Asahi India Glass Ltd Management Discussions

Asahi India Glass Ltd. (AIS) is a leading company in India that specialises in integrated glass solutions. It has established itself as a dominant player in both the automotive and architectural glass segments. With start of operations in 1987, AIS has expanded its presence across the entire spectrum of the automotive and architectural glass value chains. The company offers comprehensive services encompassing glass manufacturing, processing, fabrication, and installation.

Throughout the years, AIS has played a vital role in various glass segments such as construction, automotive, architectural, and consumer glass. AIS has witnessed steady growth over the years, driven by factors such as increased infrastructure development, rising urbanisation, and growing demand for sustainable and energy-efficient materials. The Indian glass industry itself is expected to experience strong growth in the coming years, primarily driven by the construction, automotive and solar sectors. With the governments focus on infrastructure development and smart city projects and sustainability, there will be increased demand for glass products for architectural applications. Additionally, a rising middle-class population and increased consumer spending are likely to boost the demand for home renovation using more glass products (shelf, kitchen shuttering, partitions and shower cubicles) and use of higher value added glass in automobiles. AIS stands out due to its unique position in the market, thanks to its backward and forward integration throughout the glass value chain. This allows AIS to effectively meet the end-to-end glass solution requirements of its customers. Furthermore, AIS possesses remarkable design and development capabilities, enabling continuous innovations in glass products.

In terms of trends, the industry is witnessing a shift towards advanced glass products, such as low-emissivity (low-E) glass for energy-e3cient buildings and automotive glass with advanced features like smart coatings and integration with sensors. This trend is driven by growing environmental concerns and the need for better thermal insulation and safety features.

The companys focus is on driving stable and sustainable progress. To maintain a competitive edge, AIS is focusing on product innovation and investing in design and development activities to introduce advanced glass products with improved features. Additionally, AIS is also adopting sustainable practices by reducing energy consumption, recycling glass waste, and implementing eco-friendly manufacturing processes.

The global economy showed signs of stabilisation in early CY2022. However, this positive trend was overshadowed by the Russia-Ukraine conflict that erupted in February CY2022. The conflict exacerbated inflationary pressures and further disrupted supply chains, delaying their normalisation. In response to high inflation, major central banks aggressively tightened their policy rates.

Indias economy has demonstrated remarkable resilience and made significant strides despite facing challenges such as inflation, disruptions in the supply chain, and geopolitical tensions. A crucial factor propelling Indias economic growth has been the sustained momentum in export growth, particularly in the 3rst half of the 3scal year 2022-23, leading to an increased share of India in the global merchandise exports market. As export growth slowed down, there was a rebound in domestic consumption, which gained traction and further bolstered the countrys economic growth. This, in turn, resulted in a rise in domestic capacity utilisation. The primary driver of Indias economic growth, standing at 7.2% for FY 2022-23, has been the economic rebound in private consumption, replacing export stimuli.

Outlook

The Indian economy is projected to be one of the fastest-growing major economies in FY 2023-24, supported by robust domestic drivers and improving macroeconomic fundamentals. The governments adherence to calibrated monetary policies is expected to keep inflation rates moderate. The Indian financial sector remains stable, and efforts are being made to bring down headline inflation to levels within the upper tolerance band throughout FY 2023-24. Monetary policy is focused on gradually aligning inflation with the target.

However, there are several risks to growth and the inflation outlook, including geopolitical tensions, persistent global inflation, volatility in global financial markets, and climate shocks. These factors could potentially hinder Indias growth trajectory. Despite stable domestic consumption it is essential to remain cautious as Indias economic cycle could get impacted in short term by global issues. Any disruptions in advanced economies could have an impact on Indias trade and financial connections with them. The governments continued emphasis on infrastructure development, combined with increased private investment, is providing the necessary momentum for the Indian economy to thrive.