1. OVERVIEW
In a sluggish global economy, the Indian economy had achieved highest growth in the previous year compared to all advanced economies of the world.
With several initiatives taken by Central and State Government, the Country is poised to grow higher than the previous year. Monsoon for the coming year is expected to be higher than normal this year, which augurs well to contain the inflation.
The Country has initiated several steps in the previous year to boost manufacturing. It is anticipated that for tackling unemployment, country will take various measures to boost manufacturing. Directionally also the Country is taking effective steps to boost export of manufactured products world over. In India and globally additional capacities are being built to boost Petrochemical production.Increased plastics production with a slow growth in World economy will keep the Plastics raw material prices range bound at an affordable price level. This will boost the demand for Plastics products. After success in Nal-Se-Jal scheme, the Central Government has announced actions to provide Household gas by Pipeline. This will create additional demand for Pipe System along with existing Government initiatives of providing free houses, Nal-Se-Jal and large capital outlay on Infrastructure Development.
To avail this opportunity along with large investments made in the previous year, the Company is committed to invest further monies in brownfield expansion in its existing units and plans to set up additional greenfield units in this year This augurs well for growth in demand for Plastic Pipe System.
All the business segments of the Company are poised for growth in this year. The Company expects to achieve a volume growth in excess of 20% during this year.
2. PRODUCT GROUPS
The product groups of The Company have been recast as follows:
| Group | Products |
| Plastics Piping System | uPVC Pipes, Injection Moulded PVC fittings and handmade fittings, Polypropylene Random Co-polymer pipe system, HDPE Pipe Systems, CPVC Pipes Systems, Inspection Chambers, manholes, Bath fittings and Sanitaryware Roto moulded Tanks and Fittings and Solvents, Industrial Piping System, DWC Pipe System, PEX Pe Pipe System and Fire Sprinkler System |
| Consumer products | Furniture |
| Industrial | Industrial Components, Material handling |
| Products | System and Pallets - Roto moulded crates, pallets and garbage bins and Composite LPG Cylinders. |
| Packaging | Flexible packaging film products, |
| Products | Protective Packaging Products, Cross Laminated Film products |
PRODUCT GROUP WISE SHARE IN TURNOVER FOR THE LAST TWO YEARS (% OF Value)
The net turnover (including other income) of the Company for the year under review was R 10,251.98 Crores (including
R 58.23 Crores by way of trading in other related products) as against R 9283.35 Crores (including R 71.84 Crores by way of trading in other related products) during the previous year.
During the year under review the Company has sold 6,39,701 tons of Plastic products as against 5,06,501tons of Plastic products in the corresponding period of previous year, reflecting growth of 26% in product turnover by volume. The Company exported goods worth US$ 24.29 milliion as against US$ 29.27 million during the corresponding period of the previous year. Profit before interest, depreciation and exceptional items and taxes during the period under review have been at R 1666.32 Crores as against R 1281.84 Crores during the previous year.
3. COMPANY STRENGTH AND GROWTH DRIVERS
3.1 Manufacturing Sites
During the year under review, The Company has added one new unit in its production portfolio through acquisition of an undertaking at Sangli (Maharashtra) in the segment of Plastic piping Products. With this acquisition, Companys geographical presence to cater Western Maharashtra and North Karnataka has improved significantly. Company is now operating from 29 manufacturing sites across 12 States and Union Territories. Pan India geographical spread of manufacturing facilities provides excellent support in servicing the customers efficiently and economically. The Company has plans to add more Green Field Projects. Work for 30th state of the art facility at Malanpur (Madhya Pradesh) to manufacture Industrial and Ball Valves is nearing completion and likely to go into operation during July-Sept. 2024. Brownfield expansion at all the new sites which became operational during FY 2022-23 is continuing to optimize their potential. The Company has taken in hand to put up new greenfield sites in Bihar and Andhra Pradesh to expand its manufacturing reach near to the markets. New unit for manufacturing PVC Profile, Windows & Doors has also been taken up at hand and may take 12 to 15 months time for commencement of its 1st phase of commercial production. The Company has also planned to add one more unit in Western region for manufacturing all types of foams except EPE for which land negotiations are going on. Being closer to the Port, it would give boost to exports as well.
3.2 Distribution Network
The Company is successfully increasing its reach in various parts of the country where it is less represented. Each of the business divisions of the Company is working out an extensive plan and strategy to reach such areas by appointing new channel partners, increasing the connection between retailers and influencers and also creating awareness and promotional campaigns. The Companys active Channels Partners strength increased to 5060 Nos as on 31st March 2024 as compared to 4577 Nos as on 31st March 2023. The Company has also been participating in various national and international exhibitions and remains focused on increasing its export business. Presently the Companys products are being exported to 62 countries and efforts are being made to reach more countries and new customers in existing countries.
The Company continues to open more Depots & fabrication facilities to provide value added services in a cost-efficient manner to its customers. The Company has a total of 39 Depots and 8 Fabrication facilities for its various product groups.
3.3 Growth Drivers
The Company has increased its spend on brand awareness to R 141 crores from R 97 Crores in previous year to strengthen its brand and influencers engagement. The Company is judiciously spending on promoting its products on various media platforms including national and regional TV advertisement, OTT platforms during popular events and also popular trade magazines. The Company is taking numerous initiatives on digital activities for promoting its brand and creating product awareness. Company has launched its Loyalty App for effectively engaging with retailers and plumbers in plastic Piping division. Considering the market dynamics of its various product verticals and to promote search activity for corporate brand, Company has increased its spending for Google Search activities and plans further increase in spending in this space.
Company has distinct social media presence on various major platforms like Facebook, LinkedIn, YouTube, Instagram etc. Follower base on all these platforms is steadily increasing which is helping in increasing visibility, customer connect / interaction and enquiries. Company has also launched dedicated product information sharing mobile apps for Pipe and furniture divisions.
The Company is very focused on strengthening its bond with influencers like architects, Plumbing Contractors and plumbers. Role of knowledge centers is proving fruitful. They are providing knowledge about new products/applications and are able to create awareness among architects, contractors, farmers, plumbers and channel partners and benefitting thousands of business associates.
The Company has further strengthened its efforts in dealing with the menace of counterfeit products sold by certain unscrupulous players in a large way particularly in the Pipe Segment and getting encouraging results. Continuous monitoring & vigilance in the marketplace is resulting positive outcome. Company is determined to deal with such malpractices in best possible manner by engaging teams of professionals to take suitable measures to overcome this continuous and recurring problem.
. Renewable Energy & Sustainability
Supreme is committed towards the sustainable future and taken a strategic direction to reduce the carbon foot print by improving energy efficiency. The aim of the Company is continual increase in Green energy utilization & mitigating the climate risks and leave positive impact on mother earth while enhancing profitability. Supreme is the First Indian Company in building product category committed for the Scientific based long-term Net zero emission target in India. Your Company is working on developing the reduction targets in line with SBTi criteria for validation.
The SBTi is a global body enabling business to set ambitious reduction targets in line with latest climate science. The overall aim of the initiative is for SBTi setting to become standard business practice and for corporation to play a major role in ensuring global warming is kept at a 1.5o c increase. The Company recognizes the importance of LCA in evaluating the Environmental performance of its products. Hence, Company has conducted the Life Cycle Assessment (LCA) of its major building products – PVC Pipe, CPVC Pipe, HDPE Pipe, Water Tanks, PVC Fitting and CPVC Fittings. This strategic move underscores its commitment towards gaining the Holistic approach to enhance our overall sustainability. Understanding the vital need of the de-carbonization, the Company has taken strategic steps to reduce the emissions by investing in the renewal energy. As a result Solar Capacity of the Company has scaled up from 28.05 MW in FY 23 to 34.05 MW in FY24.
Green energy utilization scale of the Company is up by 21% from 44.6 Million kwh during FY 22-23 to 53.73 Million KWH in FY 23-24 which has resulted in avoided emission up 29% from 29,883 Tco2e (2022-23) to 38,476 Tco2e (2023-24).
To further strengthening of Green energy quantum, The Company has signed following PPA during FY (23-24)
• 57.86 Million solar units for its six location in Maharashtra
• 92 lakh additional Hybrid Unit for Erode.
• 13 lakh additional Hybrid Unit for PVC Plant at Malanpur.
14 manufacturing energy Intensive units of the Company are equipped with EnMs certification ISO 50001 which aim to focusing on reduction of specific energy consumption and improving the plant energy performance.
Embracing the circular economy, Company strives to develop products that are easily recyclable and made from recyclable material. The Company manufactures such products which are certified by the CII Green products and service council. Products such as Insu sound, Insushield, Insu melafoam etc. are few of the premium Green products of the Company. The Company is continuously developing Green area by planting trees not only in its own units but other neighbourhoods of the plants as well.
Water is a critical resource in production processes of the Company. Therefore, it is of paramount importance to develop efficient water management system in its operations which aligns with its commitment to sustainability and responsible resource usages.
The Company understands that the contribution towards the Water conservation & Water Management helps mitigating the risks due to climate change. Being a responsible corporate, Company has taken a proactive initiative for reduction of water demand by judicious monitoring & awareness campaign. Aligning with Sustainable Development Goal 6, which emphasizes ‘Clean Water and Sanitation, and Sustainable Development Goal 12, which focuses on ‘Responsible Production and Consumption, Company is actively engaged in water conservation.
Motto of the Company is ‘Catch the Rain, Save the Drain, through a network of storm water harvesting measures such as rainwater harvesting ponds and pits. This strategic step is instrumental in augmenting groundwater levels, thereby contributing to sustainable water conservation and encouraging the use of recycling the wastewater after Treatment for green area development and for flushing thus reduce our fresh water consumption. The Company has initiated an ongoing Water Conservation Drive and Awareness Program within all its units and has undertaken the following measures such as :
• Drip Irrigation for maintaining the green area
• Low Flow Fixtures in the washrooms
• Waterless Urinals
• Operation of cooling towers on temperature base sensor for reducing water losses
• Conducting third party water audit in major water consuming plants All these measures helps the Company to reduce the water intensity (KL /MT )over year on year basis.
To monitor the complete ESG Performance of the Company, the Company has implemented a SaaS based digitization platform.
On Sustainability front, the Company is proving its excellence at the national and international levels. During the FY 23-24, the Company has received following accolades:
• PVC Plant at Malanpur received SEEM National Energy Management GOLD Awards 2022 in Plastic Category.
• Kanpur, Jadcherla and Plastics Piping System at Malanpur Units have received CII 24th National Award for excellence in Energy Management.
• The Company has also received the Global Sustainability Leadership Award 2023 at an international platform.
4. OPERATIONAL PERFORMANCE
4.1 PLASTICS PIPING SYSTEMS
The Company remained focussed on its business of Plastic Pipe System Business Vertical and continues to grow. Company is a leader in the segment and has the largest portfolio of products. Company continues to expand its product portfolio with additional SKUs & systems for various applications as required by the growing economy.
During the year under review the Company achieved volume growth of about 33.5% in Plastic Piping System Vertical made from different plastic materials. Overall the Company sold 5,01,001Tons of Pipe System compared to 3,75,046 Tons in the preceding year. PVC is the predominant raw material in the Companys Plastic Pipe business. During the year 23-24 the prices of PVC were again literally in roller coaster mode for second year in succession. The prices of PVC were in downward trend from 1st April23 till third week of June23. Thereafter almost every quarter the trend was in reversal mode compared to previous quarter with overall variance of R 10 per kg. However, the distribution network becomes unstable due to such frequent variations in Product prices. The Country experienced growth of around only 7.7% in PVC resin consumption.
The Government at the Centre and States have taken several initiatives, like focus on Jal Jeevan Mission, Swatch Bharat Abhiyan, Sanitation, affordable housing, smart cities and many more, which all are boosting demand for Plastic Piping Products. The same trend is expected to continue for the year 2024-25.
Real Estate Regulation Act (RERA) is now well established and giving boost to organised housing construction. Many large players have announced ambitious plans in this sector to grow geometrically with launch of their projects at multiple locations. These companies give preference to Branded products. Company has also introduced low cost piping system for affordable housing segment meeting all functional requirements. The Company expects good business from this segment on a sustainable basis.
The Company incurred a Capex of R 453 crores in this division during the year under review in its various plants to build higher capacities and increased range including acquisition of an undertaking of M/s Parvati Agroplast at Sangli (Maharashtra).
The total product portfolio in Plastic Pipe System Business Vertical has reached 13,888 nos., thus adding 3815 products to the range of various Plastic Piping System, over the preceding previous year. The Company has plans of introducing additional varieties during the year in the existing systems as well as the addition of new systems as required in the economy.
The manufacturing at new plant at Perundurai, District Erode, at Tamil Nadu was working in full capacity servicing effectively the Tamil Nadu, Kerala and part of South Karnataka markets. The Company increased the capacity of PVC Pipes and also started manufacturing Blow Moulded Water Tanks at Erode during this year. Now Company is further increasing the manufacturing capacity of PVC Pipes, HDPE Pipes and Roto Moulded Water Tanks at Erode. The
Company shall also starting manufacturing of DWC Pipes at Erode to service South Region market.
The plant at Kharagpur is fully operational with increased capacities. The Company has finalised purchase of another 30 acres of land for expansion. The due diligence and various Government approval process is underway and the Company expects to complete the acquisition by June24. Further capacity expansion is planned of PVC Pipes, cPVC Pipes, DWC pipes, Moulded Fittings and Water Tanks at this site and will be implemented during the year 2024-25. The production of Double Wall Corrugated HDPE Pipes continues from Gadegaon and Kharagpur plants with necessary BIS Certification. The Company has also launched suitable DWC Pipe for Cable Ducting application to cater to market requirements for this application. The Company is in process to educate various user departments about the benefits of putting in place a quality DWC Pipes with latest technology and using certified virgin raw materials in terms of performance and longer life. The Company is also promoting successfully the DWC Pipe requirement of private Building societies through Channel Partners mainly on merit of quality of DWC Pipes supplied by the Company. The Company now also plans to start the DWC Pipes manufacturing in the current year at Kanpur plant for Northern market and at Erode plant for Southern market.
The Company now has eight plants producing HDPE Pipes in West, East, South and North Zones to cater to these markets cost efficiently. The Company plans to start manufacturing HDPE pipe at Kanpur in the current year. The Company now manufactures Water tanks in all the four geographies of the country viz., North, South, East and West to service these markets cost effectively. This business grew by 46.8% in volume during the year under review over the preceding year. Companys Premium range of Water Tanks "Weather Shield" with added features such as superior thermal insulation etc., from three locations has received good market response. The Company also developed little economical Weather Shield successfully for selected target market. To cater to economy range of Water Tanks market the Company has started manufacturing of Blow Moulded Water Tanks at Erode. The product has been well accepted in the respective serviced markets. The Company had also launched Copper Shield Water Tanks having feature of Copper Tanks in terms of no Bacteria and no Algae formation over a period with good market feedback. Overall, now the Company is producing Tanks at eight different locations which will enable it to service customers more economically. The Company is planning to expand the capacities at existing locations as well as at newer locations near Patna and Vijaywada.
The Company manufactures the cPVC Pipes at four of its manufacturing locations and cPVC Fittings at two of its manufacturing locations with all necessary BIS certification. The Company now has multiple sources to get increased volume of cPVC resins. The cPVC system sales during the year under review grew by 14% in volume over preceding year. The Company has planned to increase the capacity of cPVC Pipes at 5 locations out of which three are existing units namely Gadegaon, Jadcherla and Kharagpur and further at two new units namely Kanpur and Guwahati for effective servicing respective markets. The Company has also initiated the NSF testing process for cPVC Pipes and Fittings at all its plants. The Companys Gadegaon plant is already tested for NSF 61 and NSF 14 for cPVC Pipes and Solvents (for PVC & CPVC). The actions are initiated to get balance plants at Malanpur, Kharagpur, Jalgaon and Jadcherla also listed respectively for cPVC Pipes and Fittings and is expected to get listing by August24. The Company has started manufacturing Braided and Plain Hoses at Guwahati, Gadegaon, Erode and Cuttack Plants. The products were well appreciated by markets. Over a period, several varieties of Hoses are planned to meet high performance Hose requirement in the Country.
The Company had introduced e-lite brand of PEX pipe Systems. The pipes are made from state of art Swiss technology. These are composite pipes i.e., PEX/AL/PEX which withstand high temperature and pressure. The Company is also making PEX mono layer pipes. Company has also decided to launch PERT Pipe System with superior properties in its respective applications. The Company has developed metal fittings suitable for this application. The fittings are offered in Two varieties i.e. Compression and Crimping type. The Company expects to launch plastic based fittings which can withstand high temperature. High rise building and premium villas will require this type of system which is presently catered only from imports.
Your Company has produced PE/AL/PE pipe for house service connections. These types of pipes are now part of house connection design approved for "Nal se Jal" scheme. The Companys product line has procured BIS certification. The compression type fittings for these pipes are also developed to offer complete system of Pe/AL/Pe Pipes applications. The Company has successfully launched Electrofusion Olefins fittings and compression molded fitting with a portfolio of 226 Nos. The Company plans to increase the range substantially and add another 51 new products during the current year. With Electrofusion Olefin fittings, Company has entered into Industrial piping system, which offers new business opportunities.
The Company is now adding range of PPR pipe system for industrial applications including 3 Layer PPR Pipes at Gadegaon Plant. Your Company has launched Cable shield conduit system. The conduits are made at Gadegaon, Cuttack. Kanpur and Erode factory. The fittings for the systems are made at Kharagpur unit. The Company has decided to initially service only selected markets before launching it throughout the Country. Company has taken in hand to offer Gas Piping System from its Gadegaon Plant. The necessary machines have been installed, BIS certification is received and the same is expected to start production by April24 . The same is planned to be launched from Kharagpur. Government has plans to multiply supply of Gas through pipe system in the country. Company expects to launch the same along with the required DVGW approved Electrofusion fittings which has lead time span of Six to Eight months. Hence, the Company would be in position to market this product around December24.
The Company has plans to introduce PP Silent pipe system during the year from its Gadegaon plant which will have improved sound damping capability. There is large growth in demand for Silent pipes system due to high rise buildings being constructed across the Country with an advanced drainage system. The System has good export potential also. The Company has become a licensee of reputed European manufacturer named M/s Poloplast GmbH & Co KG, Austria for the system. Required machines to manufacture Silent PP Pipes systems have been ordered and the Company expects to start the production by November24.
The Company has started manufacturing variety of Specialized Valves such as Butterfly Valves, Swing Check Valves, Ball type non-return Valve etc.. These Valves have been designed for different applications and are made of specialized materials to ensure reliability & longer life and also to meet best of global standards. The Company has received positive response from the market. The Company intends to increase the range of Valves for Industrial usage in the current year. The Company has acquired undertaking of M/s Parvati Agro Plast, at Sangli, Maharashtra with two major objectives i.e., to add a new Product category OPVC Pipes i.e., Oriented PVC Pipes and effective servicing of Western Maharashtra and North Karnataka. The OPVC Pipe system helps in safe water supply with high durability for high pressure water distribution as an alternate to Duct Iron (DI) Pipes being presently used. The OPVC Pipe system has cost advantage for Water Distribution Pipes. The Company did not had this system in its range. The Company has planned substantial capacity expansion for OPVC Pipes at Sangli, Cuttack as well as at Gadegaon for which required equipments have been ordered. However, due to restricted availability issue of machines the time schedule is unpredictable as of now. The Company has 36 plastic piping Systems in the division and plans to add another 5 new systems viz. PP Low Noise system, Polyethylene Gas Piping System, PERT Piping System, PE single wall corrugated Pipes, and Rain Water Harvesting System (Infiltration modules for ground recharge and storage) during the current year.
The Companys business to Export market during the year had a de-growth both in value and volume due to project execution getting slowed in middle east. The Company is continuously trying to increase its export business of Piping Systems in several overseas markets.
The Divisions Value-Added Products share in total sale was 41 % compared to 44 % in the previous year. However, the sales of Value-added Products grew by 23% in volume. The reduction in % share of Value-Added Products was mainly due to high growth in HDPE Pipes sale in non-value added category. The Company has added 214 new Channel Partner during the year 2023-24 and is now servicing through 1657 Channel partners. The Company continues to expand its reach by appointing new Distributors in areas where there is a gap in servicing. The Company has also started directly servicing retailers in selected markets for certain specific products of this division. The Company has set up multiple Knowledge Centres across the country to train Plumbers and interact with Farmers, Architects and Plumbing consultants in respective zones. Currently, they are functioning at Gadegaon, Kochi, Malanpur and Kharagpur. Knowledge Centre at Erode is now ready and will be functional from April24 itself. Company expects to start such centres at Jadcherla during this year. With the help of specialists, the Company has embarked upon a new activity with nomenclature as "Plumbing Workshop" which is a full day session with Plumbers, to improve their skill in installation of Plastic Pipe System. The Company shares latest Plumbing techniques along with applications of new products introduced by the Company in the recent past in its range to the Plumber fraternity. The markets have well appreciated it and there is pressure on Company to increase the Plumbing Workshop numbers substantially. The Company conducted 244 Plumbing Workshops during the year 2023-24 and trained 11910 plumbers. The Company plans to conduct large numbers of Plumbing Workshops during the year 2024-25. There are now more than 2,00,000 Plumbers connected with the Company. The Company has launched in last quarter of 2023-24 a LOYALTY PROGRAM for Plumbers and Retailers on Digital platform. The Company expects large increase in Plumber and Retailers connect on account of this Loyalty Program. FlameGuard cPVC pipe system made by the Company is considered as a safe material for the use in fire sprinkler system in many parts of the country. Unlike plumbing system, a fire sprinkler system requires multiple approvals. Much awaited revision in Indian standard IS-15105 has been completed and revised standard has been published. Now CPVC has been considered as a superior material than metal system for use in Automatic sprinkler fire system. As system is approved in Indian standard more customers have started exploring this system as an alternate material to traditional metal system.
Maharashtra, Karnataka and Gujarat have already started the use of CPVC Fire Sprinkler system. The Company is proud to share that its FlameGuard system is installed in modern coaches of all "Vande Bharat Express" trains. Apart from Vande Bharat express, installation of the system has been started in other fast trains.
Due to cost differential the system has limited success in some part of the country where MS pipe is still considered as material for installation in sprinkler system instead of GI pipe. The cost of the MS pipe is approximately 20-25% less compared to GI pipe system. Product installation training for this system is a mandatory requirement before the actual installation starts to avoid hiccups. The Company provides the technical support and also offers value engineering to reduce the cost without compromising the quality of the installation. The Company has registered a growth of 50% in FlameGuard system over previous year. Development of local solvent cement has helped to increase the sale as well as competitiveness in the market. The Company has planned to cover several other states for activities to develop Flame Guard cPVC System business. The Company expects good business growth in this segment in coming years.
Your Company will have its 30th manufacturing state of the art plant at Malanpur dedicated to manufacture exclusively varieties of Industrial valves and Ball valves. to go in production in second quarter of this year, with an installed capacity of One and half million Nos per month.
The Company has started work on two new manufacturing units during 2024-25 viz., for Piping System and other products, one near Vijaywada at Andhra Pradesh and another near Patna at Bihar. Both the units at Andhra Pradesh and Bihar will have manufacturing facilities of multiple varieties of products such as PVC Pipes, CPVC Pipes, HDPE Pipes, Water Tanks, furniture and other plastic products etc. The Company expects that both these units after getting land in first half of this year may go in production by July/ September 2025 quarter.
With all the systems launched successfully and with the expansion of the capacity during the year, the Company expects around 25% volume growth this year. With all the Capex planned in place , total installed capacities of Plastic Piping System Business shall reach to about 8,35,000 MT per annum by 31st March, 2025 as against existing installed capacities of 7,40,000 MT per annum as on 31st March, 2024. Windows and Door Business The Company has taken in hand to put up a Windows making unit at 34 acres additional site at Kanpur Dehat. Initial capacity will be 5000 tons per annum. The Company will be making varieties of PVC profiles for large range of windows. Initial window making capacities will be installed at same site alongwith another site at its existing Kharagpur plant. The Company expects to start selling standard off the shelf and customised windows from these two sites in the first half of 2025-26. The total capex with working capital will be around R 180 Crores.
Bath fitting and Sanitaryware
The Bathroom fittings division showed robust growth for financial year 23-24. The division was successful in bringing new innovative products in the field of sanitary ware like wash basin and orissa pan of different sizes which has been widely accepted in the market. The Company has now a dedicated new product development team in Pune Supreme Design Centre working only for development of new and innovative products for Indian toilets and kitchen. The Company intends to increase the SKU from present 421 to over 1000 in the financial year 24-25.
The division was successful to tie up with SATO Lixil Company of Japan for sanitation products which will now be made in Supreme factory and sold through supreme network. The Division also tied up with Seventurns Private Ltd for online sales of Squat stool and other similar products used in toilet. Company started its own inhouse surface coating facility through green environment friendly technology. The plan for FY 24-25 is to bring wide variety of chrome plated showers to the Indian market. The Sanitary portfolio is also being enhanced by bringing innovative products. Along with this the new preferred faucet tap range made of PTMT is also under final stages of approval and will be launched in 1st Quarter of FY 24-25.
The Division has started its second manufacturing set up at Durgapur where Sato range and Flush Tanks are being produced.
The Bathroom segment has also started to focus on export potential and planned to export its products in different countries specially in Middle East , Africa and Saarc countries.
The plant in Puducherry is in many ways unique where more than 70% workers are Ladies from nearby villages.
The plant is a model for women empowerment as more than 250 ladies are engaged in the factory. The plant in the FY 24-25 will make the inventory control digital for which necessary actions have been initiated.
The Bathroom fittings division being a startup under Company umbrella, plans to aggressively grow and have widest plastic based product range in bathroom / kitchen segment to achieve leadership position in focus states by 2026-2027.
4.2 CONSUMER PRODUCTS 4.2.1FURNITURE
The Companys furniture business did not show any growth in value terms and a negligible growth in volume terms in line with the trend witnessed by overall plastic furniture industry. However, despite no increase in value turnover, the division could improve upon its operating margin by 2% over last years operating margin as well as return on capital employed. The growth in operating margin and ROACE was primarily due to focus on increasing the sales of value-added items which also helped the Company in further consolidating its position as a premium furniture manufacturer. The overall plastic furniture industry is witnessing a strong competition from local unorganized players manufacturing plastic furniture using reprocessed polymers. The manufacturers are proliferating due to their low cost and prices to dealers who find it lucrative to stock and sell these chairs due to higher retail margin. The Company has identified different segments of plastic furniture such as Premium Products, Almirah, Blow Molded Tables & School Furniture which will help in overcoming the threat from this competition and maintain its growth journey. The Company continues to be optimistic for growth in furniture business due to its innovative product offerings, strong brand image as a premium furniture manufacturer. Its superior technological capabilities encompassing Gas Injection Molding, Blow Molding & Roto Molding makes it amongst very few manufacturers capable of manufacturing furniture with such diverse technologies. The Companys consistent business policies, intensive marketing efforts and plans for increasing its coverage will ensure growth in 2024-25.
The Company has been a pioneer in introducing innovative products and is focused on offering stylish, innovative, durable and latest products in line with international trend to Indian consumers. This has further helped the Company to develop its brand which is identified by consumers as a Company offering latest products to them. The Company introduced 20 new models during 23-24 some of which were complete trend setters such as its Premium Chair Model Tulip, Almirah range with see through glass/mirror version & Kindergarten school furniture. The Company has already committed investment for 10 new models expected to be launched in first quarter of 24-25. The new models would help in increasing the business. The Company believes that increase in visibility of its diverse range of furniture will be a catalyst for growth of its business. To have better display of its furniture range, the Company focused on increasing the retail showrooms displaying its range of products. During the year, the Company added 64 such showrooms across India taking the total strength of these showrooms to more than 300 and plan to add 97 more such showrooms in 2024-25. The Companys focus on increasing its business from institutional segment yielded good results. The Company manufactures furniture at 7 different locations across India to service its customers efficiently. The Company is committed to make available its furniture across India and is always working towards increasing its retail penetration. The Company plans to add 1000 retail outlets to its current year 14569 Retail Counters, during the year.The number of direct channel partners increased from 1440 to 1493 during the year. The Company started various activities of digital marketing through Facebook and Instagram to strengthen its brand and engagement with its consumers. It has also started various digital marketing activities which is increasing the enquiry flow and hope to improve its business. The Company is also operating its own online store www.supremefurniture.co.in to showcase its range and offer convenience to customers for ordering some select premium models from the comfort of their homes. The store is helping increase the awareness of Companys product range and helps its channel partners also in their sales. The Companys furniture is also available on leading e commerce portals such as Amazon & Flipkart through some dedicated channel partners as well as through 4 resellers. The Company has started business with modern trade retailers such as Metro & Spencer during the year. The Company hopes this will help in increasing its overall sales as well as help in further strengthening of its brand image.
4.3. INDUSTRIAL PRODUCTS 4.3.1INDUSTRIAL COMPONENTS
After having one of the best performing year of FY 22-23 for the Division, the upbeat in Appliances sector, particularly in Air Conditioners and Coolers, started tapering off during the first half of the year under review due to high finished goods inventory in the market caused by un-seasonal rains in March/April 23. Products did not move as per the expectations in both these product lines, where the division has significant presence. For the division, overall revenue in value terms de-grew by 3.5% for the year primarily due to average raw material prices of the current year being lower than previous year.
Because of sluggish demand of Appliances during first half of the year, the sector encountered de-growth of 7% over previous year. The Auto sector continued to look promising. The Company could achieve 9% growth in revenue in this sector. The major orders received for supply of EVM and VVPAT Sub-assemblies were executed over 2 years i.e. FY 23 and FY 24 well within time. This order was worth 8% of the revenue of the division, for both these years put together. The execution of initiatives taken under "Transformational Strategies were accelerated further. The focus of these initiative remained to spread the sector base for servicing and other strategies to improve Return on Average Capital Employed (ROACE). It has started yielding good results. Strategy to develop business in the sectors where the Company was not having presence, yielding development of new customers in sectors like, Telecom, Infrastructure,
Construction, Defence and Machine building. The efforts are being continued during the current year also.
On Operational front, the Company accelerated its efforts to improve Productivity, Quality, Energy Conservation, Cost reduction, People development etc. These initiatives helped the Company to keep various costs under control despite soaring inflation. This helped the Company to sustain its margins and still pass on certain cost benefits to the customers and also expand business with them. Looking at the positive demand scenario in various sectors, the Company is investing judiciously for capacity balancing and expansions. The Company expects medium- and long-term scenarios to remain bullish, supported by various reforms of Government and upbeat in the overall economy. Company has planned need based capacity augmentation to service projected increased demand going forward. The Company is investing in machines with the latest technology, Energy efficiency, Robust designed processes for Excellence, high Quality and Repeatability. Division continues to enjoy "Excellent rating by all its regular customers for Quality, Delivery, Cost and Development parameters. It continues to excel in Operational Parameters which helps the Company to remain cost efficient in this fiercely competitive Supply Chain to OEM customers.
.3.2 MATERIAL HANDLING PRODUCTS
Your Companys Material Handling products Division posted a moderate growth of 11% in volume and 4% in revenue terms. Sectors like Automobile, Engineering performed very well whereas FMCG, Whitegoods, E Commerce Companies stagnated due to higher inflation and price rise in essentials. These industries are regular users of divisions Crates which registered a 5% volume growth in Industrial Crates. Continuing with its efforts of reaching to new customers and constantly providing solutions with use of Plastics Pallets for warehousing and transit use, division posted revenue growth of 10% and volume growth of 22% in Industrial repetitive use pallets.
On the other hand, business of one time use Pallets for exports which was on the rise for past three years has de-grew both in revenue and volume. Your Company has lost substantial business in export pallets to local competition specially in Southern & Eastern market and now gearing up with plans to manufacture these pallets in other regions as well to remain cost competitive. Division is hopeful for modest growth in this segment during the current year. Companys Roto moulded pallets which are used by many FMCG and mainly by pharmaceuticals companies have done well as focussed efforts have been put to cater good quality roto pallets which are compatible with modern warehousing systems where these pallets need specific arrangements and need to be flawless in automatic warehousing operations. The division has registered volume growth of 23% and value growth of 31% in this segment. The Company specific roto crates models used for heavy duty use have also grown well. Companys focused efforts in F&V sector with specific customers, who are quality conscious and patronize very high-quality products, gave good results registering high double-digit growth in volume and revenue.
In Southern and Eastern Coastal belts where division markets high quality Fisheries crates, the customers trust and patronage has again helped division to register a 7% revenue and 18% volume growth, Your Companys endeavour to provide products of highest quality at reasonable cost is yielding good results and division is planning to improve these numbers by adding newer markets in western coastal areas. Division has expanded its range of Dustbin models and posted an impressive higher double-digit growth in most of dustbin models. Division is putting all out efforts to build a strong network for capitalising in this sector and continue the growth momentum.
Soft Drinks and Beverages segment has again consolidated its footprints and returning part of supply chain to returnable Glass Bottles (RGB) where plastic crates are extensively used. Your Company having been a trusted associate and supplier to major soft beverages Companies benefited with increased demand and the same is likely to be continued.
Your Company is constantly striving to provide superior quality with timely service to its valuable customers. Division is regularly adding suitable products to all geographically located units to add to its customer base and enhance the customer experience and confident the momentum to continue during the current year as well.
4.3.3.COMPOSITE LPG CYLINDER
The year under review was not as expected for Composite Cylinder division. The Company has doubled its plant capacity last year and expected that its major customer M/s. Indian Oil Corporation Limited (IOCL) would be purchasing the cylinders as per their projections which has not happened resulting with plant running at about 50% of its capacity. Company expects further orders from IOCL and anticipates capacity utilization at similar levels during the current year. Discussion with other OMCs are also continuing as they are exploring to introduce composite Cylinders in their portfolio.
IOCL and your Company are working on strategies to promote the use of composite cylinders to the large consumer base. Roadshows and distributor meets are planned for creating awareness. Company is exploring applications for other gases and adding new customers. This would help to optimally utilise the increased capacity. The Company continued exports to its valued customers. The Company is working on new exports marketing and discussing with various agencies for supplies in various other countries.
The Company is continuing to participate in various national and international exhibitions showcasing its capability to produce world class Composite cylinders. Company is in a process of certification to introduce cylinders with very high-pressure requirements and move up the value chain. Prospects for the division looks quite encouraging.
4.4. PACKAGING PRODUCTS
4.4.1 Performance Films Packaging Products
Performance Film Packaging Products have achieved 2% volume growth in the year under reveiw as compared to previous year.
Major contributors were High Barrier EVOH/Nylon films to Flexible Packaging Industry which was supported by demand from food industry, focusing on increased shelf life and recyclability. Oil & Dairy industry have shown growth of 4% in Volume. Persistent efforts in New Industrial /Food application helped the Company in creating value added products to its portfolio. The successful registration of trademarks for seven products has changed customers perception about product offerings, Instead of viewing products solely by their generic attributes, buyers now recognize and associate them with the divisions distinct brand names, positioning itself as a trusted provider of high-quality products.
Registration under Extended Producer Responsibility (EPR) and support for government initiatives on plastic waste management facilitated dealings with large and multinational buyers. Exports have shown similar volume as last year, 2698 T against 2753 T in the preceding year. The division received positive feedback from key export markets including South America, Canada, Middle East, Africa, and selected European countries. Encouraged by this response, the division is actively pursuing further opportunities in the USA, Europe, and African markets. The division will participate in international exhibitions and is committed to increase its global outreach and providing a platform for showcasing its products and capabilities to a wider audience.
The Company remains optimistic in the current year. The customer base will be sustained and will grow due to Companys quality, commitment and service. The Company expects to achieve volume and value growth in this business in the current year due to increase in customer base in India and abroad.
4.4.2 PROTECTIVE PACKAGING PRODUCTS
Overall Business Growth :- PPD registered the Sales growth of 11% in value terms and 15% in volume terms in the year under review, as compared to the previous year.
Segment-wise Business Growth :- On y-o-y basis, the segment-wise growth is as under :-
1) Protec :- The segment grew by 15% in value terms and 17% in volume terms. The fabrication business grew by 33% in value. Total 51 new customers were added during the year under review.
2) Civil :- The segment grew by 11% in value terms and 17% in volume terms.
3) Insulation :- The segment grew by 3% in value terms.
Some of the XLPE production in Malanpur was diverted to Packaging business, hence there was reduced growth in Insulation Segment. With the new line in place, we expect a good growth in this year.
4) Retail (Consumer Products):- The segment grew by 11% in value terms.
This division has added 48 new Distributors this year totalling to 205 distributors presently). 735 new retailers have also been added. Totalling to 6186 numbers presently. CSD business was started in the year 2021 with 4 SKUs. Our products have been well accepted. We have received approval for a further 11 SKUs. Business for 4 SKUs started from Aug2023 and balance 7 SKU orders will be received from CSD from June2024. We have started retailing on Ecom platforms such as Amazon, Flipkart and Myntra through OEM format. This has contributed R 1 Crs to the business in FY 2023-24.
Our product quality has been well accepted by end consumer as per initial feedback. We expect this to grow well in the coming years.
5) Exports Segment
This segment has a degrowth of 5% on y-o-y basis. While most customers grew, one of our major customer in US had a major de-growth due to slow down in US real estate market.
From Feb 2024, Unit has shifted one Export salesperson to Dubai. This will enable a better focus in the region leading to growth in exports in the coming years.
New Product Development ( key products)
• Last year the division developed a new variant of Capcell (Single Stage EVA Foam) for Solar Panel, Packaging. Our materials matched with one of the USA customers requirement. After due approval of product and signing of agreement, business started from July 2023.
• NBR yoga mat: new variants of reinforced NBR yoga mat have been developed in existing NBR line.
• Several Capcell grades were developed for sports related products.
• A new Capcell grade was developed for shoe sole application.
• A new grade was developed for animal farm (particularly cows) to help in better hygiene and better care for animals. Several grades will be developed for other animals as well.
Expansion with upgraded technology
• Jadcherla: Upgraded version of mixing line was installed along with the Capcell press to get higher productivity with superior quality input materials. This will yield positive results this year.
• Hosur: Waterjet machines have been installed for expanding our fabrication capabilities.
Way Forward: New Initiatives and Expansions Jadcherla
• Additional 2 new Capcell press orders have been placed to meet increasing demand. This will go in production by 3rd quarter of the year.
• Roll joining machine will be installed in 2nd quarter this year to meet the requirements of luggage & tape industry.
• New NBR line and XLPE line are expected to commence production to meet the growing requirements in South.
Malanpur
• A new EPE extruder order has been placed & will be installed in this quarter for getting better products with improved productivity to become more competitive in market place.
• New XLPE line installation has been completed in the 2nd week of April this year. This will help in meeting the increasing market demand for this insulation products.
Kharagpur
• One more Capcell press has been ordered for installation by Sept/October 2024.
• The Malanpur EPE line will be upgraded and installed in Kharagpur in 4-5 months to meet the increasing demand during 3rd and 4th quarter.
• We plan to install a new XLPE line to meet the insulation demand of the Eastern market.
Hosur
• With the help of indigenous technology, one of our Capcell presses will be converted to a Litecell press in Hosur. This should save a lot of logistics time and cost presently being borne in view of transportation from Malanpur.
Others
• Division has planned 3 new fabrication units in this year 2024-2025. One of the location viz. Coimbatore has been finalized and will go in operation by end June. Other two locations will be identified shortly in due course.
• The division expects to add one more unit in Western region. Negotiation for acquisition of land is in progress. This unit is expected to manufacture all foams, except EPE. Being close to the Port, this Division expect a big boost to exports as well.
4.4.3 CROSS LAMINATED FILM
The Business of Cross Laminated Film & Products grew by 1.02% in volume terms & by 3.28% in value terms during the year under review.
The Companys main product tarpaulin is a seasonal product with demand mostly dependent on rains. The below normal & erratic rains in several parts of the country adversely impacted the demand for tarpaulin resulting in de-growth in this product category. The India Meteorological Department [IMD] has predicted above normal rains for the year 2024 bolstering the prospect of good demand for Companys tarpaulins. The Company continues to face competition from look-a-like products but the good news is that many customers lured by look-a-like / cheap products are returning back into the Companys fold due to its high quality standards, transparent policies & best services. The sale of made up fabricated products has increased from 654 MT in previous year to 835 MT during the year under review. The growth is attributed to the introduction of new products that add value to the customers, targeting direct customers apart from distributor / dealer network and timely delivery. This is more of a consumer product with high growth potential. To cater to the growing demand for this product Company has built additional fabrication facility at each unit. The bag business though small in size is steadily growing. Exports grew by 8.75% over previous year, despite geo-political challenges including the Red Sea crisis. The Company has added Three more countries into its fold thereby increasing its presence in 35 countries across the Globe. In the coming year the Company plans to increase its reach to many more countries and expand its customer base in existing countries. The thrust is on promoting fabricated products for newer applications including Flame Retardant Tarpaulins. The aim is to achieve substantial growth in exports in the coming year.
All the equipments for manufacturing Cross Plastics are in the final stages of installation & the trial production is likely to commence in 2nd Quarter 2024. Once the samples are approved by prospective customers the Company will launch this much awaited product in the Market.
5. FINANCE
1. A brief on Liquidity Surplus and Key Financial Ratios is given hereunder:-
| Sr. | Ratio | Year Ended |
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| No. | 31-3-2024 | 31-3-2023 | ||
| 1 | Debtors Turnover Ratio | Times | 20.21 | 19.20 |
| 2 | Inventory Turnover | Times | 5.00 | 4.99 |
| 3 | Interest Coverage Ratio | Times | 95.12 | 148.62 |
| 4 | Current Ratio | Times | 2.58 | 2.53 |
| 5 | Debt Equity Ratio | Times | NIL | NIL |
| 6 | Operating Profit Margin | % | 15.10% | 12.93% |
| 7 | Net Profit Margin | % | 9.91% | 8.23% |
| 8 | Return on Net Worth | % | 24.36% | 21.14% |
| 9 | Return on average | % | 32.06% | 27.47% |
| capital employed | ||||
| Net Surplus level at the end of the year | R in crores | Surplus of 1178.19 | Surplus of 737.68 |
| Average Monthly Surplus | R in crores | Surplus of 774.05 | Surplus of 525.21 |
| Interest & finance charges as a % to turnover | % | 0.16% | 0.09% |
1.1. The above parameters reflect continued strong financial position of the Company with high net worth, Nil debt, strong debt protection metrics, healthy key financial ratios & generation of significant cash reserves year after year. The cash & bank balances, including liquid investments continue to remain robust ensuring strong support to various initiatives, including the Capex plans for expansion of production capacities and exploring the organic / inorganic growth avenues.
1.2 During the year under review the Company continued to remain debt free and maintained sufficient cash to meet its strategic and operational requirements. The excess cash accruals during the year have been judiciously deployed from time to time in safe and secure Investment avenues with the objective of generating optimal & tax efficient returns, while maintaining the assurance of liquidity at short notice. The key policy rates have remained unchanged during 2023-2024 emphasizing the withdrawal of accommodation & focus on controlling the inflation. Due to better investment mix and higher deployment of funds in the investments, the returns on surplus investments have improved in absolute amount and as also in % terms over the preceding previous year. The Companys Treasury Policy is based on three important principals of investing viz safety, security and liquidity.
2. Working Capital Borrowing
2.1 During the year under review, The Company continued its association with Eight leading (Private and Foreign) banks in its Multiple Banking Arrangement, to meet its working capital requirements at an optimum cost. During the year 7 (out of the 8) banks have sanctioned additional facilities. Aggregate fund / non-fund based working capital facilities (all on unsecured basis) now stand at R 1,710.90 crores (R 1,570.90 Crores for previous year). Since the Company is having surplus cash, fund based facilities from banks are not being used. The non-fund based facilities have however been utilised optimally during the year. 2.2 The Company continues to enjoy favourable terms with its vendors / customers for effectively managing its working capital requirements at optimum cost. The Company continues to focus on timely collections & also plans its procurement optimally to mitigate fluctuations in raw material prices while minimising the logistic & working capital costs. The Companys working capital management is strong & sturdy and involves a well-organised process, which facilitates continuous monitoring and control over receivables, inventories, and other parameters.
2.3 Working capital utilisation
During the year under review (FY 2023-2024), in a roller coaster mode, the raw material prices were albeit in a narrow range, as compared to the wild fluctuations (mainly sharp downward trend) in the preceding year (FY 2022- 2023). The prices of the key items of the raw materials, including Polypropylene, HDPE, LLDPE and PVC Resin (except LDPE) were lower by around 8 % to 10% at the end of the year except LDPE which remained higher by around 9 % by the end of the year (FY 2023-2024) vis-?-vis beginning of the year. Overall, increased level of activities with downward movement of polymer prices helped Working capital (Inventory and Book debts) remaining at similar levels at the close of FY 2023-24 as compared to FY 2022- 23. 2.4 During the year under review, the Rupee remained range bound with a moderately depreciating bias against US Dollar, mainly due to geopolitical tensions and the continued hawkish policy of FED. The Rupee witnessed depreciation of about 1.20% during the course of the year. Forward premiums remained low throughout the year. Company continued its prudent hedging policy & has largely mitigated the risk arising out of Foreign Currency fluctuations and has optimised its hedging costs.
3. Dealers Financing
During the year under review, Dealers Finance Scheme (DFS) from one more bank became fully functional. With increase in competition, both the banks (existing as well as new) have rationalised their terms, including the interest rates on offer. More channel partners are joining the DFS, in view of affordable rates of interest, unsecured nature of the facilities and other related services/ privileges being offered by the banks. Seasonal / peak business requirements are also being serviced by the banks, by providing temporary incremental limits. The credit limits of the Channel Partners are also being increased/enhanced considering their business growth in tandem with the growth of the Company. The enhanced working capital availability at most competitive rates is helping the Channel partners in meeting the full potential in their businesses.
4. CRISIL Rating
As per the latest review conducted in the third quarter of FY24, (a) the Rating for the Companys Short term bank facilities were reaffirmed at "CRISIL A1+" rating by CRISIL (which is the highest rating for the Short term instruments) and (b) Rating for Long Term Bank facilities were maintained at "CRISIL AA+ Stable".
5. Capital Expenditure
During the year under review the Company has incurred capital expenditure (capex) of R 541 crores entirely funded from internal accruals. The Capex inter alia included a sum of R 151.38 crores, spent for acquiring a running undertaking in Piping Division, in Sangli, Maharashtra, as a going concern on slump sale basis. Company plans to spend about R 1500
Crores towards capex during F.Y.2024-25 including carry forward commitment of preceding year of R 496 Crores. Details of the various capital expenditure plans have been elaborated by each business division in earlier part of the Management Discussion and Analysis (MDA). Company will continue to fund all its Capex requirements from its internal accruals.
6. In the short to medium term the Company expects strong revenue growth, better operating margins, healthy liquidity surpluses, prudent funding of its capital expenditure through achievement of operational efficiency, increasing contribution of value-added products & continued focus on efficient working capital management.
The Companys focus shall remain in (i) digital transformation by adoption of digital technology in various process & thereby making Company more effective & efficient (ii) adopting various cost austerity measures (iii) tight monitoring of its working capital & (iv)) better treasury management by investing in high rated & secured investments resulting in safe & higher returns.
6 INTERNAL CONTROL SYSTEM
The Company has adequate and effective Internal Financial Control System (IFC), which ensures that all its assets are safeguarded & protected against loss of unauthorized use and all its financial transactions are authorized, completely recorded and reported correctly in a timely manner. The Companys IFC provides for (a) well documented policies & procedures that are aligned with companys policies and Standard Operating Procedures (SOPs) (b) adherence to local statutory requirements for orderly & efficient conduct of business and (c) detection and prevention of fraud. It also identifies opportunities for improvement and ensures that good practices are imbibed in the processes that develop and strengthen the IFCS and enhance the reliability and timely preparation of financial statements.
The Companys Enterprise Resource Planning ("ERP") system of SAP S/4HANA is well implemented for ensuring day-today transaction accounting and financial reporting. The Companys ERP along with allied information technology solutions provide a strong technology architecture for financial reporting controls. The Companys investment in Advanced Automation system and its Centralized monitoring of all the key activities enable automated accounting and financial closing procedures in various areas, which has resulted in better accuracy and faster financial reporting with lesser manual interventions. The financial statement preparation has been automated to ensure end-to-end system driven reporting and reducing the scope of manual errors. The Audit Committee of Directors in its periodical meetings reviews the adequacy of IFC and procedures and suggests areas of improvement. Independence of the Audit Committee and compliance is ensured by direct reporting of the Internal Auditors to the Audit Committee of the Board. Both Internal Auditors and Statutory Auditors independently evaluate the adequacy of IFC and assess the need for increase in the scope of coverage in specific areas. Based on the Audit observations and suggestions, sustained remedial measures are being taken.
To ensure effective IFC, the Company has laid down the following measures :(i) SOPs : Operations are being executed through Standard Operating Procedures (SOPs) in respective functional activities for which key manuals have been put in place. The manuals are updated and validated as and when required.
(ii) Authorisation Matrix : Approval of all the transactions is ensured through a pre-approved Authorisation Matrix. Authorisation Matrix is reviewed periodically by the management and compliance is regularly checked and monitored by the auditors.
(iii) Strengthening of Internal Audit Function: Based on the Risk Criteria the Management and Audit Committee Meeting (ACM) review the significant Audit observations and suggestions of the respective Internal Auditors either presented or reported by them in the quarterly ACM and in the Annual Meeting of their respective units and based on the same, corrective measures are taken by the process owners in their respective areas and quarterly updated Compliance Report is submitted to the Audit Committee.
(iv) Comprehensive Risk Management Framework: The company has a comprehensive risk management framework which is evaluated by the Audit Committee & Risk Committee periodically.
(v) Regulatory Compliances: Functional heads are responsible to ensure regulatory compliances and also for the policies and procedures laid down by Management.
(vi) Risk Control matrices (RCM) : The Company has devised Risk Assessment and Control Matrix for all key processes involved in financial reporting and are being tested for its design and operating effectiveness. (vii) Secretarial Audit : Compliance of Secretarial functions is ensured by way of Secretarial Audit.
(viii) Cost Audit : Compliance relating to Cost records of the Company is ensured by way of maintenance of cost records, which is verified by the Cost Auditors.
7. KEY RISKS & MITIGATION STRATEGY
Risk management is a holistic, integrated, structured and disciplined approach to managing risks with the objective of maximizing shareholders value. It aligns strategy, processes, people & culture, technology and governance with the purpose of evaluating and managing the uncertainties faced by the organization while creating value. In todays challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks inter alia are : regulations, competition, business environment, technology, investments, retention of talent and expansion of facilities. As a matter of policy, these risks are assessed and steps as appropriate are taken to mitigate the same. Company adopts systematic approach to mitigate risks associated with accomplishment of objectives, operations, revenues, Financial, – regulations and sustainability . Company believes that this would ensure mitigating risks proactively and help achieve stated objectives. The Companys objectives can be viewed in the context of four categories : (1) Strategy, (2) Operations, (3) Reporting and (4) Compliance. Company considers activities at all levels of the organization, viz. (1) Enterprise level, (2) Division level, (3) Business Unit level and (4) Subsidiary level, in risk management framework. These components are interrelated and drive the Enterprise Wide Risk Management with focus on three key elements, viz. (1) Risk Assessment; (2) Risk Management; (3) Risk Monitoring.
The Risk Governance Framework includes the Board of Directors of the Company. The Board shoulders the ultimate responsibility for the management of risks and for ensuring the effectiveness of the internal control systems. The Boards responsibility includes a review of the Audit Committee & Risk Management Committees report on the risk matrix, significant risks, and mitigating actions. A regular review is conducted of any systemic weaknesses identified and addressed by enhanced procedures to strengthen the relevant controls. The Board is supported by the Committees viz Risk Management Committee and Audit Committee which helps to evaluate the design and operating effectiveness of the risk mitigation programme and control systems. This analysis and mitigation measures, reviews the robustness of the framework at an individual business level and maps progress against actions planned.
The Business Responsibility and Sustainability Committee of the Company reviews the sustainability related risks. At the Business Segment level all Business heads are responsible to identify and review risks relevant to their respective businesses. The Business heads are responsible to inform the Managing Director/Executive Directors about the probability, impact and mitigation measures of risk identified by them. The Senior Management team and Plant Heads are responsible for identification, review, management and mitigation of Risks of their respective departments and Plants. The management team and Plant heads periodically review control measures in order to verify effectiveness of Risk Measures.
Risk Management/ Governance Framework
| Board of Directors |
| Audit Committee |
| Risk Management Committee |
| Business Resposnibility and Sustaibility |
| Committee |
| Business Head / Sr. Managment |
| Plant Heads / Zonal Heads |
| Sr. No. | Risk Category | Risk Summary | Risk Response/Mitigation actions/ Position |
| 1. | Macro-Economic | In the era of an increasingly integrated global economy, Indias growth outlook also depends on the spillover effect of global developments. |
The Indian economy has proven to be remarkably resilient in the face of the deteriorating global situation due to the strong macroeconomic fundamentals that place it well ahead of other emerging market economies. Per capita Plastic consumption, which is very low in the country is expected to grow at a rate higher than the GDP growth rate. |
The emerging geo-political developments in the Middle-East and ongoing tension in Eastern Europe has posed challenges like inflation, supply chain bottlenecks and lower growth. |
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The company is having diversified product portfolio and has set-up 29 manufacturing facilities across the country. Company is continuously expanding its product portfolio and geographical spread by putting new manufacturing facilities across the country. Companys strategic plan and initiatives for the medium term are aligned to the goal to diversify revenue mix across product divisions and geographical locations in India. |
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Regulatory changes by the Policy makers due to the Climate change, availability of skilled workforce, unemployment, fading the hope of Rate cut by US Government in this year & further depreciation of Indian Rupee, Tightening of Monetary Policy, Inflation (both Wholesale & Retail) will have adverse impact on Indian economy and may lead to slower growth and weak demand of the products in industrial sectors and consequently affects the performance of the company. |
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The Company remains conservative with strong financial capital structure, healthy cash reserves, prudent capex investment policies and well managed uses of working capital. |
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| 2. | Talent Management – Human Resources |
At Supreme, our people are key to retaining our competitive edge. Building a future- ready talent pool and robust leadership succession pipeline continue to be priority areas for us in Talent Management. Over the last 12 months we have identified members from the middle and senior management to create a strong succession plan. These members are being mentored to take on larger roles in the organisations. |
Mitigation Strategy |
Leadership and Succession Planning as a process has been put in place at Supreme to review, identify and develop talent for leadership roles with the objective of ensuring continuity. Structured interventions have been implemented to minimize risks that could impact the performance of the Company. The Succession planning process also focuses on successor Identification vis-?-vis critical roles, superannuation, and other employee life cycle parameters. |
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Developing leadership capabilities is a key focus area, with the end goal to create a Talent pipeline across all employee levels. We have initiated various structured interventions in partnership with reputed organisations / partners to have a continued focus on building skills. |
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The talent process focuses on reviewing talent readiness, the progress on the development plans for the identified talent pool in two broad buckets - Ready Now (0-3 years) & Ready later (3-5 years). This is actively supported by business and functional leaders through their involvement in key talent initiatives such as Coaching, Development Centres, IDP development, peer learning, action learning etc. Organisation-wide training programmes in todays fast changing environment, to gain new skills and augmenting existing skills becomes extremely critical. To keep our organisation future-ready, we constantly work at strengthening functional, managerial, behavioural and leadership capabilities. We have adopted a threefold approach by developing, retaining, and recruiting key talent to mitigate talent risks and drive the objectives to achieve Companys growth plans and aspirations. |
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| 3. | Foreign Exchange Exposure | The Company is exposed to foreign exchange risk, through purchases from overseas suppliers and overseas sales & services in foreign currencies. Exports are significantly lower in comparison to its imports. The adverse foreign exchange fluctuations could increase the cost of procurement substantially and it could adversely affect companys financial performance. | Bulk of the Companys foreign exchange risk (arising out of import of Raw materials) is very short-term (less than 3 months) in nature at any given point of time. The company has adopted prudent and consistent hedging policy guided by the Board, by entering into forward contracts, at optimized hedging costs for mitigating the said risk. Company is able to partially balance the exposure risk by way of export of goods. Further, company is not exposed to any long term/ short term foreign currency loans, thereby minimizing exchange fluctuation risk. |
| 4. | Brand protection/ Trademark/ Design/ Patent - Infringement | Counterfeit products not only impact the goodwill, reputation and identity of brand owner but also endanger the health and safety of consumers as these are made with untested or substandard material. If unchecked, counterfeiting may lead to more serious crimes against society. No economy can grow, attract investment in research and development unless Intellectual Property is protected. |
The company is actively working towards eradicating this menace. We have filed civil and criminal cases against the counterfeiters, resulting into arrest, seizure, and injunction against them. |
The Company is actively involved with the trademark registry and filling oppositions against the people who try to unscrupulously own our mark by making such trademark application. |
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| Risk area the Company is facing :- | The Company has adopted anti-counterfeit technology by implementing datamatrix / Qr Code which enable investigators and police authorities to distinguish between original and duplicate pipes. |
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Counterfeiters across the country have been trying to target and encash upon its trademarks / Designs and Patents. Most of the violations have been from piping industry where people try to copy its trademark ‘Supreme in some form or other. |
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| 5. | Environment & Climate Change | Climate change is the biggest business challenge in coming years in view of the unprecedented scale of the extreme weather event such as heat waves, floods, cyclone and considerable increase in mother earths temperature continuously due to exploitation of natural resources. | In line with ESG approach and strategy, the Company has identified key areas in respect of emission & energy and water conservation. Company has taken various initiatives to improve in energy efficiency, increased usage of renewable energy, Reduction of Green House Gas emission, zero waste & efficient use of water sources. Installation of roof top solar power at different locations PAN India to increase green energy usage, conservation of water at several plants through Rainwater Harvesting, installation of Piezometer and Ultrasonic flow meter for water monitoring quantities are areas of continuous focus. |
| Due to change in the regulatory requirements, owing to climate change there is likelihood of business disruptions, adverse impacts on operations and consumer demand. | |||
Gas substitution from LPG to CNG to reduce carbon emission and usage of lead-free stabilizer in many piping products are other initiatives to support the environment. Geographical presence of the company through its manufacturing plant spread across the country also results in reduced transportation and thereby reduction of emission of carbon and other hazardous gases in the environment. |
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| 6. | Plastics Waste Management | PWM (Plastic Waste Management) rules 2016 as implemented by Ministry of Environment, Forest and Climate Change – Government of India mandates under EPR (Extended Producer Responsibility) that, | The Supreme Industries Ltd, being the largest plastic Processor in India produces packaging material, uses packaging material for its branded products and imports plastic material. Supreme has registered itself with CPCB as Importer, Producer as well as Brand Owner. Supreme uploads all the required data on CPCB portal on timely basis as mandated by Government of India. Supreme fulfils the EPR requirements and ensures that the number of credits as mandated in the PWM rules are procured and displayed on CPCB portal. |
| 1. Any Company importing, producing, using, selling plastic packaging material as defined in the rules needs to collect on its own or through registered Plastic Waste Processors, all the plastic packaging material that it introduces in the market. | |||
| 2. It needs to recycle or send the plastic to its end of life as defined in the rules (Incineration, convert to oil, use in other applications such as road building). | |||
| 3. It needs to use a certain percentage of recycled content in its packaging products as defined in the rules. | |||
| 4. It cannot produce any single use plastic as defined in the rules. | |||
| 5. The Company must get registered on the CPCB (Central Pollution Control Board) portal and upload all relevant data on it. Any Company not following these guidelines is liable to pay Environment Compensation of R 5 per kg for the total packaging material introduced in the market every year. The Consent to Operate issued by State Pollution Control Board to the company may get withdrawn. | |||
| 7. | Fire, Safety & Health | The Company has a wide spread operational presence of its manufacturing units across the country. The manufacturing process in these units for plastic products does require usage of certain inflammable materials which are prone to risk of fire and safety hazard. |
As a part of risk mitigation strategy, the Company has formulated a robust framework to ensure seamless operations of its manufacturing Units across the country. Checks and balances through an ongoing review and audit process has been put in place to identify and act proactively on any gaps / omissions. Various initiatives and actionable have been undertaken & implemented as stated below: |
Moreover since Companys manufacturing process requires uses of polymers, additives and chemicals, employees are also required to manage the plant & machinery and material handling equipment all of which has exposure and risk on safety and health aspects. Further disposal of hazardous waste also poses certain challenges which needs to be managed in a meticulous manner. |
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| i. Company has installed fire hydrant system at all its manufacturing locations along with other apparatus like sprinkler system where required, extinguishers filled with chemical foam etc. | |||
| ii. First aid training is given to safety personnel, engaging professional risk assessing advisors to conduct periodic audit, review & to suggest improvement measures. | |||
| iii. Safety Committees (formed at each location) conduct regular fire safety drills and train the employees for emergency evacuation plan etc. | |||
| iv. Appropriate illumination at shop floor, earmarked storage areas with safety measures, installation of safety guards & switches, open passages for people and material movements, fencing of high risk zones etc. has been implemented across all Units. | |||
| v. Company has implemented occupational health and safety management systems at all its locations providing personal protective equipment, installation of CCTV cameras to enhance security and surveillance, well defined Safety & Health related SOP. It conducts regular Safety Audits and training programmes. | |||
| vi. Company is also taking appropriate insurance coverage to mitigate any financial impact due to any adverse impact of any of above risks. | |||
| vii. The Company is following a robust waste management procedure in line with latest requirement of pollution control board & ISO system. Hazardous waste is being disposed of through authorized vendors. | |||
| viii. The Company has entered into agreements with authorized agencies at all locations for recycling, reusing or safe disposal of hazardous plastic waste. | |||
| 8. | Treasury management risks |
Presently the Company has a robust treasury. The treasury runs inherent risks of liquidity, capital erosion and fluctuation in returns (negative returns in some extreme cases). The risks get accentuated in cases of down grading of the rating or liquidity issues faced by any major financial institution, to which many banks & / or Mutual Funds may have exposure to, RBI rate decisions, geo political tensions, defaults by market players etc |
Company has a strong treasury management policy with well-defined checks and balances, duly approved by the board. The policy clearly lays down the institution & product wise eligibility criteria, and monetary restrictions. |
Company avoids any direct exposure to equity, except to safe arbitrage products. Company has availed the services of an experienced advisor who have a strong research team. |
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| 9. | Product liability and general risk |
The risk involves claims from customers due to any loss or injury suffered on using the company products &/or claims from third parties due to any bodily injury or damage to property suffered by them within the Company premises or on using the Company products. |
Company ensures that its products meet the highest quality standards, for which best quality raw material is procured from the most reputed suppliers. Company uses best standardised machines and equipments and the production processes for ensuring production of high quality material, which are also subjected to stringent quality tests. Company adopts best safety standards in all its premises. However, in the unlikely event of any claims, the company has taken comprehensive general liability as well as product liability insurance, which adequately covers the Company from any such claims. |
| 10. | Information Technology |
In todays interconnected digital ecosystem, organizations are constantly exposed to risks, cybersecurity threats, operational disruptions and regulatory compliance challenges. Cybersecurity threats pose a significant risk to the Companys organizations operations and data integrity. Non-compliance with regulatory requirements can expose the organization to legal liabilities, financial penalties, and reputational damage. |
Effective risk mitigation is necessary for safeguarding Companys business interests, enhancing resilience, and sustaining long-term success. Risk mitigation cannot be a reactive strategy but a proactive approach that requires foresight, strategic planning, and agile execution. |
Risk mitigation begins at Supreme with Risk Assessment, understanding and assessing the various threats and vulnerabilities that the organization faces. |
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| By identifying potential risks and their potential impact, the Company prioritize its mitigation efforts and allocate resources more effectively. | |||
| The proactive approach is about developing robust contingency plans, disaster recovery strategies, and business continuity frameworks. This is to ensure that the Companywe can respond swiftly and effectively to any unforeseen events or crises. | |||
| Implementing robust cybersecurity measures like, deploying advanced threat detection technologies, enforcing strict access controls, conducting regular security audits, and providing comprehensive employee training to enhance cyber awareness and resilience help in mitigating these risks. | |||
| Adherence to relevant regulations and industry standards is a critical aspect of risk mitigation and Company ensure to strictly follow all required regulations and standards. | |||
| Effective Vendor Risk Management includes conducting due diligence assessments, establishing clear contractual agreements, and monitoring vendor performance to ensure compliance with Companys security and privacy standards. | |||
| Mitigating risks requires collaboration and coordination across different departments and functional areas. The Company is committed to fostering a culture of risk awareness and accountability, where employees understand their role in mitigating risks and take ownership of their actions. | |||
| 11. | Reputation |
A threat to the positive perception of stakeholders/ general public about the Company, its products, services or Management may cause adverse consequences like Loss of customers, Loss of talent, Loss of revenue, Bad views by public, Additional scrutiny on behalf of Government and/or regulatory agencies and loss of brand value etc. |
The Company is (i) Actively addressing product complaints and ensuring product delivery as promised. (ii) Strengthening corporate governance norms, adherence to the code of conduct, by one and all of its employees. (iii) Warranty of products, wherever applicable, (iv) Identifying other relevant reputational attributes through brainstorming with various stakeholders and (v) Standardisation of policies and procedures to reduce/eliminate the likelihood of any such event. |
8. HUMAN RESOURCES
We passionately believe that people are our greatest assets, and it is always our endeavour to ensure their development and growth. We are continuously working to create an environment of empowerment through well-defined policies that reflect empathy, celebrate meritocracy, and provide ample professional and personal development opportunities. The Human Resource strategy supports promoting diversity in its workforce while ensuring each employee feels empowered at work. We have robust human resource framework and processes which support the smooth functioning of workforce and wellbeing of all the employees. The Company focuses on inclusive, collaborative, and growth-oriented culture built over the years. Companys workforce has grown from strength to strength over the last several decades. Company has always remained an equal opportunity employer and has embedded these values in its employees. The Company complies with all applicable fair employment practices and equal opportunity laws in every state / location where it operates. Company prohibits child labour, forced labour and discrimination of any kind against any employee or applicant based on gender identity, language, race, colour, religion, caste, creed, sex, origin, ethnicity, age, disability, marital status, sexual orientation, or any other category protected by law. At Supreme we strongly believe in the fundamental of human rights. Company remains fully committed to uphold the highest standards on human rights protection by adopting a proactive approach. The Company conducts periodical training and awareness programme for employees to sensitize them on matters linked to protection of human rights. This enables the Company to uphold its values on the protection of human rights in letter and spirit. The Company provides a work environment that fosters collaboration, lateral thinking, and innovative ideation for employees to create value. Linkage between personal goals and organizational goals is considered a vital aspect for the shared growth of employees and the organization. The annual performance management process is designed to ensure such alignments and to drive a culture of meritocracy. Company is committed to equip its employees with the requisite skills and the learning interventions are designed linked to the desired competencies. Organisation-wide training programmes in todays fast changing environment, to gain new skills and augmenting existing skills becomes extremely critical. A shift in the learning approach was implemented by moving to longitudinal learning journeys focusing on behavioural & functional skill building. In addition, each learning intervention have been designed to ensure a continuous engagement through coaching, peer learning, case studies, self and action learning, Pre-work & post work, check-Ins, and webinars.
To keep our organisation future-ready, we constantly work at strengthening functional, managerial, behavioural and leadership capabilities. We are also committed to leveraging technology for automation, controls, and enhancing employee experience. Accordingly, the company initiated its focus on transitioning core HR processes to the companys Human Resource Management System (HRMS) This transition resulted in notable improvements in transaction time, user experience, data management and controls. This eliminates the need for multiple touchpoints and simplifies the process for employees, process owners, and decision-makers. The technology journey is always evolving, and the company is committed in ensuring that the same is leveraged on a continuous basis to deliver optimal value to the organisation.
Industrial relations across all the units and locations have been harmonious and cordial.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities, laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that would influence the Companys operations include cost of raw materials, tax laws, power cost and economic developments and such other factors within the country and the international economic and financial developments.
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