In this insightful conversation, MD, Khushboo Chandrakant Doshi talks about Rajoo Engineers’ evolution, from pioneering plastic extrusion technology in India to expanding its footprint across 70+ countries. She highlights key industry trends, innovations and sustainability efforts shaping the company’s future.
Stacy Pereira: Hello and welcome to Small Cap Spotlight. This is the channel where we cast the spotlight on small market cap companies and we give you a platform to hear from their managements. Today we are talking to the MD of Rajoo Engineers.
I have with me Ms. Khusboo Chandrakant Doshi, the Managing Director at Rajoo Engineers. Thank you so much for joining us. My first question to you Ms. Doshi is, from your humble beginnings in 1986 to becoming a leader in Extrusion Machinery, what would you consider to be the most pivotal decision in Rajoo’s journey? I have noticed also that your IPO was oversubscribed by 24 times.
What was that initial early periods like and the foundation blocks that laid to make the company what it is today?
Khushboo Chandrakant Doshi: So yes, about Rajoo Engineers, the journey started in 1986 and that was itself a very pivotal decision in the company’s trajectory. In 1986, prior to that, Rajoo Engineers was a Rajoo plastic and we were into processing of polymers and that’s where we realized the need of technology which was not available at that point of time in India and of course at the cost which Indian processor would afford. So that was the turning point for Rajoo plastic to become a Rajoo Engineers and then eventually we kept focusing on the need of our prospect because we feel that when we are a processor and what all sorts of technical challenges we used to face, how we can address those challenges and making a product which can make life easy for the Indian processor and that’s how we jumped into the machinery manufacturing.
And since 1986, our agenda, our aim, our goal remain the same all the time, focusing on the technical development and making technology affordable in Indian processors doorstep. So this is how the journey started.
Stacy Pereira: And also along the way, how has the whole business offering developed?
Khushboo Chandrakant Doshi: Yeah, so it’s in a machinery business. We started with one product called a blonde film extrusion and in those early days, this product used to manufacture carry bags, plastic carry bags. But now if we talk about the today’s scenario, it is more of an entire flexible packaging industry and that’s where we cater to. So other than a blonde film line, we have a sheet extrusion system.
So we also started catering to semi-rigid packaging across the globe. Then we do have other product portfolios saying pipe extrusion and all which contributes into the basically infrastructure and agriculture sector. So this is how we keep expanding our portfolio in terms of a product and the end application and but we remain stick to our core, which is extrusion.
So under the umbrella of extrusion, now we have an offering called a blonde film extrusion system, sheet line, thermoformers and extrusion coating and lamination lines.
Stacy Pereira: The company seems to have followed a thoughtful progression, starting with Foil-X, which is that monolayer to now NonaFoil, which is nine layers. Could you walk us through how this technological evolution has aligned, especially to do with today’s market needs?
Khushboo Chandrakant Doshi: So that’s what I talk about, that it is essentially a part of blonde film extrusion. So start from the monolayer, which is mainly catered into a carry bag and a garbage bag and all sorts of application. And then the three layer came into the picture, the development happen of a three layer, which is mainly goes into the milk film packaging and other non-barrier applications. Then five layer came, which when we introduced the barrier concept in the blonde film line and eventually seven layer came that talk about the more high barrier films.
And now the nine layer comes, which talk about barrier film, but it is a recyclable. So this is a concept we started because now everybody is talking about the sustainability and while talking about the plastic usage. So under the sustainability program, we decided to develop the film, which machine, which produced the barrier film, but it is a recyclable.
So that’s how in the year of, you know, 38 years of a journey starting from a single layer now offering to a nine layer is, you know, and that is also displaying that how our vision is aligned with the market needs and the kind of environmental aspect coming and focusing on the business. This is, we thought this should be the priority and that’s how we got into the development of the product.
Stacy Pereira: So all of these different products that you just mentioned, they of course have different utilities across different industries. If one has to divide it industry wise, where does the biggest chunk of your revenue come from?
Khushboo Chandrakant Doshi: Around 45 to 50% coming from flexible packaging industry. And another 15 to 20% comes from semi-rigid packaging industry. And another 10 to 15% coming from infrastructure and agriculture.
And we have now developed the product, which goes into the renewable sector as well. That also contribute to a one or 2% of total revenue pie. And how do you see this pie changing over the course of the next few years? I feel that agriculture and infrastructure would surely increase their portion in the entire pie in coming days.
As far as the renewable is concerned, India is still under, you know, it’s getting ready for building up the entire ecosystem. Where if you talk about the China currently, the entire ecosystem for solar industry is there. And that’s how the products and machinery is performing.
So India is still under the, you know, early days where the entire market and ecosystem is getting ready for it. So we see that in the next one or two years, the revenue pie will not be occupied by the renewables, but it will take a good chunk of pie in after two to three years.
Stacy Pereira: Over the years, you’ve had several technical collaborations, Bausano and Figli in Italy, MEAF machines in the Netherlands, and earlier also Commodore Inc in the United States. How have these partnerships influenced Rajoo’s technological capabilities?
Khushboo Chandrakant Doshi: Right, so Rajoo Bausano is our joint venture company and there is a partnership with a company called Bausano and Figli, that’s Italian company ran by the third generation now. And the partnership came into the picture because we were searching for the technology as far as the infrastructure sector was concerned. And we started doing business together since 2009-10.
So that was the time when we started working together and established the company in India. Which can contribute into the infrastructure industry, mainly we, the Rajoo Bausano produce pipe extrusion systems and WPC and granulation lines for the various applications and all sorts of machinery which basically caters to PVC segments. And yeah, so with this particular company, we could bring our latest technology to the Indian doorstep and that’s how they really helped us.
Stacy Pereira: You’ve started exports to Tanzania and now serve 70 plus countries. Could you share some insights from this internationalization journey?
Khushboo Chandrakant Doshi: Tanzania was the first company where we exported in our early days. But then eventually we started focusing on many other countries and that’s how we have reached 70 plus countries.
Currently, we export more than 50% of the total revenue in the countries like Asia, Pacific regions, Africa, all sorts of Africa, including South Africa as well. Then a few of the things to Europe and the Middle East as well. So these are the focus countries for us where we are having the installation.
Apart from that, I mean if you talk about how we have reached all this thing is basically because we have a very good agent network and we do have a very strong service network across the globe. So we have a local service engineer available as and when our machines are going abroad and any other new territories. So having the strong service support available makes the journey smooth as compared to when you go and find out any different territories which is new for you.
You take some time to understand the customer’s needs and the culture and the expectations. But here we have a local agent network which makes the entire thing smooth for us and that’s how currently we are targeting the international territories for us. Which emerging markets excites you the most and why? The U.S. is something exciting for us at this point of time.
We feel that kind of product with the enhanced features which we have developed is ready to ship and market in the U.S. market against the competition of Europe and China too because now the policy is also getting changed and people are now more moving towards China plus one strategy which also creating a great opportunity for the U.S. market.
Stacy Pereira: You’ve implemented SAP S4 HANA being an industry first in India. How has this transformed your operational capabilities?
Khushboo Chandrakant Doshi: I mean SAP itself is a landmark event in our life because we failed five different ERP system prior to get into the SAP.
So since we have a very good experience in the failures we were all set while we implemented the SAP. In fact we have implemented SAP HANA in a shortest possible time of nine months across the company and then subsequently we took it across the group. So now all other group companies as well are on the SAP and as it is a requirement for the business it streamlined the processes and moreover it gives the correct picture of the business.
Sometimes we miss to see many parameters which your balance sheet and P&L talk about but then we miss to look at those and considering those aspects but then after having the SAP it has helped us a lot in terms of inventory management and tracking the entire customer’s journey right from getting the order to the dispatch and that has also enabled us to improve the customer’s experience and we can give them a real time status of the order. So this is something very good and of course it’s really a transformative journey for Rajoo engineers.
Stacy Pereira: With 140 crores in your order books and margins expanding, EBITDA margins if I’m not wrong was 16.10 percent recently. What are the key drivers of maintaining this growth momentum?
Khushboo Chandrakant Doshi: Being ahead of time and keep developing new things, keep bringing new features in the product and market that particular thing considering the customer’s need that is something is really improving our margin. When we know our customers so closely what they want, how the things would benefit to their business. If we consider those aspects then probably this is the time where we you know land up with having a good margins because the research and development happening in the right direction knowing the customer needs so precisely.
So whatever development happened in last five years that is bringing fruit for us.
Stacy Pereira: You’ve also maintained some strong relationship with marquee customers like Uflex and Reliance. How do you plan on adding on to this customer base?
Khushboo Chandrakant Doshi: We have a very good customers in our portfolio like Constantia, Reliance, Synthetic Packers, all those big giants and all the raw material suppliers even like IOCL, HML and all those.
So why could we acquire them as a customer? Because whatever the solution they were seeking as far as the new technology was concerned we could brought that on a table and to further enhance our approach towards any customer is to understand their need. We believe in having the complete understanding about the customer’s need and design the solution according to their need and the budget. Instead of selling the machine our approach would be more of a consultative where we can offer them the right solution according to their requirements and this is what the strategy is going forward as well.
Stacy Pereira: Looking at your financials there seems to be some strong growth even despite all those economic cycles that we’ve been through. How did Rajoo actually navigate through major disruptions like in the 2008 financial crisis and even more recently in the pandemic?
Khushboo Chandrakant Doshi: Of course as we all know that every business has ups and downs and of course the time during 2008 probably was the tough time for every small and large industry where there was a recession and we also face a lot of challenge in the survival and as we know that COVID has impacted the entire world and Rajoo was not excluded from that but the idea is to see the opportunity in every adverse situation. Every adverse situation can get you the better opportunity and if you pick the opportunity at the right time and then probably we can get out of the situation and that is the same thing happened even during the COVID.
In a shortest period of time we developed the mask making machine in and we helped people having the machine which has not only improved our internal cash flow but also given the solution to our customers to fight with the COVID where everybody was I mean not aware of what the situation is and how to you know cope up with the situation. So in whatever best we could do we done during those time and then the life was beautiful after COVID because it has also increased the market. The market of flexible packaging has gone up and it was growing at the 15 percent so that has also contributed at a large extent in the growth story after COVID.
Basically as I mentioned that every adverse situation get us the good opportunity and that’s what we keep looking for even in the bad times.
Stacy Pereira: Given your journey from a single product company to offering 26 plus products across six segments what is your vision for Rajoo’s next phase of evolution?
Khushboo Chandrakant Doshi: Being a plastic extrusion machinery manufacturer we would still like to do our part for the industry as a whole and so our more focus would be on the product which is more give you a recyclable solutions that’s where the entire world is looking at and we would keep developing the products considering the recyclability in the plastic and sustainability for the business.
Stacy Pereira: Now as a family managed professional business how do you balance maintaining the core values that built Rajoo while bringing in professional management practices?
Khushboo Chandrakant Doshi: We have a mixture of family members and the professionals in the business and we have a very nice drafted all sorts of policies and procedures in a place which is already implemented on all sorts of professionals as well and the family members as well.
While both the team work hands-on hands having some sets of rules regulations and policies it gives a very good diversified management bandwidth which enable Rajoo to you know take which enable Rajoo for the newer heights so this is something which is very important when the family business runs our family businesses are being handled by the promoters and the professionals sets of rules should be equal for all of them.
Stacy Pereira: Could you also tell us about the key people helping you execute your vision within the management team? What roles do they play in helping you achieve the company’s goals?
Khushboo Chandrakant Doshi: We have a good management a mixture of a first generation and a second generation so those key people who have spent more than 30 years with the company they are still with us as a mentor and advisor role and so I mean I would not hesitate to take the name of those people we have Mr. JT Jalawadia who used to be a CFO and now is in a mentor role then we have our Mr. Sunil Jain who is a president and executive director of the company and guiding us from last more than 25 years then we have Mr. R N Doshi who is the group chairman and who has started this company way back in 1986. He is still there available as an advisor mentor and as a resource and this this and apart from these three we have many more employees who has worked with the first generation and now almost at our age of retirement but serving us as a mentor and advisor so the board has a good mixture of the young of the young people who has a lot of energy and then experienced people who has an experience in channelizing this energy so it’s a good mixture and all put together everything its they are really helping us to align our vision with the existing team members and the newcomers as well.