KABRA EXTRUSION TECHNIK LIMITED
ANNUAL REPORT 2011-2012
Dear Fellow Stakeholders
The Indian economy is expected to grow by 6.9% in the Financial Year 2012-
13 according to the World Bank. India's economic growth rate in 2011-12
slipped to a nine-year low of 6.5% as compared to the 8.4% growth in the
preceding two years. Clearly fiscal and inflation concerns, cut into
investment activities across businesses.
These events, which affected consumer confidence in different regions of
the world, undermined the demand for capital goods including plastic
extrusion machinery, back home.
Looking ahead to 2012, the macro-environment remains volatile and
complicated and will pose challenges to our business. It is unrealistic to
expect that the European sovereign debt crisis and looming concerns over
the growth in global as well as the Indian economy can be entirely eased in
However, we share the belief that the worst will soon be behind us and an
economic revival will commence soon. Despite the challenge of the macro-
environment, we are confident that we will seize current opportunities to
further strengthen our leadership positioning as the market and technology
leader in the industry with our product portfolio.
Over the longer term, the World Bank has pegged growth at 7.2% and 7.4% for
fiscal years 2013-14 and 2014-15 respectively, in their report titled
'Global Economic Prospects'.
In line with this economic outlook, the prospects of plastics extrusion
machinery industry too appear positive in the long term. As per Plastindia
Foundation, India's plastics processing sector will grow from 69,000
machines to 150,000 machines by the year 2020.
We derive demand from the Plastic Industry which, despite the industry's
high growth spanning over a period of over two decades, is yet to realize
its full potential. The per capita consumption of plastics in India at 8
kgs, is one of the lowest in the world. The average global per capita
consumption is 30 kgs as per the Indian Plastic Federation. Further,
India's consumption of plastics will grow from 7.5 million tons to 15
million tons by 2015 as per Plastindia Foundation and is set to be the
third largest consumer of plastics in the world. This is reflective of the
positive outlook for plastic processing sector.
India has the advantage of a large population and thus the consumer base is
justifiably expected to propel India's plastics consumption to new levels
in coming years.
For the financial year 2011-12, In line with the subdued economic backdrop,
the Net Income stood at Rs. 19,499.70 Lacs, a de-growth of 13.76% as
compared to the last financial year. This was mainly on account of slowdown
in the end user industries due to which orders were delayed, which in turn
resulted in inventory buildup of machines during the year. The overheads
have already been incurred and accounted for the above.
Further, the operational performance has been impacted by the rise in power
cost per unit by over 30% with retrospective effect from June 2011. The
entire amount has been accounted for in the third quarter of the financial
year 2011-12. The Other Expenditure continued to rise on account of the
capex incurred on the Dunetha plant.
Most of the expenses incurred and accounted for in quarter three and four
of financial year 2011-12 are not recurring in nature. As we are now
getting past the cost curve with commercial operations having commenced in
the previous quarter, we are poised to benefit from the revenue curve
ahead, once the demand situation improves.
Business Review & Outlook
Last year KET acquired a 15 % stake in Gloucester Engineering Company Inc
(GEC), USA which catapulted our positioning in the plastic extrusion
machinery for Film Plants in terms of technical capabilities.
We have already showcased the 3 layer and 5 layer - KAGE machine
manufactured at Dunetha with Gloucester Engineering Co. Inc., USA (GEC)
technology. The plant produces film for barrier applications which are
mainly used In oil packaging in addition to packaging of milk, water, oils,
spices etc and also for lamination, stretch & shrink wraps. As I had
mentioned last year, we remain convinced that this segment has tremendous
potential and expect it to be a major growth driver. We have successfully
completed the order we bagged from a company engaged in manufacturing and
selling of edible oils, in Kerala last year.
Packaging demand and resultant demand for plastic films is expected to take
off as the growth of the middle class in developing nations continues, with
more consumers around the world seeking out packaged food. Although the
overall packaging industry was severely impacted by the economic recession,
the plastic packaging market is gradually gaining significance through the
latest technologies and enhanced products in the vast global packaging
industry. The global plastic packaging market is a steadily growing market
which is expected to follow a modest growth rate in mature markets and a
progressive above average growth rate in emerging markets. Visiongain
calculates that the global plastic packaging market will reach USD 196.42
billion in 2012. Further, plastics in packaging consume 3.5 million tones
of polymers today and will increase to 9 million tonnes by 2020 in India.
In the pipe segment too we have launched new products with our focus on
research and technology. We have been focusing on Window profile extrusion
due to modernization of building techniques and increasing awareness
amongst architects on the various advantages of the PVC profiles. KET
offers cPVC pipe extrusion lines in single as well as dual strand with
technology from American Maplan Corporation, USA (AMC). With increasing
outlay in agriculture year on year, irrigation continues to be one of our
core focus areas as regards pipe extrusion lines. India's demand for
plastics in irrigation alone is pegged to cross 2.5 million tonnes by 2015.
Along with the round drip we are now also entering the flat drip lines
market which has high scalability prospects.
Another key development during the year was that the Technology agreement
with Battenfeld Cincinnati was amended recently to include its group
member, Battenfeld Cincinnati, Austria thereby strengthening KET's
portfolio further with high quality, high performance innovative extruders,
processing tools and down stream equipments for both pipe and film plants.
KET has the exclusive right to make available Battenfeld Cincinnati's
entire product range given its end to end strengths In terms of a modern
manufacturing set up as well as well entrenched marketing set up.
Overall, on the domestic front, we expect a gradual turn around in terms of
industry demand and thereby a uptick in our order intake. We believe that
in the coming year, the exports market will provide scale. KET now exports
its machines to more than 70 countries. We are also expanding our base to
many new countries.
In addition to building capacities, we spent significant resources by
participating in various trade fairs including the Plastindia Exhibition
and received a very good response. Our Company has participated in 8
exhibitions and in the coming year too, we will focus on widening \
enhancing our global footprint and widening our agent base.
I would like to highlight here that the Kolsite Group, of which Kabra
Extrusiontechnik is a flagship company, has completed 50 years in the
industry. We have faced various economic ups and downs and emerged stronger
and better positioned for traversing the next growth curve.
The fact that we showcased new products against the backdrop of a weak
economic scenario underlines our faith in the industry prospects and our
capabilities. We are reasonably confident that as soon as the industry
starts picking up, we will be able to scale up our operations with ease,
given our five decade long experience and expertise in the markets.
A combination of effective marketing, dedicated customer service, technical
support and the flexibility provided by our modern manufacturing facilities
and technological collaborations will see us emerge stronger.
Overall, our strategic efforts remain focused on saving costs, increased
thrust on marketing and enhancing our product portfolio. As the
macroeconomic parameters turn around, we will be ready to tap the next
growth phase for our business.
A Vote of Thanks
I take this opportunity to thank all our stakeholders including our
employees, associates, vendors, clients, bankers and shareholders for their
support and faith in us. Let me assure you, we are leaving no stone
unturned to ensure that your faith in us stands vindicated.
Chairman & Managing Director