Shish Industries Ltd Management Discussions.


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 mediumsized enterprises.

In FY20, plastic and linoleum export from India stood at US$ 7.55 billion.

During April 2019-January 2020, plastic export stood at US$ 7.045 billion with the highest contribution from plastic raw material at US$ 2.91 billion, plastic sheets, films and plates at US$ 1.22 billion and packaging materials at US$ 722.47 million.

The Indian plastics industry produces and export 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 offer excellent potential in terms of capacity, infrastructure, and skilled manpower. It is supported by many polymer producers, plastic process machinery and mould manufacturers in the country.

Among the industrys major strengths is the availability of raw materials in the country. Thus, plastic processors do not have to depend on import. These raw materials, including polypropylene, high-density polyethylene, low-density polyethylene, and PVC, are manufactured domestically.

Recent Developments

India is ready to have 18 plastic parks and the Government will be investing Rs 40 crore (US$ 6.2 million) to increase the domestic production of plastics. This will achieve environmentally sustainable growth and increase employment.

Plastics Export Promotion Council

The Plastics Export Promotion Council (PLEXCONCIL) is the apex Government body responsible for the promotion of plastic export. PLEXCONCIL members comprise large-/medium-/small-scale manufacturers and exporters. The council supports exporters by participating in international trade fairs, exploring new markets, organising buyer- seller meets both in India and overseas, and engaging in various other promotion and need- based activities.

Major plastics industry associations have been jointly working on a proposal which has been submitted to the Secretary, Department of Chemicals & Petrochemicals, Government of India. The associations have strongly recommended ‘NO CHANGE in Custom Duty on Polymers and argued against fixing of any minimum import price on polymers.

Plastics Corrugated Packaging Market

There is high demand for the secondary packaging material in the market. Packaging manufacturers are in search of the material that can sustain in all the climatic condition without harming the product being packaged. Manufacturers are using corrugated paper & paperboard boxes as a secondary packaging material, but the paper and paperboard corrugated boxes have low wet strength as compared to plastic corrugated boxes. However, plastic corrugated packaging products have high resistance to water, thus, highly preferred from the manufacturing end. The material has high crushing strength, stiffness, and hardness. Further, this material is lightweight, and they can carry heavy materials. These features of plastic corrugated packaging products are preferred from ends users

Key players of plastic corrugated packaging products are shifting their interest from corrugated cardboard packaging product to plastic corrugated packaging products. Technology Container Corp., a reusable plastic corrugated packaging products manufacturer, prefers plastic packaging product. As these containers are reusable, they eliminates the time taken, labor cost and the material that is required for the production of new plastic corrugated packaging products.


• Rising Demand for Reinforced Plastics: The global fiber reinforced plastics (CFRP) market is expected to register a moderate growth during the forecast period 2018 - 2023. These plastics have been widely used in the automobile industry because they offer a great alternative to metal components. In addition, they are now gaining popularity in the construction, medical, military, and marine sectors owing to their versatility, lightweight and durability.

• Corrugated Sheets are Strong, durable and less expensive; hence its in high demand


• Increased Competition from Organized Players

• Changing in Government Policy


The company is primarily engaged in the business of Corrugated Plastic Sheets, which constitute a single reportable segment in accordance with Ind AS 108 - “Segment Reporting”.


Particulars F.Y. 2019-20 F.Y. 2018-19
Revenue From Operations 159,993,729 110,302,949
Other Income 3,659,927 1,127,683
Total Income 163,653,655 111,430,632
Less: Total Expenses before Depreciation, Finance Cost and Tax 139,503,595 88,217,709
Profit before Depreciation, Finance Cost and Tax 24,150,061 23,212,923
Less: Depreciation 8,423,106 7,944,295
Less: Finance Cost 2,480,338 2,761,532
Profit Before Tax 13,246,617 12,507,095
Less: Current Tax 4,132,563 3,762,580
Less: Prior Period Tax Expense (192,364) (386,389)
Less: Deferred tax Liability (Asset) (402,051) 256,844
Profit after Tax 9,708,469 8,874,060


During the year under review, the revenue from operation of the Company was stood at Rs 159,993,729 as against that of Rs 111,430,632 for previous year. Revenue from operation of the Company was increased by 45.05% over previous year.

Profit before Tax for the financial year 2019-20 was Rs 13,246,617 as against that of Rs 12,507,095 making the net profit of Rs 9,708,469 for the financial year 2019-20 as against the net profit of Rs 8,874,060 for the financial year 2018-19.

During the year under review, export sales of the Company was increased almost by 3 times than that of previous year, due to which the revenue of the Company was increased. However, increase in revenue also caused increase in cost of material, interest expenses, and other operation expenses.


The Indian plastic industry clearly has the potential to continue its fast growth. However, over the next few years, competition in the industry is expected to increase considerably, as a result of global trends, which will become applicable to the liberalizing economy of country. To survive the competition, both plastic manufacturers and processors will need to adopt radically new methods and approaches to reduce costs, improve market and customer service and management of performance.

The per capita consumption of plastics in India is well below the world average. However it also reflects the many years of growth ahead, as the countrys economy continues to grow and upgrade the usage of products. Translating the expected growth rate into incremental demand, it is obvious that the country will remain one of the largest sources of additional demand for almost all kinds of plastics.

Hence, it is clear that plastics will continue to be a growth industry, with boosting prospects for fresh investments in polymerization and downstream processing capacity. This is in contrast to the situation in various other countries, where growth prospects are limited, either because of stagnant demand or due to the historical over building. In such countries, the overall outlook would be far less promising, with the key imperatives being cost cutting and capacity rationalization.


The very nature of the Companys business makes it susceptible to various kinds of risks. The Company encounters market risk and mainly operational risks in its daily business operations. The Company therefore always ensures that its entire inventory, from raw material to finished goods is insured at all times, whether under transit or at the manufacturing facilities. The risk management review framework provides complete oversight to various risk management practices and process. The framework and assessment remains dynamic and aligns with the continuing requirements and demands of the market.


Internal Control system and adequacy Internal Control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. Thus, internal control is an integral component of risk management. The Internal control checks and internal audit programmes adopted by the Company plays an important role in the risk management feedback loop, in which the information generated in the internal control process is reported back to the Board and Management. The internal control systems are modified continuously to meet the dynamic change. Further the Audit Committee of the Board of Directors reviews the internal audit reports and the adequacy and effectiveness of internal controls.


The Company believes in establishing and building a strong performance and competency driven culture amongst its employees with greater sense of accountability and responsibility. The Company has taken various steps for strengthening organizational competency through the involvement and development of employees as well as installing effective systems for improving their productivity and accountability at functional levels. The Company acknowledges that its principal asset is its employees. Ongoing in-house and external training is provided to the employees at all levels to update their knowledge and upgrade their skills and abilities. As on March 31, 2020, the Company had total 23 full time employees. The industrial relations have remained harmonious throughout the year.


Particulars F.Y. 2019-20 F.Y. 2018-19 Reason
Debtors Turnover 11.71 times 5.91 times Due to increase in collection period
Inventory Turnover 3.83 times 3.83 times The Company is maintaining high level of inventory to meet market demand
Interest Coverage Ratio 6.34 times 5.92 times There is no change in the ratio
Current Ratio 3.23 : 1.00 2.37 : 1.00 Decrease in trade payable and borrowing
Debt Equity Ratio 0.30 : 1.00 0.23 : 1.00 There is no significance change in the ratio
Operating Profit Margin (%) 21.33% 13.84% Higher turnover resulted into higher operating profit margin
Net Profit Margin (%) 8.28% 8.05% Higher turnover, however also increased fixed expenditure resulted into slight increase in the net profit margin
Return on Net Worth 10.10% 10.27% --


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.