Vikas Ecotech Ltd Management Discussions.

Your Directors present Management Discussion and Analysis Report for the financial year 2018-19. Your Company recently completed its impending demerger and transfer of ‘Recycled and Trading Compounds Division to group concern ‘Vikas Multicorp Limited through corporate restructuring. And accordingly, the members of the Companywereallotted equity shares of Vikas Multicorp Limited in the ratio of 1:1. With the completion of aforesaid demerger, your Company is now operating in domain of Speciality additives andRub -ber-Plastic Compoundsonly. The present report focuses on these two business areas.

Industry structure, Developments, Opportunities and Threats

Constant rise of population globally has not only resulted in scarcity of land and other resources but also has elevated food security concerns especially in underdeveloped and developing countries due to improper storage infrastructure and food grains distribution. This in turn shall lead to an increasing high yield-enhancing agrochemicals demand owing to propel specialty chemicals market share over the forecast timeframe. According to the World Bank, farmers may have to upscale their yield by 50% per hectare by 2050 owing to boost agro-chemicals, such as fungicides, demand by 2024.Ontheotherhand,theglobalspecialtyfueladditives market size was valued at USD 6.15 billion in 2015 and has been expected to grow at a CAGR of 7.1% from 2016 to 2024. Also the global plastic compounds market size was estimated at USD 56.86 billion in 2018 and is projected to expand at a CAGR of 6.7% from 2019 to 2026. Increasing substitution for glass, metals, wood, natural rubber and man-made materials, such as concrete, is anticipated to drive the growth. The demand for plastic is rising owing to the various industrial applications due to its versatile benefits, easy moulding and ability to form desired shape.

In view of growing awareness of environment protection and initiatives taken by the Governments worldwide demand for low emission and efficient energy source from the manufacturing, aviation and automobiles along with the stringent environmental regulations are projected to boost the market growth. This shall further lead an increased use of specialty additives across the world, which is expected to curb harmful gas emissions and help enhance efficiency of gasoline, distillates, diesel and other fuels as it reduces combustion and burn rate in high temperatures and avoids dreadful emissions of pollutants. In an Indian Market perspective, Indias speciality chemicals industry is valued at about USD 25 billion and has successfully delivered 13 per cent growth over the past five years, primarily led by domestic consumption. By constituting about 3 percent of the global speciality chemicals market, this sector has great potential and is projected to further grow 6-7 percent by 2023 with market size in the range of USD 80-100 billion. As per an estimate of the Indian government, the per capita plastics consumption will be doubled by 2022, this will result in presumably a surrogate measure for econom -ic advancement and increased advanced manufacturing. With an increased plastic manufacturing and consumption, India is also seen as one of the biggest markets for Plastic Compounds business. While opportunities of growth are in abundance both in domestic market and for exports, however the critical success factor for the Companys products are their capability to provide varied application at a favourable price-performance ratio. The cost centre in this sector is in the areas of product development and marketing activities, hence the focus on improving products and usage intensity of speciality chemicals, to develop new products to give them a competitive edge in the marketplace, with unique features and benefits.

One of the main challenges is to focus on taking the industry to the Green zone Eco-friendly products and processes, addressing the pollution issues and to ensure zero discharge in water and air. This also requires development of proper technology that helps in moving towards green zone. Other systemic challenges of the sector are fragmentation and lack of scale, commoditization and regulations. Continuous endeavours are necessary to maintain Companys ability to scale up, offering of differentiated products through innovation, implementing an effective sales and marketing strategy and high levels of regulatory standards at all times.

Segment / Product wise Performance & Future Outlook

The Company operates under single segment which is manufacturing and trading of speciality additives including agro -chemicals and rubber-plastic and polymer compounds. Product wise performance of the Company is discussed hereunder:


Your Company is a leading manufacturer of specialty additives as we derive our competitive edge from our innovative products with real-world applications. We have a strong foothold in market which enables us to anticipate market trends ahead of the curve and respond with innovative solutions.Our extensive range of eco-friendly products are used in a variety of settings to enhance product performance. These are formulated to meet prescribed standards of safety, sustainability and quality.

Our exclusive range of eco-friendly stabilizers is set for a phase of high growth as policymakers in India firm up policies to phase out the usage of leaded stabilizers. The dialogue is also gaining momentum on a global platform as leading agencies are raising awareness about the inherent toxicity of metal-based stabilizers.

Accordingly, use of leaded stabilizers has witnessed a sharp decrease over the last three decades. Progressive nations across Americas, Europe and Asia have banned or voluntarily ceased the use of leaded stabilizers in PVC pipes. In FY19, the specialty additives contributed to 32% of the revenues at the Company. Some of the major highlights of the Companys products during the fiscal 2019 and Companys future outlook is discussed below:

Organotin Stabilizers

Organotin or Methyl Tin Mercaptide (MTM) continues to be the focus of our specialty additives segment. We are Indias only indigenous manufacturer of organotin and among the eight global manufacturers of the additive. In FY 2018, the Company entered US markets with the export of its flagship organotin stabilizers. Our products are certified by global agencies such as US Food & Drug Administration (FDA) and Intertek Deutschland GmbH, Germany. USA is the worlds largest consumer of organotin having banned leadbased stabilizers in the mid 1980s. As the Company has successfully initiated the process for tapping the potential embedded in the largest market place for the Organotin Stabilizers the U.S.A. & has been received well by the market due to its consistent quality of the materials. The CompanyisnowworkingtowardstheprojectedvitalsfortheOrganotinbusiness in the year 2019-20. During the first half of the current financial year, we anticipate that the exports to the U.S.A. would exceed the targeted 300 MT and the annual target of 1000 MT for Organotin business is also expected to be marginally exceeded for the year.

CaZn Stabilizers

During the last fiscal, the Company successfully designed & tried the new range of Eco-friendly Calcium Zinc (CaZn) Heat Stabilizer for PVC across various application areas like the PVC Rigid & SoftPVC Applications which have been included in the list with this new addition to the product mix offered by it. Now the Company is ready to start commercial scale pro -duction in anticipation of the huge demand that will be created Currently, the market for this compound is import-dependent with 70 percent of the requirements being traded in. The CaZn formulation promotes the governments ‘Make in India vision by offering an import substitute for essential additives.


Your Company is also a leading manufacturer of specialty rubber-plastic and polymer compounds. Our offerings un -der this segment include a sophisticated range of differentiated compounds such as thermoplastic rubber (TPR), ther -moplastic elastomer (TPE),Ethylene Vinyl Acetate (EVA), impact modifiers, Polyethylene (PE) and Polypropylene (PP) backed by our robust R&D competencies and state-of-the-art manufacturing facilities.

We engineer high performance specialty compounds to meet consumer product demands. Our products find application across the varied segments of consumer goods manufacturing, infrastructure construction, healthcare devices and automotive component manufacturing. Our ability to attract an increasing number of industry leaders as our clientele is testament to our commitment towards material innovation and ability to meet stringent quality parameters. Further, our innovations and production efficiencies enable usto effectively meet the challenges In FY19, the polymer compounds accounted for 52% of the organizations revenues. Key highlights of the Companys products duringthefiscal 2019 and way forward is discussed below:

Thermoplastic Rubber (TPR)

TPR compounds are replacement materials for rubber and soft plastic. They are widely used in the manufacturing of footwear soles and the production of automotive components such as gaskets, profiles, protective gear.

The Company is among Indias leading manufacturers of the TPR compound owing 20 percent of the market share. OurSATRA- are synonymous with flexibility, durability and fatigue & abrasion resistance. Consequently, we are the preferred TPR suppliers for leading footwear manufacturers. The Company kept its focus on expanding the reach of our TPR products to non-footwear industries. As a part of this strategy, we have added to OEM suppliers of leading automotive brands such as Maruti Suzuki, Yamaha Motors and Ford India to our TPR clientele.

Thermoplastic Elastomer (TPE)

TPE compounds comprise of hybrid properties of rubber and plastic and have excellent synergistic qualities. These compounds findapplicationin range of product manufacturing such as healthcare devices, auto component, wide consumer goods, industrial and household devices etc. The Company continued to enter into the medical devices segment for supply of its TPE compound to manufacturers of syringes and allied devices.

Ethylene Vinyl Acetate (EVA)

The EVA compound is used in the compression and injection moulding of cross-linked foams. It is used in the manufacture of jackets and coating applications for wires & cables. The Company continues to enlarge its EVA clientele and it includes leading brands such as Polycab, Shilpi, RR Kabel, Havells and KEI.

Financial Performance

ThefinancialsoftheCompanyarerestated of its ‘Recycled and Trading Compounds Division, consequently, the figures are not comparable from previous financial year. As on 31st March, 2019, the key financial indicators are discussed as under:

Net worth

The Companys net worth viz. paid up share capital, general reserves and retained earnings stood at Rs. 143.13 Crore. Details of the same are provided in notes to financial statements.


The Companys total borrowings aggregated to Rs. 157.51 Crore comprising of non-current borrowings of Rs. 24.91 Crore and current borrowings of Rs. 132.60 Crore. The details of borrowings is provided under note no. 17 of notes to financial statements. The debt - equity ratio of the Company as on 31st March, 2019 was 1.10:1.

Trade Receivables & Trade Payables

Trade receivables at the end of financialyear was Rs. 164.89 Crore and trade payables aggregated to Rs. 60.31 Crore as detailed in notes to financial statements.

Current Assets & Current Liabilities

The Current Assets of the Company stood at Rs. 330.16 Crore whereas the current liabilities aggregated to Rs. 220.42 Crore. The Current Ratio of the Company as at 31st March, 2019 was 1.50:1.

Earnings per Share

The basic and diluted Earnings per Share (EPS) as at the end of financial year was 0.59.

Risks, Concerns, Internal Control Systems and their Adequacy

The major risk that concerns the Company is its business risk. The Company is subjected to a high business risk in terms of its high dependability on other Industries for demand of its products carrying the nature of raw materials. Periodic checks are carried out on all systems and processes as part of internal audit. The Audit Committee and Board also periodically reviews adequacy of Companys checks and controls for risk management. The Board has developed a Risk Management Policy which identifies elements of business & other risks involved and constantly works towards curbing the same. Adequacy of internal financial controls with reference to the Financial Statements is also assessed and reviewed periodically.

The Companys internal control systems are commensurate with the nature of its business and the size and complexity of its operations. The Statutory Auditors also evaluate the efficacy and adequacy of internal control systems including controls with respect to the financial statements, its compliance with operating systems, accounting procedures and policies in the Company. Corrective actions are undertaken basis findings of audits.

Human Resource

The Company places utmost importance on maintaining cordial employer-employee relations as Human Resource Capital is the most valuable asset for any organisation.A reward system has been developed by the Company to compensate efforts of all its employees adequately and recognize their contributiontowards its growth. A remuneration policy has also been developed and adopted by the Company which provides for appointment and remuneration of Directors, Key Managerial Personnel and Senior Management. Key features of the policy are discussed as part of Boards Report and the policy is also available at website of the Company


Statements in the Management Discussions and Analysis describing the Companys objectives, projections, estimates, expectations are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could 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, corporate and other applicable laws together with the other incidental factors.