I didn’t find rajshree polypack on zerodha
RPPL-SM is the symbol.
Currently it only allows us to buy in lots as its still in SME at which Market cap do companies available for buy even as a single share?
https://www.nseindia.com/companies-listing/raising-capital-public-issues-eligibility-equity-debt
From
http://smestring.com/migration-from-sme.html
Any company on SME Platform having a paid-up capital of more than 10 Crores can apply to move to the Main board provided
Market Capitalisation should be minimum Rs. 25 Crores (The Market Capitalization on Weighted Average Price (WAP) of preceding 20 traded days from the date of submission of application to the Exchange for migration from SME platform to the Main board should be equal to or in excess of Rs. 25 crores);
A Special resolution is passed in the AGM with at least two-thirds of the shareholders (apart from promoter shareholders) favoring the migration;
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I was unable to ask my Questions in concall so i ended up emailing the co. Received answers today:
Please find below answers for the queries raised by you
Q1: Are we working on creating packaging for pharmaceutical products? Do we have any clients yet?
Ans: We are in advanced stages of working with multiple players in different industries for tube laminates and expect to commence business with some of them in 6-9 months. More specific details shall be shared with all the Investors as we progress further.
Q2 I have read in previous management commentary that we have the ability to manufacture biodegradable plastics as well as recyclable plastic packaging. Can you add some colour on what % of top line these products are right now and also how the demand is evolving for these environment friendly packaging in the medium to long term? Also, what is the gross margin profile like for these products vis a vis our current product line up?
Ans: Most of the demand of such products come from food service segments such as café, restaurants, events etc. The demand is expected to revive as soon as these segment get back to normal. We are well equipped to manufacture biodegradable packaging products and have all requisite certifications.
We have already been in talks with multiple large players and see a significant potential in near future.
Q3 Our cash flow from operations has constantly been going down since FY16. From 17cr it has come down to 9cr in fy21. This shows our worsening working capital position. Can you please comment on what has led to this and how we can expect cash flow from operations to evolve in the future?
Ans: Let’s use 2 simple metrics i.e. Inventory and Debtors to understand this. If we compare inventory for FY16 and FY21, the same has gone up from 7.3 Cr in FY16 to 20 Cr in FY21. While, a growth of 30-40% is expected on account of increase in sales, a significant sum of ₹5 Cr needs to be solely attributed to recent increase in RM prices. At the same time we chose to maintain little higher inventory to partially safeguard ourselves against constantly increasing prices.
On the Debtors side, while the outstanding was approx. 14 Cr at the end of FY16, the same stood at 27 Cr as on 31st March 2021. Hence, let me invite your attention to the fact that we have been able to achieve a significant jump in sales in later part of the year which has contributed to higher outstanding as at the end of the year as against normal level of ₹20 Cr as seen during last 3 years.
While, the working capital requirements are bound to increase with new project operationalized, we are expecting the parameters to get normalised during the year.
Q4 When do we expect to commercialise our tube packaging and our barrier packaging products?
Ans: We are in advanced stages of working with multiple players in different industries for tube laminates and expect to commence business with some of them in 6-9 months. More specific details shall be shared with all the Investors as we progress further.
Barrier packaging products for food application production already started and we have started commercially supplying to various customers.
Q5 I wanted to understand our competitive position in exports. Given the rise in freight costs how are we able to compete with local suppliers in the countries to which we export?
Ans: Our exports are more of technical nature, hence we do not forsee competition from local suppliers.
Q6 Given that this space is hyper-competitive and very fragmented, and given that these large FMCG companies conduct lot of due diligence before finalizing any vendor/supplier what makes our marquee clients like Amul, Epigamia, HUL, Nestle, Tata Q, Baskin robbins, ID, swiggy, Kwality Wall’s to choose us? What is the key differentiator of our product vis-a-vis our competitors?
Ans: Due diligence parameters are very stringent hence many manufacturers don’t qualify on those parameters. Quantity, Quality, Service ability to develop new products with quick turnaround time, good infrastructure, people with knowledge of the product & process, RM & their recipes, mould bank, there are many such factors hence it is not very easy to get entry in FMCG companies.
Disc: invested, biased
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Great work @sahil_vi
It’s a myth that micro cap companies do not give adequate data. By emailing them and them replying to your queries with detailed answers surely busts this myth.
It’s a long gestation investment with spurts of growth in between.
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There was a question asked in the concall (around 37 minutes mark in the recording). The shift to normal may happen sometime in Q3.
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It’s an SME stock with a defined lot size. You cannot buy less than this.
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What is the moat here?
From reading the posts I do not understand this as a high barrier of entry industry.
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No major moat other than its hard to secure clients that Rajshree has.
Packaging is a very important part of any FMCG product esp. perishables, so FMCG companies take a while to approve or even change vendors for packaging material.
Rajshree has demonstrated capability to onboard even very strict FMCG clients like Hatsun.
D: Invested, transactions in past 30 days
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I am trying to assess the impact on RPPL, from the following govt notification. There are two aspects that will (potentially) impact plastic manufacturing starting next year.
a) Thickness of packaging products. Less the thickness, more the problems. Management seem to have assured that RPPL products are above the banned (whenever happens) thickness but thickness limit doesn’t seems like a constant. It will slowly be increased.
b) Nature of plastic products. Refer the link but there could be some RPPL products that might fall in the banned category.
I glanced over this thread and a few investor docs. While this is known risk and has been brought up by VP members, this perhaps require further due diligence. Would appreciate if folks with industry knowhow can throw some light on the impact.
Link:
Disc: invested.
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list of all [single-use plastic items] that will be banned from July 1, 2022:
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Ear buds with plastic sticks
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Plastic sticks for balloons
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Plastic flags
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Candy sticks and ice-cream sticks
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Polystyrene (thermocol) for decoration
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Plates, cups, glasses, cutlery such as forks, spoons, knives, straw, trays
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Wrapping or packing films around sweet boxes, invitation cards, and cigarette packets
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Plastic or PVC banners less than 100 micron, stirrers
It seems item 6 will be relevant for RPPL. And we need to check how many of their products fall into this category.
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The other thing to keep in mind is that rajshree also has capabilities to produce biodegradable plastic and recyclable plastic. It is up to fmcg cos what covering they pick. They obviously won’t stop selling products due to plastic ban. They will need to decide on alternative.
Definitely worth asking management in next concall how this can impact them. My own sense is they’ll move to thicker plastic. Key question is whether rajshree machines can produce that thickness of plastic.
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Definitely worth asking management in next concall how this can impact them.
What I would want to know is the chances of any of the existing machinery in thermoforming becoming a liability.
I am overall positive and don’t think management is naive to not factor in this risk. They are on record for producing thicker plastic goods and their readiness on biodegradable plastics. The items in the product portfolio that might get banned are more of a commodity nature. Looking at the FMCG logos that RPPL serves, the tailwind, and readiness for biodegradable plastic will compensate for any bans.
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Inspired by @sahil_vi, I reached out to RPPL investor relations to assess the impact of the ban and got the following response.
Our Company is into primary packaging products. The primary packaging products are out of the ambit of this single-use plastic ban.
Our Company is into manufacturing primary packaging products, where the food is packed at source. We sell packaging to brand owners.
Ban is applicable to products that are sold as cutlery products for use in marriages for serving food or in restaurants. Although we do make few products that may be affected due to the notification and the impact will be negligible.
We are already registered and have obtained license from CPCB for manufacturing of compostable/biodegradable/PLA based products and our machines are capable of processing these materials and we can augment the capacities in very short time, based on the market requirements.
None of the machineries, will be affected or will go obsolete.
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I have been tracking RPPL for past 5-6 weeks. Thanks to the VP community for providing information for my research.
I have a slightly naive question (new here on ValuePickr so do forgive me if this has been clarified before)
Q. Has anyone come across plans for RPPL to move to mainboard. My concern here is stock volumes which are low on the SME platform (for RPPL they have spiked from May 2021 onwards). For RPPL to really fire up (from an investor’s perspective) I guess everyone invested would look into this. Would love to get any news/management guidance (if any) or views of people tracking the stock.
Discl: Not invested. Currently, researching the stock
Yes vide letter dtd. 29.06.2021, they had intimated NSE of postal ballot notice for voting and voting period ended on 30.07.2021. Hopefully within 3-4 months it will come on main board.
Invested
Unless a suitable replacement is found, will be difficult to ban it. What i see is there may b some regulation introduced which may make the companies collect their waste and recycle.
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Hi guys, I have been studying this company for the past few days and I have some questions. (I am fairly new to investing so I apologize in advance if I don’t make any sense):
Q1. I have read some estimates that the rigid plastic packaging industry is expected to grow at 20-25% CAGR during 2020-2025. How reliable is this estimate?
For the packaging industry to grow at this rate, shouldn’t the end-user industries, in turn, need to grow at similar rates?
I dug deeper to look at growth rates of a few segments:
Dairy: Overall industry expected to grow at 12-13% CAGR over FY18-23. Some subsegments like icecream, cheese, paneer expected to grow very fast at high double-digit rates (RBSA research report)
Confectionery: Candy, sweets market forecast to grow at 15-16% CAGR over FY22-26 (Global NewsWire)
QSR: Expected CAGR of 19% for FY 2020-25 led by increased penetration in Tier I & II cities, acceptance of new cuisines, increase in presence of international brands (welcome Wendy’s) (Burger King DRHP)
Bakery: Estimated to grow at a CAGR of 8-10% during FY 2021-26 (imarc research, EMR report)
Beverages (Non-Alcoholic): Projected to grow at just 4-6% CAGR. (Market Data Forecast, Mordor Intelligence)
Now the sources could be debatable but no segment screams a CAGR of 20-25% in itself. I think a more realistic estimate of 17-18% seems reasonable, led by dairy, confectionery and QSR.
Q2. Is it possible for any ONE company to enjoy siginificant competitive advantage in this industry?
These companies cater to large FMCG companies. To mitigate supplier concentration risk, any sensible management of an FMCG company would not give monopolistic supply of its packaging to one single company. Even Rajshree is not the only packaging supplier for every Kinder Joy made AND sold in India, as mentioned somewhere above in this thread. I locally bought one Kinder Joy (from MP, Indore area) to check the packaging, it was made by Huhtamaki. (Edit: Mr. Ramswaroop mentioned in the July 21 concall that they supply base material to Huhtamaki, who do the printing)
Even if a company develops any novel packaging technology in-house, it may initally struggle to get large orders for that kind of packaging from FMCG companies, until other players catch-up with the same tech. Otherwise, packaging sourced by these FMCG cos for the same product from multiple vendors would end-up being very different.
Mold-Tek recently announced that they have developed QR-coded IML technology that can facilitate tracking/traceability and anti-counterfeit check (more on this later), but I think they haven’t received any large orders for it because other vendors can’t supply it.
From Jul 21 concall:
Q3. So does this mean that the industry does not offer promising investing opportunities?
No, maybe a single player cannot enjoy a dominant market share, but surely consolidation can take place in the industry. As market share of branded products grows over loosely sold items (curd, milk), QSRs and food delivery deepen penetration and exports, travel etc rise rapidly, the need for high quality packaging that provides better shelf lives would increase, favouring organised and efficient players like Rajshree.
FMCG cos have strict due diligent paramaters around quality, infrastructure, delivery timelines, ability to expand and innovate quickly etc. It is very difficult to get entry into their supply chains. Rajshree, having several marquee clients has passed all these tests and can continue to win more clients and gain market share.
Thus if the industry grows at 17-18% and companies like Rajshree, Mold-Tek gain market share, maybe they can offer returns in the range of 20-25%.
Q4. Mold-Tek is coming up with a lot of interesting tech. Does Rajshree need to develop these capabilites to stay competitive?
QR Coded IML: Can be used for product traceability, anti counterfeit measures, dynamic discounting, providing product information
quoting chairman from July 21 concall:
“a dynamic QR code can help them in unique identification and traceability of the product throughout their supply chain right from our plant to their plant filling and then to distribution points, dealers, sub dealers right into the shops they can trace it with the outside QR code, but the inside QR code which can be scanned only once that is what gives them the anti counterfeit feature”
“the moment you scan it you are taken to the website, and you will be giving all this data and one more dynamic very interesting thing in this QR code is that the promotion schemes let us say their promotion scheme ends on December 31, 2021 and on 1st December, the QR code, which was printed long ago can be disabled and a new promotion can be started from first January and that is kept in the software or the website of the company and whatever let us say instead of silver coin, hereafter it will a gold coin whatever 2 grams or whatever and then by changing that website in their portal they will be effectively changing the scheme after this particular break, so it is so dynamic for promotions that is what made developed countries to adopt it, but here in India of course that also can be done the promotion, but more than that the anti counterfeit can be completely implemented.”
3D Rendering:
Not sure if Rajshree is already working on these or if it even needs to, but worth looking out for as a potential tech obsolesence risk.
These are just some of my thoughts regarding this industry, would love to hear counter-views.
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I attended company AGM on Friday but I joined bit late. When I joined, I heard last part of business update provided by MD. But funnily, there was neither any Q and A session with shareholders nor anyone was provided any opportunity to speak, which was very weird. So meeting started at 4pm but ended by 4.25pm…:- 
Not sure if any shareholder interaction happened before I joined. If anyone has attended complete AGM, would appreciate your feedback for the benefit of this forum