Jyoti Global Plast CFO, Karan Shah shares the company’s journey from a family-run packaging business to entering the high-margin defense and aerospace sector, leveraging decades of molding expertise. With strategic partnerships, FRP capabilities, and a new manufacturing plant in the works, the company aims for rapid expansion.
Mubina Kapasi: Hello everyone and welcome to Small Cap Spotlight. I’m Mubina Kapasi and today we have with us a company that is in the business of manufacturing plastic products. They are into injection molding and now they are making a very interesting foray in the sectors of defense and aerospace.
The company’s name is Jyoti Global Plast and I have with me the CFO of the company Mr. Karan Shah. Karan, hello and thank you so much for joining us on SmallCap Spotlight. I think to begin with, could you give our viewers an introduction into the company, the evolution of Jyoti Global Plast.
I think it was incorporated back in the 1990s as Jyoti Industries. Then there was also a decision to rename from Jyoti Polycontainers to Jyoti Global Plast. So could you tell us through this entire journey and walk us through it?
Karan Shah: First of all, thank you so much for having me on the show with you.
Really looking forward to the session. So as you rightly mentioned, we are Jyoti Global Plast Limited. The company was started by my grandfather in 1990s.
So we started out of a small unit in Maharashtra. We were doing packaging solutions for a B2B customer using blow molding techniques. Soon after my father and my uncle joined the business.
So that was the second generation of business. We set up our first big manufacturing plant in Navi Mumbai in 2003-04 and that is when we got incorporated as a private limited company. So we were called Jyoti Polycontainers Private Limited.
So from 2003 to 2020, we focused on expanding our packaging range, providing entire solution across the spectrum. In 2020, I and my brother, my cousin, we joined the business. So that was the third generation in the business.
And that is when we decided that we wanted to expand and diversify into products that give us better margins, I would say. So that is when our new journey began. And the first step that we took in that journey was rebranding ourselves as Jyoti Global Plast Private Limited.
So we did that in 2022. The goal or the vision behind the rebranding was that we wanted to make our name more universal, more global. So we changed our name.
And recently, as you rightly mentioned, we have expanded into the defense and aerospace sector and are actively focusing on that. So if I had to just summarize maybe in a single line. So we’ve begun the transition of our company from a packaging company to a defense and aerospace company.
Mubina Kapasi: You know, that’s a very interesting journey. And I’m going to talk to you a bit more about that. But before that, Karan, you mentioned that you joined the business about a decade or ago.
Let’s hear a bit about you, you know, your career path, what did you study, what prompted you as well, and what interested you the most about the business?
Karan Shah: Yeah, so just to give a brief background about me, I’m a chartered accountant by qualification. So I cleared my CA exams in 2017. So prior to becoming a CA, I was working at a CA firm for three years.
Post clearing, I joined a defense and aerospace company. So I worked there closely with the managing director for a couple of years. So that is when my journey and my interest in the defense and aerospace sector arose.
So post working there for a couple of years, I went to USA, I went there for a year to study entrepreneurship. So I’ve done my master’s in entrepreneurship from Babson College in Boston. Post completing that I moved back to India in 2020.
And since then, I’ve been in the family business.
Mubina Kapasi: Okay, very interesting journey indeed. And the fact that you have experience in defense kind of explains the foray. And that brings me to my next question, because I’m particularly interested as to how a company that, you know, manufactures primarily plastic products, you know, talk about jerry cans, other containers, even injection molding products, moves into defense, because when you speak about defense and aerospace, obviously, the requirements are more stringent, more focused. So I would just like to know how that segue is going. Could you share a bit of light on that?
Karan Shah: So there are multiple reasons why we forwarded to defense and aerospace.
The first one being as I answered your previous question, I have an experience in the defense and aerospace background. So I have my connects in that sector, as I would say, plus I have an experience of working in that sector. So that definitely helped.
Second being, we are in the blue and injection molding business for the past 35 years now. So we have created our own expertise in that sector. And we are providing solutions and components, I would say, using the technologies and infrastructure that we have built and developed over the last three decades or so.
So this is basically a natural evolution for us using our expertise, building on that and pivoting to a sector which has a better margin, I would say. So you’re confident of the manufacturing capabilities as well, having synergies with the space, the defense and aerospace industry.
Mubina Kapasi: I’d like to understand that, you know, you’ve mentioned that there are some partnerships with Indian defense company, with a big market trap and a US-based company.
Could you elaborate on those partnerships a little bit?
Karan Shah: So, yes. So without naming them for obvious reasons, we’ve been associated with these companies for the last couple of years. We’ve been extensively working with them, understanding their deliverables, their requirements.
So we were involved in the R&D stage. We were involved in the prototyping, testing, auditing, quality checks. And we were finally able to get through and we were finally able to get firm orders from them, which I’m proud to say we’ve started executing from the current financial year.
Mubina Kapasi: Let’s talk about the capabilities that you have in FRP, Fiber Reinforced Polymer Manufacturing. I understand that that’s something that gives you some sort of competitive edge when it comes to defense applications. Could you elaborate on that?
Karan Shah: So FRP is one of the critical raw material that is used in molding of components for defense and aerospace.
So we’ve used our knowledge in blue and injection molding to start providing components which are made out of FRP. So for that, we have specially imported machinery. We’ve built a team that knows how to operate that machinery.
And we are well-versed with the technical parameters, I would say, and the quality checks that are required to achieve success in the FRP molding process.
Mubina Kapasi: I understand you’ve already secured like 20 crores worth of orders, I think, in the defense and aerospace industry. So if you could tell us what’s the strategy for scaling it up further, this part of your operations? And maybe in the next three to five years, is there a target that you are looking to achieve in terms of contribution from this space? Because it’s clearly a high margin area.
Karan Shah: So for that, as I was mentioning earlier, we’ve imported specialized machinery for that. We are already building a team and we’ve already built and we are growing that team, which specializes in these areas. Also, one of our IPO proceeds is going to go towards setting up our latest manufacturing plant.
So we will be infra-ready as well in terms of whenever there is a need to grow and expand, we’ll have the infra-ready with us as well.
Mubina Kapasi: Any revenue targets that you know you’re perhaps looking to achieve from this space that you can share with us? So we are still working on that and internally we know what we are going to achieve and we are working towards that. You’re also, of course, manufacturing drone components, anti-drone systems, RF connectors.
If you could tell us what sort of capacities you have to manufacture there?
Karan Shah: So for the drone components and RF connectors and all, we need a mix of different raw materials to manufacture the same. The most basic one being the SDP-PP granules and the most critical and extensive one being FRP. So there’s an entire spectrum and depending upon the criticality of each component, we decide the raw material and then the eventual molding process for the same.
Mubina Kapasi: How do you differentiate Jyoti Global Plast from other competitors in the plastic molding industry? If you could shed a bit of light on that.
Karan Shah: So there are a few factors which I would like to share with everyone. One being our extensive experience in this field for the last 35 years.
The second being we have a dedicated quality setup inside our organization right from testing of the raw material to the finished product. Our plants are automated with conveyor systems. We provide value-added services such as stickerings, sleeving, automatic testing, printing, which can be automatic manual.
We have our own fleet of six trucks for logistics. So these are a few of the factors which gives us a competitive edge in the market, I would say.
Mubina Kapasi: Okay. I understand that you’re expanding, you mentioned a bit as well. You have an expansion MIDC, Mahadraigar. If you could tell us how does this geographic expansion align with your long-term growth strategy?
Karan Shah: The reason for choosing Mahadraigar, there were multiple reasons. First, we wanted a bigger space as compared to our existing setup. So we were able to procure that in Mahadraigar. Also the facilities situated in MIDC area, which will give us access to all the infrastructure facilities that comes with being situated in an MIDC area, I would say.
Also, strategically, it is located close to the JNPT port as well as the airport. So that would help us with the logistics. So these are a few of the reasons why we chose Mahad as a location for our expansion.
Mubina Kapasi: All right. Now, of course, you are, I understand, also investing solar power infrastructure. Could you shed some light on the reason behind that?
Karan Shah: Yeah. So in the molding industry, I would say the second highest cost driver after the raw material cost is electricity. So by installing a solar power plant, we’ll be able to bring down our electricity costs significantly, which in turn will add to our bottom line. Also, this is our way of doing a little bit for the environment since we are involved in the business of plastic and FRP.
So this is our little contribution towards the environment, I would say.
Mubina Kapasi: So just to summarize with the fresh funding that you will receive from the IPO proceeds, could you just summarize where all would it be invested? I know you mentioned a little bit that you’re putting some of the money in a new plant, but if you could just summarize what growth initiatives would this IPO fund?
Karan Shah: So the major expense or the major utilization of this fund would be towards setting up of our Mahad plant. So this is poised to be our biggest plant till date.
We’ve already procured the land and basic construction work on it has already begun. The rest of funding for the project would come from the IPO proceeds. So that is one utilization of the fund.
Second, we are setting up a solar power plant, as I mentioned earlier. So this will be set up in Nashik district in Maharashtra. And the capacity of this plant will be 2.4 megawatt.
So this will give us substantial saving in the bottom line. And a little portion of our IPO money would go towards repayment of our existing terminal. So these are the three main objects that we are proposing to fund out of our IPO money.
Mubina Kapasi: You know, you run the business on a day-to-day basis. I’d like to know what are some of the challenges you’ll face in the day-to-day operations and also if there are any risks you foresee to the industry?
Karan Shah: So the first and foremost challenge I would say is associated with the raw material itself since we are in the plastic industry, I would say. So there’s that threat of using plastic always.
And to mitigate the threat, we have, I would say, successfully broadened our spectrum or our offering. And now we are no longer just offering plastic solutions, but we have included FRFE solutions in our basket as well. So this is one challenge that I would say.
Second would be to get approvals in the defense and aerospace sector since we are going to be expanding into that sector. So again, I would say that we’ve put in years of our expertise and I would say the trial testing research and development phase. So we have a pretty robust infrastructure when it comes to expanding into the defense and aerospace sector.
So these are a couple of challenges that I would foresee and the ways how we’ve mitigated them to an extent.
Mubina Kapasi: I’d like to know what is it like in terms of raw material price volatility, because like you mentioned, raw material is obviously a very big chunk of your cost component followed by electricity. So could you tell us how do you deal with the changes in commodity prices?
Karan Shah: So in our industry, the general pricing trend for the finished product is that it is based on raw material plus plus basis.
So whatever fluctuations are there in the raw material prices are passed on to the customer. So that is the general industry practice and historically, we’ve been able to do that successfully.
Mubina Kapasi: Let’s talk about the fact that right now, a big chunk of your revenue does come from Maharashtra.
So any plans to go beyond Maharashtra and of course, you have defense, which is a national source of revenue for you. But any plans for the regular business to go outside of Maharashtra?
Karan Shah: So our regular packaging business, I would say is a volumetric business. Basically, the logistic cost involved in transporting the drums and containers are quite high.
So you need to be closer to the customer. Hence, since our manufacturing plants are based out of Maharashtra, our major revenue also comes from this region. The sole reason for this is that you need to be closer to your customer in the packaging business.
Mubina Kapasi: I’d like to understand from you what excites you most about Jyoti Global Plast Future Prospects?
Karan Shah: So as I would like to summarize, now, so we’ve built the foundation successfully over the last 35 years. Now is our time to grow and use that base that we’ve already created. And as I started our talk, I would again like to conclude by saying the same thing that we have successfully started our transition from a packaging company to a defense and aerospace company.
Mubina Kapasi: Could you share what you’re trailing 12-month revenue at Patward and also if you have any five-year, 10-year milestones that you would like to achieve for Jyoti?
Karan Shah: Last year’s figures were, we closed our top line at 93.48 crores and we’ve achieved a bottom line of 6.08 crores. The company has targeted that, okay, in five years, we would like to hit a top line and a bottom line of a certain figure. Anything that you’d like to share there? So again, we’ve discussed it internally and we would like to keep it that way, yes.
Mubina Kapasi: Could you tell us a bit about your team, the number of employees you have, the top management who is helping you in achieving your vision for the company?
Karan Shah: I mentioned I’m the third generation in the business. The first generation, my grandfather, he’s still a part of the business. So he’s our mentor and guide, you could say.
The second generation, my uncle and my father. So my uncle, Mr. Hiren Shah, is the managing director. My father, Mr. Deven Shah, he’s the chief executive officer and whole-time director.
My cousin, Mr. Saryam Shah, he’s our chief marketing officer and I’m the chief financial officer. In addition to that, we have a very strong tier two team ready. So this is a brief about our structure.
Mubina Kapasi: Karan, we’ll leave it at that. Thank you so much for joining us today and sharing your vision and the story behind Jyoti Global+. Thank you so much for having me.
It was really nice talking to you. Thank you so much. Well, there you go.
That’s Karan Shah of Jyoti Global Plast. Remember that this platform only serves as a channel for you to hear a company’s story and their vision. If you’d like to invest, please do so at your own risk and always consult a financial advisor.
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