Prima Plastics Management Meet Note By Nirmal Bang

PPL currently has combined capacity of 10,000mt in Daman and Kerala. These two plants have a combined capacity utilisation level of 70%-75%. PPL has invested ~Rs70mn- Rs75mn on greenfield expansion at its plant in Ongole, Andhra Pradesh. This plant will have 1,500mt capacity and will serve eastern region. PPL has formed a 90:10 JV in Central America to serve the markets of Guatemala and Mexico. PPL has set up 4,000mt capacity in Guatemala incurring total capex of Rs180mn. PPL used to export its products to these markets before setting up the plant. It used to take ~90 days all the way from getting the order to shipping products to the clients. As a result of setting up this plant, the company will cut delay and save on logistic costs. PPL expects to clock sales of ~Rs200mn-Rs250mn from this JV in Guatemala by FY19. The partner having 10% stake in this JV has a distribution network in place which PPL plans to utilise. PPL also plans to expand its capacity in Cameroon from 4,00mt to 7,500mt with an investment of Rs120mn. All these capacities (~8,500mt) are expected to start contributing to total sales in the 4QFY17. PPL believes that with increased contribution from African and Central American JVs, operating margin will improve further.

Healthy growth with a clean balance sheet: