FA PROJECT

Analysis Report of

TIME TECHNOPLAST Ltd.

Sector Analysis
Overview of the sector
Indian Polymer & Packaging Industry is expanding at a phenomenal pace. Major international companies from various sectors such as automobiles, electronics, telecommunications, food processing, packing, healthcare etc. have set-up large manufacturing bases in India. Therefore, demand for polymer packaging is rapidly increasing and soon India will emerge as one of the fastest growing markets in the world. The next two decades are expected to offer unprecedented opportunities for the industry in India.

Growth in the sector

Indian Packaging Industry is currently valued at US $13 billion and ranks 11th in the world. The packaging industry is poised to grow rapidly led by the increasing use of innovative packaging equipments and the rising flexible packaging market. With an increasing investment by domestic as well as the foreign companies; the market for packaging industry has expanded rapidly. Emerging opportunity for the packaging industry is giving rise to new prospects for packaging machinery and equipment industry in India.

Future prospects in view of the Indian & Global scenario

Asia accounts for almost 50% of the Global Industrial packaging requirements, the penetration levels of polymers products in most of the markets are still below 10% except India, where the penetration level is up to 50%.Therefore, Asian markets offer s tremendous growth opportunities. In India, the demand for rigid polymer packaging-based products is growing at a rapid pace with increase in consumption further aided by shift to polymer products from metal products used earlier. With a widespread marketing and distribution network, state-of-the-art technologically advanced manufacturing facilities, Time Tech is well poised to sustain and grow its market leadership in the Industrial Packaging space.

Main Players in the sector

Finolex Industries Limited Supreme Industries Ltd. Sintex Industries Ltd.

OVERVIEW OF THE COMPANYIncorporated in 1991, Time Technoplast Ltd. (Time Tech) is a leader in manufacturing and marketing polymer-based products globally. Its rapid growth is nothing short of meteoric. Starting from humble beginnings, Time Tech is today an internationally acclaimed group with global footprints. The group's core business remains polymer products but the portfolio has grown manifold.The growth story has been dual pronged. The massive expansion in product portfolio has been matched only by the increase in production facilities. Going global, Time Tech has taken the path of organic and inorganic growth.The product bouquet of the group today straddles industries as varied as Industrial Packaging, Infrastructure, Lifestyle Products, Automobile, Healthcare and Material Handling.With the rapid expansion of its product portfolio, production facilities have also been augmented. Setting up plants in the country and abroad and acquiring manufacturers locally and internationally Time Tech today has a staggering28 manufacturing locations spread across the globe, of which 14 are in India alone! The group today employs about 3600 personnel and has operational foot prints in geographies like India, UAE, Bahrain, Thailand, Korea, Poland, China, Taiwan and Indonesia, Egypt, Malaysia and Singapore. R&D-TimeTech has a dedicated R&D team in house to consistently design improved technologies, better processes and bear the user friendliness touch.
Milestones

- Started industrial packaging units in Pantnagar and Jammu. -Acquired a mid-sized battery manufacturer in Bengaluru, specializing in batteries for power sector and solar power. -Acquired Astroturf, the premium European matting brand. -Acquired Yung Hsin, the largest industrial packaging company in Taiwan. -Commissioned green field project in industrial packaging in Tianjin, China. -Started pilot project for composite gas cylinders in India and augmented capacity in the Czech Republic

BOARD OF DIRECTORS

Mr. K. N. Venkatasubramanian - Chairman (Non-Executive & Independent) Mr. Anil Jain - Managing Director Mr. Bharat Vageria - Wholetime Director - Finance Mr. Naveen Jain - Wholetime Director - Technical Mr. Raghupathy Thyagarajan - Wholetime Director - Marketing Mr. Hans-Dieter von Meibom - Director (Non-Executive & Independent) Mr. Sanjaya Kulkarni - Director (Non-Executive & Independent) Mr. M. K. Wadhwa - Director (Non-Executive & Independent) Mr. Kartik C. Parija - Director (Non-Executive) Mr. Atul Gupta - VP - Finance & Company Secretary

FUTURE OUTLOOK:

Whereas Asia accounts for almost 50% of the Global Industrial packaging requirements, the penetration levels of polymers drums in most of these markets is still below 10% except India, where we have seen the penetration level going upto 50%. Therefore , Asian markets offer us tremendous growth opportunities. Our growth strategy for the years ahead is to replicate the Indian model in key Asian countries where we have set up the operations. PRODUCT LINE:Over a period of time, Time Tech has developed an array of trusted brands across its product portfolio. TechPack for packaging products, Ecopet for PET sheets, Coni Pails for pails, Meadowz for lawn grass, DuroTurf, DuroSoft and Astroturf for entrance matting, Regal for garden furniture, 3S and ClearPass for anti-spray flaps, Genex for healthcare products, Max'M for high pressure pipes, Maxlife for Batteries, FastTrac for prefab structures, Dumpobins for refuse bins and Litesafe for composite cylinders. PRODUCT LINE2010-

2012-

PRODUCT DIVISION

COMPETITORS-

Main Players in the sector

Finolex Industries Limited Supreme Industries Ltd. Sintex Industries Ltd.

EXPANSION /MAJOR PROJECTS-

A. Material Handling Division (returnable Transit packaging Solutions) Under this vertical, vast range of stackable, nestable and foldable containers, plastic pallets for use in various Industries like Automotive, retail, Fruits & Vegetables, Food Processing etc. The products and solutions offered generate savings year after year due to its sturdy construction which offers it longer life multiple users. The solution offered reduces costs at various stage of the supply chain thus providing an excellent Return on Investment.

B. Composite Cylinders

Composite Gas Cylinders offer tremendous business opportunities across the world but more particularly in Asia and Middle East. Owing to its superior performance lighter weight, explosion proof, translucent, non-corrosive, these high tech Composite Cylinders are all set to replace a mammoth population of metal cylinders currently in use. Several gas distributors in Middle East, Far East & Brazil have evinced huge interest in introducing Composite Cylinders as a replacement of metal cylinders. TimeTechhas now fully functional astate-of-the-art production facility in India and has the requisite
product approvals already from international testing/ accreditation agencies for making supplies of Cylinders.

DIRECTORS REPORT
To The Members, Your Directors have pleasure in presenting the Directors report on the business and operations of the Company for the year ended on 31st March, 2012.

Standalone
Gross sales and other income for the standalone entity increased to ` 9,942.87 Mn, as against ` 8,805.99 Mn in the previous year, registered a growth of 12.91%. The Net Profit at ` 777.46 Mn as against ` 936.82 Mn represents a decrease of 17.01%, as compared to the previous year. Your Directors are pleased to recommend 45 % Dividend (being ` 0.45 per share) (Previous Year : 45% final) on 210,11,77,500 Equity Shares of the Company subject to the Approval by the Shareholders and this will absorb about `109.89 Mn including Dividend tax and surcharge thereon (Previous year : ` 109.45 Mn). Mr.Bharat Vageria, Mr. Sanjaya Kulkarni and Mr. K. N.Venkatasubramanian, Directors of the Company retire by rotation and being eligible; offer themselves for reappointment at the ensuing Annual General Meeting. All the major units of the company are ISO Certified as on date. The relations with the employees were cordial during the year.

ENERGY CONSERVATION:
Your Company continues to emphasize on energy conservation at the early stage of plant design and in selection of plant and equipment, electrical motors /designs for optimizing energy consumption by installation of necessary equipment to improve the power factor with a view to achieve better energy efficiency at all levels of operations. TECHNOLOGY ABSORPTION: The Collaborators offer periodical training to improve the quality of the Company's products and performance to conform to the latest international standards. Besides, employees of the Company have been attending in-house training programs designed and developed with the help of Collaborators FOREIGN EXCHANGE EARNINGS & OUTGO: Total foreign exchange earnings - ` 819.28 Mn(including deemed exports). Total foreign exchange outgo - ` 3267.02 Mn ( including value of imports on CIF basis)

MANAGEMENT DISCUSSION & ANALYSIS

New Products Division : A. Material Handling Division (returnable Transit packaging Solutions)

Under this vertical, we manufacturer vast range of stackable, nestable and foldable containers, plastic pallets for use in various Industries like Automotive, retail, Fruits & Vegetables, Food Processing etc.
B. Composite Cylinders

Composite Gas Cylinders offer tremendous business opportunities across the world but more particularly in Asia and Middle East. Owing to its superior performance lighter weight, explosion proof, translucent, non-corrosive, these high tech Composite Cylinders are all set to replace a mammoth population of metal cylinders currently in use.

International Operations:

A key element of Time Tech's growth is its strong commitment to the global marketplace.The groups' emergence as an industry change and thought leader, has resulted over the years owing to its impeccable strategy and commercial sagacity that has pre-empted needs, foreseen changes on the business horizon and harnessed technology to offer quality coupled with flawless service consistently for nearly two decades.The Company has now manufacturing facilitiesin North China (Tinajin) South China (Guangzhou), Indonesia, South Korea, Vietnam, Egypt, Taiwan, Thailand, UAE, Romania, Poland and Bahrain.During the year, Company consolidated its presence in the Thailand market by acquiring remaining 51% shareholding from Mauser Group in Pack Delta Public Company Limited.

SWOT ANALYSIS: STRENGTHS: Polymer Focus: TimeTech develops value added polymer products in certain functional areas TimeTech is well positioned to work on new growth opportunities. Strong Captive Machine Building Unit: TimeTech has in recent years built up strong in-house Machine Building capabilities. Research & Development Capabilities: TimeTech has a dedicated R&D team in house to consistently design improved technologies, better processes and bear the user friendliness touch Consolidated Technology Platform: Time Tech has developed a platform comprising the basic polymer technology blowmoulding, injection moulding and extrusion. Diversified Product Portfolio: Time Tech offers a wide array of products catering to the requirements of the high-growth sectors such as industrial packaging, lifestyle automotive components and infrastructure segments. Recognized Brands, Multi-locational Manufacturing Set Up & Cost Efficient Model are some of the other strengths.

OPPORTUNITIES: Capacity Addition In Feedstock Sector: A continuous availability of polymers at reasonable prices and the Company's ability to pass on such fluctuation to the Company's users remains a key to our success, growth and prosperity Inorganic Growth Route: Time Tech on a consistent basis evaluates the available opportunities via the inorganic growth mode and aims to make the most of the feasible opportunities drawing more synergic operations for the Company. Increasing presence in international key markets: Time Tech enjoys formidable market share and consequently has successfully consolidated its leadership position in India.

CHALLENGES: Adverse development as the entire manufacturing capacity is polymer-based since polymer technology and innovation pertain to all our businesses, any adverse development in one or more of these areas could be an area of concern.

FINANCIAL PERFORMANCE FOR THE YEAR: Consolidated net revenues for the year stood at ` 15,401 million. This is 20.01% higher than net revenues of `12,833 million in FY2011. This significant increase is primarily driven by strong performance in all the major segments of Time Tech businesses.EBITDA amounted to ` 2,470 million, a growth of 3.65% over the ` 2,383 million reported last year while the Net profit de-grew by 19.10% to Rs. 898 million from ` 1,110 million last year. For the year, the company has maintained dividend @45 % as against the previous year of 45 %. During the year, Company had pressure on EBITDA margins due to adverse impact of the foreign exchange on account of the import of raw materials and increase in the Other Expenditure relating to overseas Greenfield new projects which have been commissioned in last six months whereby while the fixed expenditures have been fully expensed out, optimum revenues shall be reached in the coming years. Further, decline in the Net Profit is attributed to the increase in the cost of borrowings. Average cost of borrowings during the year ended 31 March 2012 have gone up by 200 bps compared to the previous year. HUMAN RESOURCES OVERVIEW: As an organization, Time Tech is working towards increasing the diversity of its leadership group, making conscious efforts to build an inclusive workplace that promotes cultural agility, global mindset and diversity of experience and thoughts. Given the company's increased global footprint, the hiring process has also been stepped up to hire talent from outside India. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company's internal audit system is geared towards ensuring adequate internal controls to meet the increasing size and complexity of business for safeguarding the assets of the Company. Identifying weakness and areas of improvement and to meet with all compliance. The internal audit program focuses primarily on checks and controls on systems and processes, monitoring compliances, continuous upgrade of controls and the current business risk assessment.

D) Financial Analysis:-

(i)

Turnover :Year Turnover (in Rs. crores) % Increase 12.03 24.27 26.60 2011 - 12 920.739 2010 - 11 821.893 2009 - 10 661.396

The above data is a comparative analysis for the turnover of the company. From the above data it can be understood that there has been steady increase in the turnover of the company. However, in the current year (2011 2012), the increase in the turnover has been a little sluggish as compared to the previous two years.

(ii) Year NPAT

NPAT as a percentage of sales. 2011 12 73.604 2010 11 93.681 2009 - 10 70.039

(in Rs. crores) Sales (in Rs. crores) % Increase 8.00 11.40 10.60

920.739

821.893

661.396

The data is with respect to net profit after tax as a percentage of sales. The percentage of profit with respect to sales is in decline in comparison to the previous two years. This may also be attributed to the decline in the current years increase in turnover in comparison to the previous years. (iii) Fixed assets and Capital work in progress :Year Gross Block (in Rs. crores) Depreciation (in Rs. crores) Net block (in Rs. crores)
Capital work in progress

2011 12 636.970

2010 11 526.150

2009 - 10 463.324

197.055

161.478

137.148

439.915

364.672

326.176

95.34

96.69

39.33

The above data shows that there has been a constant increase in the fixed assets that the company owns. Thus, this shows that there is further scope of expansion for the company. The fixed assets mainly comprise of tangible assets as the company is more of a manufacturer. Also, there are some assets that are still under construction which have been included in the balance sheet. These assets have been valued at cost incurred. (iv) Working capital :Year Current assets (in Rs. crores) Current liabilities (in Rs. crores) Working capital (in Rs. crores) 136.421 137.636 295.866 406.228 333.793 107.813 2011 12 542.644 2010 11 471.429 2009 10 403.679

The above data gives a view of the working capital of the company. Working capital shows the net current assets that may be left with the company after paying off all the current liabilities of the company. Over the past three years, the working capital of the company has been declining. There was a sharp decline in the working capital of the company in the year 2010 11 as compared to the working capital in the previous year. Also, in the current year there was a slight decrease in the working capital.

(v)

Secured and unsecured loans :Year Secured loans (in Rs. crores) 2011 12 2010 11 2009 10 328.380 297.568 271.289 Unsecured loans (in Rs. crores) 30.00 25.00 30.30

The above table gives data with regards to the borrowings of the company and the nature of borrowing. Secured loans are loans which are obtained by keeping some security with lender. Unsecured loans are obtained without any such security. The secured loans taken by the company are on an uptrend i.e. they are increasing with every passing year. The unsecured loans have been obtained as per the requirements of the company and therefore the amount borrowed in 2010 11 was less as compared to the other two years.

(vi)

Operating expenses as a percentage of turnover :Year Operating expenses (in Rs. crores) 2011 12 2010 11 2009 10 748.718 652.105 533.2 920.739 821.893 661.396 81.32 79.34 80.62 Turnover (in Rs. crores) Percentage

The operating expenses of the company are given in the above table as a percentage of turnover. They are the general expenses that are incurred in day to day running of business. The operating expenses form a major part of the turnover that the company generates. This can be seen in the above table, wherein operating expenses form 80 % of the total turnover of the company.

(vii)

EPS and Diluted EPS :Year 2011 12 2010 11 2009 10 EPS 3.51 4.31 3.27 Diluted EPS 3.43 4.23 3.23

The above Earnings per share and diluted earnings per share is on equity shares of the company with face value of Rs. 1/-. From the above table it can be concurred that the EPS has decreased in the current year in comparison to the previous year(2010 11) .

(viii) Accounting policies followed by the company :Fixed Assets

a) Fixed Assets are stated at cost of acquisition (inclusive of any other cost attributable to bringing the same to their working condition), less accumulated depreciation.

(b)Fixed Assets manufactured / constructed in house are valued at actual cost of raw materials, conversion cost, and other related cost, less accumulated depreciation. (c) Pre-operative Expenses incurred up to Commencement of Commercial production of respective unit has been appropriated on the Fixed Assets value at the end of the year of respective unit.

Depreciation
Depreciation on fixed assets is provided on straight line method at the rates and in the manner as specified in Schedule XIV to the Companies Act.

Inventory Valuation
a) Inventories are valued at lower of cost or estimated net realizable value. b) Excise Duty is added in the Closing Inventory of finished goods. c) The basis of determining cost for various categories of inventories is as follows i) Raw Material, Packing Materials and Stores & spares First in First out (FIFO) ii) Finished Goods and Goods in- Process Cost of Direct Material, Labour and Other Manufacturing Overheads

Foreign Currency Fluctuations

i) Monetary Assets and Liabilities related to Foreign Currency transactions remaining unsettled at the end of the year are translated at year end rate. ii) The difference in translation of monetary assets and liabilities and realized gains and losses on foreign exchange transactions other than those relating to fixed assets are recognized in the Profit and Loss Account. In respect of transactions covered by foreign exchange contracts, the difference between the contract rate and the spot rate on the date of transaction is charged to the Profit and Loss Account over the period of the contract.

iii) Exchange differences in respect of liabilities incurred to acquire fixed assets are adjusted to the carrying amount of such fixed assets.

E ] Comparative analysis with competitor :-

SUPREME INDUSTRIES
Packaging Application
While competition in this product category has increased, the division expects to continue growing in the segment. The product enjoys a good brand image in the market. New products and new applications are being developed in the cross linked foam product category. This will ensure higher utilization of all cross linked product manufacturing facilities.

Packaging products have 25% contribution to the turnover.\

Turnover and NPAT Year Turnover (in Rs. Crores) NPAT (in Rs. Crores) NPAT/Turnover 2011 12 2927.04 240.51 8.22 2010 11 2435.73 174.01 7.14 2009 10 2005.73 144.72 7.21

The turnover of Supreme ltd. is approximately three times that of Time Technoplast Ltd. Also, there has been a steady increase in the turnover of the company with an increase of an average 20% in the
current year and the previous year. Comparatively the increase in turnover this year has been high for Supreme ltd as compared for TTL. The NPAT as a percentage of turnover was higher for TTL in the previous years. However, in the current year Supreme ltd has a higher profit margin as compared to TTL.

Fixed assets and capital work in progress :-

Year Net block (in Rs. Crores) Capital work in progress (in Rs. Crores)

2011 12
739.37 33.80

2010 11
741.64 26.17

2009 - 10
543.00

13.08

The assets of Supreme ltd. is more in comparison to Time Technoplast Ltd. as the size of the companies are different. However, the assets composition of both the companies are same with more of tangible assets. Also, the capital work in progress of Supreme Ltd. is less than that of Time Technoplast Ltd. This shows a higher growth trajectory for Time Technoplast Ltd. as it is investing in its assets.

Secured and Unsecured loans :Year Secured Unsecured 2011 12 158.04 95.68 2010 11 297.20 150.04 2009 10 269.12 118.23

The amount of secured loans as well as unsecured loans of Supreme Ltd. is quite less in comparison to the loans taken by Time Technoplast Ltd. This may be partly attributed to the fixed assets acquisition and other growth requirements of Time.

Operating expenses as a percentage of sales. Year Operating expenses (in Rs. Crores) Turnover (in Rs. Crores) % 2011 12 2448.20 2010 11 2154.07 2009 - 10 1749.41

2927.04 83.64

2435.73 88.44

2005.73 87.22

The operating expenses percentage of Supreme Ltd. is very high in comparison to percentage of operating expenses with sales in Time Technoplast Ltd. It is really high in Supreme Ltd at an average of 86%. Thus, the operating margin can be said to be better for Time Technoplast Ltd. as it is near 80% of sales.

Working capital Year Current assets (In Rs. Crores) Current liabilities (in Rs. Crores) 2011- 12 607.22 634.80 2010 11 628.77 678.51 2009- 10 538.08 314.88

(27.58)

(49.74)

223.20

The working capital of Supreme Ltd. is in negative. As such the liquidity of Supreme Ltd. is negative. In comparison to Time, Supreme does not enjoy as much liquidity in its business. Also, it may mean that Supreme does not maintain too much amount of inventory with itself. Thus, Time has a better working capital compared to Supreme ltd.

F] Analysis of company:Revenue:The revenue of the company is in terms of the turnover that the company generates as well as the profit for the company. The revenue for Time Technoplast Ltd. has been growing over the past three years. However, in the current year (2011 12), the growth was sluggish compared to the previous two years. This may be due to slowdown in demand as a cause of the slowdown. The revenue over the past three years has increased on a basic average of 21%. However, in comparison to Time Technoplast Ltd., its competitor Supreme Ltd., has improved on its performance. Supreme has performed better than Time in the current year.

Profit:Profit for the company is generated by the sales or turnover of the company. Higher the sales/turnover, higher will be the profit for the company. Compared to the previous years, in the current year Time has underperformed. Mainly the decline in increase of turnover as per previous standards has led to a fall in the profit for the company. Comparing the profit with that of Supreme Ltd., the profit for the current year is not at the same level. Also, the profit margin for the company has always been on the higher side of 10%, which is not the case in the current year.

Fixed assets:Fixed assets of Time Technoplast Ltd mainly comprise of tangible assets like plant, machinery, building, etc. This may be because Time is a manufacturing company manufacturing polymer products. Fixed assets of Time are seen to be steadily rising year on year.this increase in expenditure on fixed assets indicates that the management is interested in growing the company. Also, in comparison to its competitor Supreme Ltd. its assets are quite less.

Working capital:Working capital indicate the liquidity in the company. It is also known as net current assets. The working capital of Time Technoplast Ltd is positive. Thus, this indicates there is liquidity in the company. However, the working capital is declining on year on year basis.