Anujeet Darade of Atharva Polyplast shared how the company is evolving from a traditional injection moulding manufacturer into an engineering-led solutions provider, working closely with global OEMs from product design to finished components. He also highlighted the company’s focus on premium segments, value-added manufacturing, and strengthening engineering capabilities to drive long-term growth and margin expansion.
Hello everyone and welcome to SmallCap Spotlight. I’m Mubina Kapasi and today we are joined by a company that manufactures products that we all use in daily life, right, from chairs to other small plastic equipments and big as well. The company we’ll be speaking with today is Atharva Polyplast and I have with me the Managing Director, Anujeet Darade, who’s joining us on the show.
Thank you so much for joining us, Anujeet. To begin with, if you could explain the products and the solutions as well, in fact, that the company provides. What exactly is the key business of Atharva Polyplast to a viewer who is listening to you and hearing of your company for the first time?
Anujeet Darade: Okay, yeah, thank you, Mubina. Thank you for giving us an opportunity to be here. So Atharva Polyplast is a precision polymer engineering company where we actually manufacture high quality and complex components and assemblies to top global OEMs. So we position ourselves as one-stop solution provider where we support our customers right from design concepts to finished products.
We are majorly operating in three important verticals. One is the premium office furniture industry, engineering solutions and home appliance sector. So our focus is on building long-term partnership with the clients in this sector.
Mubina Kapasi: Okay, what has been your own journey with the company? You know, we’d love to hear your story. Where did you begin first or was Atharva Polyplast the first, you know, step as well for you in your professional career? If you could tell us a bit about your own background?
Anujeet Darade: Yeah, so I’m a polymer engineer by profession. So plastics is the one thing that we understand completely.
So my father was also in the plastic business for a long time and this is when we started Atharva Polyplast in the year 2014. So the journey so far has been both challenging and rewarding at the same time. We started, we were just another basic injection moulding company and as a vendor to a major domestic home appliance OEM.
So the initial years they kept us occupied, you know, with heavy groundworks like achieving operational stability, understanding what our customer expectation is from us and trying to deliver those. But the next phase was about creating strong processes in the company, strong systems and most importantly building a high qualified team. So as we evolved, we strategically, you know, tried to move up the value chain by partnering with higher value-added clients.
So this is where actually where we could, you know, leverage our design and engineering capabilities also. Today we see ourselves not as manufacturers but solution providers to these global OEM partners by delivering more integrated and technology-driven solutions. And honestly speaking, I can say our journey has just started.
Mubina Kapasi: You know, the industry that you operate in, polymers and plastic, it’s very competitive and there are very few barriers to entry as well. Of course, having said that, demand is there because the industries that you’re talking about that you cater to. But what would you say would be your mood that sets you apart from competitors?
Anujeet Darade: Yes. So basically, you said it very rightly, the basic plastic moulding industry is relatively straightforward. You know, you just go and invest in machines and start manufacturing parts as per the customer requirements. So it’s a no-brainer.
The customer takes over your business, all the aspects of your businesses and you just become a contract manufacturer in the long run. So basically, a large part of the plastic injection moulding companies, they still operate in this category, what we call as the basic injection moulding. This is a highly competitive and very low margin industry.
Even we started similarly in our initial years. But like I said, being a polymer engineer myself, I always had this clear vision of moving beyond this conventional moulding and building a engineering-driven organisation. Like you said, plastic itself is a very large field and there are countless product opportunities.
But if you study the most successful companies in this domain, one thing is clear, long-term success comes only when you focus on your niche. This is exactly what we are doing. We found our niche in the high engineering segment, the premium segment that we are doing business with and we are consciously investing in building a high qualified team and strengthening our engineering capabilities so that we move away from the competition.
So our most important or the differentiating factor is that we just don’t manufacture parts for our customers. We try to co-develop products with them. While most of the competition is still operating in silos, we are giving our customers an integrated end-to-end manufacturing solution.
In fact, we are engaging with our customers right from the product design stage itself. So that is our biggest mode. This is where our stickiness in the business comes from.
Positioning ourselves as a long-term development partner, not just as a vendor. And one thing we have understood is that in the future, the customer is going to choose the vendors who are able to solve his manufacturing problems. And this is what exactly we are trying.
Mubina Kapasi: Yeah, almost like mass customisation of sorts. But yeah, you’ll be working more specifically with customers and their projects and their needs. So you’ll be customising.
Anujeet Darade: Yeah, basically what we are providing the customer is our engineering capabilities. See, manufacturing is not very difficult. Manufacturing can be the most easiest part of our business.
You know, the most difficult part is to get engaged with the customer right in the stage where he is designing his own product. Currently, we are co-developing products where the customer has given us just concepts. So our designers are actually working on those concepts to bring that concept into reality.
And for that, we have a complete integrated platform. So right from his concepts, we can actually make models, we can make soft tools, we can make prototypes. After that, we can go into tooling phase, we can make precision toolings for that.
And then comes the manufacturing part. So the, you know, the services that before the manufacturing part, this is what we are trying to evolve into, you know, provide those engineering package to the customer, where we can differentiate ourselves and add more value to the customer.
Mubina Kapasi: You know, you mentioned that when you started off, of course, it was your, you know, it was a manufacturing firm, you used to manufacture your standard plastic products and through injection moulding. And now again, like you already said, manufacturing anybody can, you know, do it’s not that hard. You’re adding that design element, the more cerebral element to it by working so closely with your clients, you know, designing, etc.
But I want to know what kind of challenges are you going to encounter here, especially in terms of finding the right kind of engineers, the right kind of talent? Or do you think that journey has been easy? Or is there any other challenge that that you face on a day to day basis as you try to move to the next step and take the company to the next level?
Anujeet Darade: Like I said, we have already done the hard part. That is, you know, building this, the foundation of the company we have already, you know, over the years, we have tried our level best to have the most qualified team into our company, so that they can, you know, add more expertise to the engineering segment that I’ve been focussing or I’ve been discussing this. So the challenges that I foresee coming forward is that we need to retain and invest more into this design and engineering aspect of our business model. So this is where we are going to focus going forward.
And like I said, the processes, the standardisation, the certification, the compliances, this all we have already established and this all we already have. So this is an entry barrier when we start approaching any MNC or a global client. The first entry barrier is that we should be compliant enough so that we become a part of their ecosystem.
So that the difficult parts we have already taken care of. Now, the challenge is to, you know, add more and more value in the engineering segment of our business so that the same value can be added to the customer’s products.
Mubina Kapasi: I would imagine there would be one more challenge at least right now that you may be undergoing and that’s procuring raw material, considering everything that’s happening in the world.
And at the end of the day, plastic is a crude derivative, crude oil derivative, sorry. So how are you? And yes, that’s what we always, when we speak to companies, we always know this much that this is not the first challenge. It’s not going to be the last either, unfortunately.
So what we’d like to understand is when such things happen and especially when your company is so exposed to what’s happening geopolitically, because your key raw material comes, you know, navigating through these geopolitical uncertainties. How do you sort of strive to tide over this?
Anujeet Darade: Yes, you are very right that plastic is a highly volatile material and that is the fact of our industry that we are operating in. It is largely influenced by the global geopolitical and supply chain situations.
Anywhere something goes wrong, the first thing to get affected is plastics. But you know, when I say that we are working with premium segment or we are working with high clients who have a very high brand value, pricing in fact comes secondary in their entire chain of operations. Also to mitigate the risk of these plastic fluctuations, whenever we finalise the commercial agreements, we ensure that a structured price revised mechanism is actually built into this agreement.
And these are, like I said, the MNC companies who also understand the situations and they also revise our pricing based on the market situations. But that is not the value that we are discussing here. Price optimisation and continuous efficiency in improvements actually remain our prime responsibility towards our customers.
However, beyond that, we generally don’t face any pricing pressure from these clients because the business that we are operating into is quite niche and increasingly focused on the engineering driven manufacturing rather than commodity products. If you see in the commodity products, these prices are immediately affected. They start hitting the margins.
They start hitting the bottom lines. And all the numbers are haywire whenever you’re operating in the commodity industry. But when you’re more into engineering driven manufacturing system, pricing actually comes secondary.
Precision and quality is always the primary drivers of this industry. And that is precisely why our long term strategy is to continuously move forward towards higher value and precision manufacturing where partnerships matter most rather than price.
Mubina Kapasi: So as you’re changing how the company would look and make it move more towards engineering solutions, how do you think your margin picture will change as well? Because you’re moving from your plain vanilla basic products to something that’s more customised, something that’s more premium, specialised, etc.
So how do you think this will impact and change your profitability?
Anujeet Darade: So to give you a fact from the last three years, what we are trying to do, we are trying to gradually migrate from being a basic company, basic company who is focused on just delivering components to the industry, rather than that we are focussing on graduating to a more engineering driven and design and development led manufacturing. So what we are trying to do is from the commodity sector, we are improvising on the premium segments. Slowly, steadily, we are increasing their revenue share in our total revenue model.
And this, in fact, you can see that our margins are exponentially growing. The higher the revenue share of these premium segment, the higher is the EBITDA margins that we can see. And this has been clear in our financial numbers as well.
Because what we are doing here is we are doing high value added products to them. And this value added products are being done in the same machines that were actually earlier being utilised to do commodity products. So when we actually have the same capex, the numbers that we are getting in terms of revenue and in terms of EBITDA, they are significant.
Mubina Kapasi: So right now, what’s the share like, you know, from a traditional products and your value added? And what do you hope to bring it up to in the next three, five years?
Anujeet Darade: Yeah, so when we started, we were actually doing 100% of business with a domestic home appliance client. Volume was very high, but what I can say the margins were not at par of what we were expecting. So when we started doing businesses with the premium segment categories, we slowly, steadily evolved ourselves.
So when from 100% of home appliance, currently we are operating at almost 50% of business revenue is coming from the premium segment. And going forward, what we want to do is we want to have almost 75% of revenue coming from these two segments, the premium office furniture, and the engineering segment that we have been talking about. And this will add more and more to the margins that we are talking.
Mubina Kapasi: Could you I mean, apart from the fact that of course, you’re looking at a higher mix of revenue coming from, you know, your value added products, could you also tell me what the overall picture of the company could look like maybe in terms of revenue is something that you’re perhaps targeting in the next, you know, three to five years, what level of revenues you’d like to achieve, perhaps what level of profitability also you’d like to achieve?
Anujeet Darade: So I will not focus more on the numbers here. But what I can say is that we have a long term vision to you know, transform our company into a highly respected global manufacturing company. So if you talk about the next three to five years, what we are focussing is on scaling our revenues definitely improving our margins, increasing more value added into the manufacturing that we are doing, you know, focussing more on exports and deepening our existing customer relationships.
So going forward, we also want to improve our engineering capabilities. And where we are actually, you know, able to innovate products, which will, in turn, add more value to our customers. So what we foresee is that the Indian manufacturing is at a very important stage where the next decade is going to be India’s decade.
So we also want to position Atharva as a part of this transformation story. So we are not just focussing on building big, but we are also focussing on, you know, defining or representing the new standards that the Indian industry will be offering on the global stage.
Mubina Kapasi: Is there something you can tell us about what your current manufacturing capacity is? And if there are any plans to increase it? To what extent? How so that you can also accommodate all these innovation, all the innovation that you will be doing with the products?
Anujeet Darade: So currently, we are operating on a 40,000 square foot manufacturing facility, which is built on a 2.3 lakh square feet of space.
Now, since we have only utilised one fourth of the area that we have, we have a significantly high headroom for expansion. So the ability to scale rapidly will come with relatively, you know, a low capex spent on the infrastructure. So in this manufacturing facility, we are operating 20 machines which are equipped with modern technologies.
But going forward, what we see is that our expansion strategy should be highly disciplined and closely aligned with the customer demands that we are foreseeing. So we have already planned the capex, which is going to be in a phased manner where we want to, you know, steadily expand our moulding capacity, the assembly operations, product portfolio, and obviously the quality infrastructures as well. So like I said, we are not very keen on being a volume driven game, but we want to, you know, get into the more value driven aspect of this business.
Mubina Kapasi: Okay. And of course, I know that you have a great team and a pool of talent now that will help you, you know, take forward the business. I’d like to know in the upper management as well, if you could share some names of the people who are helping you drive this vision in the leadership team or in your board of directors, etc, who are helping you drive the company forward, if you could share a little bit about that team.
Anujeet Darade: Yeah. So the core team member includes basically the family members of Atharva. So basically my father, he leads the strategic and the fundamentals of the business so that, you know, we can, he focusses more on the fundamentals where we plan to grow sustainably.
So this is what his focus is on the business. He still takes all the strategic decisions going forward. I am the managing director of the company, and I can say that I’m mostly responsible for the existing customer relationships and, you know, getting more of the business from the existing clients.
So I also have my brother who helps us in the business. He takes care of the finance and the export, or you can say getting the global customers on board. So the three of us bring all the collective experience that we have in our own industry to this, to Atharva.
And apart from that, we also have a very competent team in operations. We have Mr. Das who leads the operations from the forefront. And from Mr. Das, we’ll be handling a very qualified team of experts who will be taking all the operational aspects, will be driven by these team members.
Then we have, you know, in our office, we have our design, the project managers, the design engineers, the marketing managers, all these will be directly reporting to me. So we have actually segregated the business into two parts. One is the business development aspect where we, where we, you know, add more engineering value to the customer.
These will be the designers, these will be the project managers, the tooling engineers, the marketing managers who will try to bring more and more customers to visit us. And then there is the operational part of the business where whatever business we have converted, the team in the operations will ensure that we consistently deliver quality products to our customers every time we supply.
Mubina Kapasi: All right, great Anujeet. It was a pleasure talking to you. Thanks very much for joining us and introducing Atharva Polyplast. Wish you all the very best.
Anujeet Darade: Thank you so much. Thank you.
Mubina Kapasi: All right. Well, there you have it. That was Atharva Polyplast. Do remember folks that this interview does not constitute any sort of investment advice. Please conduct your own research or speak with a consultant before making any investment decisions. Thank you so much for watching. Don’t forget to hit the subscribe button to Small Cap Spotlight.