Annexure-B
Global economy
The global economy has endured a period of turbulence and instability over recent
years, as a result of pandemic, trade tensions, and geopolitical confrontations combined
with rising inflation. Pivoting to CY23, the global economy finds itself confronting a set
of challenges that feel both familiar yet unprecedented.
The IMF predicts that the global economic growth will decelerate from 3.4% in CY22 to
2.9% in CY23, before experiencing a modest recovery of 3.1% in CY24. This slowdown can be
attributed to a widening divergence in growth rates between advanced and emerging
economies, coupled with tightening financial conditions and a significant rise in food and
energy prices. In addition, persistent inflation and the decoupling of the worlds two
largest economies are also contributing to the economic downturn. However, there are
reasons to remain optimistic. Central banks across the globe are expected to signal
interest rate cuts, which is expected to result in a sustained recovery of asset prices
and the economy by the end of CY23.
Despite these persistent headwinds, the global economy has demonstrated remarkable
resilience towards the end of 2022, dispelling the apprehensions of a protracted downturn.
In addition, a delightful surprise has emerged in several economies. The unforeseen
strengthening of real GDP, driven by the remarkable resilience of private consumption,
investment and favourable fiscal stimulus, has fortified economic growth. Tight labour
markets and pent up demand for services have created a unique opportunity for households
to capitalise on their savings, while business investment has further consolidated this
expansion, signifying a growing sense of confidence in future prospects.
Additionally, it is also noteworthy that the energy markets have demonstrated
remarkable agility in responding to the shock of Russias invasion of Ukraine, thus
propelling the growth momentum forward. In summary, while challenges loom over the global
economy, the strength demonstrated by key economies in the face of these challenges
inspire confidence that will lead to achieving sustainable growth in the years ahead.
Indian economy
Indias economy has been on a remarkable upswing, with a projected growth rate of 7%
(in real terms) for FY23. Despite the challenges posed by the COVID-19 pandemic, conflict
between Russia and Ukraine, and Central Banks across economies responding with
synchronised policy rate hikes to curb inflation, India continues to be projected as the
fastest-growing major economy by agencies worldwide.
The factors driving this economic growth include a surge in credit growth to the Micro,
Small, and Medium Enterprises (MSME) sector, which has averaged over 30.5% between January
and November, 2022. Additionally, the capital expenditure of the Central Government rose
by 63.4% in the first eight months of FY23, further driving economic growth. In addition,
the rebound in private consumption, supported by a rebound in contact-intensive services
such as trade, hotels, and transport, has contributed to Indias growth in FY23.
In addition to these factors, Indias economic growth has been driven by capital
formation, generating employment as seen in the declining urban unemployment rate and in
the faster net registration in the Employee Provident Fund. The countrys vaccination
drive involving more than 2 billion doses has also helped lift consumer sentiments,
prolonging the rebound in consumption. As Indias private consumption and capital
formation continue to drive growth, the country is poised to embark on a dynamic cycle of
credit disbursal and capital investment in FY24. The expansion of public digital
platforms, along with pathbreaking measures such as PM GatiShakti, the National Logistics
Policy, and the Production-Linked Incentive schemes, are set to boost manufacturing output
and further propel the economy forward.
With a strong focus on innovation and sustainable development, India is set to
spearhead the global economic recovery and emerge as a leading player in the international
arena. Its unwavering commitment to progress and growth will continue to inspire and
propel the nation towards greater heights of prosperity and success.
Global plastic furniture market overview
Plastic furniture, with its myriad of benefits has emerged as a favoured choice among
consumers worldwide. Boasting of affordability, lightweight design, and unparalleled
durability, the global plastic furniture market has seen remarkable growth over the years.
The global plastic furniture market was valued at $13.6 billion in 2021, and is expected
to reach $22.9 billion by 2030, registering a CAGR of 6% during the forecast period
between 2021-30.
Undoubtedly, one of the key factors driving this growth is the surging demand for
ergonomic furniture in response to the growing trend of compact and integrated modular
homes. With the increasing number of nuclear families, the demand for versatile, space
efficient furniture solutions is greater than ever before.
Notably, the benefits of plastic furniture extend beyond its ergonomic design. The
durability and cost- effectiveness of plastic furniture make it an optimal choice for
budget-conscious consumers, with products available for both residential and commercial
settings. The Asia-Pacific region commands the largest share of the global plastic
furniture market, owing to its rapidly developing economy and increased investment in
real- estate and hospitality sectors. In conclusion, the plastic furniture market is
growing at an impressive pace globally, thus promising an exciting future for consumers
and industry players alike.
Indian plastic furniture market overview
The Indian plastic furniture industry is poised for robust growth, driven by the
projection of increasing revenue and a growing number of users. The Indian plastic and
other furniture industry has exhibited commendable tenacity in adapting to the evolving
needs of a discerning clientele, providing pragmatic solutions that are both versatile and
cost-effective for various settings, including an array of applications. With an
anticipated surge in the number of users and average spends, the industry is poised to
leverage its innovative prowess and cater to a diverse spectrum of consumer tastes and
demands.
Growth drivers:
• The burgeoning demand for high-end and contemporary furniture is expected to
propel the growth of the Indian furniture market by the end of 2024.
• The rise of e-commerce platforms, and furniture e-tailing as potential
distribution channels have created huge demand from millennial consumers, who are inclined
towards purchasing furniture online.
• The popularity of plastic furniture is growing, particularly among Indian youth,
who are the countrys largest generational cohort and have a growing disposable income.
• Small businesses are entering the plastic furniture market with an environmental
conscience, introducing new designs, made from recycled plastic to capitalise on
increasing customer demand for eco-friendly items.
• The 100% FDI policy for townships and settlement development projects is
attracting foreign investors to the Indian market, further bolstering the growth of the
furniture industry.
Company Overview
Since its incorporation in 1992, PIL Italica Lifestyle Limited has grown to become a
premier manufacturer of plastic furniture and storage bins, further foraying into material
handling products. A testament to its commitment to quality, PIL Italica is the only
Indian company with CE certified plastic furniture products, and boasts an ISO-9001:2015
accreditation.
The Company operates out of its 2 manufacturing facilities in Udaipur and Silvassa,
with a cumulative manufacturing capacity of 10,700 MTPA. The Companys strategic focus on
expansion has resulted in its successful partnership with Kisan Mouldings Limited (KML),
Silvassa, to expand its market share and presence across untapped territories. This
strategic tie-up has enabled PIL Italica to expand its manufacturing capacity and
geographical presence, demonstrating the Companys commitment to growth and innovation.
PIL Italicas manufacturing facilities are a testament to its dedication to excellence.
Apart from its production capacities the plants are equipped with hundreds of moulds,
allowing the Company to produce a diverse range of high-quality products with a quick
turnaround time. PIL Italicas commitment to excellence and innovation has enabled it to
remain at the forefront of the plastic furniture segment, meeting the evolving needs of
customers across India and beyond.
FY23 Performance Review
The company has achieved a remarkable growth of 27% in its top line, reaching a record
high of Rs 8,531 lakhs in FY23, as compared to Rs 6,757 lakhs in the previous year. The
growth in Revenue from Operations is attributable to the growth in both of the Companys
product segments, namely, Plastic Furniture and Material Handling & Waste Management
Products. The Companys strategy of launching new and innovative plastic furniture
products, entering new markets, and strengthening its distribution network has fueled its
overall sales growth. In addition to the above, the Company has successfully forayed into
the wooden furniture segment through its collaboration with Atmosphere. The launch of new
products like SAGO and ARECA, which are wall-mounted multipurpose folding tables, along
with Model No. 6003 in the Flip Series, further strengthened the Companys product
portfolio. The Oxy Chair Series was also expanded with the launch of the Luxury Plastic
Chair - 5106 and 5103, and the Stool & Patla series was augmented with the
introduction of Model No. 9729. Additionally, under the Storage Section, the Company
launched Model No. 6120 and 6140 during FY23. As a result of its strong performance, the
Companys PAT stood at Rs 304 lakhs in FY23, which represents a 21% year-on-year increase
from the previous years Rs 251 lakhs. The Companys entry into the wooden furniture
segment and the launch of new products across its various series signify its commitment to
diversifying its product range and catering to the evolving needs of its customers.
Financial Ratios
| PARTICULARS |
FY23 |
FY22 |
CHANGE(%) |
REMARKS |
| Current Ratio |
4.15 |
4.00 |
3.75% |
|
| Debt to Equity Ratio |
0.25 |
0.26 |
-3.84% |
|
| Debt Service Coverage Ratio |
5.19 |
4.59 |
1.13% |
|
| Return on Equity (ROE) |
4.44% |
3.85% |
15.32% |
|
| Inventory Turnover Ratio |
5.28% |
4.01% |
31.67% |
In view of increase in sales |
| Trade Receivables Turnover Ratio |
15.79 |
14.64 |
7.85% |
|
| Trade Payables Turnover Ratio |
21.51 |
15.59 |
37.97% |
Increase in trade payables in view of increase in purchases |
| Net Capital Turnover Ratio |
1.59 |
1.26 |
26.19% |
In view of increase in sales |
| Net Profit Ratio |
3.67% |
3.92% |
-6.37% |
|
| Return on Capital Employed (ROCE) |
6.64% |
6.17% |
7.61% |
|
Outlook
PIL Italica has long upheld the belief that every region in India boasts its own
distinct and unique characteristics, each with its own set of specific requirements. As
such, the Company has invested significant effort and resources into gaining a deep
understanding of these variances, with the ultimate aim of cementing its position as a pan
India player. By implementing bespoke solutions that cater to the eclectic demands of each
region, supported by its growing distribution & fulfilment infrastructure, PIL Italica
has established itself as a customer-centric organisation, determined to provide tailored
solutions to its diverse client base.
As PIL Italica embarks on a new chapter of growth and expansion, the organisation is
excited to continue its asset-light business model, leveraging strategic investments and
collaborations to extend its reach throughout India. With an unwavering commitment to
proximity to customers and reduced logistical costs, the Company is further dedicated to
enhancing its distribution network through the addition of new fulfilment centres and
warehouses. PIL Italica is also working towards diversifying its product basket, focusing
on the development of innovative, customer- oriented solutions that cater to the unique
demands of both the hospitality and education sectors. By placing a strong emphasis on
sustainability and environmental consciousness, PIL Italica aims to offer its customers
the highest quality products while contributing to the creation of a greener, more
sustainable future.
Internal Control and Adequacy
The Companys proper and adequate system of internal control ensures that all its
assets are safeguarded and protected against losses from unauthorised use or disposition,
and that all transactions are authorised, recorded and reported appropriately. The Company
has deployed an effective mechanism to achieve optimum and effective utilisation of
resources, efficiency in operations, monitoring thereof and compliance with applicable
laws. Further, the auditors have also expressed that the Companys internal control
systems are adequate and satisfactory.
Human Resource Development and Industrial Relations
PIL Italica Lifestyle believes that its human resources are one of the most crucial
assets and critical enablers of the Companys growth. To that extent, the Company engages
with its employees to hone their skill sets and equip them with knowledge and know-how. It
is also deeply invested in establishing its brand name to attract and retain the best
talent in the market. During the period under review, employee relations continued to be
healthy, cordial and harmonious at all levels, and the Company aims to maintain such
relations with the employees going forward as well. As of March 31, 2023 the Company has
203 people across all its group companies.
Risks, Concerns & Risk Mitigation
The business operations of the Company expose it to a number of risks namely: Safety
Risk, Regulatory Risk, Supply Chain Risk, Credit Risk and Commodity Fluctuation Risk. The
Company seeks to minimise the potential impact of unpredictability of the financial
markets on its financial performance.
Safety Risk
Our manufacturing facilities are subject to various stringent safety laws and
regulations. Non-adherence to process and workforce safety requirements, safety laws and
regulations may impact business continuity and reputation.
Regulatory Risk
Our operations are governed by various statutes encompassing law and regulations for
environment and climate change, trade measures, competition, taxes, and others. Any
deviation in compliance and adherence has the potential to not only impact our operating
performance but also dent our reputation. The continuously evolving regulatory scenario,
resulting in changes of the statutory provisions and introduction of newer ones, make
compliance more comprehensive.
Supply Chain Risk
The supply chain network is subjected to physical and environmental destruction, trade
restrictions due to geopolitical tensions and disruptions of supplies. The developing
rail, road, port infrastructure, handling facilities and dependence on outsourced partners
may lead to disruption of operations.
Credit Risk
The Companys debt servicing capabilities could get affected due to major volatility in
financial markets and in a changing interest rate scenario. Further, the Company may be
exposed to currency risks if its exports business scales up to be a meaningful part of its
sales in the future.
Commodity Fluctuation Risk
The Companys performance is closely linked with that of the plastic furniture
industry. Any material changes in demand-supply scenarios within the sector, in India or
abroad, may impact its performance.
In efforts to mitigate these risks, the Company does regularly monitor, analyse and
manage the risks faced by the Company. It is also set to monitor appropriate risk limits
and controls for mitigation of the risks. The Company continues to follow suitable
strategies to optimise its risk profile by eliminating and significantly reducing key
business functions and developing and implementing strategies to achieve the maximum
possible degree of insulation from the identified risk points.
Cautionary Statement
This document contains statements about expected future events, financial and operating
results of PIL Italica Lifestyle Limited, which are forwardlooking. By their nature,
forward looking statements require the Company to make assumptions and are subject to
inherent risks and uncertainties. There is significant risk that the assumptions,
predictions, and other forward-looking statements will not prove to be accurate. Readers
are cautioned not to place undue reliance on forward-looking statements as a number of
factors could cause assumptions, actual future results and events to differ materially
from those expressed in the forward-looking statements. Accordingly, this document is
subject to the disclaimer and qualified in its entirely by the assumptions, qualifications
and risk factors referred to in the Management Discussion and Analysis of PIL Italica
Lifestyle Limiteds Annual Report, FY23.
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