Rajshree Polypack Ltd Q1 FY23 Earnings Conference Call Insights

Key highlights from Rajshree Polypack Ltd (RPPL) Q1 FY23 Earnings Concall

Management Update:

• RPPL said it has entered into exclusive toll manufacturing agreement for injection molding products for food packaging with a third-party manufacturer. The production is expected to commence in first week of Sept. 2022.

Q&A Highlights:

• Suyog Patil from Patil Investments asked about the thickness limit in India for plastic packaging and RRPL’s thinnest product. Ramswaroop Thard MD said that the company is into manufacturing of rigid packaging products where the thickness is all about 250 microns. Therefore, RPPL doesn’t fall under that issue as such.

• Suyog Patil from Patil Investments enquired about the top three contributing clients for sales as of now. Ramswaroop Thard MD replied that the top clients are Ferrero, Nourishco, Amul, and Hindustan Unilever.

• Suyog Patil from Patil Investments also asked about the difference between barrier packaging and rigid packaging. Ramswaroop Thard MD clarified that rigid packaging is barrier and non-barrier. And barrier, it’s to increase the shelf life of the food, which is a functional feature of packaging.

• Gurjot Ahluwalia enquired about the competitive landscape, the top 3-5 players in the market. Ramswaroop Thard MD said that the RPPL space is a niche sector. Thermoforming with rigid packaging is not a big segment in India. However, there are some companies like RN Packaging in South and Greiner Packaging in North.

• Gurjot Ahluwalia asked about the market share of RPPL in the industry. Ramswaroop Thard MD answered that the overall size of the market of thermoforming into food packaging is around INR800-1,000 crores, but it’s divided into different segments and different zones. This is about 20% market share.

• Ankit Agrawal of Yellowstone Equity enquired about the injection molding project and the rationale behind it. Ramswaroop Thard MD clarified that there are some applications where one needs injection molded products. The idea is to enter into the ultimate tech as the customers RPPL is serving to are also using injection molded products.

• Ankit Agrawal of Yellowstone Equity asked about the Olive JV and the timeframe for the manufacturing unit to go into production. Ramswaroop Thard MD answered that it will happen by Oct. or Nov. 2023.

• Vivek Tolat of ACME Family Office asked about the drivers for the jump in EBITDA per Kg. Ramswaroop Thard MD answered that it was helped by the softening of the RM prices and increase in production capacity to scale up, in turn reducing expenditure.

• Vivek Tolat of ACME Family Office also enquired about the volume expectation for FY23. Ramswaroop Thard MD said the company will surely cross 10,000 tons of volume in FY23.

• Vivek Tolat of ACME Family Office asked about the reset with RPPL clients, considering the softening RM prices. Ramswaroop Thard MD answered that it’s a mix bag. Some are monthly arrangement, some are with quarterly arrangement and a few are with spot arrangements.

• Gurjot Ahluwalia enquired about the Olive partnership, the capex involved and if there will be any debt.  Ramswaroop Thard MD said that total capex is around INR100 crores and INR50 crores investments will be done by both parties equally. RPPL will use preferential issue, internal accrual, and a bit of debt to fund the investment.