The following discussion is intended to convey managements perspective on our financial condition and results of operations for the period ended on October 31, 2023 and for the year ended on March 31, 2023, March 31, 2022 and March 31, 2021. You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Prospectus. You should also read the section entitled "Risk Factors" beginning on page 20 of this Draft Prospectus, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and, is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year ("Fiscal Year") are to the twelve-month period ended March 31 of that year.
In this section, unless the context otherwise requires, any reference to "we", "us" or "our" refers to SPP Polymers Limited, our Company. Unless otherwise indicated, financial information included herein are based on our "Restated Financial Statements" for period ended on October 31, 2023 and for the Financial Years 2022-23, 2021-22, and 2020-21 included in this Draft Prospectus beginning on page 134 of this Draft Prospectus.
BUSINESS OVERVIEW
Our Company is engaged in the business of manufacturing of HDPE/PP woven fabric & bags, Non-woven fabrics & bags and PP Multifilament yarn. We offer packaging solutions to Business to Business ("B2B") manufacturers catering to different industries such as cements, chemicals, food grains, sugars, polymers, agriculture, and others for the packaging of goods in big quantities. We have achieved installed capacity of HDPE/PP Woven Fabric and bags 9125 MT and Non-Woven Fabric 3600 MT by incurring Capital expenditure of Rs. 2111.37 Lakhs during F.Y. 22-23.
SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:
After the date of last financial period i.e. October 31, 2023, there is no any significant development occurred in the Company except mentioned below.
KEY FACTORS AFFECTING THE RESULTS OF OPERATION:
Our Companys future results of operations could be affected potentially by the following factors:
OUR SIGNIFICANT ACCOUNTING POLICIES
For Significant accounting policies please refer Significant Accounting Policies, "Annexure IV" beginning under Chapter titled "Restated Financial Information" beginning on page 134 of the Draft Prospectus.
Financial performance of the stub period for the period ended on October 31, 2023
( in lakhs)
Income from continuing operations |
Amount |
% |
Revenue from operations | ||
Revenue from operations | 4856.38 | 99.88 |
Total | 4856.38 | |
Other Income | 5.62 | 0.12 |
Total Revenue | 4862.00 | |
Expenses |
Cost of Material Consumed( after stock adjustment) | 3504.33 | 72.08 |
Employee benefits expense | 280.30 | 5.49 |
Finance Costs | 168.12 | 3.30 |
Other expenses | 570.18 | 11.18 |
Depreciation and amortisation expenses | 237.97 | 4.66 |
Total Expenses | 4,760.90 | 97.92 |
Restated profit before tax from continuing operations | 101.10 | 2.08 |
Share of profit from Associate Company | ||
Total tax expense | 28.15 | |
Restated profit after tax from continuing operations (A) | 72.95 | 1.50 |
EBDITA | 507.19 | 10.44 |
Standalone Financial Performance Total Income from Operations
The Total income from the operation for the stub period ended on October 31,2023, was 4862.00 Lakhs which includes revenue from operation of 4856.38 las and other income of 5.62 lacs.
Total Expenditure
The total expenditure for stub period ended on October 31,2023 was 4760.090 lacs which is 97.92 % of the total revenue for the stub period. The major expenditure which is part of the total expenditure is Cost of Material Consumed of 3504.33 lacs (72.08%), Employee Benefit Expenses of 280.30 lacs (5.49 %), Financial expenses of 168.12 lacs (3.30 %) and other Expenses of 570.18 lacs (11.18%).
EBDTA
The EBDITA for the stub period was 507.19 lacs representing 10.44% of total Revenue.
Profit after Tax
The profit after Tax for the stub period was 72.95 lacs representing to 1.50 % of the total revenue.
RESULTS OF KEY OPERATIONS ( in lakhs)
Particulars |
For the year ended on |
||
31.03.2023 |
31.03.2022 |
31.03.2021 |
|
Income from continuing operations | |||
Revenue from operations | 6,604.72 | 8,028.16 | 6,553.59 |
Total Revenue | 6,604.72 | 8,028.16 | 6,553.59 |
% of growth | (17.73) | 22.50 | |
Other Income | 72.76 | 49.80 | 38.20 |
% total Revenue | 1.09 | 0.62 | 0.58 |
Total Revenue | 6,677.48 | 8,077.96 | 6,591.79 |
(17.34) | 22.55 | ||
Expenses | |||
Cost of Material Consumed | 5,230.86 | 6,502.25 | 5063.91 |
% of Revenue from operations | 79.20 | 80.99 | 77.27 |
Employee benefits expense | 484.46 | 572.72 | 468.52 |
% Increase/(Decrease) | (15.41) | 22.24 | |
Finance Costs | 110.84 | 60.56 | 50.51 |
% Increase/(Decrease) | 83.03 | 19.90 | |
Other expenses | 621.84 | 798.96 | 784.54 |
% Increase/(Decrease) | (22.17) | 1.84 | |
Depreciation and amortisation expenses | 127.15 | 102.56 | 95.70 |
% Increase/(Decrease) | 23.98 | 7.17 |
Total Expenses | 6,575.15 | 8,037.05 | 6,463.18 |
% to total revenue | 98.47 | 99.49 | 98.05 |
EBDITA | 340.32 | 204.03 | 274.82 |
% to total revenue | 5.10 | 2.53 | 4.17 |
Restated profit before tax from continuing operations | 102.33 | 40.91 | 128.61 |
Exceptional Item | |||
Total tax expense | 47.41 | 12.91 | 21.65 |
Restated profit after tax from continuing operations (A) | 54.92 | 28.00 | 106.96 |
% to total revenue | 0.82 | 0.35 | 1.62 |
COMPARISON OF F.Y. 2022-23 WITH F.Y. 2021-22:
Income from Operations
Our Company is an ISO 9001:2015 certified company engaged in the business of manufacturing of HDPE/PP woven fabric & bags, Non-woven fabrics & bags and PP Multifilament yarn. In the F.Y. 2022-23, the Companys total revenue was 6604.72 Lakhs, which is decreased by 17.73 % in compare to total Income from operations of 8028.16 Lakhs in F.Y. 2021-22. Revenue decreased during FY 2023, due to slack in demand from cement and fertilizer manufacturing company for Woven Bags which has reduced from Rs. 6005.34 lacs to 4393.69 lacs in FY 2023. However, there was increased in revenue in non-woven fabric from 1673.04 lacs to Rs. 2151.03 lacs in FY 2023.
Other Income
The other Income for the FY 2022-23 was 72.76 lacs which was 49.80 lacs in the FY 2021-22. The other income is increased by 46.10 % in FY 2022-23 as compared to FY 2021-22. Other income increased due to increase in trade incentive and commission received from Rs. 19.94 lacs to Rs. 57.98 lacs in FY 2023 Expenditure:
Cost of Material Consumed
The Cost of Material Consumed for F.Y. 2022-23 was 5230.86 Lakhs against the cost of Material Consumed of 6502.25 Lakhs in F.Y. 2021-22. The cost of material consumed was 79.20 % of the total revenue from operations in F.Y 2022-23 as against 80.99 % of total revenue from Operations in F.Y 2021-22.
Employee Benefits Expenses:
The Employee expenses for F.Y. 2022-23 was 484.46 Lakhs against the expenses of 572.72 Lakhs in F.Y. 2021-22 showing decrease by 15.41%. The reductions of the business by 17.73 % also reduce Employees cost and also due to improve efficiency and focus on cost saving to improve the margin.
Finance Cost:
The Finance Cost for the F.Y. 2022-23 was 110.84 Lakhs against the cost of 60.56 Lakhs in the F.Y. 2021-22 showing increase of 83.03 %. The company had taken term loan of 1056.95for the project in the FY 2022-23 and interest on the said term loan increased borrowing cost.
Other Expenses
Other Expenses decreased to 621.84 Lakhs for F.Y. 2022-23 against 798.96 Lakhs in F.Y. 2021-22 showing decrease of 22.17 %. The reductions of the business by 17.73 % also reduce the cost of carriage outward and Commission and Brokerage. The Carriage outward and Commission and brokerage was 107.04 lacs and
230.14 lacs in FY 2021-22 which was 96.70 lacs and 114.35 lacs in FY 2022-23.
Depreciation and Amortisation Expenses:
The Depreciation for F.Y. 2022-23 was 127.15 Lakhs as compared to 102.56 Lakhs for F.Y. 2021-22. The depreciation increased by 23.98 % in F.Y. 2022-23 as compared to F.Y. 2021-22. The depreciation in FY 2022- 23 was increased on account of addition of the Fixed assets by 2152.54 lacs in FY 2022-23 which was 178.57 lacs in FY 2021-22.
EBDITA
The EBDITA for F.Y. 2022-23 was 340.32 Lakhs as compared to 204.03 Lakhs for F.Y. 2021-22. The EBDITA was 5.10 % of total Revenue as compared to 2.53 % in F.Y. 2021-22. EBDITA has improved due to improves in material consumption ratios to sales from 80.99 % to 79.20 % in FY 2023 and further cost control in other expenses.
Profit after Tax (PAT)
PAT is 102.33 Lakhs for the F.Y. 2022-23 in compared to 40.91 Lakhs in F.Y. 2021-22. The PAT was 0.82
% of total revenue in F.Y. 2022-23 compared to 0.35 % of total revenue in F.Y. 2021-22Profit has improved due to focus on cost reduction in material consumption, employees cost and other business expenses.
COMPARISON OF F.Y. 2021-22 WITH F.Y. 2020-21:
Income from Operations
Our Company is an ISO 9001:2015 certified company engaged in the business of manufacturing of HDPE/PP woven fabric & bags, Non-woven fabrics & bags and PP Multifilament yarn. In F.Y. 2021-22, the Companys total revenue was 8028.16 Lakhs, which is increased by 22.50% in comparison of total Income of 6553.59 Lakhs in to F.Y. 2020-21.
Other Income
The other Income for the FY 2021-22 was 49.80 lacs which was 38.20 lacs in the FY 2021-22. The other income is increased by 30.37% in FY 2022-23 as compared to FY 2021-22. Other income increases due to sundry balance written back.
Expenditure:
Cost of Material Consumed
The Cost of Material Consumed for F.Y. 2021-22 was 6502.25 Lakhs against the cost of Material Consumed of 5063.91 Lakhs in F.Y. 2020-21. The cost of material consumed was 80.99 % of the total revenue from operations in F.Y 2021-22 as against 77.27 % of total revenue from Operations in F.Y 2020-21. The increase in cost of raw material consumed is on account of increase in prices of major raw materials
Employee Benefits Expenses:
The Employee expenses for F.Y. 2021-22 was 572.22 Lakhs against the expenses of 468.52 Lakhs in F.Y. 2020-21 showing increase by 22.24% The increase in the employee expenses was on account of increment in the salary of the employees.
Finance Cost:
The Finance Cost for F.Y. 2021-22 was 60.56 Lakhs against the cost of 50.51 Lakhs in the F.Y. 2020-21 showing an increase of 19.90 %. The increase in Finance cost was on account of more utilization of working capital limit and
additional term loan.
Other Expenses
Other Expenses increased to 798.96 lakhs for F.Y. 2021-22 against 784.54 Lakhs in F.Y. 2020-21 showing increase of 1.84%.
Depreciation and Amortisation Expenses:
The Depreciation for F.Y. 2021-22 was 102.56 Lakhs as compared to 95.70 Lakhs for F.Y. 2020-21. The depreciation was increased by 7.17 % in F.Y. 2021-22 as compared to F.Y. 2020-21. The depreciation in FY 2021-22 was high on account of the addition of fixed assets of 178.57 lacs in F.Y. 2021-22 which was 87.66 lacs FY 2020-21.
EBDITA
The EBDTA for F.Y. 2021-22 was 204.03 Lakhs as compared to 274.82 Lakhs for F.Y. 2020-21. The EBDITA was 2.53 % in FY 2021-22 of total Revenue as compared to 4.17% in FY 2020-21. The EBDITA is decreased on account of cost of material which was 77.27% in FY 2020-21 has increased to 80.99% in FY 2021-22.
Profit after Tax (PAT)
PAT is28.00 Lakhs for F.Y. 2021-22 as compared to 106.96 Lakhs in F.Y. 2020-21. The PAT was 0.35 % of total revenue in F.Y. 2021-22 compared to 1.62% of total revenue in F.Y. 2020-21. The PAT margin was decreased on account increase of material cost which was 77.27% in FY 2020-21 has increased to 80.99% in FY 2021-22.
CASH FLOW
Particulars | September 30, 2023 |
March 31, 2023 |
March 31, 2022 |
March 31, 2021 |
Net cash from Operating Activities | 442.68 | 380.45 | (647.48) | 447.65 |
Net cash flow from Investing Activities | (42.81) | (1672.84) | (592.37) | (40.03) |
Net Cash Flow Financing Activities | (477.96) | 1249.05 | 1275.45 | (388.07) |
Cash flow March 31, 2023
The Company has positive cash flow from operating on account of reducing the inventory level by the Company. The positive cash operating flow was used to invest in the fixed assets of the Company. The Company had borrowed the funds for the purchase of fixed assets and the positive cash flow from financing activities was used for acquiring the fixed assets for the Company.
Cash flow March 31, 2022
The negative cash flow from operating activities and investment activities were financed through long term borrowings and short-term borrowings. As far as Cash flow from operating activities were concerned, the companys funds blocked in change in working capital is more than the Profit earned by the Company hence the cash flow from Operating activity was negative. The negative cash flow from operating activity was financed by short term borrowings from the bank. The Negative cash flow from investing activities is on account of investment in fixed assets and the same is financed through long term borrowings.
Cash flow March 31, 2021
The Company had positive cash flow from operating activities which was used for reduction of the short-term borrowings from financing activity and the same has been used for purchase of fixed assets which result in to negative cash flow from investing activities.
Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:
To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years
Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in Factors Affecting our Results of Operations and the uncertainties described in the section entitled "Risk Factors" beginning on page 20 of this Draft Prospectus. To our knowledge, except as we have described in this Draft Prospectus, there are no known factors which we expect to bring about significant economic changes.
Income and sales of our Company on account of major activities derives from manufacturing HDPE/PP woven fabric & bags, Non-woven fabrics & bags and PP Multifilament yarn
Our Company has not followed any unorthodox procedure for recording sales and revenues.
Apart from the risks as disclosed under Section titled "Risk Factors" beginning on page 20 in this Draft Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.
Increases in revenues are by and large linked to increases in volume of business.
The Company is in the business of manufacturing, the relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page no 79 of this Draft Prospectus.
Our Company has not announced any new services or business segment.
Our business is not seasonal.
Our Company is dependent on few customers and few suppliers for the business of the Company.
Sr. No. |
Particulars |
October 31,2023 |
Fiscal 2023 |
Fiscal 2022 |
Fiscal 2021 |
||||
Amount (Rs In Lacs) |
% of total Revenue |
Amount (Rs In Lacs) |
% of total Revenue |
Amount (Rs In Lacs) |
% of total Revenue |
Amount (Rs In Lacs) |
% of total Revenue | ||
1 | Top 10 Buyers | 4,595.72 | 94.16 | 6,513.01 | 84.93 | 8,044.01 |
86.87 |
6,016.13 |
79.06 |
2 | Top 10 suppliers | 4826.68 | 65.59 | 5,526.48 | 65.59 | 7,952.39 |
85.34 |
5,259.91 |
87.30 |
Competitive conditions are as described under the Chapters titled "Industry Overview" and "Business Overview" beginning on pages 79 and 84, respectively of this Draft Prospectus.
FINANCIAL INDEBTEDNESS
SECURED LOAN
Overdraft:
Name of the Lender | Credit Facility | Sanctioned Amount (Rs. in Lakhs) | Outstanding Amount as on January 31,2024 (. in Lakhs) |
Interest Rate per Annum (Interest Rates are linked to Reference Rate. | Security |
State Bank of India | Cash Credit Limit |
1000.00 |
906.10 |
Interest at the rate of 2.50% above EBLR which is presently 9.15% p.a., Present Card Rate being *11.65% p.a. |
Primary Security
|
State Bank of India | Term Loan |
1244.00 |
1031.36 |
||
State Bank of India | Bank Guarantee |
100.00 |
- | As per Applicable Card Rate |
|
2. Extension of Equitable Mortgage Charge on Land and Building in the name of company situated at Plot No. 4, Sector-1, Pantnagar Industrial Area, SIDCUL, Rudrapur, Udham Singh Nagar, Uttarakhand- 263153 measuring 13650 Sq Mtr. |
|||||
3. Exclusive First Hypothecation Charge on the entire New Plant and Machinery to be purchased out of Bank Finance and from own sources including spares and Auxiliary Machines consisting of Tapeline and 60 looms. |
|||||
Collateral Security Exclusive First Hypothecation Charge on the Existing Plant and Machinery of the company as per ABS2021 including spares and Auxilliary Machines |
Personal Guarantee |
|||||
State Bank of India | Car Loan |
10.00 |
6.56 |
7.85% | Hypothecation of the aforesaid vehicle purchased out of the loan amount in favour of Bnak. |
PERIOD OF ADVANCE & REPAYMENT TERMS:
Working Capital: Repayable on demand. The facility which has been sanctioned on 29/03/2023 is available for 12 months from that date, subject to review every 12 months, when it may be cancelled / reduced depending upon the conduct and utilisation of the advance, or as per the Banks Scheme.
Term Loan: To be availed within a period of 6 months from the date of sanction.
The Term Loan is to be repaid as per the following repayment schedule:
The Term Loan of Rs.13.50 Crore which has been sanctioned for a period of door to door tenor of 9 years and 4 months to be repaid in 102 Installments starting from October 2022 i.e. after a moratorium period of 10 months from December 2021 to September 2022. The repayment schedule is as given below.
Sr. No. | From | To | No of Installments | Amount of Installments (Rs. In Lakhs) | Total Repayment (Rs. In Lakhs) |
1 | October 2022 | March 2030 |
90 |
13.33 |
1,200.00 |
2 | April 2030 | March 2031 |
12 |
12.50 |
150.00 |
102 |
- |
1,350.00 |
Charges for Non-Fund Based facility:
BG Issuance Charges | As per Applicable Card Rate |
LC Opening Charges | As per Applicable Card Rate |
Enhanced / Penal Interest:
Other Terms & Conditions
Penal Interest/charges:
5.00% of the entire outstanding, If continuously irregular for a period beyond 60 days. 5.00% p.a on the entire outstanding for the period of irregularity.
0.25% of total FBWC limits (our share) as flat penalty on each instance/ default,
Flat Rs 50,000/- up to the due date of renewal & flat Rs 1,00,000/- per month thereafter till the date of submission.
borrowing entity:
For listed companies, the above penal provision would be applicable, if the audited financials are not filed with the stock exchange as per SEBI requirements/listing agreement
1.00% p.a. on the entire outstanding for the period of non-compliance
2.00 % p.a. on the entire outstanding (over and above the aggregate penal interest of 3 % p.a) till such time the position is rectified.
Invest wise with Expert advice
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