TCPL Packaging Ltd Management Discussions.


The Indian packaging industry continues to grow on the back of rising domestic consumption. However, during the year 2019-20 the rate of growth of the Indian economy has considerably slowed down thereby adversely affecting the demand growth for your Companys products.

Your Company continues to be one of the leaders in the industry, with plants at multiple locations, as well as a very strong customer profile. Your Company is at the forefront of technology in the industry and has a substantial scale advantage over smaller competitors. Your Company, whilst continuing to expand its capacity is focused on consolidation and capacity utilization, leading to a positive correction in the debt: equity ratio as well as an improvement in EBITDA margins over the past year. We believe that your Company will continue to maintain good ratios and steadily improve EBITDA margins as the new capacity gets fully utilized, on an overall higher scale of operations. We believe that the outlook is quite positive in general but the outbreak of COVID-19 will most certainly reduce demand growth and affect our operations.


During the year the Company has managed to grow at 9.32 % and achieved a turnover of Rs 870.27 crores. The Company could not achieve the much-awaited milestone of Rs 900 crores due to the COVID-19 induced lock-down. However, there has been significant improvement in EBITDA margin which is 14.72% as against 13.28% in the previous year, translating into a higher PBT.


The macroeconomic consequences of the Covid-19 pandemic and the associated impact on our business remain difficult to assess. For certain, a recession is imminent whose extent, duration and development cannot be predicted. Even if the demand for our products, packaging for consumer staples, has a certain resilience and is currently doing well overall, it is difficult for us to assess how much is attributable to end- consumption or stockpiling. On the cost side, we are facing price increases for the important raw material of recovered paper, which we are countering with higher prices for recycled fiber-based carton board.

Due to short-term visibility and macroeconomic uncertainties, a further assessment for the current year is not possible at the moment. In any case, sustained investment activity should further strengthen the competitiveness of your Company.


The overall long term macro-economic conditions in India are expected to improve considering the stable Government at the Centre. With the diverse geographical presence of the Company across India and that Company supplies to both the carton and flexible packaging requirements of its customers, your Company has a definite edge over its competitors.


The COVID-19 pandemic is the biggest threat to the Companys operations and prospects until a medical solution is found to overcome this virus. Further, there continues to be increase in capacity of packaging manufacturers resulting in over supply. Coupled with inflation-led increases in costs of not only raw materials but also operating expenses, there is significant pressure on margins. Whilst the Company tries to pass this on to customers and absorb some of it by improving productivity, there is still a threat to margins on an ongoing basis. Your Company shall adjust its capex plans and schedule as per the changing market demand scenario.

The Company also does a significant quantity of its business with the Tobacco industry which is under constant threat due to increase in taxes levied by the Government which impact the overall volume besides the need to print graphical health warning on the packs which do deter many from its consumption.


Your Company currently has only one segment of business i.e. Printing and Packaging.


The Board of Directors of the Company has adopted the policy of paying out 20% of retained profit, as Dividend each year. However, in view of the disruption caused due to COVID-19, to conserve funds, dividend of Rs 4.00 per share which is equivalent to 10 % of the retained profit, is recommended by your Board of Directors to be adopted in the ensuing AGM. Accordingly, the dividend payout, would amount to Rs 364.00 Lakhs, subject to deduction of tax at source as per provisions of prevailing of Tax Rules.


The Company has adequate internal control system and a defined organizational structure besides, internal rules and regulations for conducting the business. The Management reviews actual performance with reference to budgets periodically. The Company has a Audit Committee, Independent Statutory Auditors and also Internal Auditors who submit reports periodically which are reviewed and acted upon.


Industrial relations continue to remain cordial during the year and total 1863 employees are on the Companys payroll as on 31.03.2020 as compared to 1724 employees on the Companys payroll as on 31.03.2019.


In preparation of financial statements, the Company has not followed a treatment different from that prescribed in the Accounting Standards.