The legacy of more than 47 years and manufacturing FIBCs for more than 18 years havehelped us retain the trust of our customers.
How would you
Q summarise the year that went by for India and the Company?
Our country witnessed the historic tax reform with implementation of Goods and ServiceTax (GST) in fiscal 2017-18. With the lingering effects of demonetization stillpersisting the GST roll out did bring some initial hiccups as the government tookseveral steps to ease out the operational glitches during the course of the year. Theexporting community faced serious difficulties with implementation of GST with blockedworking capital leading to higher interest cost. Mapping of the information technologyinfrastructure took considerable time even at the end-user end. We are glad to see much ofthe pain behind us giving us the confidenceof reaping the advantages which will come outof the historic tax reform. The country remains one of the fastest growing economies ofthe world accounting for about 15% of the global growth with implementation of reformsand liberalization of the foreign investment regime. These reforms did have a positiveimpact for Kanpur Plastipack accounting for better governance increased compliances andhigher growth. This transcended into higher revenues as we enhanced our operationalefficiencies and increased our productivity level from existing capacities. Ourimplementation of a dedicated sales engine helped record more value-added revenues andretain majority of our existing customers in addition to helping us penetrate newcustomers. Our strong liquidity position helped us avert the initial challenges of GSTimplementation for export refunds and manage our operations smoothly.
Could you explain in detail the factors that Q helped record growth for the Company inthe current year?
Our brand value has remained an integral part of our success story over the years andcontinues to be remain so even today. The legacy of more than 47 years and manufacturingFIBCs for more than 18 years have helped us retain the trust of our customers. At theoperational level we did see an increase in selling expenses and manufacturing costsdriven by rising raw material prices manpower costs and higher freight costs. However weovercame these with better utilization of resources (primarily Polymer) which helped us toincrease our yield ratio. We also implemented several operational excellence programmesthat enabled us to control our costs. Our customer satisfaction levels improved further atthe backdrop of improved quality levels and better on-time deliveries. The combination ofthese initiatives helped us sustain our margin levels amidst volatile macro-economicenvironment.
Could you please enlighten the investors on the rationale for the Q capex made by thecompany in recent past? And if any more capex is lined up in the near future.
Yes definitely. The greenfield project that we had started in the previous fiscal isnow under final phased manner. The formal inauguration took place on the 20thof July 2018. The new facility when fully operational is positioned to offer more than8000 tonnes of processed Polymer for onward conversion into FIBCs. The state-of-the-artfacility is spread over a factory space of nearly 40000 sq. mts is equipped with modernmachinery. This will also allow us to shift some production from the older facilitiesyielding higher efficiencies and better margins. In the current year we have also plannedfurther investments to double up our Multi Filament Yarn (MFY) capacity over the next 18months. This would make us the largest player in North India in the segment. As a part ofour deliberate plan to diversify our business this additional capacity in High TenacityMFY would add to our business revenues and yield more earnings per worker employed.Considering the increasing demand in the packaging industry growing at double digits andincreasing application of MFY in several downstream industries we believe therein lies ahuge opportunity for us to tap which also aligns to our business model and drivevalue-creation for stakeholders.
With such aggressive expansion lined up do Q you see any challenges that might affectthe future plans?
The increasing regulatory mechanism in the banking and financial sector coupled with arise in bad loans might pose a threat to raising funds in the near future. Also themodernization in technologies poses risk of employability for skilled worker fornon-technical jobs. At Kanpur we are well positioned to avert these challenges. One weremain financially stable with a strong operating cash flow H (28.35 crore as on March 312018) and low debt-equity ratio of 0.33 as on March 31 2018. Two our plant locations atthe heart of north India provides us with abundant availability of workforce therebyde-risking us from any possible labour shortages in the near future. Third our resilientfocus on quality on-time deliveries customization and flexibility has enabled us toremain ahead of the peers and cement our market leadership.
Where do you see the Q Company in the near short-term?
We are extremely optimistic and excited for the next phase of the Companysgrowth. The past and proposed investments are well aligned to the companys businessmodel and deliver value for the stakeholders. As per internal projections made by usrevenues are likely to touch H 450 crore over the next two financial years on similarEBITDA margin levels. The financial sustainability will be built on the foundation of ourstrong customer relationships. Going ahead we have laid out a blueprint to furtherstrengthen our customer engagement methodologies to derive a larger part of revenues fromexisting customers. We shall also continue to build a stronger employee base with a higheremployee engagement quotient in our journey towards excellence.
What message would you Q like to give to the investors?
Your Company now stands at a threshold of opportunities at the backdrop of risingindustry growth. The rising cost of manufacturing hubs in countries like Turkey China andSouth America augur well for your company. Our commitment towards building an effectivecost mechanism with relentless pursuit towards quality will help us gain a strong footholdin newer markets. We thank our stakeholders for their unwavering support and helping theCompany transcend to greaterimplementationinscales of success.
Mr. Manoj Agarwal
Mr. Shashank Agarwal
Dy. Managing Director