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DHAVAL PACKAGING LIMITED

Dhaval Packaging Limited - Related Party Transactions

Introduction

Based on the Prospectus dated July 23, 2026, and subsequent filings, here are the “Related Party Transactions” (RPT) details Dhaval Packaging Limited.

Business Model Operations

Business Model: The company manufactures and trades plastic packaging materials, specifically In-Mold Label (IML) containers and SAW pipe protection plastic caps (End Caps) for industrial and FMCG clients.


Advances from customers: Yes, the company reported ₹53.22 lakhs in "Advance from Customers" as of March 31, 2026.


Comparable peers: The identified listed industry peer is Mold-Tek Packaging Limited.


Raw material consumed: Primarily polymers such as Polypropylene (PP), High-Density Polyethylene (HDPE), and Low-Density Polyethylene (LDPE).


Sourcing (Domestic vs. Imports): Sourcing is predominantly domestic (93.29% in FY 2025-26), with imports accounting for 6.71%.


Level of volatility in raw material prices: High volatility, as prices are influenced by international crude oil and demand-supply dynamics. For example, the price of PP rose from ₹97.81/kg in FY 2024-25 to approximately ₹150.00/kg in June 2026.


Key raw material vendors: The top 10 suppliers account for 88.31% of total purchases. Specific names are not disclosed for confidentiality.


Key factors affecting business: These include raw material price fluctuations, geographic concentration in Gujarat, and the performance of end-use industries like FMCG and Oil & Gas.


Competitive & Regulatory Landscape: The landscape is shifting toward automation and quality-driven standards. Regulatory focus includes environmental norms for plastic use and safety standards like FSSAI for food packaging.


Total Addressable Market (TAM): Focused on FMCG, Dairy, Food, and industrial segments like Oil & Gas and Infrastructure.


Key competitors: Includes large-scale domestic and multinational players, with Mold-Tek Packaging specifically cited as a listed peer.


Order book: While a total value isn't given, the company relies heavily on repeat business, with ₹4,792.23 lakhs (73.69%) of FY 2025-26 revenue coming from repeat orders.

Financial Performance Health

Balance Sheet health: Total assets grew from ₹3,370.44 lakhs in FY 2023-24 to ₹6,642.35 lakhs in FY 2025-26. The debt-to-equity ratio improved from 4.70 to 0.78 over the same period.


Operating cashflows: Generated ₹673.92 lakhs in FY 2025-26, up from ₹434.71 lakhs in FY 2024-25 and ₹65.71 lakhs in FY 2023-24.


Customer concentration: High; the top 10 customers account for 51.27% of revenue in FY 2025-26.


Domestic vs. Exports mix: Revenue is heavily domestic (98.73%), with exports accounting for only 1.27%.


Total Debt raised in last 3 years (Financing Inflow): ₹1,436.46 lakhs in FY 2025-26, ₹1,767.17 lakhs in FY 2024-25, and ₹1,109.66 lakhs in FY 2023-24.


Capital Expenditure incurred: Totaled ₹1,415.95 lakhs in FY 2025-26, ₹1,075.66 lakhs in FY 2024-25, and ₹410.70 lakhs in FY 2023-24.


Return on Capital (RoCE): Reported at 22.58% in FY 2025-26, 25.28% in FY 2024-25, and 12.38% in FY 2023-24.


Asset turnover: Fixed asset turnover was 2.57 in FY 2025-26, down from 3.36 in FY 2023-24.


Debtors age analysis: As of FY 2025-26, 81% of trade receivables (₹673.39 lakhs of ₹830.74 lakhs) are outstanding for less than 6 months.


Sales, EBITDA, and PAT Trends: All are increasing. Sales grew from ₹4,799.32 lakhs (FY 2023-24) to ₹6,503.18 lakhs (FY 2025-26). EBITDA rose from ₹498.79 lakhs to ₹1,392.55 lakhs, and PAT increased from ₹155.11 lakhs to ₹803.89 lakhs.


Margins: Increasing. EBITDA margins rose from 10.39% to 21.41%, and PAT margins rose from 3.23% to 12.33%.


Growth breakdown: Growth is driven by capacity expansion (up to 8,400 kg/day), improved utilization (reaching 90%), and high growth in the End Caps segment (+46.22% in FY 2025-26).


Cash Flow and Conversion Analysis (₹ in lakhs)


Trend Analysis: The EBITDA to Cash flow from operations conversion percentage is steadily increasing, rising from 13.17% in FY 2023-24 to 42.53% in FY 2024-25, and further to 48.39% in FY 2025-26.


Key Insights:

  1. Free Cash Flow: The company has reported negative free cash flow across all three years. This is primarily because the net cash generated from operations was insufficient to cover the substantial capital expenditures required for the purchase of fixed assets, intangible assets, and ongoing construction of new manufacturing facilities.
  2. Conversion Growth: The significant improvement in the conversion percentage indicates that a higher portion of the company's EBITDA is being successfully converted into actual operating cash, suggesting improved working capital management and operating efficiency over the period.
  3. Capital Intensity: The negative FCF reflects the capital-intensive nature of the business, where continuous investment in expansion and modernization is required to sustain growth

Risks Management Outlook

Key risks: High customer concentration (Top 10 = 51%), supplier dependence (Top 10 = 88%), raw material price volatility, and concentration of manufacturing facilities solely in Gujarat.


Red Flags:

  1. NCLT Proceedings: Pending petition for voluntary revision of financial statements (FY 2020-2023) due to clerical errors and missing disclosures.
  2. Statutory Delays: Historical delays in filing GST returns and depositing PF/ESIC dues.
  3. Negative Free Cash Flow: Reported negative FCF across all three years due to high capital expenditure.
  4. No Orders Placed: As of the RHP date, the company has not yet placed orders for the ₹2,093.47 lakhs in machinery proposed for the expansion.


Growth Plans: Establishing a new manufacturing facility (Unit E-552) in Sanand-II, Ahmedabad, and increasing IML share in core food/FMCG categories through automation and premium geometry.


Government Intervention: Subject to evolving plastic waste management and environmental regulations, which may shift demand toward biodegradable alternatives.


Management Outlook (Structural vs. Cyclical): Management views the shift toward high-quality, automated packaging standards as a structural transformation in the Indian market. Demand in the IML segment (FMCG/Food) is generally stable, while the End Caps segment is more sensitive to cyclical project ramps in oil, gas, and infrastructure.


Disclaimer

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