Anuroop Packaging Ltd Management Discussions

Global Economy Overview

The global economy has experienced significant fluctuations from 2021 to 2024, marked by recovery, challenges, and gradual stabilization.

Financial Markets:

2022 saw concurrent declines in bond and equity markets, with the S&P 500 and 10-year US treasuries both delivering negative returns exceeding 10%.

2023 witnessed a recovery in many global equity markets, with the S&P 500 gaining approximately 24%.

2024 is expected to see continued, albeit more moderate, growth in financial markets.

Foreign Direct Investment (FDI) and Trade:

FDI flows have been volatile:

2021: Strong recovery

2022: 8.49% decline in gross FDI inflows

2023-24: Gradual improvement expected,

Global trade growth: 2021:10.4% 2022: 2.7% 2023:1.7% (estimated) 2024: 3.2% (projected)

Commodities:

2022: S&P GSCI TR fell from a peak in June to December 2023: Mixed performance, with some commodities recovering 2024: Stabilization expected, with moderate growth in demand

Outlook:

Despite ongoing challenges such as geopolitical tensions and climate concerns, the global economy shows resilience. Key factors for 2024 include:

• Continued moderation of inflation

• Potential easing of monetary policies in some economies

• Ongoing technological advancements driving productivity

• Increased focus on sustainable and green economic practices

The largest economies are expected to avoid recession, with approximately 75% of the global economy demonstrating resilience and adaptability to the evolving economic landscape.

[1] IMF World Economic Outlook, April 2022 [2] IMF World Economic Outlook, October 2023 [3] U.S. Bureau of Labor Statistics, Consumer Price Index 2022 Annual Report [4] World Bank Global Economic Prospects, January 2024 [5] OECD Economic Outlook, November 2023 [6] IMF World Economic Outlook Database, April 2024 [7] World Bank Data and OECD Economic Outlook, 2024 [8] S&P Dow Jones Indices LLC, 2022 Annual Report [9] S&P Dow Jones Indices LLC, 2023 Annual Report [10] Goldman Sachs Global Investment Research, 2024 Outlook [11] UNCTAD World Investment Report 2023 and WTO Annual Report 2024 [12] S&P Global, Commodity Insights Annual Report 2022 [13] McKinsey Global Institute, Global Economic Conditions Report, Q1 2024

Global Economic Overview:

The global economy has navigated through significant challenges and changes from 2021 to 2024. Following a robust post-pandemic rebound of 6.1% growth in 2021, the world economy moderated to 3.2% growth in 2022 due to various headwinds. As we moved through 2023, the global economy showed signs of resilience with an estimated growth of 2.8%. Looking ahead to 2024, projections indicate a slight uptick to 3.1 % growth, with global inflation expected to moderate to around 4.5%.

Paramount Pointers: Global Economic Overview

The global economy experienced significant fluctuations from 2021 to 2024:

2021

Post-pandemic rebound with 6.1% growth [1]

2022

Moderation to 3.2% growth, impacted by various challenges [2]

Estimated growth of 2.8%, showing signs of resilience [3]

Projected growth of 3.1%, with inflation expected to moderate to around 4.5% [4]

Indian Economic Overview:

India has emerged as a bright spot in the global economic landscape, demonstrating remarkable resilience and growth. In 2022-23, Indias economy is estimated to have grown by 7.2%, making it the second-fastest growing G20 economy. This strong performance has enabled India to overtake the UK as the fifth-largest global economy and surpass China as the worlds most populous nation.

Indian Packaging Industry Overview:

The Indian packaging industry is experiencing robust growth, riding on the back of strong economic fundamentals and changing consumer preferences.

Market Valuation and Growth:

• 2023: Estimated at USD 71.90 billion

• 2028: Projected to reach USD 130.14 billion

• CAGR: 12.60% from 2023 to 2028

Key drivers fuelling this growth include:

• Rapid expansion of e-commerce

• Growth in food processing, pharmaceuticals, FMCG, manufacturing, and healthcare sectors

• Governments Make in India initiative promoting domestic manufacturing

India has also emerged as a significant player in the global packaging arena:

• Notable exporter of various packaging products

• Packaging materials exports grew at a CAGR of 9.9% from 2018-19 to 2021-22

Indian Kraft Paper Market:

The kraft paper market in India is showing particularly strong growth potential, aligning well with the sustainability trends in packaging:

The market is expected to grow at a CAGR of 8.9% from 2023 to 2028.

Sectorial demand drivers:

Online retail: Online shopping has expanded in China, India, Brazil, ASEAN, and other regions due to the increasing use of smartphones, which has led to a surge in online shopping and a subsequent rise in the use of corrugated boxes and paper bags.

Literacy: Indias literacy rate is 77%. The government has allocated f1.48 lakh crore to education, employment, and skilling in the Union Budget 2024-25. This significant allocation is ₍ expected to expand the market for eco-friendly packaging awareness.Online shopping has expanded in China, India, Brazil, ASEAN, and other regions due to the increasing use of smartphones, which has led to a surge in online shopping and a subsequent rise in the use of corrugated boxes and paper bags.

E-commerce: The Indian e-commerce market is projected to grow from USD 74.8 billion in 2022 to USD 350 billion by 2030, influencing the use of sustainable packaging.

Rising population: Indias population has surpassed Chinas, reaching an estimated 1.41 billion, which is driving the Indian packaging sector.

Demographic dividend: The median age of the Indian population is 28.4 years as of 2022, ¹ compared to the global average of 30 years. This younger demographic is boosting the demand for green packaging products.

Restaurant takeaway: The Indian food and beverage packaging market was valued at USD 31.75 billion in 2022. It is expected to grow at a CAGR of 14.8%, reaching USD 85.9 billion by 2029. Higher standards of living and fast-paced urban lifestyles contribute to the growth of online food delivery and packaged food

Organised retail: By 2032, the retail industry is expected to be worth USD 2 trillion. Contemporary retail, including e-commerce, is predicted to rise to 35%, while traditional retail is anticipated to decline to 65%. Despite the predominantly unorganised sector, Indias per capita net national income is estimated to be f172,000 yearly for 2022-23, marking an increase of 14.4% over the previous year

Growth drivers for the kraft paper market include:

• Booming e-commerce sector

• Increasing emphasis on sustainable packaging solutions

• Supportive government policies promoting domestic manufacturing and eco-friendly alternatives

Company Overview:

Anuroop Packaging Limited

Anuroop Packaging, founded in 1995, has established itself as a key player in the packaging industry. The company specializes in manufacturing corrugated boxes, liners, sheets, and kraft rolls, catering to the growing demand for sustainable packaging solutions. In a significant milestone, the company went public in November 2019.

Outlook:

The Indian economy and packaging industry show promising growth prospects. With the governments focus on infrastructure development, sustainable practices, and the Make in India initiative, companies like Anuroop Packaging Limited are well-positioned to capitalize on these opportunities. The shift towards eco-friendly packaging solutions and the rapid growth of e-commerce are expected to drive demand for kraft paper and corrugated packaging products in the coming years.

As India continues to outpace global economic growth and moves towards becoming the third-largest economy by the end of the decade, the packaging industry is poised for substantial expansion.

Anuroop Packaging Limited, with its strong market presence and focus on quality and innovation, is well-equipped to ride this growth wave and create value for its stakeholders.

(Note: Data for 2023-2024 are based on estimates and projections available as of April 2024. Actual figures may vary.)

Sources:

[1][2][3][4] IMF World Economic Outlook, April 2024 [5] IMF, World Bank data [6] Budget FY 24; Economy Projections, RBI projections [7][8][9][10][ 11] Ministry of Trade & Commerce, various government reports [12] Government economic data [13][14] IBEF.org, NIIR.org reports [15] IMARC Group market research [16] Anuroop Packaging Limited Annual Report 2022-23

Risk Management:

The company faces various risks in its operations. Heres an overview of key risk factors and mitigation strategies:

Internal Control Systems and Their Adequacy :

The company maintains a robust internal control and risk management system aligned with its corporate governance principles. Key features include:

• Integration into the overall organizational structure

• Involvement of various individuals fulfilling respective responsibilities

• Board of Directors offering directives and overseeing monitoring activities

• Supervision of control and risk committee and audit department head by statutory auditors This comprehensive approach ensures effective governance and risk management practices throughout the organization.

Human Resources :

The company considers its workforce its most valuable asset and focuses on:

• Providing competitive compensation packages

• Fostering a healthy work environment

• Implementing structured reward and recognition programs

• Creating opportunities for employees to discover and unleash their full potential

• Encouraging participation in voluntary projects to enhance learning and foster creative thinking

Cautionary Statement:

This section of the report contains forward-looking statements based on certain assumptions and expectations of future events. These statements are subject to:

• Risks and uncertainties

• Changes in government regulations, tax regimes, economic developments within India and other incidental factors

Actual results may differ materially from those expressed or implied. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements based on any subsequent developments, information or events.