INDUSTRY STRUCTURE AND DEVELOPMENT
India is currently the worlds sixth largest economy and one of the fastest-growing
large countries, with an annual gross domestic product (GDP) growth rate of mid to high
single digit percentage, a momentum that is expected to sustain over the next five to ten
years. In purchasing power parity terms, India ranks third behind the United States and
China.
Domestic consumption, which powers 60% of the GDP today, is expected to grow into a $6
trillion opportunity by 2030. This consumption growth will be supported by a 1.4 billion
strong population that is younger than that of any other major economy. Household savings
have historically been high as thrifty and cautious Indian families put away more than a
fifth of their incomes for a rainy day. This buffer provides support to domestic
consumption expenditure even through challenging cycles in economic activity.
The vision for the future of consumption in India is anchored in the growth of the
upper-middle income and high- income segments, which will grow from being one in four
households today, to one in two households by 2030. The country, one of the last big
consumer markets, is still up for grabs.
Over the next decade, one of the biggest changes in India will be the coming of age of
liberalizations true children - the nearly 700 million people born through the late 1980s
to the 2000s. With a median age of 28 years, India is a nation of young working-age
persons who drive both income and consumption. It will continue to remain young up to 2030
with a median age of 31 years. These individuals will have grown up in a more open and
confident India and will not carry the cultural or economic baggage of their predecessors.
This is a generation on the move that aspires to a materially better life, backed by the
ability to spend and make it a reality.
One of the most challenging and exciting implications for companies in India is the
opportunity to shape consumption patterns - in terms of categories consumed, brands
purchased or ways of accessing products and information. Indias unique combination of
preferences, aspirations and prudence will require innovation specifically for this
market. A massive increase in internet penetration will lead to more than a billion
internet users in India by 2030.
Those who are more connected have a keener sense of what is "desirable" and
are willing to invest in more comfortable living - including a greater spend on household
durables and services.
The GDP growth in the fourth quarter has pushed up the full-year GDP growth of
FY2022-23 to 7.2%. We expect India to grow between 6% and 6.3% in FY2023-24 and have a
stronger outlook thereafter. In fact, if global uncertainties recede, we expect growth to
surpass 7% over the next two years.
Indias revival in consumer spending is likely to be driven by households that earn
more than a million rupees a year when the lockdown is lifted. Consumer sentiment survey
data suggest that while all income groups are worse off than they were earlier, richer
households are doing better than the rest on the sentiment front. These are the least
affected households and most likely with the best savings.
India is going digital and the pandemic has accelerated this shift. Even before the
COVID-19 pandemic, Indias e-commerce sector had begun to gain immense traction as people
swayed from physical shopping and gravitated towards online shopping. The pandemic
accelerated this adoption of e-commerce and India, today, is one of the fastest-growing
e-commerce markets in the world with an estimated 330 million online shoppers over the
past year.
Consumers are flocking online for almost all their needs - from groceries and
essentials to clothing and accessories. Moreover, goods that will come in useful during
long periods at home are seeing increased sales. Brands have been compelled to develop an
online presence even if they had none before. This has led to a massive spurt in Direct to
Consumer (D2C) brands.
The economy is now enabling people to cater to niche segments of consumers economically
and there is also a rise in digital entrepreneurs. Brands are also realizing the need to
approach consumers directly rather than going to marketplaces to build private labels.
Moreover, payment infrastructure and integration with multiple payment options and the
demand for niche products has led to the surge in the number of D2C brands.
PearlPET is the houseware brand of Pearl Polymers, the leading manufacturer of rigid
packaging and house ware products since its inception in 1971. We offer the widest range
of jars and bottles for usage in the kitchen, home and offices.
Now the Company is operating with its B2C Business segment only which is widely known
as PearlPET.
PearlPET is proud to be seen as a mark of quality in the minds of all our consumers. We
endeavor to give you a wide & unique variety of storage options to help keep your food
safe and hygienic using state of the art technology and precision engineering.
We are proud to have bought a new thought process to the Indian kitchen by making the
first safe, transparent, unbreakable, odorless plastic jars & bottles. We are now
expanding our range to include trendy steel, glass, biodegradable and other products.
We believe that our products should be safe for everyone to use from sneaking a snack
in the dark to drinking water on the go.
Our R&D Team have been provided with state-of-the-art CAD systems, along with
in-house mould development systems, by which a team of skilled and dedicated staff develop
new techniques to better serve our customers.
The success of our R&D Department has been realized through several packaging
awards, like the World Star, Asia Star, India Star and Plast Icons Awards that have been
awarded to Pearl Polymers Limited, both nationally and internationally.
Pearl has been the brand of choice for Kitchenware products used by end customers in
the market.
Consumers demand is increasing for more sustainable kitchenware products and will
continue to shape the industry and the answer is responsible products that offer
differentiated functionality while minimizing waste in the environment. PearlPET products
have been and will continue to be sustainable by using fully recyclable material.
RECENT DEVELOPMENT
The Indian kitchen storage market size was valued at INR 11.3 billion in 2021 and is
expected to grow at a CAGR of 10.5% from 2022 to 2028, reaching INR 24.1 billion by 2028.
The growth of the Indian kitchen storage market is being driven by a number of factors,
including:
• Increasing disposable income and changing lifestyles of consumers, leading to an
increase in demand for organized and functional kitchen storage solutions.
• Rising urbanization and nuclear families, leading to a decrease in the size of
the average kitchen, which is driving the demand for space-saving kitchen storage
solutions.
• Growing popularity of online shopping, which is making it easier for consumers
to purchase kitchen storage solutions from a wider range of retailers.
• Rising demand for sustainable kitchen storage solutions, made from materials
such as bamboo, wood, and recycled plastic.
Consumers want their kitchenware products to be hygienic, safe and at the same time to
look attractive. This development has led to healthy competition between the local
manufacturers to deliver innovative products, and as a result, the entire ecosystem is
gearing up for the change.
The industry is driven by key factors like rising population, increase in income levels
and changing lifestyles. Demand from the rural sector for products is being fueled by
increasing media penetration through the means of internet and television.
With advancement in technology and general awareness, the plastic sector in India is
well poised as most of the raw materials for making these products are abundantly
available in the country. Moreover, the per capita spending has increased tremendously,
leading to changing rural markets and a growing middle class who demand the best of
products. Various upgraded technologies are being used in industry.
OPPORTUNITIES AND THREATS
The Indian economy is the third largest in the world by nominal GDP and the fourth
largest by purchasing power parity. It is a rapidly growing economy with a young and
growing population. The economy is driven by services, followed by industry and
agriculture.
The following are some of the opportunities for the Indian economy:
• Large and growing domestic market: India has a large and growing domestic market
with a population of over 1.3 billion people. This provides a large pool of potential
consumers for goods and services.
• Young and growing population: India has a young and growing population, which
provides a large pool of potential workers. This can help to drive economic growth.
• Low-cost labor: India has a low-cost labor force, which can make it an
attractive destination for businesses looking to manufacture goods or provide services.
• Growing middle class: India has a growing middle class, which is creating demand
for new goods and services. This can help to drive economic growth.
• Increasing urbanization: India is urbanizing rapidly, which is creating new
opportunities for businesses in sectors such as real estate, retail, and transportation.
• Expanding infrastructure: India is investing in expanding its infrastructure,
such as roads, railways, and airports. This can help to improve connectivity and
facilitate economic growth.
The following are some of the threats to the Indian economy:
• Inflation: India has been facing high inflation in recent years. This can erode
the purchasing power of consumers and businesses and make it difficult for the government
to manage its finances.
• Rising interest rates: The Reserve Bank of India has been raising interest rates
in an effort to control inflation. This can make it more expensive for businesses to
borrow money and invest, which can slow economic growth.
• Weakening rupee: The Indian rupee has been weakening against the US dollar in
recent years. This can make it more expensive for Indian businesses to import goods and
services, which can hurt their profits.
• High unemployment: India has a high unemployment rate, which can lead to social
unrest and instability.
• Infrastructure bottlenecks: Indias infrastructure is not as developed as some
other countries. This can make it difficult for businesses to operate and can also lead to
congestion and delays.
The retail industry in India has emerged as one of the most dynamic and fast-paced.
With the constant entry of several new players across a variety of product categories and
retail formats, Indias retail market is expected to increase significantly. Organized
retail in India has been growing exponentially every year.
Houseware is a growing category in the Indian domestic retail market with an annual
growth of 25-30%. From the traditional to the modern society, across the globe, houseware
has always existed as a major product category in the marketplace. India has also
witnessed a major shift in buyer or consumer base for houseware products and it is no more
restricted to women.
Production of standard quality tableware, kitchenware, and general houseware, and
products in India is still very limited and hence, the market is also fed through imports.
There are hundreds of importers and distributors, who either import and sell under their
own brands or represent international brands in India.
With the evolving lifestyle of Indians, India has witnessed a major shift in the
houseware industry. Due to the high degree of urbanization, the proliferation of nuclear
families and technological advancement, there have been far-reaching changes in the nature
of houseware products. In India, globalization has also brought about significant changes
in cooking, serving and dining habits.
The complexity of the products also makes it necessary that husband-wife both engage in
the purchase of these products - be it kitchenware, cookware, tableware, kitchen
appliances, storage, cleaning or maintenance products, outdoor houseware, or travel goods,
one can see the drastic change in the market scenario. Most of the modern day houseware
products are now made by combining materials like steel, plastics, ceramics, glass and so
on. Hence the market classification is now less material-driven and more utility or
functionality-driven.
Aspirational demand across segments will also drive the consumption and consumer
spending upwards. Increasing number of nuclear families and their keenness to invest in
their own homes is leading to a consistent growth in the housing sector, which is bound to
push demand for houseware products. It will also push upwards the market for consumer
durables. With rising affluence, consumers are bound to move beyond functionality in their
purchases and will increasingly spend on lifestyle factors like design, trends, fashion
and aesthetics. All these factors create a potential market for entrepreneurs to tap into
and explore huge opportunities in India in manufacturing, retail, distribution and
imports. Retail will obviously be the biggest of them all.
Traditionally, houseware products were more utility-driven with a high focus on
functionality, labour saving and simplifying domestic chores. Today, such products are
already well accepted by consumers across all market segments. But the Indian houseware
industry missed the retail boom enjoyed by categories like apparel and food in India over
the last 28 years, as the majority of its products lacked good design and glamour of
branding. Retailers always identify retail space allocation with big brands and
well-designed products. As the houseware sector emerges in its contemporary avatar with
focus on good design, high technology, branding and glamorous presentation, retailers are
discovering a great opportunity in this segment as both unit prices and margins go up.
With the increased allocation of retail space as well as the entry of e.com players,
houseware business is poised for substantial growth.
The advancements in terms of product innovations and technologies in the market are
also expected to create strong investment opportunities for global players. Regulatory and
structural guidelines are expected to be the strongest restraints for the industry. High
input costs and environmental concerns are the major challenges, whereas fluctuating
demand patterns and advancements of alternative technologies are expected to be the
burning issues.
However, despite having a good growth potential, the industry faces many threats and
challenges. Some of the challenges are:
Environmental Consciousness
All of Pearls products are designed by keeping the environment in mind. We use fully
recyclable materials which are approved by the worlds leading certification agencies for
use.
With environmental awareness rising globally, there is a lot of discussion
biodegradable solutions.
However, there are teething challenges the market is facing in providing these
biodegradable solutions. The investment required for the research of these solutions is
high. This has limited the number of available eco- friendly options. Also, these
solutions come at an added cost which neither the industry nor the consumer is prepared to
absorb. This is making manufacturers wary of investing in the production that might not
fetch the markup price.
Stringent regulations
Stringent regulations imposed for plastic products may act as a restraint but to a
lower extent. Compliance with regulations is necessary as the smallest defect in a product
may lead to rejection of the product. It will also negatively impact the manufacturers
profit.
Some of the players present in the industry follow unethical practices to increase the
revenue by selling poor quality products which may look similar but are hazardous to the
environment.
Most of these challenges can be solved with technology, to form a tightly knit and
integrated system. However, with technology, an all-embracing approach would be necessary.
Every stage of the procurement process will need automation. Business leaders can empower
their teams with visibility of their supply chain in real-time. This would help them
absorb demand fluctuations faster.
India remains one of the most complex countries to manage and build businesses in. The
market requires an in-depth consumer understanding and is not only price and value
sensitive but also unorganized. Nonetheless, the Indian houseware markets potential and
growth aspect are appealing to major international players.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
Employees are the most important asset of any company. They are the ones who make the
company run, and they are the ones who contribute to its success. Employees are
responsible for providing the products or services that the company offers, and they are
also responsible for creating a positive customer experience.
Pearl is committed to creating a workplace where employees feel valued and appreciated.
We are doing this by:
• Providing competitive salaries, health insurance, paid time off, and retirement
savings plans.
• Offering opportunities to learn new skills and advance careers through training
programs and tuition reimbursement.
• Allowing employees to have a flexible schedule and to take time off when they
need it.
• Creating a respectful and supportive workplace where employees feel comfortable
and valued.
• Recognizing employees contributions through awards, public recognition, and
thank-you notes.
• Engaging employees in the companys mission and values by providing
opportunities for employees to share their ideas and to be involved in decision-making.
• Empowering employees to make decisions and to take ownership of their work by
giving them the freedom and resources to do their jobs effectively.
We believe that by doing these things, we can create a workplace where employees feel
valued and appreciated, which can lead to increased productivity, innovation, and customer
satisfaction.
We are committed to continuing to evaluate our practices and to make changes as needed
to ensure that we are creating a workplace where all employees feel valued and respected.
As on 31st March, 2023, there were 75 employees including the Executive
Directors recorded on roll of the Company.
OPERATIONS AND FINANCIAL REVIEW
The operations and financial review is covered in the Boards Report and is to be read
as a part of this report itself.
KEY FINANCIAL RATIOS
| Ratios |
FY 2022-23 |
FY 2021-22 |
% of Variance |
Reason |
| Current Ratio |
6.70 |
5.64 |
18.79% |
- |
| Debt-Equity Ratio |
0.01 |
0.01 |
0.00% |
- |
| Debt Service Coverage Ratio |
-30.96 |
80.15 |
-138.63% |
A |
| Return on Equity (ROE) |
-19.00% |
62.00% |
-130.65% |
A |
| Inventory Turnover Ratio |
5.08 |
1.24 |
309.68% |
B |
| Trade Receivable Turnover Ratio |
8.00 |
0.97 |
724.74% |
C |
| Trade Payable Turnover Ratio |
2.65 |
0.61 |
334.43% |
D |
| Net Capital Turnover Ratio |
2.07 |
5.31 |
-61.02% |
E |
| Net Profit Ratio |
-48.00% |
156.00% |
-130.77% |
F |
| Return on Capital Employed |
-20.00% |
59.00% |
-133.90% |
F |
Note: Explanations given where the change in the ratio is more than 25% as compared to
the preceding year
A. Decreased due to operating loss
B. Due to increase in sales
C. Due to better collection of receivables
D. Due to better management of trade payables
E. Due to sale of B2B Business in last year
F. Due to profit on slump sale of B2B Business in last year and operating loss in the
current year SEGMENT-WISE PERFORMANCE
During the Year under review, your Company was operating only in one segment.
RISK MANAGEMENT
The Company is also exposed to several potential risks both from internal and external
sources. By addressing the risk in its nascent stages allows for long-term corporate
success. Risks such as industry segment risks, technological changes, political risks,
product distribution and supply can be anticipated and curbed.
Your Company believes that the products should not be hazardous to the environment. Our
products are made of virgin plastics which are universally approved by USFDA, EU Directive
2002/72/ EC, BIS IS: 12252 -1987 and other regulating bodies for Food, Beverage and Water
storage.
Some of the features that give an advantage to the Company over other local players in
the market which may help the Company in reducing the loss of sales are:-
• Non-toxic, Food-grade and Re-usable.
• Unbreakable, Strong and Light-weight.
• Manufacturing process integrates the finest quality certified raw materials,
with state-of-the-art equipment and stringent quality control procedures, at every station
on the line.
• PearlPET products & raw material do not use Bisphenol A (BPA) or other
harmful plasticizers/chemicals.
• All of our products have good barrier properties that protect and preserve the
food content.
• Good strength, premium quality, Air tight.
• 100% recyclable and environment friendly.
DISCLOSURE OF ACCOUNTING TREATMENT
The financial statements have been prepared in accordance with Ind AS notified under
the Companies (Indian Accounting Standards) Rules, 2015 as amended by the companies
(Indian Accounting Standards) (Amendment) Rules,2016 and notified under Section 133 of the
Companies Act, 2013 ("the Act") and other relevant provisions of the Act and
other accounting principles generally accepted in India.
BUSINESS OUTLOOK
The Consumer Products market is expected to grow by 15% to 20% in the medium term in a
normal business environment with potentially higher growth rates in the near term.
Verified Market Research points out that the non-biodegradable properties of plastic
products have been reported to have a serious impact on the environment, which has slowed
growth. Fluctuating raw material prices are also hindering growth. However, the plastics
commodity market is expected to rise from $468.3 billion in 2020 to $596.1 billion by 2025
at a CAGR of 6.0% as plastics continue replace metals in the marketplace.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH
REFERENCE TO THE FINANCIAL STATEMENTS
Pearl has in place an adequate system of internal control procedures for business
processes, operations, financial reporting, fraud control and compliance with applicable
laws and regulations, among others. They commensurate with the size of the company and the
nature of the business and is in line with requirements of the regulations.
During the year under review, no material weakness in the policy or procedures was
observed. Your Company has put in place an independent internal audit system conducted by
a professional to ensure adequacy of internal financial control system, adherence to
Company policies and compliance.
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