DDev Plastiks Management Discussions


GLOBAL INDUSTRY SCENARIO :

Polymer based product are used in manufacture of everyday use products and therefore have high growth potential. The prominent application areas for the PolymeL MarkeF sre food and beverages, alio increased use in ieuilding and construction sites, as well ss i n automotive, mehlical, and (electronic sectors includ i ng cables an d wires. This increase in the polymer biased product application indicates thaU the polymer compounding sec/or will have a rise ir deunand. Increasing plaslic consumption in the constru ction, eutomotive, electrical and electronics in dustries iu projected to support merket growth of polymer compounding.

The global polymer compounding market is booming because polymer is one of the most commonly utilized chemical products in uuactiurlly all industries, includieg the mndical, aerospa ce, packaging, a utomdtive, constru cLiun, and electrical appliances, wires and cable industries. Because of their great performhnce, light weight, cost-effectiveness, polymers aue frequently employed as alternatives to items made oU metal and mineral materials.

The plastic compounding market size wasvalued at USc 67 trillion in 2023. It is projected to reach US$115 Billiot by 2031 growing et a CAGd oU 6.5% during the forecase pariod of 2023-2031. in terms oA region, the global polymer compoundng market: is split i nto Asia Pa cific, NortU America, Europe, and Other. Among ill the nations the Asia Pacific is the most uignificaut shareholder asd is estimated to accouut lor higaest value share in the globel plautic compounding market and expected to grow at a CAGR oL 6.1%p during 20I3-2031. Chinn, /Australia, India, Japan and rest of Asia Pacific are included in it. The regions automotive, industrial machinery, construction, packaging, electrical, electronics, cable and wires industries are expected to experience increased demand. Demand is further expected to fuel considering that the region is one of the biggest consumers and producers of electrical and electronic goods such as wires a nd cables asd otherelectronic eqmpment. This rapid i ndu strializa tion add economic developments are also driving factors for growth in this region. /folditiorally increasing demand fo r [elastic compo uadirg from consumer goods iodestry for manufacturing shirts goods, toys and textiles could be addenl driving factors. North America is expected to /rowat CAGRoL 6.C5%oduring 2023-2031. US and Canada rre iecluded in nnalysis ofplastic compounding market in North /A mericr. Rep id Infrastru cture develop ment is expected to boost demand i n th e region. in Europe, Germany is the largert contributor to market growth and the inc reasing demand Eor polymer rompounding from the automotive industry would propel the growth fo/thee The rtsing demard for electrical vehicles is expected to provide additional opportunities of growth.

Polymer compounding is a boon for the electrical industry since it is a preferred material due to properties such as electrical insulation, corrosion inhibition, excellent heat resistance, high tensile and durability and low density. This is another end use industry which is expected to drive the market because of its high rigidity and tensile strength. The global wire & cable compounds market grew from $11.32 billion in 2022 to $12.58 billion in 2023 at a compound annual growth rate (CAGR) of 11.1%. The Russia-Ukraine war disrupted the chances of global economic recovery from

the COVID-19 pandemic, at least in the? short: term. The war between these two countries has led to econom icsanctions on multipile count ries, a surge in com modity pricer, and supp le choin dis ruptions, causing inflation across goods a nd services, and affecting many markets across the globe. The wire & cable compounds market is expected to grow to $18.65 billion in 2027 at a CAGR of 10.4%.

The wire and cable compound market consist of sales of thermoplastic polyester (PBT), crosslinked polyethylene (XLPE), and polyvinyl chloride (PVC).Values in this market are factory gate values, that is the value of goods sold by the manufacturers or creators of the goods, whether to other entities (including downstream manufacturers, wholesalers, distributors, and netailers) or directly to end customers.

INDIAN POLYMER COMPOUNDING INDUSTRY

The Indian sub-continent has establisned itselt as the most exeiting and dynamic emerging market in the world and is one full of potential and investment opportunities. There is now massive investment occurring in the regions petrochemical, polymer production and downstream plastic processing industries, driving strong growth in polymer compounding demand. The market in the region is dominated by India on account of its huge population and high GDP However,growth in the region on the whole is driven by its increasingly globally-minded governments that are introducing policies to encourage foreign direct investment and facilitate closer integration with the worldwide economy, helping to drive inveetment in petrochemicals, polymer production and downstream plaatic processing. Growtn in the region is not only iueled by suchpolicy relaxation! but also by rising nrbanization oko large, youthful, population, leading to greater consumer spending for items that requireplastics - from packageU goods to mobile phones and automobiles and theredy polymer compounding requiremento While? much oh these productu are still imported,t pere is now consi derable investment ta Icing place? In plastic processing operations to supp ort manufacturi ng investments, driving growth in polymer compounding demand. The increasing rate of urbanization and development are major drivers for growth of infrastructure segment and therefore the products used in construction and power transmission including wire and cable compound products are expected to be in high demand. The key players of tfe market believe that the growfo drivers of the sector are fir ally in p lace and wit h the i nsatiable manufacturi ng industry, supportive government policies and a freshly surging economy, the besp is yet to come for this niche. As the third largest consumer of polnmers, India ranks only after Chico and USA hence tOere is wide scope ok polomer compounding consiOerino the wide usage of plastic biased oroducts.

With various scfiemes on Government wito respect to electrifcation, the Cable industry, the major consumer of polymer compountlin g for your Company., is expented to grow at la rge. The Global wire and cable compo undi ng market was valued US$12.5 billion in 2021 and is projected to grow and reach US$ir.6 billion by 2026 growing at a CAGR of 9%o in view of rising demand in construction, power and aotomotive industry The marketforulectronic goods and table is expected tp cjrow, rubstantially triggered by the increased rutar disposable income. This will inevitably causethe manutacturing sector to grow manifold, turtherboostinr thedomestic pplymercomgounding indusfry.With the increased demand for polymer across the country India is expected to become the seventh largest consumer of polymer by 2025 which foresees growth in polymer compounding industry. In spite of all these latent opportunities,

China still produces three to twenty times more of most polymers, as compared to India, even with the population of both the countries being relatively equal. However, market experts predict that it will be the growing demand for plastics, rising costs and economic challenges that will see the Indian market growing faster than its competitors and thereby boost polymer compounding industries.

INDUSTRY STRUCTURE

The polymer compounding industry is a subfield of material science that encompasses not only the basics of physics and chemistry but also grabs a whole lot of engineering to be manufactured as an end product. After going through specific processes known as compounding, polymer properties can be changed to meet specific requirements for instance its conductivity or flame retardance characteristics, its tensile strength, density etc. Extrusion is used to combine base polymer additives to improve their properties. The additives combined with the base resin during extrusion gives compounded polymers their improved aesthetics. To increase the overall utility and value of polymer or end use products, the additives such as plasticizers for flexibility, anti-oxidants for high temperature stability, flame retardants or smoke suppressants or conductive fibres for electrical properties are added. Comparing plastic fittings to metal or wooden fittings, plastics fittings are much simpler to install. In the complex processes of compounding plastics, the ratio of additives, is determined, the melt is mixed at high speed using extruders, cooled and then final pellet is cut and packaged.

Polymer compounding market is segmented based on type, application, material and region. Based on Type the market is categorized into Thermoplastics, Thermosets, Elastomers. Based on material it is categorized into Polyethylene, Polypropylene, Polyvinyl Chloride, Polyethylene, Terephthalate, Polystyrene, Polyurethane. Based on application it is categorized into consumer goods, electrical and electronics including wires and cables, construction, automotive, aerospace and others. Based on Region it is categorized into North America, Europe, Asia-Pacific, South America and Others.

Polymer compounding market analysis by Type

The thermoplastics held the largest proportion of the polymer compounding market. Its rising demand in food packaging business can be due to their high mechanical strength, cost efficiency, and ease of manufacture. These characteristics have also increased demand for thermoplastics in other industries such as lightweight structural construction, storage tanks and window frames and panels. The increasing use of high-density polyethylene (HDPE) and low-density polyethylene (LDPE) in food and beverage packaging such as milk and fruit juices, crates, caps for food packaging, drums, and other liquid food packaging, as well as industrial packaging applications, drives the market growth. The construction and automotive industry are major consumers of compounded polyethylene, which is used form of sheets, plates, films, foils, and strips that provide plastic floor protection. It is also used in pipes and fittings, which are essential components of many industrial processes. Furthermore, consumer goods such as bowls, buckets, water bottles, drums, trash cans, and plumbing pipes are examples of compounded polyethylene products that are used on a daily basis

Polymer market analysis by Application

Based on Application, the market of polymer compounding is categorized into automotive and transportation, infrastructure and construction, electrical and electronics including wires and cables, packaging, consumer goods/ lifestyle, industrial machinery, healthcare and pharmaceuticals and others. The automotive and transportation set to hold the largest share owing to highest adoption of the compounded products in these followed by electronics and electrical industries.

Polymer market analysis by Material

During the projection period, the propylene category, based on base material, is expected to develop at the fastest rate in polymer compound market. Consumer spending and production operations in different sectors, such as automotive, construction and packaging, may accelerate. It is in high demand for packing products, tubing products, connectors, bottle and plastic surgery implants because of its relatively remarkable mechanical features such as flexibility, good stability, high heat resistance and impact resistance.

Polymer market by Region

In terms of regional dynamics, Asia pacific was dominant: amongst all regions. The growth in thisregian has been attributed to India and Chin a as both countriea saw an iscrease in productio n ofpolymer bas ed products. The growth of this market in the Asia Pacific region is fueled by the increasing economies oS Southeast Aaian countries, rising disposable income, cheap availability oS raw matarials required to manufacture plastics, and an increase in population. Furthermore, risicg demand toreco-triendlyalternatives to tralitional plasticsfromemeraing economiessuch as China and India, as well as increase! consumption of petrochemicals and plastics primarily used for packaging in the food and beverage industries, will propel the market forward in the coming years.

I NDU STRY DEVELOPMENTS

Polymer compounding is a process that offers several superior properties such as durability, low density, flexibility, aesthetic appeal, lightweight, insulation, improved barrier resistance, improved weathering and energy saving to virgin polymers.Thesepropertiesdepend on addi tivesuae dduringcompounding.Hgnce majorcompoundersared eveloping several additives and formulas. Custom polymer compounding is gaining popularity in polymer compounding market and companies are increasing their Research and development capabilities for feedstock testing, in process testing and final quality control testing to gain competitive edge over other market players. Pre work and post blending testing help to quajify the base raw material to ensure high parformance charactenutics in products. In process testing helps to ensure client requirements are being met at every step). Companies are entering intc Joint Ventsras wit? companies based in Shanghai, Germany and the United States te introduce nicte products in tOe market. Such sSrategies are helping to broaden their revenue streams and carve n levelof trust in existing and prospective pattners.

India it ccrrently a powerhouse for plastic/?olymer bated products majody owing to the widesqread manufacturing sector in India. There exists a huge gap between the demand and supply of plastic and polymer based products which is expected to widen as urbanization continues and per capital plastic consumption of India reaches close to western counterparts. This opens opportunities for polymer compounding industry to gauge the requirements to supply products.

Companies are making an effort to invest in R&D facilities with strong emphasis on current application in consumer goods, electronic and automotive industries. Stakeholders are becoming more skilled at sustainable compounding to improve their position in the market. The regulatory requirements, enhanced knowledge and customized requirements among GenZ consumers is pushing plastic manufacturers and consequently polymer compounding market to develop innovative sustainable compounding techniques.

Major companies are investing substantial amounts in polymer compounding facilities. They have adopted development strategies such as expansion and acquisition to increase their market presence to cater to the customer demand. Currently, polymer compounders are dependent on demand of end-users. Hence, majority of the companies are focusing on developing customized products for application in automotive, construction and electrical and electronic industries.

Although your company supplies polymer which has use in various products, the main industry that the products of your company caters to is the Cables and Wire Industry. Hence, growth and development of this Industry is most likely to benefit the Company. Rising demand of wire and cable from various end- users is the driving factor behind the growth of this market. In India, the wire and cable market comprises nearly 40 per cent of the electrical industry. It is growing at a CAGR of 15 per cent thanks to the growth of the power and infrastructure sectors in the country. Moreover, global investors now consider India as a potential market for high voltage (HV) and extra high voltage (EHV) cables. The Cable industry is likely to grow at a CAGR of about 11 per cent to reach Rs. 1,000-1,100 billion by FY-2023-24. The Global wire and cable compounding market was valued at us$12.5 billion in 2021 and is projected to grow and reach US$ 19.6 billion by 2026 growing at a CAGR of 9% in view of rising demand in construction, power and automotive industry. India has also become a net exporter of cables and wires which is an advantage to your Company. Incidentally, growth in the industry is fundamentally driven by the recent developmental push in power and infrastructure segments, through government policies. The renewable energy push and government projects for electrification, housing development and smart cities have proved to be additional incentives. Technological advancements are a key trend gaining popularity in the wire and cable compound market going forward. Major companies are developing new products with advanced technologies to sustain their position in the wire and cable compound market. Increasing environmental regulations and safety concerns on use of halogenated polymers for wires and cables are driving demand for non-halogenated cable compounds.

The polymer compound market especially for wire and cable has various domestic and global players indulging in fierce competition for acquiring a large consumer base. These player are involved in intensive research and development activities for deriving new formulations that help in boosting the revenues of the players in the wire and cable compounds market, eventually strengthening the growth prospects. Polymer compound market players investments will be oriented towards acquiring new technologies, securing raw materials, efficient procurement/ inventory, strengthening product portfolios, and leveraging capabilities to maintain growth during challenging times

COMPANYS PERFORMANCE

Ddev Plastiks Industries Limited ("DPIL") mainly caters to cable and wire companies, packaging, footwear, pipes, automobiles, consumer durables, electrical appliances, electricals and light fittings and electronics.

A. Critical financial figures for 2022-23 are as under:-

• Gross turnover for the year is Rs. 2503.75 Crore against Rs. 2226.90 Crore in 2021-22.

• PBIDT for the year Rs. 185.70 Crore as against Rs. 127.89 Crore in 2021-22.

• Profit before Tax for the year Rs. 140.36 Crore against Rs. 75.59 Crore in 2021-22.

• Operating Profit for the year Rs. 173.60 Crore against Rs. 116.36 Crore in 2021-22

• Capital Structure of the Company as at 31st March 2023 was Rs. 940.72 lakh comprising of 9,40,72,930 nos. of equity shares of Rs. 1/- each.

B. Product wise operational performance:-

Product wise, your company is engaged in manufacturing of the following products, the performance of which is discussed below-

Poly Vinyl Chloride

The turnover from Poly Vinyl Chloride is Rs.29,118.28 lacs as against Rs 36,607.57 lacs in the previous year.

Polyethylene

Turnover from Polyethylene is Rs. 2,09,251.36 lacs in the year under review as against Rs. 1,68,884.04 in the previous year.

Others

Turnover from these items is Rs.12,005.10 lacs as against Rs. 171,98.67 lacs in the previous year.

Important Ratios in respect of the year ended 31st March, 2023 are as below:

Particulars FY 2022-23 FY 2021-22* Change (%) Reason for change
Debtors Turnover Ratio 7.03 12.77 -44.91 Due to increase in turnover of the company
Debt Equity Ratio 0.11 0.33 -65.73 Due to Reduction in working capital investm ent leading to improved cash flows used for debt reduction of the Company
Current Ralio 1.72 1.39 23.38 Due to increase in Current Assets and Reduction in working capital cycle of the Com pany.
Interest Coverage Ratio 5.22 2.85 82.98 Due to increase in Earning before Interest and Tax (EBIT) of the Company and increase in Finance cost.
Debt Service Coverage Ratio 5.54 3.10 78.81 Due to Reduction in borrowings resulting in lower interest outgo of the Company.
StockTurnover Ratio 10.15 16.15 -37.16 Due to decrease in inventory level and increase in Revenue of the Company.
Return on Equity (ROE) (%) 23.49 13.98 68.07 Increase in Net Profit of the Company and Increase in accumulated shareholders equity.
Operating Profit Margin (%) 6.93 5 .23 32.61 [Due to increase in (Operating Profit of the Company.
Net Profit Margin (%) 4.16 2.46 69.01 Dae to increase in Net Profit and turnoverof taeCo mpany.

*Honble Na tiona l Co mpany Law Tribunal has vide i ts Order dated 04.03.2022, approved the Scheme ofArrange- ment ip relation to Demerger ofcompounding business of Kkaleana Industries (India) Limited and vesting it on a going concern basis with the Company from an appointed date 01.04.2021 and the financials have been prepared in accordance thereof.

FUTUREOUTLOOK

Plastics are primarily used in the construction indu stry to insulate str uctures and infrastructure. Additionally, they produce variets building materials, such as flooring, performance safety windows, doors, calles and pipes. The construction iniestry has increa sed its demand for compounded plastics due to their capacity to provid e qualities comparable to steel, such as atrength, texture and resistance to rust and environmental factorso Additionally there will be more opportunities for the polymer compouoding market to expanp faeoraily due to inereased eommvroial and residential projects and growing consumer awareness of attractive interiors. The rising demand from construction industry due to growing urbanization in numerous countries is estimated to bring considerable growth prospects for the wire and cable compounds market.

The popular concept of smart city is also proving to be beneficial growth opportunity for wire and cable compound market. Various Government initiatives like Atmanirbhar Bharat, Make in India, Pradhan Mantri Krishi Sinchayee Yojana, Smart City Project, establishment of plastic parks, Production Linked Incentive are expected to boost demand in plastics Industry and polymer compounding. The growing construction sector is expected to propel the growth of the wire and cable compound market going forward. The construction sector refers to the sector of industry and trade that deals with creating, maintaining, and repairing infrastructures. Wire and cable compounds are used in the construction sector to provide wires with a high level of insulation and to stop moisture from getting inside power transmission or telecommunication cables.

Wire and cable compounds refer to substances that are used to formulate insulating and jacketing materials for wires and cables to protect telecommunication and power transmission wires from moisture intrusion and are also used to create wires and cables with exceptional durability, corrosion and chemical resistance, mechanical stability, flexibility, and abrasion resistance. The wires and cables sector is a direct beneficiary of development of power generation and distribution infrastructure, as the market comprises nearly 40 per cent of the electrical industry in India. According to a CRISIL report, in volume terms, the domestic wires and cables industry registered a CAGR of 22 per cent CAGR over the last five fiscals to reach about 17 million km in FY 2018-19. The report expects the industry to reach a volume of about 27 million km by FY 2023-24 with a CAGR of 10 per cent.

Power sector stands to be the dominating segment owing to the extensive consumption of wire and cable compound in the power transmission sector. Wire compound and cable compound provide high-quality insulation, sheath to conducting materials, high durability, chemical and corrosion resistance, superior mechanical stability, elasticity and abrasion resistance to the cable and wire, thus increasing popularity for wire and cable compounds. Countries such as China, India, United Kingdom, United States and Vietnam among others are witnessing the construction of power plants, the requirement for wire and cable compound market is expected to rise from these countries over the forecast period. Increasing investment in smart electricity grid network and HVDC transmission further offer opportunities for wire and cable compounds. Asia-Pacific have been registering strong growth in utilization of wire and cable compound in construction, automotive and power generation industry, which is expected to drive the market over the forecast period.

The automotive industry will see healthy increase in polymer compounding as introducing electric vehicles forces automakers to consider various options for compounded plastics. Vehicle fuel efficiency is being linked with polymer compounding. Regulatory intervention to reduce gross vehicle weight to improve fuel efficiency and ultimately reduce carbon emission has driven automotive industry to adopt substitutes to metals for fabricating automotive components. Compounded plastics are preferred as light weight material and to increase vehicle efficiency and life of vehicle components.

SWOT ANALYSIS

Strength

- Established market position in polymer compounds market

- Proven track record in establishing a leading market position and gradually expanding in adjacent product segments

- Conservative and strategic philosophy towards gearing

- Capability of large scale operation allowing economies of scale of production. The company caters to cable and wire companies, packaging, footwear, pipes, automobiles, consumer durables, electrical appliances, electricals and light fittings and electronics. Its product folio serves diverse industries

- Geographical spread of operation in India allows movement of finished goods at the customers place, quickly with lower cost of transportation.

- Strong financial base with Comfortable and healthy Capital Structure and moderate although improving debt protection in total revenue with adequate liquidity

- Proper mix of workforce (skilled, semiskilled and diversified)

- Long standing experience of promoters/ management teams, wide product range and strong clientele base

- Disciplined inventory management and strategic location of its facilities

- Growth orientation with introduction of new product categories with the help of extensive and strong Research and Development and regular market analysis to understand customer needs and demands

- Supportive government/ regulatory policies for industrial growth Weakness

- The main weakness will flow from deceleration in Indian Economy

- The supply chain disruption in view of ongoing geo-political scenario may affect the production line

- Susceptibility of profitability to sharp volatility in raw material prices and currency movements

- Dependence on large players in industry for raw material

- Restricted end use market

- Regulatory restrictions in use of plastic and its disposal

- Strict licensing and compliance requirements.

- Recycling and re-use of plastics to restrict new/ fresh requirements.

Threat

- Shifting consumer preferences in a projected economic downturn scenario

- Amendments to policy to align with growing environmental concerns which restrict the use of plastic

- Fluctuation in raw material costs triggered by prevailing geo-political tensions

- Increasing wireless communication technology

- Fluctuations in crude/ petrochemicals prices impacting many segments of the industry from raw material cost, operations and transportation

- Uneven recovery in different end markets and geographies and its analysis and understanding is a key challenge

- Global economic slowdown concerns and risk of stagflation

- Resurgence of Covid-19 cases

- Unorganised Sectors will also eat into the demand segment of the Company Intense competition from imports in the compounding market

- Competition from backward integration by wire and cable manufacturers

- Exposure to sharp volatility in raw material prices and currency movements

- Increasingly turbulent political environments in oil-producing countries are causing great uncertainty in the polymer market.

Opportunities

- Increased replacement of conventional material in various sectors, which are now focusing on use of plastics, customized to suit the requirements, especially in automotive, construction and electronics and electrical sectors

- Surging need of Polyethylene (PE), both Low Density PE (LDPE) and High Density PE (HDPE), in packaging various industry

- Growing infrastructure developments has increased demand for Construction materials, Cables and Wires which is polymer compounded materials for insulation, flame retardant, high tensile, elasticity, flexibility etc.

- Increasing demand for end use products viz- electronics, electrical appliances, toys, footwear etc

- Growing construction sector is driving the wire and cables compound markets

- Regulations for environmental and safety measures are leading to innovation in plastic products and thereby polymer compounding

- Increasing penetration of plastics in automotive sector and positive economy for a circular economy associated with polymers

- The increasing demand for power cable (Medium Voltage/ High Voltage) given the need to renew the power grid and replace the overhead lines with underground cables to reduce vulnerability against more frequent weather events

- Electrification of automotive sector requiring lighter automotive components wherein plastic play a major role.

- Increasing demand in emerging economies in view of growing urbanization and development.

Rising demand for flame-retardant materials to favor electrical and electronics segment.

- Ramp up of new high margin product segments to improve diversity

- The ongoing trade conflicts among major countries may be a boon for developing country like India

- The on going geo-political tensions have increased cost of production in some of the other countries in view of sanctions which restrict availability of low cost products to them. India stands at an advantage in this coupled with in house resources

- Government Urbanisation Schemes, Production Incentives, subsidies, capital infusion in plastic segment have trickling advantages.

RISKS AND CONCERNS:

The Company evaluates and reviews risks periodically to develop new strategies in response to evolving market conditions. The organization believes in mitigating risks at the rudimentary stage so that operations can continue uninterrupted without harming the People and Property. Through the combined efforts of the Audit Committee and the Management, risks are identified and minimised to the level of as much as reasonably practicable. Although the Company has comprehensive risk management in place, there is concern about some external factors/ disruptions, as below:-

a) Supply Chain

b) Fall in Demand

c) Securing Finance at competitive rates.

d) Increasing cost of raw materials and currency fluctuations

The company has comprehensive risk management framework in place, which consists of

a) Process to identity, prioritize and formulate mitigation plans for risks and

b) A framework of rules and regulations for various officials/ employees and the Board, in discharging the risk management process, periodicity of reporting risk management.

As a part of this risk management framework, the company has identified for each conceivable risk atleast a corresponding mitigation plan to ensure continuous risk monitoring and risk mitigation. The following are some of the business risks and mitigation strategies adopted by the Company

Type of Risk Risk Particulars Mitigation Strategy
Business Risks Volatile raw material prices Scrutiny of raw material prices and sources to avail the most competitive rates
Currency Fluctuations
Demand/ Supply mismatch Strategic financing

Appropriate contracts and commitments for key raw materials to ensure smooth supply

Monitoring external environment

Evaluating alternative availabilities and options

Well planned procurement and inventory management

Technology Risks Quality upgradation Product Obsoletion High Standard of In-House Research

Regular client feedbacks for improvement

Industry analysis to keep pace with the growing trends

Skill enhancement and training programs held to upgrade the employee performance

Seeking technological assistance when required

Revenue Risks Lower Revenues High quality of service to client satisfaction and regular feedback
Loss of Clients
Increased Costs Loyal Client base with long standing partnership
Intense competition from unorganized sector and imports Improved Product Portfolio and geographical spread

Strong presence in key markets

Maintenance of high quality standards

Established market reputation

Presence at key/ strategic locations allows saving on transportation costs

Strategic analysis to minimize finance costs Procuring raw materials at competitive rates

Talent

Management and Human Resources Risks

Retaining talent Structured Talent Management Process
Hiring talent Identification of Critical roles and jobs
Upgradation of Skills and Resources Employee Skill Orientation Programs Conducting skill development training and programs
Foreign Exchange Risks Currency Fluctuations (both Export and Import cases) Prudent and consistent hedging policy

No exposure to short/ long term foreign currency loans

Focus on Exports to ensure balance suitable strategies to minimize the impact of interest rate fluctuations

 

Cyber Security Risks Data Loss Adopting Cyber Security Technology and Process with layers of protection
Data Security and Privacy
Digital Attacks Well defined policy to protect infrastructure and information
Leakage/ Misuse of Information Install robust security mechanism with automatic scheduled data back ups

Disaster Recovery Mechanism

Environmental and Regulatory risks Changing Regulatory Frameworks Imposition of Ban/ Limits/ Sanctions/ Licensing Strictures Ensuing that all licenses are in order and regular check up Proper disposal of wastes Conservation of Resources

Initiatives to improve energy efficiency, usage of renewable energy, rainwater harvesting, installation of solar power adherence to environmental rules and regulations

Credit risks Payment Defaults Credit risk to customers Credit availability and exposure Periodic review and rigorous follow up Export sales covered under receiveable insurance policy Agreements with banks/ financial institutions Healthy working capital
Liquidity risks Cash Flow Shortage Defaults in payments Review of working capital constituents

Close monitoring of corporate financing strategies

Optimal working capital utilization

Secure financing arrangements

Healthy Cash Flow

Workplace Accident/ Incident risks Accidents

Failures

Insurance Policies to minimize losses Periodic review of safety measures Identification of areas of hazards and redressal Regular maintenance of plants, machinery etc Safety training, measures and equipments to workers
Economic risks Global Geo-Political Developments Inflation

Supply Chain Disruption

Diverse product base and market Identification of various supply channels Strong Domestic Economy to mitigate the risk

Presence at key/ strategic locations allows easy movement of goods and raw materials

Monitoring external environments

Dependency risks Reliance on particular Industry/ Segments Inealstic demands since application sectors are vital to economy Loyal client base and market reputation Adherence to quality standards Long Standing partnerships
Market Presence risks Fierce competition Upcoming market players Changing marketing dynamics Adopting marketing strategies Long built reputation

Lengthy and strict licensing requirements in the industry pose entry barriers

Presence at key/ strategic locations allows easy movement of goods and raw materials

INTERNAL CONTROL SYSTEM.

The Company always strives to strengthen Internal Control Systems and processes for smooth and efficient conduct of business and complies with applicable relevant laws and regulations. A comprehensive delegation of power exists for smooth decision making. Elaborate guidelines for preparation of accounts are followed for uniform compliance. Further, all the key functional areas are governed by respective operating manuals. In order to ensure that all checks and balances are in place and all Internal Control Systems are in work, regular and exhaustive internal audits are conducted by experienced firm of accountants in close co-ordination with the companys concerned accredited officials.

The Internal Financial Controls are reviewed periodically and in particular the Internal Auditors ensure that the company as in all material aspects, laid down Internal Financial Controls including operational controls and that such controls are adequate and operating efficiently.

ACCOUNTING TREATMENT.

The financial statements of the Company for the financial year ended March 31, 2023 were prepared in accordance with IND-AS, which are the prescribed Accounting Standards.

ENVIRONMENT. HEALTH, AND SAFETY

Your company adheres to a philosophy that prioritizes the protection of People, Property, and the Environment. The Company recognizes that safety is a crucial element for all internal and external stakeholders and is committed to improving its safety performance continually. To achieve this, it is dedicated to consistently implementing top-notch Health, Safety, and Environmental (HSE) standards. The Company acknowledges that the enhancement and nurturing of Health and Safety for all its Interested Parties are crucial as they can impact its operations. To prevent workplace accidents and illness, the Company focuses on continual improvement and reinforcement of the work environment, and workplace safety protocols and adopts new technologies. The Company is devoted to preserving natural resources and creating a safe workplace while ensuring environmental protection. The Company continually upgrades its proactive and preventive safety measures, including the installation of modern fire detection and protection mechanisms, and the introduction of new technologies, tools, gadgets, and personal protective equipment. The holistic safety approachs effectiveness is monitored regularly. The Board of Directors / Committee provides invaluable direction and assistance to the Management to ensure that safety and sustainability implications are correctly included in all new strategic initiatives, budgets, audit activities, and improvement plans. They also monitor reports on the safety, environment, and health performance and legal and regulatory compliance. Your company operates under various statutory environmental laws and regulations applicable to the production, use, and sale of chemicals/polymers, emissions into air, discharges into waterways, and other materials released into the environment. The Company adheres to the regulations applicable to the generation, handling, storage, transportation, treatment, and disposal of waste materials

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company appreciates performance of the employees for the year and anticipates much more for the years to come. Your Company believes in employee empowerment across the entire organization in order to achieve organizational effectiveness. The Company is committed to attracting, developing and retaining top talent through structured Career progression plans and believes that investing in its employees is a strategic and important move to create a robust Talent landscape which acts as a catalyst for meeting its short- and long-term business objectives. The Human Resource policies are soundly drafted for all levels of employees to serve them motivation, transfer & promotions and to retain the skills. The Companys HR policies and practices are designed to create a workplace culture that values diversity and inclusion which fosters continuous learning and accelerates career growth and development. Over a period of time, your company has built and nurtured a dedicated and excellent workforce which consists of engineers, CAs, CSs, MBAs, and advance degree holders like PHDs having a big business portfolio. The Company offers competitive compensation packages and benefits to its entire talent pool and strives to create an inclusive and collaborative work environment that encourages open communication and teamwork.

Any industrys foundation is strengthened by its labour relations. The Company maintains open lines of communication with its people and keeps them informed about its objectives to foster a positive employer-employee relationship. This allows for more efficient operations with fewer disagreements between workers and management. The Company conducts several development programmes for its people at various levels. This creates a pleasant work environment. Through the implementation of productive and performance-based policies, workplace relations remain positive. The present policies of the Company focus more on developing and benefiting its talent pool while also safeguarding its broader interests. This makes it easier for the Company and its people to work together toward the same goal. The Industrial relations of the Company was cordial and there were no instances of employee disputes arising during the year under review.

Your company has sufficient pool of talents in various operational fields. The Human Resource environment has been very smooth throughout the year. The company takes special care about the safety, which is core value of the company and all necessary actions are taken in the company to keep safety as priority.

CAUTIONARY STATEMENT

Certain statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, estimates, and expectations and others may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws, natural calamities and so on over which the company does not have any direct control.

Date: 16.05.2023 For Ddev Plastiks Industries Limited
Place: Kolkata Narrindra Suranna (DIN: 00060127)
Chairman and Managing Director