The Managements views on the Companys Performance and outlook are discussed below:
INDUSTRY STRUCTURE AND DEVELOPMENTS:
Indian plastic industry market is one of the leading sectors in the countrys economy.
The history of the plastic industry in India dates to 1957 with the production of polystyrene. Since then, the industry has made substantial progress and has grown rapidly. The industry is present across the country and has more than 2,000 exporters. It employs more than 4 million people in the country and constitutes 30,000 processing units; among these, 85-90% belong to small and medium enterprises. India manufactures various products such as plastics and linoleum, houseware products, cordage, fishnets, floorcoverings, medical items, packaging items, plastic films, pipes, raw material, etc. The country majorly exports plastic raw materials, films, sheets, woven sacks, fabrics, and tarpaulin. The Government of India intends to take the plastic industry from a current level of Rs. 3 lakh crore (US$ 37.8 billion) of economic activity to Rs. 10 lakh crore (US$ 126 billion) in four-five years.
OPPORTUNITIES:
The Union Ministry of Commerce and Industry of India targets to increase the plastic exports of the country to US$ 25 billion by 2025. There are multiple plastic parks are being set up in the country in a phased manner that will help improve the plastic manufacturing outputs of the country. Under the plastic park schemes, funds of up to 50% of the project costs or a ceiling cost of Rs. 40 crore (US$ 5 million) per project.
Government initiatives like "Digital India", "Make in India", and "Skill India" will also boost Indias Plastic industry. For instance, under the "Digital India" program, the government aims to reduce the import dependence of products from other countries, which will lift the local plastic part manufacturers.
The government also launched a program for building Centres of Excellence (CoEs) to develop the existing petrochemical technology and promote the research environment pertaining to the sector in the country. This will aid in promoting and developing new applications of polymers and plastics in the country. Additionally, about 23 Central Institute of Plastics Engineering & Technology (CIPET) have been approved to accelerate financial and technological collaboration for promoting skills in chemicals and petrochemicals sector.
THREATS, RISKS AND CONCERNS:
Sustainable production: Though the huge demand for plastic products around us might seem to be a boon, it is quite a big responsibility. It is equally challenging to meet such growing demand of the growing population. During the pandemic too, the demand for plastic utility products grew to a great extent. To manage the mushrooming demand one needs to set up a big manufacturing unit and huge manpower. Maintaining and fulfilling the government norms for the large manpower at work is also very challenging. The demand always creates pressure on the manufacturer to produce more and more quickly. Also, the lifespan of a plastic product has decreased to months from years which has created the need to produce more plastic products in less time.
Meeting the quality: It becomes quite impossible to reduce human errors to zero percentage. The efficacy of the products produced is hampered in a big way. These lots are segregated from the fresh lots and increase wastage. The products that have quality issues thus increase the cost of production. It needs to put in constant efforts and checks to ensure the quality at each stage of production.
The environmental Pollution: The unaltered important place of plastic in our daily life could not be ignored at all. Such huge usage of plastic products is being causing Environmental pollution. It is leading to huge dumps of non-biodegradable wastes of plastic bottles, polythene, packing material, etc. From production to use to disposal of plastic, each stage adds to the greenhouse effect affecting nature. All of these together put a great challenge on the manufacturers to save the environment and continue plastic production as per the market requirement. It is quite challenging to fulfill the environmental regulations with tons of plastic production every day Innovation and competition: Plastic products are in so much of demand, and is probably a very common business around the globe. At the same time the more the competitors the more is the responsibility to stand out of the crowd. It adds immense pressure to innovate uniqueness in your product. To capture the market your product must have special unique features that attract and hold your customer base. Not only once, but the manufacturing units also need to innovate something or the other at some fixed interval of time to remain the bestseller in the plastic industry.
COMPANY PROFILE AND PERFORMANCE:
Business Process:
1. Trading Business Process
The trading business vertical of the company is a B2B model and operates primarily on an agency basis wherein the goods are procured from suppliers on cash or credit basis and supplied to customers on credit basis. The procurement of goods is carriedout on an "order" basis as well as "demand estimation basis".
2. Proposed Manufacturing Process
The basic raw material is PVC Granules. This raw material is fed into the Feeding hopper of Injection Moulding Machine. Wherein, the raw material is heated by the heater and is converted into hard solvent and the hard solvent then injected into moulds. Water is circulated and re-circulated on moulds for cooling purpose. The injection moulding items are then packed and are ready for sale.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has adequate internal control procedures commensurate with its size and nature of business in India. The Company has clearly laid down policies, guidelines and procedures that form a part of the internal control systems. The adequacy of Internal Control Systems, which encompasses the Companys business processes and financial reporting systems, is examined by the management as well as by its internal auditors at regular intervals.
The internal auditors carry out audits at regular intervals in order to identify weaknesses and suggest improvements for better functioning. The observations and recommendations of the Internal Auditors are discussed by the Audit Committee to ensure effective corrective action.
OUTLOOK:
The Ministry of Commerce & Industry of India aims to increase the plastic exports of the country to US$ 25 billion by 2025. Multiple plastic parks are being set up in the country in a phased manner that will help improve the plastic manufacturing outputs of the country. Under the plastic park schemes, funds of up to 50% of the project costs or a ceiling cost of Rs. 40 crore (US$ 5 million) per project.
Government initiatives like "Digital India", "Make in India", and "Skill India" will also boost Indias Plastic industry. For instance, under the "Digital India" program, the government aims to reduce the import dependence of products from other countries, which will lift the local plastic part manufacturers.
The government also launched a program for building Centers of Excellence (CoEs) to develop the existing petrochemical technology and promote the research environment pertaining to the sector in the country. This will aid in promoting and developing new applications of polymers and plastics in the country. Additionally, about 23 Central Institute of Plastics Engineering & Technology (CIPET) have been approved to accelerate financial and technological collaboration for promoting skills in chemicals and petrochemicals sector. Our company is looking forward to these opportunities and planning to increase its production capacities in future.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS:
The Companys relations with the employees continued to be cordial and harmonious with its employees. It considers manpower as its assets and that people had been driving force for growth and expansion of the Company. The Company acknowledge that its principal assets is it employees. The Company has continued its efforts in building a diverse and inclusive workforce.
The Company employees including factory workmen are employed daily wages basis. Hence, as on March 31, 2022 there was no employees on roll in the Company. The Company will continue to create opportunity and ensure recruitment of diverse candidates without compromising on meritocracy.
FINANCIAL HIGHLIGHTS:
(Rs. in Lakhs)
Particulars |
F.Y. 2022-23 | F.Y. 2021-22 |
Revenue From Operations | 548.93 | 1075.11 |
Other Income | 11.36 | 0.44 |
Total Income |
560.29 | 1075.56 |
Less: Total Expenses before Depreciation, Finance Cost and Tax | 453.44 | 1061.88 |
Profit before Depreciation, Finance Cost and Tax |
106.85 | 13.68 |
Less: Depreciation | 63.56 | 94.25 |
Less: Finance Cost | 32.34 | 38.70 |
Profit Before Tax |
10.95 | (119.27) |
Less: Current Tax | 1.71 | - |
Less: Deferred tax Liability (Asset) | 2.41 | 7.05 |
Profit after Tax |
6.83 | (126.32) |
DETAILS OF SIGNIFICANT CHANGES (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREFORE:
Ratios |
Numerator |
Denominator |
Current Reporting Period | Previous Reporting period | % of Change | Reason |
Debt Equity Ratio |
Debt Capital |
Shareholders Equity |
0.79 | 0.72 | 9.94% | - |
Debt Service coverage ratio |
EBITDA-CAPEX |
Debt Service (Int+Principal) |
0.12 | 1.37 | (91.40%) | As have loss in previous year. |
(18.99%) | (2.07%) | (1018.73%) | ||||
Return on Equity Ratio |
Profit for the year |
Average Shareholders Equity |
As have loss in previous year. | |||
Inventory Turnover Ratio |
COGS |
Average Inventory |
2.76 | 4.02 | (31.35%) | As have higher COGS in Current Year. |
Trade Receivables turnover ratio |
Net Sales Total Purchases (Fuel |
Average trade receivables |
1.07 | 2.01 | (46.67%) | As have higher Avg. Trade Receivables. |
Trade payables turnover ratio |
Cost + Other Expenses+Closing Inventory-Opening Inventory) |
Avg. Closing Trade Payables |
1.02 | 4.32 | (76.34%) | As have higher Avg. Trade Payables. |
Net capital turnover ratio |
Sales |
Avg. Capital employed |
2.03 (11.75%) | 1.86 1.53% | 9.15% (867.90%) | - As have |
Net profit ratio |
Net Profit |
Sales |
higher expenses in current year. | |||
Current ratio |
Current asset |
Current Liability |
1.35 | 2.43 | (44.35%) | Due to Increase in Trade Payables Due to company has |
Return on Net Worth Operating Profit Margin (%) |
Net Profit for the year Operating profit |
Shareholders Equity Revenue |
0.01 0.28 | (0.19) | (99.99%) | generated profit in current year |
0.02 | (99.98%) | Due to company has generated profit in current year | ||||
Net Profit Margin (%) |
Net profit |
Revenue |
0.01 | (0.12) | (100.12%) | Due to company has generated profit in current year |
DISCLOSURE OF ACCOUNTING TREATMENT
The financial statements of the Company have been prepared in accordance with Accounting Standard ("AS") notified under the Companies (Accounting Standards) Rules, 2021 read with section 133 of the Companies Act, 2013.
CAUTIONARY NOTE:
Statements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the Companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.
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www.indiainfoline.com is part of the IIFL Group, a leading financial services player and a diversified NBFC. The site provides comprehensive and real time information on Indian corporates, sectors, financial markets and economy. On the site we feature industry and political leaders, entrepreneurs, and trend setters. The research, personal finance and market tutorial sections are widely followed by students, academia, corporates and investors among others.
Copyright © IIFL Securities Ltd. All rights Reserved.
Stock Broker SEBI Regn. No: INZ000164132, PMS SEBI Regn. No: INP000002213, IA SEBI Regn. No: INA000000623, SEBI RA Regn. No: INH000000248
This certificate demonstrates that IIFL as an organization has defined and put in place best-practice information security processes.