Mold-Tek Packaging Q1FY18 Concall Sunmary

Mold Tek Packaging.png

Financial Highlights:

Mold Tek Packaging Q1FY18 Financial Performance.png
  •  Steep fall in sales in June due to the expected GST implementation, company manages to maintain 6% growth in value terms.
  • Profits have gone up by just over a marginally 1.3% due to better product mix.
  • There’s an increase food and FMCG sales sharply from about 5% last year of Q1 to almost 16% in this quarter.
  • Reduced profitability due to option of defer tax adjustments almost to the tune of Rs. 45 lakhs in this quarter.
  • Impact of PP price increase which hardly was about a Rs.1000 in this month would be passed on to the client as it will be passed on to the client
  • Current price is around 85, 86. last quarter it was 89/ Unit
  • 15% revenue has been contributed from food and FMCG segment, one of the new big clients is Cadbury
  • Contribution from FNF is already at 15.8%. It will be ending at least 17%, 18% of the overall sales coming from food and FMCG this year. and target is more than 20% for the year 2018, 2019.
  • EBITDA per kg is about 33 as against earlier estimate of 28, 29 levels in FY2018.
  • Breakeven point would be in the region of around 1.5-2 Crore monthly sale
  • RAK plant also will start contributing to the bottom-line from December.
  • Penetration rate for IML is 54.5% in Q1, this was below 25% two years ago.
IML vs Non IML Q1FY18.png
  • 40% of Sales to paint industry goes in IML
  • Breakup of paint is at 4,900 tons with around 53% pink, 31% blue, and 16% food and sense.
  • Working capital is currently also the similar level Rs. 30 - 33 crore is the utilized funds – more than Rs. 70 croresavailable.
  • Working Cycle inventory at about 68 day
  • EBITDA Per kg revenue is 189 for IML & HDL and overall it is at 172
  • In food and FMCG, 10+ percent growth at delta.

Innovation and Product Development

  • Threat from bio degradable plastics -
    • The biodegradable plastics are very long shot and are not even in the countries like Europe and U.S., Japan.
    • They’re n ot  even come to 0.1% of entry or not even 0.01% of the entire consumption. However, it can adapt if the situation changes.
  • Oxygen barrier IML is the second thing and It has also been talking about it. The company has come to a stage where it has developed prototypes and submitted to couple to clients
  • Over a period of every six months or one year it will be adding couple of new products which would be adding numbers in the food and FMCG. 

Capital Expenditure

  • RAK capacity utilization has improved from 90 Lakh in Q4 last year to 180 Lakhs in Q1 this year and in the current couple of moths again It will see another 20% to 25% growth on the monthly numbers.
  • For new plants of Asian Paints the land and the building designs are just being finalized and plants are expected to go into production one by around July, August of next year and another by end of the calendar year 2018
  • The company is expanding the IML label capacity and the thin wall container molding capacity, which will be almost more than double from 1,400 tons to 3,000 tons.
  • Autofit will be ready by December and rest will be by June next year.
  • In FY 2018 & 2019, Capex for two Asian paint plants will amount to 4-5 Crores
  • Major investment of almost another 20 -25 Crore has to happen during the year 2018, 2019.
  • There may be a few crores of investment in the present FMCC given the opportunities come up.
  • Total of 30-35 crores kind of CapEx during 2018, 2019, which is happening almost same level in this year also.
  • Next five expansions will add total capacity from 3,000 to 4,000 tons,
  • Addition of Robots
    • It is adding another 10 robots, some of them are getting operative in December itself and that adds up to 55 robots in total
    • The robots are being added through In house manufacturing as well as import. The company has a limited capacity to manufacture and assemble robos
    • Imported price from Taiwan or Hong Kong or even China is around Rs. 30- 32 lakh whereas it makes for at least around Rs. 16-20 lakh depending upon the complexity. 
    • If it goes for a European robo it could be as the expenses are Rs. 50 lakh plus. 
    • Capability at Vizag and Mysore is 14,000 tons in first five year

Customer Update

  • Good Chance of food and FMCG orders from various MNCs.
  • Talks with 5-6 MNCs for product development as a result of Cadbury tie up.
  • The company is working with many other MNCs on different product ideas
  • Commercial agreement with a big client soon, commercial production has to start for them in FY18-19.
  • Low price continues to attract dairy client in Dubai

 Competition 

  • Paint & Lube being very lucrative industry are technologically very advanced. Competitors are Jolly Plastics and Hi-Tech in this space 
  • MTR and other food companies are also taking thin wall IML containers.

GST Effect

  • Paint has degrown by 4% and lubes by 11% because of  GST, expected to improve
  • June and July both are affected due to GST. The movement of goods has come down resulting in lower orders.
  • August and September things have started stabilizing growth has started picking up
  • Paint has degrown by 4% and lubs by 11% because of GST, expected to improve soon
  • GST has impacted everybody to relax and first look at business and supply chain. T is one of the reasons why there was some delay in some of the decisions, which have been pending for last three, four months.
  • Things are now slowly moving back to growing numbers in the last few weeks. Otherwise there could have been much more editions during the last four, five months.

 Guidance

  • Growth from paint will come in 2019-20 as both of Asian plants become operational
  • By end of this year RAK plant will be operating around breakeven
  • Paints and lubes together has its share of around 18% to 20% of the overall market size.
  • Growth from paint will come in 2019-20 as both of Asian plants become operational
  • Sipper will be there in less than 1 litre category by June next year, it was delayed due to GST
  • In the next three months to six months Total can emerge as one of the major clients forin Gulf. 
  • Next year could be more RAK and food and FMCG driven growth. 

Downloads