Meet Packaging Streamlines Cash Flow, Prepares for Unexpected Expenses

A packaging business in Gujarat sails through uncertain commodity pricing and working capital shortage issues with C2FO’s Early Payment platform.

The ever-growing packaging market in India is pegged at registering a rising compound annual growth rate (CAGR) of 26.7% between 2020 and 2025. (1) The industry, besides promising significant headroom for growth, serves as a crucial element in the supply chain of various manufacturing sectors. In recent years, the packaging industry has also been playing an important role in adding value to goods and products by driving technology and innovation.

Raw material procurement, infrastructure acquisition and maintenance are vital processes in this business. Managing fluctuating raw material prices and recurring expenditures on infrastructure maintenance and manpower are central to the success of an enterprise in the packaging industry, and it requires a smooth flow of working capital. This is exactly where C2FO with its innovative working capital solutions comes into the picture.

Dinesh Patel’s entrepreneurial journey with Meet Packaging

Born in a farmer’s family from Mehsana in Gujarat, Dinesh Patel is the eldest of four brothers. He began his career with a trading firm based out of Ahmedabad, where his work often brought him to the industrial town of Ankleshwar. It was there in 1992 that Dinesh started his journey as an entrepreneur by entering the trading business of raw materials for the plastic packaging industry.

Dinesh is a traditional businessman with a prudent approach to expenditure and strong financial discipline. He strongly believes that a major portion of the earnings from a business should go back into the business for growth and expansion. Owing to his deep focus on efficient financial management, Dinesh was able to derive maximum profits from his business, using the available resources strategically. As a result, he managed to scale up the turnover of his business by 50% in four short years.

The turning point in Dinesh’s journey came in 2010, when he chanced upon a sick packaging unit in an industrial zone at Palej, Gujarat, not very far from Ankleshwar. He seized the opportunity and acquired it at once. This unit was restructured, renovated, rebuilt and today stands as the factory setup of Meet Packaging. It spreads over 3,000 square meters and is equipped with state-of-the-art machinery and infrastructure.

The establishment of Meet Packaging was a calculated and planned move by Dinesh, as he had carefully considered the high potential for growth and expansion in the packaging industry. It was a sector where Dinesh could leverage his knowledge of the raw material markets of the plastic packaging industry.

Today, Meet Packaging, with its two units in Palej and Ankleshwar, creates packaging products such as fertilizer bags, salt and chemical bags, soda ash bags, and a host of other storage bags with different specifications and product-specific guidelines.

The association with Tata Chemicals and C2FO

Dinesh imbued Meet Packaging’s operational culture with goodwill. Goodwill, according to Dinesh, is a direct result of doing ethical business, standing up to financial commitments, being true to the quality of your goods, and addressing the needs of your customers, employees and business associates. 

He attributes Meet Packaging’s association with Tata Chemicals to the goodwill that he generated in his early entrepreneurial years with his business associates. Meet Packaging has been a supplier to Tata Chemicals since its inception, and currently Tata Chemicals accounts for about 15% of Meet Packaging’s total business.

The Tata Chemicals procurement team introduced Dinesh to C2FO. The supplier relationship manager (SRM) from the C2FO team explained the benefits of the platform to Dinesh. The one factor that led Dinesh to opt immediately for the Tata Chemicals-C2FO Early Payment Program was the control that it brought for Meet Packaging’s credit line and accounts receivable. 

The power to select an invoice of its choosing and get paid early meant that the program could become a part of the larger financial strategy that Dinesh had in mind for Meet Packaging. It also meant that several regressive factors that affected the market, and thereby Meet Packaging’s prospects, could be managed with greater efficiency and flexibility. In C2FO, Dinesh had found a tool that synced harmoniously with his principles of financial planning and discipline. 

Solving challenges with C2FO

Constant volatility in raw material costs is the major restraining factor on the growth of the packaging business. So, while commodity pricing fluctuations are common in the industry, the payment for these commodities must be made immediately in most cases. Meet Packaging, therefore, makes all payments against its raw material procurements in advance or upon delivery on a nondeferrable basis. On the other hand, the company must plan for and adjust to the longer payment terms of its clients. These credit periods usually range from 45 to 90 days. 

Infrastructure maintenance and machine breakdowns are challenges that mostly come unannounced and the resolution of which is indispensable for business. There are also the nonnegotiable and recurring utility, manpower, logistics and other administrative costs, which are bound by time, and any delay in their disbursement is practically out of question. The COVID-19 lockdown-induced challenges further added to the troubles, adversely affecting Meet Packaging’s orders, income and cash flow. 

Dinesh realized that the solution to all of the above problems was the infusion of fresh working capital, and he found C2FO to be the best option. The fund augmentation through C2FO’s Early Payment platform resolved these challenges without impacting Meet Packaging’s credit portfolio and turned the revenue cycle in its favor. 

Dinesh uses the C2FO platform judiciously and precisely to Meet Packaging’s cash flow requirements. He accesses the platform on his mobile phone and finds the interface extremely user-friendly. He keeps in regular touch with his dedicated C2FO SRM, who is there to troubleshoot or explain the process to him whenever required.

The road ahead with C2FO

Dinesh believes that ups and downs are part of any entrepreneurial journey, but good intent, self-discipline and management champions a business in trying times. Dinesh was looking for a sustainable solution for the pressures of working capital needs, and C2FO suited his needs to perfection. With the early payment advantage facilitated by C2FO, Meet Packaging managed to maintain a balance in its payouts and income. 

Despite the challenges, Dinesh believes in providing fair quantity, good quality and optimum service to clients. He also feels that not compromising on these values has paid off significantly for Meet Packaging. With C2FO on its side, Meet Packaging has found a way not only to regulate its recurring, as well as unforeseen, expenses and also to plan to accelerate its expansion in the times to come.