Kanpur Plastipack Ltd- Fully Integrated Packaging Solution Provider
Undiscovered Small Cap Series- 5
Lets meet with our 2 Characters called Krishna Dev Roy and Tenali RK who will help you understand the company….
Krishna Dev Roy-”Tenali give me all details about this company called Kanpur Plastipack within 1 week”
Tenali Rk-”Yes sir ”
After one week…
Krishna Dev Roy-”Ok I hope you would have prepared analysis on Kanpur Plastipack, Lets start then , What is the history of this company?”
Business History and Management:-
Tenali RK-”Yes sir,Kanpur Plastipack Ltd in a fully integrated bulk packaging solution provider. It was established in 1971 with just 2 lakhs and now it has Profit of 30 Crores by Mahesh Swarup Agarwal , Mahesh Agarwal have layed down the office after serving this company for 50 yrs and now it has been headed by his son Manoj Agarwal and his grandson Shashank Agarwal .”
Krishna Dev Roy-”Wow this company has evolved a lot from its start and also these company’s promoters have skin in the game and are experienced.What are the products that the company sells?”
Tenali RK-”The company mainly manufacturers :-
FIBC
MFY
Fabric
UV Masterbatch
And many more”
Products:-
Tenali RK-”Now lets dive into each segment
FIBC- Flexible Intermediate Bulk Container they are used to transfer bulk materials from here to there. FIBC Looks like this:-
FIBCs contribute 51% of their revenue.They sold 12,500 MT (1 MT= 1000kg) of FIBC in 2020-2021.They also recently expanded production capabilities which led to their global presence in FIBCs.
FIBCs are used in many industries like- chemicals, food products, grains,fertilizers,plastics, pigment,etc.
They also provide customized FIBCs for various usage,UN FIBC that is UN recommended for carrying hazardous goods and last but not least MAP FIBC that means Modified Atmosphere Packaging which helps in controlling atmosphere in FIBC. It is used in food products , basically it adjusts Oxygen and Carbon dioxide in FIBC to increase shelf life of food products.
MFY - means Multifilament Yarn, they have very big product portfolio in this segment and have PAN India presence in MFY, They sold 4000 MT of MFY in 2020-2021. They look like this:-
MFY contributes nearly 11% of their revenue. MFYs are used in 3 fields, Industrial,Safety&Flooring and Consumer. Watch the below image to get full detailed applications for all:-
Fabric- They make many types of Fabrics like PP Fabric,PP Multifilament Yarn Fabric, Circular Fabric, Sulzer Fabric, Ventilated Fabric,etc. This is how they look-
Fabric contributes nearly 25% of their revenue. They sold 8000 MT of Fabric in 2020-2021. Apart from India they also have clientbase for Fabric in countries like- USA, Brazil, Argentina, UK, Italy, Spain, Bangladesh,etc.
These fabrics are used in various applications like:- Packing,Raw material for FIBC,Tents,Tarpaulin ,Outdoor cover, Garden covers,etc.
UV Masterbatch- means Ultraviolet(UV) rays is harmful for polymer properties hence to protect that UV Stabilisers are used they protect polymer and plastic from harmful UV rays.
This segment was released last year only and within that short span it has already sold 380 MT of UV Masterbatch and contributes 2% to the total revenue.This is how it looks:-
Its various applications include- MFY,FIBC Bags, Greenhouse films,Drums,outdoor articles,garden furniture etc.
Lastly the company also has many products that we haven’t talked about like:-
PP woven slacks,liner,retail products,body bag, crimp yarn,etc.”
Krishna Dev Roy-”Interesting this company has wide range of products and is very well diversified.Earlier you mentioned that this company is fully integrated,right? ”
Tenali RK-”yes sir”
Krishna Dev Roy-”This clearly justifies your statement Tenali as company manufacturers FIBC bags and raw materials used to make FIBC bags are UV Masterbatch,MFY and fabric, which is also manufactured by the company. This is called a fully integrated company. This also has created economies of scale in this business as they make raw materials as well?”
Tenali RK-”Absolutely correct sir”
Krishna Dev Roy-”How many manufacturing plants does this company have?”
Manufacturing Plants
Tenali RK-”The company has 3 units called unit 1 unit 2 and unit 3. They look like this:-
The Company currently has a capacity of 576.50 KW from roof top Solar Panels with an additional capacity of 1.75 MW planned for Unit 3 which will together cater almost 8% of our total energy needs from captive energy sources. And plans that by the end of FY22 40% of their plant will be powered by Solar Panels.”
Krishna Dev Roy-”Renewable energy is always good and also doesn’t harm the nature.Now lets talk about the financials and future plans for the company?”
Tenali RK-”Yes sir,
Financials :-
Their financials are robust and on - upward trajectory , ROCE at 20%, Sales growing at 42%, OPM% at 12%,PAT Margin at 65% ,Debt is reduced,EBITDA Margin at 12% and EPS at swooping 20 ruppees.
Future Plans and Growth Drivers-
They want to widen their geographical footprint hence exports remain at 75% of their revenue.Their framework is to increase Product portfolio and widen customer base.They are also focusing on digital solutions in their existing business wherein they will use features like IOT,etc. Management is guiding of 10-12% growth in revenue over the next decade.”
Krishna Dev Roy- “Thanks Tenali RK. I got to learn a new company today.“
Tenali RK- “Welcome sir“
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