emphasis on safe, odour-free, sustainable and green materials

Stringent CO2 emissions regulations and guidelines especially in automotive industry

Raw Material Trends

The fluctuation in the price of crude oil or natural gas has an impact on plastic industry

Plastic additives market to register highest growth in packaging and automotive applications

Application Trends

Increasing demand for lightweight materials replacing glass, rubber and wood in numerous applications is driving plastics market Replacement of heavy metals in dyes and pigments applications by plastics

Supplier Power

Factors such as presence of few supplier and large number of buyers are leading to greater supplier power

Multiple plastics applications have spurred higher product variety demand


Competition from local and multinational players

Execution risk

Regulatory changes

Credit squeeze on lending by NBFCs

Input Cost risk

A ttraction and retention of human capital

Technological Advancements

The most critical, challenges that Indian plastic industry is facing today is the “image of plastics” and unmindful ban on some plastic products in some states in India. Some of the myths perpetuated about plastics are:

Feared as being toxic

Could be health hazards

Maybe harmful to the soil

Could cause acid rain

Is not environment friendly

Has high carbon foot print


The Company implemented proper and adequate systems of internal control to ensure that all assets are safeguarded and protected against loss from any unauthorized use or disposition and all transactions are authorized, recorded and reported correctly. The Company also implemented effective systems for achieving highest level of efficiency in operations, to achieve optimum and effective utilization of resources, monitoring thereof and the compliance with provisions all laws including the Companies Act, 2013, Listing Agreement, directions issued by the Securities and Exchange Board of India, labour laws, tax laws etc. It also aimed at improvement in financial management, and investment policy. The System ensures appropriate information flow to facilitate effective monitoring. The internal audit system also ensures formation and implementation of corporate policies for financial reporting, accounting, information security, project appraisal, and corporate governance. A qualified and independent Audit Committee of the Board of Directors also reviews the internal control system and its impacts on improvement of overall performance of the Company.


The Companys HR philosophy is to establish and build a high performing organization, where each individual is motivated to perform to the fullest capacity: to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realize the full potential of our personnel. Industrial relations are cordial and satisfactory.


The International Monitory Fund (IMF) in its latest World Economic Outlook update retained its GDP growth forecast for India at 7.4% in 2018 and further projected it to grow by 7.8% in 2019. India once again is estimated to win the tag of the world fastest growing economy in 2018 and 2019 which it lost temporarily to China in 2017. The global economic growth estimate was revised to 3.8% in 2017, which is 0.2 percentage points higher than its October estimates and to 3.9% each in 2018 and 2019, 0.2% percentage point higher. GDP growth gaining momentum in India, US. Middle East region, and Brazil, amongst others, supported the upwards revision GDP growth estimate in 2018

Plastic have significantly penetrated in all aspects of our life owning mainly to its ability to sustain itself in the nature for long period of time as compared to other commercial materials. By, virtue of their superior characteristics, plastics are replacing various metals and traditional materials almost in all applications. It is necessary to understand the positive role of plastics are playing and could continue to play in improving the quality of life of citizen. Automotive has the highest penetration among all segments of plastics. Increasing incorporation of plastics as opposed to metals & alloys in automotive components has been a major factor for the applications growth. Over the recent past, there has been a considerable rise in automotive production, which is largely driven by growth of the industry and manufacturing landscape of emerging markets.

India has established a strong position in global flexible packaging trade, rising to become a leading exporter. This ascension of Indian flexible packaging industry in global market can be attributed to the ability to produce at lower cost while maintaining quality standard. Value of flexible packaging products exported from India have increased from less than INR 3 Bn in FY 2000 to over INR 30 Bn in FY 2018. This growth in exports has been aided by a weak rupee, which has been depreciating steadily in the past few months. Thus, high potential application segment with moderate penetration is packaging. Plastics have been an integral part of packaging industry.

The overall industrys growth rate depends upon high potential region such as Asia Pacific, where industrial output is above global average. Due to considerable rise in consumerism that is driven by economic growth, favorable credit landscape, and increased disposable income, countries in Asia particularly India and China have witnessed exponential rise in manufacturing activities. Plastics, which are consumed in the manufacturing of almost every tangible good, are scheduled to gain traction in terms of demand over the future, thus affecting plastics industry.