ECO NOMIC SCENARIO AND O UTLOO K :
GLOBAL
Global economic growth slowed down to 3.4% in 2022 as per International
Monetary Fund (World Economic Outlook Apr 2023) compared to 6.2% in 2021. The year saw
geopolitical uncertainty with the prolonged Russia-Ukraine conflict and economic
challenges leading to disruptions in the global supply chain and elevated inflation with
increase in commodity and energy prices. This prompted central banks to aggressively
tighten their monetary policy, which further impacted economic activity.
O U TL O O K:
Analysts estimate that 2023 will continue to see the above issues
playing out leading to a further slowdown in economic growth and a mild recession in the
UK as well as potentially in the Euro area. The UK has been impacted by an increase in
cost-of living, dampening households purchasing power and consumption, as well as tighter
fiscal and monetary policy. Current estimates project global recovery in the second half
of 2023, with moderation of inflation and re-opening of the Chinese economy. We have
already started seeing cooling-off of fuel and commodity prices as well as global
container freight rates.
However, risks remain to this outlook with the stress seen in banking
systems in the US and Europe in the last few months, potentially getting aggravated with
extended high inflation levels and triggering further rounds of rate hikes and adversely
impacting the business environment. There is also continued uncertainty on a resolution of
the Russia-Ukraine conflict further impacting energy markets and disrupting the supply
demand balance.
IND IA:
Despite global volatility, the Indian economy grew by 6.8% in 2022 -
making it the fifth largest economy globally in terms of nominal GDP (US dollars). This
growth has been supported by: (1) reduction in Covid-19 cases leading to opening up of the
economy; (2) expansion of manufacturing footprint by both global and Indian firms, aided
by Government policies (eg Production Linked Incentive (PLI) Scheme, PM Gati Shakti,
corporate tax cuts); (3) capex recovery; and (4) cyclical upturn in many sectors (eg
Banking, Auto). Indias digital infrastructure has strengthened in the last few years and
the widespread adoption of real-time digital payments is estimated to have unlocked 0.56%
of GDP.
However, we saw interest rate hikes done were by the Reserve Bank of
India to control inflation. The Indian rupee weakness against the US dollar also added to
the inflationary pressures.
O U TL O O K:
According to the International Monetary Fund, Indian economy is
projected to deliver robust growth of 5.9% for 2023, highest amongst the emerging
economies, driven by strong domestic demand and healthy consumption growth supported by an
improvement in labour market conditions, increasing consumer confidence, an expected
recovery in rural demand and higher purchasing power with moderating of inflation. In the
Union Budget for FY2023-24, the government announced a 33% increase in capex allocation to
INR 10 trillion, which is expected to boost private investments. The Budget has also
targeted a lower fiscal deficit in FY2023-24 at 5.9% and the government has committed to
bring it down to below 4.5% by FY2025-26.
Risks to the outlook remain with weakness in the global economy
impacting exports, volatility in food and crude oil prices, slowdown in private
consumption and aggressive monetary tightening by global central banks to moderate
inflation.
INDUSTRY STRUCTURE AND DEVELOPMENT
PACKAGING INDUSTRY:
Packaging is an essential component of almost every product. A
products packaging acts as an eye catcher, allowing it to stand out from competing
goods in todays market environment, which faces stiff competition, and therefore, an edge
is required for the product to outshine its rival. Packaging is also instrumental in
conveying the products message to consumers and helps in establishing the visual appeal
of a brand; hence, marketers view product packaging as the best possible opportunity to
attract consumers to their product. Moreover, the products packaging is designed to
capitalise on the impulse shopping behaviour, especially in large supermarket chains that
account for a significant proportion of purchases made by an average consumer. The main
functions of packaging besides marketing is to transmit information, protect the product,
provide convenience and add security.
The Indian packaging market is expected to register a CAGR of 12.60%
during the forecast period (2022 - 2027). The demand for packaging in India has expanded
drastically, spurred by the rapid growth in consumer markets, especially in processed
food, personal care, and pharmaceutical end-user industries. Packaging is Indias one of
the fastest growing sectors. Over the last few years, the industry has been a key driver
of technology and innovation, contributing to various manufacturing sectors, including
agriculture and the fast-moving consumer goods (FMCG) sectors. The packaging industry is
driven by the factors such as rising population, increasing income levels, and changing
lifestyles are anticipated to drive consumption across various industries leading to
higher demand for packaging product solutions. Moreover, demand from the rural sector for
packaged products is fueled by the growing media penetration through the internet and
television.
The rise of the Indian middle class, the rapid expansion of organized
retail, the growth of exports, and Indias rising e-commerce sector is further
facilitating growth.
Key M arket Trends
The food packaging industry in India witnessed major innovations in
terms of branding and packaging. Many popular brands, like Amul, Mother Dairy, Patanjali,
and others, use UV-protected films, color-changing films, and holographic films to reduce
the chance of adulterating their products.
Packaged food is significantly driving the growth of the Indian
packaging industry. It is expected to fuel the demand for plastic packaging, as it ensures
food quality, safety, and long shelf life. According to the Federation of Indian Chambers
of Commerce & Industry (FICCI), the expenditure on packaged foods is increasing (at
inflection point) due to an increase in per capita income, urbanization, and an increase
in the number of working women.
India has seen a rise in the paper and packaging of food and beverage
with an increase in demand, along with new companies in the food and beverage space. The
entry and meteoric rise of food delivery service companies such as Zomato and Swiggy have
led to growth in the consumption of packaging used for food and beverage. Food packaging
has seen significant innovations that focus on highlighting the brand while maintaining
the quality and standard of the food product contained within.
Globally, the packaging industry sector has positioned itself as one of
the fastest growing industry across all countries. The industry is worth over $ 917
billion (in 2019), growing at CAGR 2.8% to reach to $ 1.05 trillion by 2024. Packaging is
an emerging science, an emerging engineering discipline, and a successful contributor to
major industries such as pharmaceutical, FMCG and electronics. Packaging is the worlds
third largest industry following the food industry (1st) and energy (2nd) and the only
industry that has to do with every single product produced in an economy.
In Indias case, packaging is the fifth largest sector in its economy
and is one of the highest growth sectors in the country. Over the last few years,
packaging industry has been an important sector driving technology and innovation growth
in the country and adding value to the various manufacturing sectors including agriculture
and FMCG segments. According to the Indian Institute of Packaging (IIP), the packaging
consumption in India has increased 200% in the past decade, rising from 4.3 kg per person
per annum (pppa) to 8.6 kg pppa.
GRAVURE INDUSTRY:
Gravure is used for labels, cartons, packaging, gift-wrap, wall and
floor coverings, and a variety of precision coating applications. In the face of uncertain
economic times, the gravure market is striving to maintain margins and market share while
focusing on technological advances to drive growth.
Gravure printing is characterized by excellent print quality and high
printing speed. Its further advantages are that it involves a simple printing process,
accurate ink use, and the flexibility of printing machine structures. Gravure printing,
due to several technological innovations, now belongs to innovative technologies. The
market of packaging materials is the largest segment of gravure printing, and a further
increase is forecast. In this chapter, the bases of gravure printing process (ink
transfer, drying, gravure cylinder, doctor blade, impression cylinder, characteristics of
the prints) and the characteristics of gravure printing inks are presented. The up-to-date
methods of gravure cylinder production and the characteristics of the structure of gravure
printing machines are touched on, and finally the areas of the development of gravure
printing are dealt with.
The global gravure printing inks market size is expected to reach USD
5.06 billion by 2028, at a CAGR of 4.6% during the forecast period 2022-2028. Liquid inks
having a very low viscosity are gravure inks. They can then be transferred onto substrates
by being pulled into etched cells in cylinders as a result. The paper is put through gas-
or electric-fired dryers to dry the ink and drive out solvents or water. Before the paper
gets to the next printing station on the press, the ink has already dried. This is
required since its impossible to overprint with wet inks without them smearing and
smudging. As a result, a substantial number of air dryers are installed after each
printing station.
Your Company serves complete cross-section of the gravure industry such
as: Flexible Packaging, Anilox Rollers, PVC Flooring, Decorative Laminates, Specialty
Coatings, Artificial Leather, Gift Wrapper, Security printing and Transfer printing etc.
India has an advantage of large volume consumption of consumer products and therefore
gravure is the most preferred technology to handle such volumes due to economy of scale,
availability of skilled manpower and high quality printing.
Your company continues to cater the Indian Packaging Industry with its
dedicated endeavors which in turn stimulates the growth of the Company in the future. Your
company has been investing in training the manpower and upgrading the technology from time
to time to keep the pace with the changing trends.
FLEXO PRINTING INDUSTRY:
Flexographic printing is a modern printing technique that creates
raised images on a variety of materials by using a flexible printing plate connected to a
plate cylinder. The ink is transferred to the substrate by rotating the flexible inked
plate at a high speed. Flexographic printing is used to print high volumes of labels and
packaging.
The main types of printing equipment in flexographic printing are
narrow web, medium web, and sheetfed. Narrow web printing is a rotary method with numerous
in-line converting stages that is defined as any web with a width of 16" or less. The
technologies involved include automatic, semi-automatic and is used in various
applications such as corrugated boxes, folding carton, flexible packaging, labels, print
media. It is implemented in several sectors including industrial, print media, food and
beverage, consumer electronics, pharmaceutical, others.
LIMITED
The global flexographic printing market size is expected to grow from
$5.35 billion in 2022 to $5.70 billion in 2023 at a compound annual growth rate (CAGR) of
6.6%. The Russia-Ukraine war disrupted the chances of global economic recovery from the
COVID-19 pandemic, at least in the short term. The flexographic printing market size is
expected to grow to $7.10 billion in 2027 at a CAGR of 5.6%.
The increasing demand for packaged food products is expected to propel
the growth of the flexographic printing market going forward. The packaged food products
are foodstuff pre- packaged in the packaging to offer shelf life and sterility to food
unless the packaging is damaged or opened. The growing demand for packaged food goods
necessitates the use of flexographic printing to provide packaging that is convenient,
attractive, cost-effective, and lightweight. On the label packaging, flexographic printing
aids in the effective marketing of food goods and information about them. For instance, in
2021, the Food Industry Association (FMI) estimated that the packaged food and beverages
online sales could reach $109 billion. Therefore, the increasing demand for packaged food
products is driving the growth of the flexographic printing market.
Technological advancement is a key trend gaining popularity in the
flexographic printing market. Major companies operating in the flexographic printing
sector are focused on developing new technological solutions to meet consumer demand and
strengthen their position. For instance, MPS, a US-based company that manufactures flexo,
offset, and hybrid printing presses for label converting and flexible packaging sector,
launched E-Sleeve technology to improve print efficiency and quality. The technology
includes pressure settings, precise concentric runout properties, increased dimensional
accuracy for optimum register, and constant parallelism for the ideal register across the
entire print length. The technology enables better speeds to generate results with assured
quality tolerances and reliable production cost calculations.
Key Highlights:
Flexographic printing continues to be one of the fastest growing print
processer and is no longer reserved for printing specialty items. The ability of
flexography to print on a variety of substrates allows the process to be used for a wide
range of printed products. Food packaging is an important market because of the ability of
flexography to print on non-porous substrates.
This ability makes it useful for printing on plastic bags, as well. The
process is ideal for publishing packaging, wallpaper, calendars, books, laminated tetra
packs, and food packaging The material that receives the print, known as the substrate,
can be paper, cand, polymers, textiles, and even metalized films (polymers coated with a
thin layer of metal).
The increasing demand for a printing machine that can be used for a
variety of substrates and other products with high versatility and ease of operation,
particularly for rather long printing runs on all extensible plastic flims, is expected to
fuel the adoption of the flexographic printing machines, as flexographic printing machines
can operate at high speeds and have applicability on a different surface and water-based
inks, as well as oil-based inks.
Flexo graphic Pr inting Market Trends:
Flexographic printing is quick drying and able to use non-toxic inks.
These factors make flexographic printing accessible in the printing of food packaging for
food packaging as well It can primarily be used on packaging like milk cartons, food
containers, beverage containers, and disposable cups and containers.
To their lightweight nature, folding cartons are witnessing an
increased customer demand globally. Quality assurance is essential for the physical carton
and the final package print. Printers are looking at multi-site operations to address this
growth and meet demand in such a multi-site operation, a critical challenge comes into
play print consistency.
The rising consumer demand for packaged products due to changing eating
habits and lifestyles may significantly impact the market for flexographic printing of
folding cartons in food packaging Due to high barrier properties, shelf life, and consumer
safety, a rise in per capita disposable income and a growing population will aid in
product demand. Printing used on a variety of packaging materials. Direct printing is
possible on plastic, paper, board, and cork.
Flexographic printing has been used to print folding cartons for many
years, but it has only been in the last few years that the industry has begun to use
central impression presses for this application. Pizza cartons are an example of the type
of work that was originally relegated to the flexoprocess. The ability to print multi
colors in close registers on the wide web, on the other hand, has made the process more
appealing to other point of purchase folding carton applications.
OPPO RTUNITIES, THREATS AND CONCERNS:
The industry is constantly faced with several challenges in terms of
cost, technology, knowledge, regulations, and environment. The changing economic
conditions, trade and market preferences imposed by the pandemic have added to the woes of
the industry in the form of raw material price rise.
Notwithstanding the challenges, the growth drivers are distinctly
defined for the industry even during this current crisis. It is thus, for the industry to
leverage the considerable opportunities available in the various spaces and emerge as a
significant global player in the sector. Strengthening capabilities in terms of
technology, skills, efficiency, and competitiveness will be crucial going forward. Package
manufacturing and packaging services are the two potential segments for the Indian
packaging sector, where the industry can expand considerably both onshore and offshore.
In coming years, the Indian packaging industry will see substantial
growth. The increasing awareness regarding clean water, safe food, and pharmaceuticals
along with adoption of next gen digital technologies will aggressively penetrate and drive
the Indian packaging industry".
This rise in consumption is driven by key aspects of the rising Indian
economy namely, strong favourable demographics, increasing disposable income levels,
rising consumer awareness and demand for processed food. The growth of individual end user
segments of food, beverages, FMCG and pharmaceuticals will trickle down into rising demand
for packaging solutions.
The next d ecad e:
In the coming decade, India will focus on transitioning this industry
towards sustainability. The implementation of single-use plastic ban policy along with a
focus on recycling and biodegradability will bring about a major transformation in this
sector. Currently, the Indian packaging industry consumes more polymers compared to the
global average. This creates a unique opportunity for India to drive this industry towards
sustainability, bio-based/paper-based packaging.
The packaging sector has a much wider exposure to other sectors of our
economy. The growth of these sectors in the coming decade will have a combined effect to
take this sector to new heights. The Government of India recognised the potential of this
sector and released a slew of policies like the single use plastic ban policy, profit
linked tax incentive for food packaging, adoption of the National Packaging Initiative, to
further incentivise innovation in this sector. There has also been a rise in material
technology research-based start ups to create new sustainable packaging materials.
The presence of large number of players in the market and entry of new
entrants in the flexible packaging market is projected to intensify the market
competition. The market competition is seen on the basis of price, quality, services, and
innovation. The leading players in the market putting efforts by introducing innovative
and bio-based packaging materials.
Environm ental Consci ou sness
With environmental awareness rising globally, there is a strong
momentum towards sustainable solutions. Stakeholders across the value chain are voicing
their concerns regarding the use of plastic packaging and organizations are realigning
themselves in this direction. However, there are teething challenges the market is facing
in providing these sustainable 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 of packaging that might not
fetch the markup price. Importing again is cost-intensive.
Solving Industr y Challenges with Technology
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.
The industry has immense potential in terms of manufacturing capacity.
This combined with an automated supply chain system can create a sustainable ecosystem
that can be used by generations to come. Digitalization of the supply chain is what will
enable the packaging industry to operate at full potential. And thats a mission every
individual at Bizongo is working towards developing. SEGMENT WISE PERFORMANCE: As
on March 31, 2023, the Company has only two reportable segments, that of i) manufacture of
engraved copper rollers and ii) energy generation through wind mill. The segment revenue,
results, assets, and liabilities include the respective amounts identifiable to each of
the segment and amount allocated to it. The figurative parameter in detail is provided in
Note no. 43 (Segment Reporting) in the Note to Financial Statements.
FINANCIAL PERFORMANCE: An overview of the financial performance is
given in the Boards Report. The Audit Committee constituted by the Board of Directors
periodically reviews the financial performance and reporting systems.
KEY FINANCIAL HIGHLIGHTS:
| Particulars |
Standalone |
Consolidated |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
| Revenue from operation |
7695.24 |
6771.41 |
8719.97 |
7479.04 |
| EBITDA |
1481.72 |
1578.16 |
1589.45 |
1554.22 |
| Profit after Tax (PAT) |
757.04 |
870.04 |
780.92 |
791.18 |
| Basic/Diluted Earnings per share |
12.31 |
14.15 |
12.70 |
12.87 |
KEY FINANCIAL RATIOS (STANDALONE):
In accordance with the SEBI (Listing Obligations and Disclosure
Requirements) (Amendment) Regulations 2018, the Company is required to provide details of
significant changes (i.e. change of 25% or more as compared to the immediately previous
financial year) in key financial ratios, along with detailed explanations:
| Ratios |
2022-23 |
2021-22 |
%change |
| Debtors Turnover |
68.20 (days) |
64.37(days) |
5.78 |
| Inventory Turnover |
105.92 (days) |
95.55(days) |
10.29 |
| Interest Coverage Ratio |
55.70 |
57.44 |
3.08 |
| Current Ratio1 |
5.15 |
3.82 |
29.65 |
| Debt Equity Ratio |
0.00 |
2.48% |
0 |
| Operating Profit Margin |
13.74% |
11.40% |
18.62 |
| Net Profit Margin |
13.40% |
12.85% |
4.19 |
| Return on Networth |
12.02% |
11.21% |
6.97 |
1 Company has increased its investment and paid its borrowing during
the financial year.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has laid down internal financial controls. The policies and
procedures adopted by the Company ensure orderly and efficient conduct of its business,
safe- guarding of its assets, prevention and detection of frauds and errors, accuracy and
completeness of accounting records and timely preparation of reliable information.
Your Company have an Audit Committee and has met four times in the
year. Audit Committee ensures proper compliance with the provisions of the Listing
Regulations, Companies Act, reviews the adequacy and effectiveness of the internal control
environment and monitors implementation of internal audit recommendations. Besides the
above, Audit Committee is actively engaged in overseeing financial disclosures. The
recommendations of the Internal Auditors and the Audit Committee are followed up
effectively for implementation.
HUMAN RESO URCES / INDUSTRY RELATIONS:
The Company considers its people to be its biggest asset and credits
its sustained improvements to their ethics, dedication and energy. It is its endeavour to
offer a work environment and HR processes that promote creativity, teamwork, meritocracy,
learning and leadership. The Human Resource Management continues to be focused on
improving employee productivity, reducing employee cost and building necessary skill sets
whilst building employee motivation through varied employee engagement initiatives. Your
Company is confident that its Human Capital will effectively contribute to the long-term
value enhancement of the organization. The Company continuously nurtures this environment
to keep its employees highly motivated, result oriented and adaptable to changing business
environment. There exists peaceful and amicable relations with staff and workers at office
and plant.
As on 31.03.2023, Shilp employs more than 427 employees directly and
indirectly. It believes that the quality of these employees is the key to its success and
is committed to providing necessary human resource development and training opportunities
to equip employees with additional skills to enable them to adapt to contemporary
technological advancement and evolving workplace requirements. The focus of any industry
is usually on its men and machinery and if these are looked after well then, any business
is sure to succeed.
C AUTIONAR Y S TATEMENT:
Statements in the Management Discussion & Analysis Report
describing the Companys objectives, projections, expectations, opinion and predictions
may please be considered as "forward looking statements" only. Actual results
may differ materially from those expressed or implied. Important factors that could
influence the Companys operations should be viewed in light of changes in market
conditions, domestic demand and supply conditions, prices of raw materials, economic
developments in the country, changes in the government regulations, tax laws and other
statutes and such other incidental factors which are material to the business operation of
the Company.
|
For and on behalf of the
Board of Directors of Shilp Gravures Limited |
|
Ambar Patel |
Shailesh Desai |
|
(Managing Director) |
(Director) |
| Place: Rakanpur |
(DIN:00050042) |
(DIN:00169595) |
| Date: 13th May, 2023 |
|
|
+91-9892691696
