Today's Top Gainer
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Shaily Engineering Plastics Limited (SEPL) is a pioneer in engineering plastics. We have an expertise of manufacturing complex precision components & assemblies and have an experience of decades to our credit. Over the years, we have not only strengthened our area of expertise but has also integrated all post molding services such as pad printing, vacuum metalizing, hot stamping, hot foiling, ultrasonic welding, vibration welding and assemblies. We have been offering total solutions in plastics i.e. development, manufacturing and validation. We are catering to fortune 100 companies in the space of Consumer & FMCG, Pharmaceutical and Retail. Today, we have five facilities with over 100 injection molding machines ranging from 35 tons to 1000 tons including a dedicated ISO Class 8 clean room manufacturing facility.
The World Bank forecasts global economic growth to edge up to 3.1 percent in 2018 after a much stronger- than-expected 2017, as the recovery in investment, manufacturing, and trade continues, and as commodity exporting developing economies benefit from firming commodity prices. It was majorly driven by an investment recovery in advanced economies, continued strong growth in emerging Asia, a notable upswing in emerging Europe, and signs of recovery in several commodity exporters.
Key emerging market and developing economies, including Brazil, China, and South Africa, also posted third-quarter growth stronger than the fall forecasts.
As per the latest IMF report, world growth forecast for 2018-19 has been revised by 0.2% to 3.9%. supported by strong momentum, favourable market sentiment, accommodative financial conditions, and the domestic and international repercussions of expansionary fiscal policy in the United States.
The year 2017 was marked by several key structural initiatives to build strength across macro-economic parameters for sustainable growth in the future. These reforms are expected to help reduce internal barriers to trade, increase efficiency and improve tax compliance.
The 1st half of the economy felt the continuing effects from demonetization and the implementation of GST from 1st July 2018. But the economy recovered from the initial setbacks to grow at over 7% in the 3rd quarter.
The 2017-18 fiscal year GDP growth was pegged at 6.6% and is estimated to grow at 7.3% in 2018-19.
Plastics Processing Industry
The plastics processing industry in India has grown at CAGR of 10% in volume terms from 8.3 MMPTA in FY10 to 13.4 MMPTA in FY16. The industry is expected to grow at 10.5% CAGR from FY15 to FY20 to reach 22 MMPTA. In value terms, the plastic processing industry has grown at a CAGR of 11% from f 35,000cr in FY05 to f 100,000cr in FY16. The Government of India is taking every possible initiative to boost the infrastructure sector with investments in roads, railways and shipping infrastructure. Investments in water and sanitation management, irrigation, building & construction, power, transport and retail also have been encouraged. Plastics play an important role in these sectors through various products like pipes, wires & cables, water proofing membranes, wood PVC composites and others. Smart cities, rapid urbanisation, increase in sale of packaged products through retail and e-commerce mode, low per capita consumption, shifting consumer lifestyles, large young population, majority of population of middle income group, many manufacturing segments adopting higher percentage of plastics, etc are contributing towards the growth of plastics industry. Consequently, higher investments in these sectors will drive the demand for plastics.
Snapshot of India
|Estimated size of plastic processing in value (FY16)||Rs 1 Lakh Crore|
|Market size in volume (FY16)||13.4 MMPTA|
|Processing Units||> 30,000|
|Technical manpower||40 Lakh|
|Per Capita Plastic Consumption||12 Kg (World: 40 Kg)|
Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. As per 12th five-year plan, India has committed USD 1 trillion in upgrading its infrastructure like Power, Telecom, Roads, Irrigation, Railway, Oil & Gas and others.
In addition, with the governments renewed focus on providing clean water for drinking and improving sanitation facilities through the construction of individual household toilets, cluster toilets and community toilets under Swachh Bharat Mission. PVC and Chlorinated polyvinyl chloride (CPVC) plays important role in the sustainable management of these sectors through various products like pipes, wires & cables, water proofing membranes, wood PVC composites, food and medicinal packaging. The huge allocation to infrastructure sector, higher focus on water management and on improvement in sanitation facilities provide huge growth potential for plastic manufacturer.
The Indian packaging industry is expected to grow to $32bn by CY2020 as per the Indian Institute of Packaging (IIP). The industry constitutes about 4% of the global packaging industry. The per capita packaging consumption in India is quite low at 8.7kg compared to countries like Germany (42kg) and Taiwan (19kg), as per data from the Indian Institute of Packaging which clearly indicates under-penetration and provides growth opportunity for Indian plastics packaging. The growth of the Indian packaging industry will be heavily influenced by changing demographics such as growing urbanization and the rising proportion of middle class consumers which will lead more people buying more branded products and hence packaging plays an important role in creating and sustaining brand equity.
https://timesofindia.indiatimes.com/business/india- business/indian-electronics-market-expected-to-reach- 400-billion-by-2020-study/articleshow/59108734.cms
Automotive plastics market size is likely to exceed 18 million tons by 2022, growing at a CAGR of over 9.5% from 2015 to 2022. The market is likely to be worth more than 52 billion by 2022, growing at an estimated CAGR of over 13.5%. Plastics provides considerable weight reduction for the automobiles resulting in low fuel consumption and emission thereby increasing the overall vehicle efficiency. Strict norms set by CAFE (Corporate Average Fuel Economy) have forced the automobile manufacturers to improve vehicle design fulfilling (complying with) weight reduction, low fuel consumption, and emission control norms. Shifting of automobile production units to India, Thailand, China, and Indonesia by key manufacturers due to government initiatives and the availability of affordable manpower is expected to stimulate the regional growth.
https://www.supplychaindive.com/press- release/20161102-global-automotive-plastics-market- size-to-touch-usd-538-billion-mark-by-20-9/
Demand of electronic products in India is expected to grow at a CAGR of 41% during 2017-2020 to reach $400 billion by 2020, the domestic production which is currently growing at a CAGR of 27% may touch $104 billion leaving a huge gap for import to the extent of $300 billion, according to the joint study brought out by ASSOCHAM and NEC.
A joint study undertaken by NEC Technologies and ASSOCHAM reveals, India is becoming home to a growing middle-class population. Increasing disposable income has led to increased consumer demand for electronics products. The growing customer base and the increasing penetration of electronic products in consumer durables segment have provided enough scope for the growth of plastics in the Indian electronics sector.
Pharma Medical Devices:
The Indian pharma industry has been growing at a compounded annual growth rate (CAGR) of more than 15% over the last five years, has significant growth opportunities and is likely to be in the top 10 global markets in value term by 2020. The global medical plastic market size is expected to reach USD 33.6 billion by 2025. Rising demand for sterilized plastics for use in the medical industry is expected to emerge as the major factor driving market growth.
The industry is driven by the global population growth, increasing access to the consumers towards healthcare services, primarily in the developing economies, and growing substitution of the metal parts in surgical components. The demand for the product in medical components such as syringes, surgical device components, gloves, and catheter tubing is likely to drive the segment growth at a CAGR of 6.9% by revenue from 2017 to 2025. The Global Human Insulin Market Is Poised to reach ~USD 39.13 Billion by 2020, growing at a CAGR of 8.1% from 2015 to 2020.
The industry in Asia Pacific was estimated to account for 24.5% of the global revenue in 2016 driven by the growth in consumer healthcare spending coupled with high levels of medical tourism primarily in China and India.
https://health.economictimes.indiatimes.com/ news/pharma/the-indian-pharma-companies- confidence-is-now-high-and-it-forecasts- rapid-growth-yogesh-mudras/60494835
Outlook for the sectors we operate in Pharma packaging
Pharmaceutical packaging is one market across the globe which is advancing at a constant pace. Pharma packaging solutions is an essential part of delivery system in the sector that needs to be reliable and speedy and deliver a combination of quality, patient comfort and protection. It protects the medicine and drugs from various external environmental factors. Packaging is critical in pharmaceutical industry and is defined as a technique which allows containment of pharmaceutical product from the time of production in a unit till its use. According to the industry forecasts, the global market is growing rapidly and is expected to reach $ 158.8 billion by 2025.
Indian Home Furniture Market
The Indian furniture market, which is expected to grow in worth to over $27 billion by 2022. Home furniture is the largest segment in the Indian furniture industry, accounting for more than 65% of total furniture sales. India furniture market growth is driven by various attributes such as rising trend for modular and state of the art furniture among the population living in urban cities, growing urbanization in Indian states, rising demand for durable and hybrid seating furniture. The demand for low cost plastic furniture is also increasing in commercial sector.
https://retail.economictimes.indiatimes.com/news/ home-and-decor/furniture-and-decor/indian-furniture- market-huge-opportunity-for-asia-hktdc/61126528
Beauty and Wellness Industry
The beauty and wellness industry in India is booming, with a tremendous potential for growth in 2018. In fact, it is said to be growing twice as fast as markets in the United States and Europe. India is also the second largest consumer market in the world. According to a KPMG report, the size of Indias beauty and wellness market is expected to touch f 80,370 crores by 2017-2018. This includes the beauty products, beauty salon and spa businesses. Indias male grooming industry is set to grow at compound annual growth rate (CAGR) of about 45 percent and touch Rs 35000 crore (approx. $5.5 billion) by 2021 from the current Rs 16,800 crore (approx. $2.64 billion), according to a latest report by Indian industry body The Associated Chambers of Commerce & Industry of India ASSOCHAM. Indian shaving products are the highest contributors to the mens grooming market followed by Deodorants and antiperspirants. Both are expected to grow at a CAGR of 29% and 25% respectively.
https://economictimes.indiatimes.com/magazines/ panache/between-the-lines/beauty-wellness-in- 2018-brand-identity-unique-products-will-drive- the-industry/articleshow/62349944.cms
http://in.fashionnetwork.com/news/India-s- male-grooming-industry-to-grow-at-45-touch- Rs-35000-crore-by-2021,939783.html
Performance of the Company for FY18
The company reported revenue of f 319.7 cr in FY18, up from f 252.9 cr in the last year, i.e. a growth of 26.81% YoY.
The company reported EBITDA of f 55.4 cr in FY18, up from f 43.9 cr in the last year, i.e. a growth of 26.3% YoY.
Profit before tax (PBT) came in at f 34.2 cr during the year, up from f 23.2 cr in the last year, i.e. a growth of 47.7% YoY.
The company reported Profit after Tax (PAT) of f 23.9 cr in FY18, up from f 15.9 cr in the last year, i.e. a growth of 50.6% YoY.
Key developments during the year
Commercialized large portion of the f 60 Cr. order received from the Home furnishing major during FY18.
Pen injector order confirmation received in FY17 was further extended for US markets.
Received confirmation for the development & supply of six different types of Pens for different Therapies/Customers. These are expected to be launched during FY 2019-21.
Successfully launched Skin care device for five pharmaceutical companies.
Derma applicator - development completed and samples submitted to customer for approval.
Received confirmation for development & supply of Anal applicator for global markets from a large domestic Pharma company.
Received confirmations from a Domestic FMCG major (new customer) for manufacture of packaging for one of their flagship products
Witnessed ramp up in sales from auto anciliary segment during FY18.
Successfully converted a Metal part to Plastic for Honeywell.
Awards & Accolades
The Company continues its quest for excellence in its chosen area of business. The Company, this year, was awarded with:
Gold Winner for outstanding export of finished plastic goods by PlastIndia Foundation on 7th Feb 2018 at Plasticon Awards, 2018.
Top Exporter Award (1st Position) for exports out of RCT, Vadodara by Container Corporation of India Ltd on 17th November, 2017 at Concor Awards, 2017.
Threats, risks and concerns
The Company operates in contract manufacturing segment as an OEM supplier, hence, business depends on customer requirements. Any fluctuation in the customers demand can affect the Companys performance. We are also exposed to project risks due to delay in project implementation/cost escalation, risks on account of fluctuation in FX rates.
Company has adopted sufficient risk management mechanism in terms with the nature of business, segments and sectors it operates in. Risk management systems are periodically reviewed by the Board and optimum steps have been taken to mitigate the risk factors.
With a total workforce of 1200+ employees, which includes staff, permanent employees and contract workers. The prime objective of Human Resource function is employee development. To achieve success and profitability, Company relies on its greatest assets - its intellectual capital.
SEPLs culture fosters continuous learning. Inhouse trainings programmes for employees at all levels are conducted on a regular basis.
New employees are educated about the Company with Induction training. Under this programme, new recruits undergo an induction training by departmental heads, which offer a broad overview of the Companys varied functions, processes, strategy and growth objectives.
This allows the new incumbent to fit seamlessly within the organization structure, culture and environment.
Employee engagement initiatives
The Company carried our various employee engagement activities including the following:
Celebration of Diwali, New Year, Womens day, Mothers day, Environment day among others.
Birthday celebrations of employees
Annual Cricket event
Organized Seminar on Health and Hygiene for women employees to educate and encourage them to adopt better hygiene methods.
Internal Control System
The Company has a system of Internal Controls over financial reporting ensuring the accuracy of the accounting system and related financial reporting. The Internal Control System adheres to local statutory requirements for orderly and efficient conduct of business. The efficacy of the internal checks and control systems are validated by Internal as well as Statutory Auditors.
The Audit Committee reviews the adequacy and effectiveness of the Internal control systems, significant audit observations and monitors the sustainability of remedial measures.
Outlook on opportunities
The past year has witnessed a spate of structural changes and policy reforms that totally shook up the Indian economy. The Indian economy is all set to strengthen on the back of robust activity from the construction, manufacturing, and services sectors. The negative shock from demonetization and GST implementation has largely subsided. With increasing disposable income and aspirations, rising middle class and urbanisation we see a potential growth in sectors like electronics, Automobile, Packaging, Healthcare, Consumer Durables and Telecommunication offering good growth opportunity for plastic consumption in the country.
Plastic being most durable due to tremendous range of properties exhibited by them because of their ease of processing makes it user friendly and hence the plastic consumption is on rise.
Existing wide range of clientele coupled with client additions in the Pharma/Healthcare sector, Consumer & FMCG segments offer a good outlook for us.
With increase in disposable income, rise in middle class, change in lifestyle will boost sectors like pharmaceuticals, packaged foods, Home furnishing market where plastic is majorly used and offer a great opportunity for company like us.
For and on behalf of the Board
Mahendra Sanghvi Executive Chairman
Vadodara May 14, 2018