Premium Plast Limited
Company
Website 🔗 | |
Business Activity | Manufacture |
Division | Automotive Components |
Sub-class | Injection Moulding, Blow Moulding |
Location | Thane, Maharashtra |
Establishment Year | 1995 |
Management
Managing Director | Chetan Nagendra Dave |
Educational Qualifications | Diploma in Plastic Engineering |
Experience | Over 18 years |
Annual Salary | ₹ 60 Lakhs |
Total Number of Employees | 42 |
About
Premium Plast Limited specializes in the manufacturing of advanced plastic injection and blow-moulded automotive components. It is a Tier 1 supplier, serving commercial vehicle manufacturers directly. The company also produces industrial plastic parts and moulded industrial packaging.
Products and Services:
Automotive components:
Exterior components: Fenders, grilles, bumpers, door panels, floor rails, light covers, etc.
Interior components: Instrument assemblies, interior instrument panel assemblies and child parts, dashboard panels, door handles, glove boxes, vents, etc.
Steering wheels: Injection-moulded steering wheels for commercial vehicles.
Under-the-hood components: Ducts, assemblies, tanks, and other functional parts.
Industrial plastic parts:
Electronic and electrical components: Holders, covers, bushings, clamps, locators, etc. Safety limit switches for elevators.
Moulded industrial packaging:
Specialized packaging for torque spanners. Earbud packaging boxes.
Clients:
Premium Plast Limited’s primary clients are the original equipment manufacturers (OEMs). The company is the exclusive supplier for some of these OEMs. A major client of the company is VECV, a commercial vehicle manufacturer. Other clients include:
- Varroc Polymers Limited
- TAFE Motors and Tractors Limited
- Lavino Kapur Cottons Private Limited
- Bhagirath Coach & Metal Fab Private Limited
Manufacturing Process:
Injection Moulding:
- Raw Material Preparation:
The process begins with preparing raw plastic material, typically in the form of pellets or granules. These materials are carefully selected based on the desired properties of the final product, such as strength, flexibility, and heat resistance. Additives, such as colourants or stabilizers, may be incorporated into the raw material to achieve specific characteristics. - Melting and Injection:
The prepared raw material is then fed into a hopper, which guides it into the injection moulding machine. The material is heated to a molten state inside the machine, ensuring it flows smoothly and evenly. Once the material is fully melted and injected under high pressure into a mould cavity. A mould is a precision-engineered tool that determines the shape and features of the final product. - Cooling and Solidification:
After the molten plastic fills the mould cavity, it is allowed to cool and solidify. The cooling time varies depending on the size and complexity of the part being produced. During this stage, the plastic material hardens and takes on the shape of the mould cavity. Once the material is fully solidified, the mould is opened, and the finished product is ejected.
Blow Moulding:
- Melting and Parison Extrusion:
Similar to injection moulding, the process begins with the preparation of raw plastic material. The material is fed into a hopper and then into an extruder, where it is heated and melted. The molten plastic is then extruded through a die, forming a hollow tube called a parison. The parison is a preform that will be shaped into the final product. - Mould Clamping and Inflation:
The parison is then clamped into a mould cavity. The mould is typically made of metal and is designed to create the desired shape of the final product. Once the mould is closed, compressed air is blown into the parison, inflating it like a balloon. The inflated parison expands to fill the mould cavity, taking on its shape. - Cooling and Ejection:
After the parison has filled the mould cavity, it is allowed to cool and solidify. The cooling time varies depending on the size and complexity of the part being produced. During this stage, the plastic material hardens and takes on the shape of the mould cavity. Once the material is fully solidified, the mould is opened, and the finished product is ejected.
Raw Materials:
The primary raw materials used by Premium Plast Limited are polymers. These polymers are sourced from both domestic and international manufacturers. Common types of polymers used include:
- Acrylonitrile Butadiene Styrene (ABS)
- High-Density Polyethylene (HDPE)
- Polypropylene (PP)
- Polyamide (Nylon)
- Polycarbonate (PC)
- Polyoxymethylene (POM)
- Thermoplastic Olefins (TPO)
- Thermoplastic Elastomers (TPE)
- Polyurethane (PU)
- Polyvinyl Chloride (PVC)
- Phenol-formaldehyde (PF)
Suppliers:
The company maintains a diversified supplier base, procuring raw materials from various local and international companies. Some of the key suppliers include:
- INEOS Styrolution India Private Limited
- Reliance Industries Limited
- Indian Oil Corporation Limited
- GSFC Limited
- DuPont India Private Limited
- SABIC Innovative Plastics India Private Limited
- Covestro India Private Limited
- Lotte Advanced Materials India Private Limited
- Celanese India Private Limited
- Kingfa India Private Limited
- Autotech Sirmax India Private Limited
- J&K Industries
Distribution Network:
Other Key Aspects:
Certifications:
The company is certified under ISO 9001:2015 and ISO 14001:2015, demonstrating its commitment to quality and environmental management.
Awards:
The company has received numerous awards and recognitions for its outstanding contributions to the automotive industry. These include the Eicher Motors Limited Award for Outstanding Contribution to Supply Chain Management (2002) and the VECV Vendor Award for Outstanding Contribution to New Product Development (2014).
Revenue – Category
Audit and Legal
Auditor’s Remarks:
The auditors have issued an unqualified opinion on the company’s financial statements
Non-Compliances and Other Issues:
The company has, in the past, been penalized for not filing certain forms with the Registrar of Companies (RoC) on time. Additionally, there have been instances of delays in filing GSTR-3B (a monthly self-declaration form filed under the Goods and Services Tax (GST) law) and Employee Provident Fund (EPF) returns.
Contingent Liabilities:
The company does not have any contingent liabilities.
Legal Cases:
Cases Filed Against the Company
Cases Filed by the Company
Tax Proceedings against the Company:
The company is currently involved in one pending case, related to the Goods and Services Tax (GST) levied by the government.
SWOT Analysis
Strengths
Strong customer relationships: The company has built strong relationships with key customers, including leading commercial vehicle manufacturers. These relationships have resulted in repeat business and a stable revenue stream. |
Specialized expertise: The company possesses specialized expertise in injection moulding and blow moulding technologies. This expertise allows the company to produce high-quality automotive components that meet the stringent requirements of its customers. |
Quality certifications: The company holds ISO 9001:2015 and ISO 14001:2015 certifications, demonstrating its commitment to quality and environmental management. These certifications enhance the company’s reputation and competitiveness in the market. |
Weaknesses
Dependence on key customers: The company is significantly reliant on a few major customers for a substantial portion of its revenue. Any loss or reduction in orders from these key customers could adversely affect the company’s financial performance. |
Lack of long-term contracts: The company primarily operates on purchase orders, without long-term agreements with its customers. This lack of contractual commitments exposes the company to fluctuations in demand and potential loss of business. |
Limited product portfolio: While the company offers a range of automotive components, its product portfolio is primarily focused on exterior, interior, and under-the-hood components. Diversifying into new product categories could mitigate the risk associated with limited offerings. |
Opportunities
Expansion into new markets: The company can explore opportunities to expand its business into new geographic markets, both domestically and internationally. This expansion would reduce the company’s dependence on its current customer base and increase its market reach. |
Diversification of product portfolio: The company can invest in research and development to diversify its product portfolio and offer a wider range of automotive components. This diversification would make the company less susceptible to fluctuations in demand for specific products. |
Adoption of Industry 4.0 Technologies: The company can explore opportunities to integrate Industry 4.0 technologies, such as automation, artificial intelligence, and data analytics, into its manufacturing processes. This adoption would enhance operational efficiency, improve product quality, and reduce costs. |
Threats
Intense competition: The automotive component industry is highly competitive, with the presence of established domestic and international players. The company may face challenges in maintaining or increasing its market share due to competitive pressures. |
Economic downturns: Economic slowdowns or recessions can adversely affect the automotive industry, leading to reduced demand for the company’s products. The company’s financial performance could be impacted by economic fluctuations. |
Raw material price volatility: The prices of raw materials, especially polymers, are subject to market fluctuations. Volatility in raw material prices can impact the company’s profitability and financial stability. |
Technological disruptions: Rapid technological advancements in the automotive industry, such as the emergence of electric vehicles (EVs) and autonomous driving technologies, could disrupt the demand for existing automotive components. The company needs to adapt to these technological changes to remain competitive. |
Porter’s Five Forces1
Threat of New Entrants | MODERATE |
The automotive component industry requires significant capital investment and technical expertise, creating barriers to entry for new players. However, the presence of a large and growing market attracts potential entrants, posing a moderate threat |
Bargaining Power of Suppliers | LOW |
The availability of numerous suppliers for raw materials, particularly polymers, reduces the bargaining power of individual suppliers. The company can leverage this competitive landscape to negotiate favorable prices and terms. |
Bargaining Power of Buyers | HIGH |
The concentration of a few major customers, including large commercial vehicle manufacturers, increases the bargaining power of buyers. These buyers can exert pressure on prices and demand favourable terms, impacting the company’s profitability. |
Threat of Substitute Products or Services | LOW |
The critical role of automotive components in vehicle manufacturing limits the threat of substitute products or services. While some components may face competition from alternative materials or technologies, the overall demand for automotive components remains strong. |
Rivalry Among Existing Competitors | HIGH |
The automotive component industry is highly competitive, with the presence of several large and established players. The company faces intense rivalry from both domestic and international competitors, requiring it to maintain a strong competitive edge through innovation, quality, and customer relationships. |
Peer Comparison
The company’s performance on various financial and operational metrics compared to its peers for FY 2024 is as follows:
Metric | Premium Plast Limited | Varroc Engineering Limited | Uno Minda Limited |
Revenue from Operations (₹ Lakhs) | 4,670 | 4,53,496 | 8,98,330 |
EBITDA Margin | 13.82% | 9.91% | 10.35% |
Net Profit Margin | 10.2% | 7.87% | 6.52% |
Return on Net Worth | 28.90% | 39.22% | 21.59% |
ROCE | 28.01% | 15.55% | 15.18% |
Debt-Equity Ratio | 0.34 | 1.37 | 0.34 |
Green Box
Positive Operating Cash Flow:
The company has maintained a positive operating cash flow over the past three financial years. This indicates the company’s ability to generate sufficient cash flow from its operations to cover its expenses and invest in its growth.
IPO Funds:
Expansion of Existing Manufacturing Facility:
The company plans to expand its existing manufacturing facility located in Pithampur, Madhya Pradesh. This expansion will involve increasing the floor area of the facility and installing additional machinery to enhance production capacity and efficiency. The company plans to expand its manufacturing capacity by 15% to 20% to meet the increasing demand for its products.
Funding of Capital Expenditure for Solar Power Plant:
The company also plans to invest in a rooftop solar power plant at its existing manufacturing facility in Pithampur. This investment aligns with the company’s commitment to sustainable business development and will contribute to its goal of becoming a responsible and environmentally conscious organization. The solar power plant will help reduce the company’s reliance on conventional energy sources and lower its electricity costs.
Prepayment or Repayment of Outstanding Borrowings:
A portion of the proceeds from the public issue will be used to prepay or repay outstanding borrowings availed by the company. This will help reduce the company’s debt burden and improve its financial position.
Industry Outlook:
The automotive component industry in India is expected to grow at a CAGR of 12% to 15% over the next five years.
Amber Box
Capacity Utilization:
The capacity utilization rate of the company is in the range of 70-80% in its manufacturing units for FY 2024.
Red Box
Dependence on a single customer:
VE Commercial Vehicles Limited alone contributed more than 80% of the revenue for FY 2024.
Images
- The force value of “LOW” is considered good Click Porter’s Five Forces article for more information. ↩︎
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