Shish Industries Ltd Management Discussions.


Plastics are among the fastest-growing industries in India, experiencing a double-digit growth rate on an average. 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.

Some of the common plastic merchandise exported by India are:

• Plastic-moulded extruded goods • Polyvinyl chloride (PVC) • Electrical accessories
• Polyester films • Leather cloth and sheeting • Laboratory / medical-surgical ware
• Soft luggage items • Packaging • Fishnets
• Writing instruments • Consumer goods • Travelware
• Plastic woven sacks and bags • Sanitary fittings

During H1 2018-19, India reported merchandise exports worth $164.04 billion, up 12.5 percent from $145.75 billion in H1 2017-18. The growth in Indias plastics export has been primarily boosted by higher shipment of plastic raw materials, plastic sheet, film, plates, and packaging materials.

Chairman of Plexconcil said that "China, United States, and the United Arab Emirates continue to be top-3 destinations for Indias plastics products. These three countries accounted for 27.5 percent of Indias plastics product exports, by value, during H1 2018-19. We added new destination countries for plastics export which includes French Guiana, Guam, Kiribati Republic, Lesotho, Marshall Island, Mayotte, Monaco, Nauru Republic, and United States Virgin Islands".

Plexconcil executive director Sribash Dasmohapatra said that "In the first half of 2019, the trend in plastic exports from India has been very positive with a strong year-on-year growth vis-a-vis 2017-18 with August 2018 topping $800 million. Indias plastics exports in H1 2019 were boosted by higher exports, especially to North-East Asia, Africa, European Union, South Asia, and North America".

In conclusion, the Indian plastics export industry has always offered excellent potential in terms of capacity, infrastructure, and skilled manpower. Among the industrys major strengths is the availability of raw materials in the country. Thus, plastic processors do not have to depend on imports because raw materials can be manufactured domestically. This is a major advantage as it will only help towards the growth of the Indian plastic industry.

Recent Developments:

India is ready to have 18 plastic parks and 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 exports. PLEXCONCIL members comprise large-/medium-/small-scale manufacturers and exporters. The council supports exporters by participating in international trade fairs, exploring new markets, organizing buyer- seller meets both in India and overseas, and engaging in various other promotion and need- based activities.


Rising Demand for Reinforced Plastics: The global reinforced plastics market is anticipated to reach $16 billion by the end of 2019. 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".

Financial Highlights: (Amount in Rs.)
Particulars F.Y. 2018-19 F.Y. 2017-18
Revenue From Operations 110,302,949 83,332,199
Other Income 1,127,683 1,222,254
Total Income 111,430,632 84,554,453
Less: Total Expenses before Depreciation, Finance Cost and Tax 88,217,709 68,883,414
Profit before Depreciation, Finance Cost and Tax 23,212,923 15,671,039
Less: Depreciation 7,944,295 4,913,835
Less: Finance Cost 2,761,532 2,298,776
Profit Before Tax 12,507,095 8,458,427
Less: Current Tax 3,762,580 2,207,239
Less: Prior Period Tax Expense (386,389) -
Less: Deferred tax Liability (Asset) 256,844 170,151
Profit after Tax 8,874,060 6,081,037

During the year under review, the revenue from operation of the Company was stood at Rs. 111,430,632 as against that of Rs. 84,554,453 for previous year. Revenue from operation of the Company was increased by 32.37% over previous year. Profit before Tax for the financial year 2018-19 was Rs. 12,507,095 as against that of Rs. 8,458,427 making the net profit of Rs. 8,874,060 for the financial year 2018-19 as against the net profit of Rs. 6,081,037 for the financial year 2017-18. During the year under review, export sales of the Company was increased almost by six 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. Although, almost 61.67% increase in the Depreciation cost on the other hand, the Company manages to maintain the industry standard rate of net profit from revenue.


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, 2019, the Company had total 23 full time employees. The industrial relations have remained harmonious throughout the year.


Particulars F.Y. 2018-19 F.Y. 2017-18 Reason
Debtors Turnover 5.91 times 4.14 times Due to reduction in collection period
Inventory Turnover 3.83 times 4.23 times The Company is maintaining high level of inventory to meet market demand
Interest Coverage Ratio 5.92 times 5.92 times There is no change in the ratio
Current Ratio 2.37 : 1.00 3.15 : 1.00 Increase in trade payable and borrowing
Debt Equity Ratio 0.23 : 1.00 0.25 : 1.00 There is no significance change in the ratio
Operating Profit Margin (%) 13.84% 12.91% Higher turnover resulted into higher operating profit margin
Net Profit Margin (%) 8.05% 7.30% Higher turnover resulted into higher net profit margin
Return on Net Worth 10.27% 7.84% Due to increase in profitability of the Company

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.