Asad Daud, Managing Director, Sah Polymers Ltd

26 Dec 2022 , 09:38 AM

Share with us the key expansion projects of the company, highlighted as one key area of use of IPO proceeds.

As mentioned in our RHP; we shall be utilizing the net proceeds from the IPO in funding our expansion project relating to manufacturing FIBC or Bulk Bags in the city of Udaipur. We have already undertaken this expansion projects utilising our internal accruals as well as by borrowing funds from banks and external sources.  As on date; constructions of the factory building have already been completed and we have received some core machineries and other ancillary machines on site. The installation of these machinery is in process and we expect to commence commercial production by January. The IPO proceeds shall be utilised for payment of suppliers of Plant & Machinery, Building materials etc. as well as in repayment or prepayment of certain borrowings undertaken by the company to fund this expansion.

What is the current debt amount in your books? What will it be after repayment?

As of 18^th November 2022, the total debt is approx. Rs 44 crore. After repayment from IPO proceeds, it will be approximately Rs 24 crore. The details are mentioned in the RHP.

Share with us the key macro opportunities for your company across all key markets.

Global flexible packaging markets is expected to grow at CAGR of 4.5% up to 2025 and Global FIBC market specifically is expected to grow at 5.3% between 2022-2028. Our company is strategically placed to take advantages of this growth and by banking upon our experienced team, market presence across the Globe and ability to supply an entire bouquet of products, we believe we have all right ingredients required to make the most of this growth opportunity.

What is the growth strategy of the company?

We have both organic and inorganic growth strategy on the cards. Organically we plan to utilize our existing and new infrastructure; our experienced team as well as our global presence in understanding the market requirements and developing new and improved products. Our R&D team is focussing on developing new products. We are also exploring growth opportunity in high end packaging markets like Back seam BOPP BAGS, D cut BOPP BAGS, etc. that would offer higher margins.

We are open to all options for a strategic tie-up or joint venture opportunities both in the Indian and the global markets which would help us grow faster and farther.

What are the key challenges facing the company? How is the company mitigating them?

Our industry is highly labour intensive and our dependence on migrant labor from the eastern part of the country is huge. Over time, we have developed on the job training session for our local labor especially workers from nearby villages. This strategy has helped us significantly in mitigating the challenges relating to our dependence on outside labor and has addressed the important concern such as cyclical movements of labour during harvesting seasons or during festival season. We have now sufficient availability of trained local labor which are helping us in operating at optimal level throughout the year.

How is the company contributing to ESG (Environment, Social and Governance)?

Our management is committed towards our social and environmental responsibility. We have implemented zero wastage policy in our company and target to recycle or reprocess all wastages generated during our production process. We have planted numerous trees in & around our factory and are planning to install maximum permissible level of solar power plants on our new factory in future. We shall be targeting to utilize maximum level of renewable energy to power our factory and are in discussions with our major domestic customers on how to develop process to achieve post-consumer recycling material (PCR) to ensure zero plastic waste to landfill.

Provide us with a snapshot of the company’s financial profile. What are the company’s key strengths thereof? 

For FY 2021-22, Total Income stood at Rs 8,123.45 lakh and EBITDA was Rs 773.40 lakh. Our key strengths are our loyal customer base, unmatched service and product quality.