Sah Polymers Ltd

‘‘Apart from the IPO, anothersignificant development for FY23 was the successful acquisition of a controlling stake in Fibcorp Polyweave, making it a subsidiary of Sah Polymers.

Dear Shareholders,

As we close the FY 2022-23, it is with great pleasure that I present the first Annual Report of Sah Polymers as a listed enterprise. Right from our IPO launch, to the commissioning of our new manufacturing facility, this year has marked many important milestones for us. I would like to take this opportunity to express our gratitude to all our shareholders, for reposing their faith in us and investing in our future. I would also like to extend our appreciation to our employees, customers, and all other stakeholders, who have supported us in our journey that has led to this eventful year. Apart from significant achievements, the year was also marked by various macro challenges, all of which we have been able to overcome through our hard work, perseverance, and commitment to excellence. Today, we are proud to present a detailed account of our progress to everyone, and we look forward to having your continued support in the years to come.

We are pleased to present the operational and financial highlights for FY23, which have been characterised by various strategic initiatives and investments, all of which have paid off well. We ended the year on a high note, as our IPO in December 2022 was a resounding success, with investors showing great enthusiasm for our business, resulting in an oversubscription of 17 times. We express our heartfelt appreciation to all the investors who placed faith in us and in our vision.

We are also pleased to share that our new facility, nestled in Modi, Udaipur, is now entirely operational. With the addition of this facility, we have officially doubled our manufacturing capacity to 7,920 MTPA, a feat that would not have been possible without the support and trust of our valued stakeholders.

The new facility was commissioned in January, 2023, and undoubtedly brings us a step closer to turning our shared dream into a tangible reality. Ever since commissioning, we have been actively ramping up our production efforts. Thanks to the dedication of our hardworking team, we have nearly achieved 50% capacity utilisation in the month of March, 2023. This definitely instils us with confidence that we will be able to reach optimum capacity utilisation by the first half of FY24.

Another significant development for FY23 was the successful acquisition of a controlling stake in Fibcorp Polyweave, making it a subsidiary of Sah Polymers. The Board of Directors passed the resolution of the amalgamation of the subsidiary in the Company in February 2023, which is now pending regulatory and shareholder approval.

The amalgamation acts pivotal as it brings forth a formidable synergy, as a result of cross-selling opportunities, cost optimisations, and combined manufacturing capabilities of both the companies. Resultantly, this enhances our competitiveness, and allows us to unlock greater value that drives sustainable growth for all our stakeholders. We are excited to embark on this transformative journey and remain committed to delivering exceptional value.

The macroeconomic environment for the bulk packaging industry was marked by significant challenges in the past year, and had left the industry in a tough position. The raw material prices for the entire woven bags and FIBC product categories remained extremely volatile throughout the year. In addition, the Russia-Ukraine conflict had far-reaching impacts, including an energy crisis in Europe that resulted in lower overall production & industrial output, and thus significantly decreased requirement for bulk packaging products. In light of these circumstances, the demand outlook from Europe remains uncertain and will be dependent on various factors, including the resolution of the ongoing crisis.

However, we have been actively seeking ways to mitigate the impact of this uncertainty on our financial performance. In addition to our constant monitoring of market dynamics, we have implemented several measures to optimise our cost structure while maintaining our product quality and customer service levels. Additionally, we are exploring new markets, products, and customer segments to diversify our revenue streams.

Overall, we remain cautiously optimistic about the future of our industry and believe that our proactive approach will position us well to overcome the challenges and capitalise on the opportunities that lie ahead.

We have been expanding our reach into the global markets with a focus on sustainable packaging solutions. In line with this, we have recently started supplying reclaim products to the building material packaging consumers in the UK and African markets. The products use our in-house recycled waste which in turn reduced the carbon footprint of these products. Developed markets such as the UK have also adopted regulatory policies and guidelines to boost use of such sustainable bulk packaging products. This move has been well-received by the building material industry, which is increasingly becoming conscious about its environmental impact and is keen on adopting sustainable packaging products. Our focus on sustainability is not only aligned with our long-term vision but also represents a significant growth opportunity for us.

Additionally, we are planning to expand our footprint in the food-grade bulk packaging products category, which has the potential for better realisations and margins. With the new facility in Modi, we are set to pursue this industry in the coming years. This strategic move will not only diversify our portfolio, but also enable us to tap into a growing market segment.

As a part of our endeavour to expand our global footprint, we are actively seeking and evaluating strategic investments, both in India and abroad that will enable us to broaden our presence, capacities, and business offerings.

In terms of organic growth, we are constantly looking to enter new markets like Belgium or Sweden in the coming years while also increasing our penetration in the American and European markets, leveraging our expertise and proven track record of delivering high-quality packaging solutions.

Through this focused geographical expansion strategy, we aim to strengthen our position as a leading player in the global packaging industry, while delivering amplified value to all our stakeholders.

We look forward to the coming year as we have some well-thought-out plans in the pipeline. Equipped with an expanded capacity, we stand poised to embark on a journey of growth in both our top line as well as bottom line. By the end of the first half of FY24, we envisage operating our incremental capacities at optimal levels.

Furthermore, once we are operating at optimum capacity utilisation levels we will trigger the second phase of our brownfield capex in H2FY24, which can potentially double the capacity at the Modi plant. This will enhance our competitive advantage, and open new doors for us in the market. Throughout this journey, we remain steadfast in our commitment to delivering exceptional value to our stakeholders, while upholding the highest standards of quality, sustainability, innovation.

We have been expanding our reach into the global markets with a focus on sustainable packaging solutions. In line with this, we have recently started supplying reclaim products to the building material packaging consumers in the UK and African markets. Additionally, we are planning to expand our footprint in the food-grade bulk packaging products category, which has the potential for better realisations and margins. With the new facility in Modi, we are set to pursue this industry in the coming years. This strategic move will not only diversify our portfolio, but also enable us to tap into a growing market segment.

We are extremely confident that our strategic outlook, combined with our dedication to excellence, will allow us to achieve sustainable growth and create significant value in the coming year. Thank you once again for your continued support. As we navigate the dynamic market landscape, we believe that together we will build a brighter and better future that empowers our people and society that we live in.