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Flexituff Ventures International Ltd.

BSE: 533638 Sector: Industrials
NSE: FLEXITUFF ISIN Code: INE060J01017
BSE 00:00 | 20 Mar 46.00 -2.00
(-4.17%)
OPEN

47.50

HIGH

47.50

LOW

46.00

NSE 00:00 | 20 Mar 47.35 -1.10
(-2.27%)
OPEN

47.30

HIGH

49.55

LOW

46.65

OPEN 47.50
PREVIOUS CLOSE 48.00
VOLUME 47
52-Week high
52-Week low
P/E
Mkt Cap.(Rs cr) 114
Buy Price 45.75
Buy Qty 25.00
Sell Price 49.75
Sell Qty 40.00
OPEN 47.50
CLOSE 48.00
VOLUME 47
52-Week high
52-Week low
P/E
Mkt Cap.(Rs cr) 114
Buy Price 45.75
Buy Qty 25.00
Sell Price 49.75
Sell Qty 40.00

Flexituff Ventures International Ltd. (FLEXITUFF) - Chairman Speech

Company chairman speech

We are India's largest producer of geo-textiles and injection moulded drippers with apolymer processing capacity of more than 74000 metric tonnes per annum.

Anirudh Sonpal

Chairman

Dear Shareholders

Growth always comes through overcoming challenges. For Flexituff International India'slargest producer and exporter of polypropylene woven packaging solutions serving retailindustrial agro and infrastructure sectors FY 2017-18 was challenging yet fullof opportunities to align operations for growth.

While the Flexible Intermediate Bulk Containers (FIBC) division continued to operate athealthy margins receivable delays in the geotextiles segment high fluctuations inthe raw material prices and stronger Indian Rupee posed a challenge. Nonetheless giventhe headwinds we faced the Company's performance remained satisfactory with thelast two quarters glimpsing the shoots of a growth trend.

This FY 2017-18 also witnessed a crucial decision to carve-out the FIBC businesssegment essentially our operations of Pithampur (Madhya Pradesh) manufacturing plant asa wholly-owned subsidiary through a slump sale agreement. This repositioning of the FIBCbusiness will help the Company to unlock value and raise capital to facilitatefuture growth.

COMPANY OVERVIEW

Flexituff International Limited headquartered in Pithampur Madhya Pradesh is avertically integrated

Company with four manufacturing facilities in India and a couple of direct and indirectsubsidiaries. We are India's largest producer of geo-textiles and injection-mouldeddrippers with a polymer processing capacity of more than 74000 metric tonnes perannum. Our products are exported to 60 countries with little over half of the revenuesachieved from exports. We have the industry's largest Research and Development centre inIndia owning major patents and proprietary rights of technologies. With rigidadherence to high quality standards and dependable supply record the Company's productsenjoy an excellent reputation in the domestic and international markets.

FIBC BUSINESS

Our manufacturing of Flexible Intermediate Bulk Containers or standardised bulk sacksoperate at close to full capacity utilisation levels at both the units withhealthy operating margins and is an established segment both in the domestic and overseasmarkets. It finds application in the industrial bulk packaging of dry andflowable products used for protection storage handling and transportation of goods.Chemicals pharmaceuticals and food industries primarily drive the global FIBC market withsome push from the fertiliser and mining industries. Together these industriesaccount for more than two-thirds of the demand for FIBCs.

With India and China as the key producers the FIBC export market in Americas Europeand Asia-Pacific region collectively accounts for 88% of this market. The FIBC segment hasbeen our largest revenue generating division and holds a market share of nearly 20% ofIndia's exports of FIBC while accounting for 44% of our revenues which stood at Rs. 1335crore.

Customers prefer our eco-friendly and recyclable FIBCs as these are safe and have along shelf life. The industry is expected to grow between 6% and 8% in the near futureeven though it remains highly capital-intensive and cost sensitive.

In FY 2017-18 the Company decided to give it special attention by transferringoperations of Pithampur (Madhya Pradesh) manufacturing plant to a wholly-owned subsidiary.The Company is hopeful that with this restructuring it will achieve higher growth infuture.

GEOSYNTHETICS SEGMENT

Flexituff International Limited is a leading manufacturer of geosynthetics which arenon-biodegradable and immune to bacteria and fungi. Primarily used in infrastructure andcivil construction projects geosynthetics usually account for 3% to 5% of the projectcost but help to reduce the maintenance cost by 30%.

We continue to offer a range of competitive geosynthetics-based pre-engineeredsolutions with cost time and quality advantages that has pushed the performance in thissegment in both the domestic and international markets to 33% of Company revenues.Segmental growth is expected to rise with increase in demand. By 2020 growth inthe global geosynthetics market is estimated to touch 10.5% with increase in value fromUS$ 47.8 billion in 2015 to 12.8 billion.

Our manufacturing plant at Kashipur Uttaranchal housed in 40 acres of land with750000 square feet of modern constructed industrial shed fully dedicated tomanufacturing varied forms of geosynthetics is geared to meet the growth challenge. TheCompany has completed large project orders from governments and private parties inIndia and aims to achieve Rs. 5000 millions from this division.

As a leading supplier of reverse-printed Biaxially Oriented Polypropylene (BOPP) wovenbags with an installed production capacity of 100 million bags a year this segmentconstitutes nearly 12% of our revenues. In FY 2017-18 we continued to operate atoptimum capacity.

DRIP IRRIGATION BUSINESS

Flexituff International Limited continues to enjoy a leadership position in the marketas a supplier of NPC drippers. With an installed production capacity of over one billionNPC drippers per annum the Company enjoys 30% market share in India's flat drippermarket. Our supplies to drip irrigation pipe manufacturers across the world hasalso grown.

The Government's exercise to create awareness of micro irrigation systems among Indianfarmers along with higher budgetary support to farmers to move from conventional floodirrigation is expected to improve demand.

OPPORTUNITIES & OUTLOOK

World Economy

The global economy with a record growth of 3.8% in 2017 has staged a recovery withhigher industrial production resurgence in global trade volume and upbeat consumer andbusiness sentiment with increase in the demand for investment and fall in unemployment.The global economy is expected to experience higher growth in 2018 while developingeconomies may experience faster growth.

Indian Economy

The Indian economy reflected the growth trend with some setback from thetransition to the Goods and Services Tax (GST) regime even as the impact of demonetisationfaded during FY 2017-18 and the economy resumed its normal course. Exports grew 9.8% in FY2017-18. India's ranking on the World Bank's ease of doing business list improvedwith the slew of structural reforms unleashed by the Government. The Government's extendedmassive budgetary support for the development of infrastructure is expected to helpagriculture and industry.

IMPACT ON COMPANY'S FUTURE

Flexituff International Limited is well-placed to address the growing demand in thedomestic and international market as its FIBC products meet stringent internationalquality criteria and command premium realisations in the export market. The growing demandfrom domestic industry especially fertilisers cement petrochemicals and fly ash isexpected to create a surge in this business segment.

The technical textiles industry is expected to grow at 13.1% compounded annualisedgrowth between FY 2017-18 and FY 2022-23 as per estimates of India Brand EquityFoundation. The growth in the technical textiles market is expected to be driven by demandin the healthcare and infrastructure sectors. In infrastructure the Government iscommitted to making incremental investments in highway construction and roads.

Our geosynthetics division is expected to benefit from the Government's incrementalspending on infrastructure across geographies. India's e-commerce boom and the growth inorganised retail is also likely to push the demand for reverse-printed BOPP woven bags.Being a leader in this segment Flexituff is well-placed to exploit the marketopportunities and grow the revenue of this division.

The Government's encouragement of micro irrigation programmes holds promise for theCompany's dripper business. Flexituff manufactures polymer compounds used in irrigationautomobiles appliances wires and cables demand for which is expected to surge.

CHALLENGES AND CONCERNS

Over-Dependence on Government - Government demand drives the geosynthetics marketand any budgetary constraints or change in the Government at the helm may pose a growthrisk for this sector.

However Flexituff has increased its presence across geographies to deal with suchrisks effectively and has been developing unique products at competitive costs.

Price Fluctuations - Sudden changes in prices of crude oil and natural gas impactraw material prices of polypropylene and cause foreign exchange rate fluctuations puttinga strain on profit margins. The Company mitigates this risk through short tenure contractsand timely price revisions besides following a board-approved hedging policy whereverpossible. Its export orientation also offers a natural hedge to the Company.

Capital Intensive - Flexituff International Limited operates in one of themost capital and labour intensive sectors. However it offers fair and rewarding growthopportunities for its people by organising intensive training programmes inaddition to employing a robust system of checks and balances that covers all hierarchiesand functions. Its relations with labour are cordial.

FUTURE SCOPE

Looking forward we believe our commitment to growth and operational excellence willdrive us forward with better prospects in the new financial year.

I thank each stakeholder for the continued support.

With regards

Anirudh Sonpal

Chairman