RDB Rasayans Ltd Management Discussions.

World Economic Conditions

The global economy will continue to grow at a steady pace of around 3 percent in 2019 and 2020 amid signs that global growth has peaked. However, a worrisome combination of development challenges could further undermine growth, according to the United Nations World Economic Situation and Prospects (WESP) 2019.Growth in the United States is projected to decelerate to 2.5 per cent in 2019 and 2 per cent in 2020, as the impulse from fiscal stimulus in 2018 wanes. Steady growth of 2.0 per cent is projected for the European Union, although risks are tilted to the downside, including potential fallout from Brexit. Growth in China is expected to moderate from 6.6 per cent in 2018 to 6.3 per cent in 2019, with policy support partly offsetting the negative impact of trade tensions. Several large commodity-exporting countries, such as Brazil, Nigeria and the Russian Federation, are projected to see a moderate pickup in growth in 2019-2020, from a low base. Amid the rise in global trade tensions, global trade growth moderated over the course of 2018, from growth of 5.3 per cent in 2017, to 3.8 per cent. While tensions have materially impacted some specific sectors, stimulus measures and direct subsidies have so far offset much of the direct economic impacts on China and the United States. But a prolonged escalation of trade tensions could severely disrupt the global economy. The global market for polypropylene woven bags and sacks market was valued at US$ 3,421.5 million in 2017. The market is expected to expand at a CAGR of 4.2% over the forecast period, 2018-2028.

Indian Economic Conditions

India has emerged as the fastest growing major economy in the world as per the Central Statistics Organisation (CSO) and International Monetary Fund (IMF) and it is expected to be one of the top three economic powers of the world over the next 1015 years, backed by its strong democracy and partnerships. Indias GDP is estimated to have increased 7.2 per cent in 201718 and 7 per cent in 2018-19. India has retained its position as the third largest startup base in the world with over 4,750 technology start-ups. Indias labour force is expected to touch 160-170 million by 2020, based on rate of population growth, increased labour force participation, and higher education enrolment, among other factors, according to a study by ASSOCHAM and Thought Arbitrage Research Institute. Indias foreign exchange reserves were US$ 405.64 billion in the week up to March 15, 2019, according to data from the RBI. With the improvement in the economic scenario, there have been various investments in various sectors of the economy. The M&A activity in India reached record US$ 129.4 billion in 2018 while private equity (PE) and venture capital (VC) investments reached US$ 20.5 billion. During 2018-19 (up to February 2019), merchandise exports from India have increased 8.85 per cent year-on-year to US$ 298.47 billion, while services exports have grown 8.54 per cent year-on-year to US$ 185.51 billion. Net direct tax collection for 2018-19 had crossed Rs 10 trillion (US$ 144.57 billion) by March 16, 2019, while goods and services tax (GST) collection stood at Rs 10.70 trillion (US$ 154.69 billion) as of February 2019.

As India continues to ascend in the rankings of the worlds largest economies, its contribution to global GDP growth momentum will also increase. India will also play an increasingly important role as one of the Asia-Pacific regions major economic growth engines, helping to drive Asian regional trade and investment flows.

Industry Structure & Developments

The global market for polypropylene woven bags and sacks market was valued at US$ 3,421.5 million in 2017. The market is expected to expand at a CAGR of 4.2% over the forecast period, 2018-2028.

Polypropylene woven bags and sacks are 100% reusable and non-toxic. Polypropylene woven bags and sacks find applications in various end use industries. Agriculture product packaging, food packaging, geotechnical packaging, tourism and transport, daily necessities, flood control products are some of the prominent applications of polypropylene woven bags and sacks. On the basis of bag type, the polypropylene woven bags and sacks market is segmented into valve bags, gusseted bags, block bottom bags, pinch bottom bags, open mouth bags and others.

The demand for polypropylene bags and sacks from the cement industry has increased significantly in the last few years, due to increase in urbanization and growth in the industrial sector. Multinational companies are eyeing the Middle East region in anticipation of increased demand from the building & construction industry. The cement industry in Saudi Arabia is expected to grow at an annual average rate of the 10-12%, during 2014-2020. Steady increase in the cement industry will increase the demand for its packaging, and in turn, polypropylene woven bags and sacks. Polypropylene woven bags & sacks offer optimum strength and good material handling during transportation and shipping. They are highly preferred for cement packaging. In recent years, it has been noticed that the number of polypropylene woven bags & sacks manufacturers for industrial applications has increased dramatically.

SWOT Analysis

Strengths and Opportunities:

Your Company is taking all efforts to improve the quality and productivity to get more orders at competitive rates. The strength of the business lies in the manufacture and supply of value added goods to reach the end users. The intense competition with many enterprises fighting for a share in market demands competitive pricing and quality in the product to survive and your company is able to grow under this challenging conditions as result of expertise from decades of experience in the market, quality improvements, innovation, better pricing and servicing of customers and the ability to meet the demand from market.

Weaknesses and Threats:

Availability of labour: There is tremendous shortage of manpower and being a labour intensive industry it has the potential to affect production. However, management has adequate systems in place to constantly monitor manpower requirement, provide internal training and is also introducing new initiatives to reduce attrition rates.

Volatility in Raw Material prices: The prices of polypropylene and polyethylene are fluctuating. This can adversely affect the growth of the bulk container packaging industry as these two products are used in the manufacture of bulk container packaging.

Competition Threats: Though you company is well positioned in the market, yet it is exposed intense competition from other large and small organizations which could put pressure on market share and margins.

Replacement Threats from Substitutes: With the growing alertness against the use of plastic in daily life at an alarming rate, there is a threat of close substitutes.

Risks and Concerns

1. Your Company shall need capital for fast expansion and any delay in raising capital is a risk to our growth.

2. Your Company is cost conscious and therefore we have control on spending. Price volatility in the market is an area of concern. Risks arise also due to fluctuation in foreign exchange market. Volatility in price leads to stoppage in production and increase manufacturing costs.

3. Your Company operates in Polymer based industry which is highly regulated and therefore any adverse regulation may affect our growth.

The Company has a well defined Policy for risk mitigation which is subject to change as and when required.

Segment Wise Performance

The Company is primarily engaged in the business of manufacture and sale of polymer-based woven bags. It also deals in trading of raw materials to further enhance its performance.

Financial Performance

During the year under review your Company has achieved revenue of Rs 89,31,29,859 as against Rs. 78,28,41,355 in the previous year. PBIDT rose to Rs 14,75,78,251 as compared to 14,13,24,393 in the previous year. PAT for the year under review was Rs 9,00,88,290 which is almost 1.23 times that of previous years PAT of Rs 7,33,89,032.


Driven by the requirement for FIBC bags your Company is aggressively making effort to expand business activities in West Bengal and also all over India. The Company will continue to tap new global prospects by leveraging its leadership position in the FIBC segment. The Company is optimistic of increasing its revenue by focusing on plastic processing solutions.

Internal Control Systems and their Adequacy

Your company has adequate Internal Audit and Control system across the Company. The internal control systems are competent and provide, among other things, reasonable assurance of recording transactions of operations in all material respects and of providing protection against significant misuse or loss of company assets. The internal processes have been designed to ensure adequate checks and balances at every stage. Internal audit is conducted to assess the adequacy of our internal controls, procedures and processes, and the Audit Committee of the Board reviews their reports. The management duly considers and takes appropriate action on the recommendations made by the Statutory Auditors, Internal Auditors and the Audit Committee of the Board of Directors.

Human Resource

The unstinted effort and hard work of the employees has been the major factor for the growth of your Company. The Company employed a total 97 employees in the last year. Your Company endeavours to maintain very cordial and harmonious relations with its employees.

Cautionary Statement

Statements in the Management discussion and analysis, describing the Companys objectives, outlook, opportunities and expectations may constitute" Forward Looking Statements" within the meaning of applicable laws and regulations. The Actual result may vary materially from those expressed or implied in the statement. Several factors make a significant difference to the Companys operations including the government regulations, taxation and economic scenario affecting demand and supply condition and other such factors over which the Company does not have any direct control.