PLASTIBLENDS INDIA LIMITED
ANNUAL REPORT 2011-2012
The World Bank expects the Indian economy to grow by 6.9% in the Financial
Year 2012-13 notwithstanding problems like high fiscal deficit and sticky
inflation. For the longer term, however they have pegged growth at 7.2% and
7.4% in fiscal years 2013-14 and 2014-15, respectively in the report titled
'Global Economic Prospects'. The global economy is projected to grow by
2.5% in 2012 and 3.1% in 2013, following a growth of 2.7% in 2011, a slight
downward revision from previous forecasts.
Despite the uncertain economic outlook in India and worldover, we are
optimistic about the long term prospects of the plastic industry. As per
Plastindia Foundation the demand for plastics in India alone is expected to
almost double over the next three years. Globally too, the Plastics
Consumption is expected to reach 297.5 Million Tons by 2015, according to
New Report by Global Industry Analysts, Inc.
The masterbatch industry is a direct beneficiary from the growth in plastic
industry. The value of total masterbatch market is 14.8 Billion USD and the
share of additive masterbatch market in this is about 3 Billion USD.
Despite witnessing a temporary deceleration in growth in the years 2008 and
2009, world masterbatch market is expected to grow, on account of the
resurgence of demand fundamentals, such as, improving income levels,
growing propensity to spend, continued shift towards packaged products and
increase in the demand for consumer goods, automotives and electronic
appliances among others. The Government of India is likely to announce huge
investment in infrastructure, irrigation, agriculture water management, in
the 12th Five year plan which as a whole will lead to increased demand for
masterbatches used in processing plastics.
With the polymer consumption in India expected to grow at annual rate of
15% and the per capita consumption of plastics expected to double over the
next five years, the outlook is very optimistic in terms of growth for
masterbatches in the coming years and the business could grow at about 20%
for the next few years. (Source: www.derivatives.capitaline.com)
I am pleased with the way we have performed during the year, despite
subdued economic growth. The Net Income stood at Rs. 34,112.47 lacs, a
growth of 23.2% as compared to last year. The Indian polymer processing
industry grew at the rate of 3-4% in the year 2011-12, which has been
Fat an average rate of 10-12% and masterbatch industry is growing at a rate
of 15%. Exports continued to boost our topline as it grew by 46% in terms
of value in 2011-12, while, in terms of volumes it registered an increase
of 27% in 2011-12. On the domestic front too we have been able to maintain
our performance as our sales grew by 16%.
Notably, the significant rise in exports and domestic sales have been on
account of our continued thrust on marketing initiatives, participation in
trade fairs, focused marketing approach for specific markets, developing
high performance specialty masterbatches thereby creating a strong brand
equity for our products.
During the year, EBIDTA stood at Rs. 3,217.28 lacs while Net Profit stood
at Rs. 1,671.17 lacs, de-growing by 9.8% against the previous year.
Raw material price volatility and fluctuations impacted our operating
performance as crude oil prices rose last year along with rupee
depreciation. Further, we had to account for the rise in power cost by over
30% with retrospective effect from June 2011, the entire amount for which
had to be debited in the third quarter of the financial year 2011-12. There
was also a one-time cost of implementing SAP which has been accounted for
in the third and fourth quarter of the financial year 2011-12.
As we are now getting past the cost curve, we are poised to benefit from
the revenue curve ahead, once the demand situation improves. As SAP
implementation has been completed we expect improved inventory and
financial management arising out of efficiencies in various areas of
We are diversifying our product mix by focusing on high performance and
specialty masterbatches. In line with our focus on technological
advancement and resultantly innovation, we have been able to introduce some
new generation additives and masterbatches like anti-rodent, antimicrobial
(bactiblock), nucleating and clarifying agents and high performance
masterbatches such as UV Stabilizers.
These speciality and high performance additive masterbatches enhance the
performance of the plastic products that are widely used in household
appliance, kitchen wares, electronic goods, sports & leisure, construction,
agricultural activities etc. with Indian population over 1.2 billion, the
opportunity for these sectors to grow is immense besides the global
The Growth Strategy:
Sharp deceleration in the Indian economy has meant that the polymer
consumption was nearly flat in the first half of the current fiscal on y-o-
y basis. Going forward, as India's inflationary trend eases, we can expect
a rebound in demand for polymers from many interest sensitive sectors like
automobiles, real estate, packaging, consumer durables etc. So, while the
demand for masterbatches is relatively sluggish in the current fiscal thus
far, the prospects remain bright for the medium to long term.
We will also continue to lay thrust on exports which provides us with
immense opportunities as India accounts for 4% of global masterbatch
Our participation in various trade fairs including the Plastindia
Exhibition, K-2010 etc. yielded a very good response and thus aided our
geographical expansion. This will be a key strategic area going forward as
we continue to strengthen our marketing network.
While opportunities are abound, we would continue to focus on product and
service innovation and improvement. In a market which is highly
unorganized, it is our ability to invest in R&D and differentiate ourselves
by offering innovative yet cost effective and value added offerings that
makes us the market leader.
The recognition from the Department of Scientific & Industrial Research
(DSIR) continues to propel our growth by enabling the development of newer,
high performance, value added and low cost products in our portfolio. This
will help us not only improve our business performance but also to
strengthen our relationships with our existing and prospective clients.
Overall, our strategic efforts remain focused on saving costs, increased
thrust on marketing and enhancing our product portfolio through continuous
investments in R&D. As the macroeconomic parameters turn around, we will be
ready to tap the next growth phase for our business.
We won the Plasticon 'Gold Trophy Award' for Fastest Growing Enterprise
Processing (Commodity Polymers) declared by Plastindia Foundation and
Government of India has also awarded to us Star Export House status based
on excellent export performance for the last three years. This has
strengthened the conviction that our strategies are working.
Vote of Thanks:
I extend my sincere thanks to all of you who have helped us achieve
continued success and who will remain the vital force in shaping our
history-our employees, consumers, customers, suppliers, business partners,
bankers and stakeholders. I am also grateful to our Management Team for
their persistent efforts towards redefining our growth strategy and to our
Board of Directors for their continued guidance. We look forward to
continued success and profitable growth.
S. V. Kabra
Chairman & Managing Director