bkm industries ltd Management discussions

Global economic overview

During 2019-20 due to Covid Pandemic Global economy has been heading for Negative growth and also consumption has been declined due to massive job loss in world.whole world has started to boycott Chinese product due to the Pandemic issue.this issue will continue till this Pandemic issue will be solved.

Global economic growth for 6 years

Year	2016	2017	2018	2019	2020 (f)	2020 (f)
Real GDP Growth (%)	3.4	3.8	3.6	2.9	(4.9)	5.4

Source: IMF June 2020

Indian economic overview

After registering GDP growth of over 6.1% during 2017-18, the Indian economy headed for somewhat slower growth, estimated to be 4.2% in 2018-19. The Indian economy will headed for a negative growth of (4.5%) during 2020-21 due to Covid – 19 Pandemic.Once the Covid – 19 situation will come under control again the Indian economy will headed for 6% growth during 2021-22.

The year under review was marked by various structural reforms by the Government after this Covid – 19 Pandemic & India is one of the country where foreign exchange reserve is $ 516b during 2020.

Outlook for India

World Bank projected Indias economic growth to accelerate to 6% in 2020-21, Strong private consumption and services are expected to continue to support economic activity. Over the medium- term, GST introduction is expected to catalyse economic activity and fiscal sustainability. The recapitalisation package for public sector banks announced by the Government of India is expected to resolve banking sector Balance Sheets, enhance credit to the private sector and spur investment.

(Source: IMF, World Bank)

Global packaging sector overview

The global packaging market is estimated to total USD 424 billion with an annual growth rate of 3.5%. Europe accounts for USD 127 billion (30%), North America for USD 118 billion (28%), Asia for USD 114 billion (27%), Central America for USD 30 billion (7%) and other countries for USD 30 billion (8%). The global market for flexible packaging totaled USD 104.527 billion in 2016. Over the coming five years it is expected to grow to USD 138,680 billion.

While the Asia-Pacific region is still the market leader in flexible packaging, demand from such threshold countries as China and India, Brazil and Mexico is rising. Even as packaging made of paper, cardboard and paperboard accounts for the lions share at 46%, the production of steel-based metal packaging went up by 12.9%.

The demand for packaging is rising disproportionately fast in threshold countries. The global e-commerce industry which includes online retail shopping has witnessed a substantial growth during the period between 2014 and 2017 and is expected to grow further due to increased penetration of internet in emerging nations such as India, China, Brazil, Mexico, and South Africa. This growth in online retail sales has boosted the demand for packaging products to ensure safe shipment of products. The main drivers for the global packaging sector are an increasing awareness among consumers about health and wellness, growing awareness about environmental issues and impact of various macroeconomic trends.

(Source: Smithers Pira, PR Newswire, Mintel, Interpack, Research and Markets)

Five trends impacting the global packaging sector

Lesser waste: The throwaway culture of today will evolve into one that understands and embraces the role of packaging as a primary means to reduce global food and product waste. Consumers have long considered packaging as often unnecessary and ultimately as just waste to be disposed of. But that misconception is now changing. A focus on package innovations that extend food freshness, preserve ingredient fortification and ensure safe delivery is increasingly benefiting consumers.

Cleaner labels: Aiming for packaging designs that enlighten consumers purchase decisions, brands will reject approaches that offer too much or too little, as they can leave shoppers more confused than ever. This can lead to the questioning of provenance, authenticity, and transparency. Hence, the need of the hour is cleaner labeling. Better e-commerce packaging: As more and more consumers embrace online shopping, packaging will play a pivotal role in brandsand consumers e-commerce experiences. However, while the key advantage of online shopping is convenience, consumers expect more from their favoured brands.

Greater eco-friendliness: Concerns over safe packaging disposal will increasingly colour consumers perceptions of different packaging types, and impact shopper purchase decisions. While collecting waste plastic from the sea to recycle into new packaging can raises consumer awareness, it wont solve the problem. In order to keep plastic out of the sea, a renewed effort towards the circular economy needs to be seen.

Keener youth focus: Brands will look to contemporary packaging formats to help reinvigorate the centre-of-store aisles less visited by younger consumers. Young shoppers are increasingly ‘shopping the periphery, visiting the fresh shoppers are increasingly ‘shopping the periphery, visiting the fresh and chilled aisles around the store perimeter and turning their backs on processed, ambient, and frozen offerings in the centre of the store.

Global caps and closures sector overview

The global market for caps and closures was valued at USD 49.78 billion in 2015 and it is expected to grow at a CAGR of 4.9% between 2017 and 2023. In volume terms, this market is likely to surpass 3.34 trillion units by 2023, growing at a CAGR of slightly more than 4.4% between 2017 and 2023. Caps and closures play an important role in packaging and are widely used by various industries such as food, beverages, and healthcare. Increasing consumption of carbonated beverages, soft drinks and other bottled beverages is expected to fuel the demand for caps and closures. Another trend that is prevalent in this market is due to increasing urbanisation with consumers shifting towards healthy and safe packaged food. Emerging nations such as India, China, and Brazil are all witnessing a shift in the buying patterns of consumers towards packaged food and beverages owing to increasing disposable incomes. The growth drivers for the caps and closures segment are an increasing demand from the Asia Pacific region, growing diversity in terms of applications of caps and closures, a rising need for storing food and beverages longer and mounting consumer concerns regarding product safety.

The Asia Pacific region leads the market with the majority of the demand coming from the packaging niche. Nations such as Brazil and Argentina have untapped potential and are expected to offer lucrative opportunities for dedicated players.

(Source: Businesswire, Infinium Global Research, Market Research Future, Grand View Research)

Global caps and closures market sub-division

By material	By type	By application	By region
Plastics	Caps	Food and beverages	North America
Metals	Closures	Pharmaceuticals	Europe
Others	Corks	Cosmetics	Asia Pacific
	Stoppers Cans	Automotive components	Rest of the World
	Others	Others

Indian packaging sector overview

Currently the fifth-largest sector of Indias economy, the industry has reported steady growth over past several years and shows high potential for much expansion, particularly in the export market. Costs of processing and packaging food can be up to 40% lower than parts of Europe which, combined with Indias resources of skilled labor, make it an attractive venue for investment.

A high degree of potential exists for almost all user segments which are expanding appreciably-processed foods, hard and soft drinks, fruit and marine products. The Indian packaging industry has made a mark with its exports that comprise flattened cans, printed sheets and components, crown cork, lug caps, plastic film laminates, craft paper, paper board and packaging machinery, while the imports include tinplate, coating and lining compounds and others. In India, the fastest growing packaging segments are laminates and flexible packaging, especially PET and woven sacks.

The Indian packaging industry will see notable growth over 2016-2021, growing at a CAGR of 9.2%, compared to 6.2% during 2011-2016. The growth of the Indian packaging industry will be heavily influenced by changing demographics such as growing urbanisation and the rising proportion of middle-class consumers. These changes will drive the demand for new packaging formats in terms of sizes, materials, and strengths. Till 2021, the soft drinks and food products industries will be the highest packaging market share gainers (by units) with share growths of 3.4% and 1.3%, respectively. The growing organised retail sector has been a significant driver of the growth of the food and beverage industries, which in turn drives the growth of Indian packaging industry. A study by trade and commerce trade association Assocham and global consulting firm EY revealed that the packaging industry in India is anticipated to reach $73.6bn by the 2020 financial year (FY2020), due to Indias growing population and income levels.

The packaging industry in India is predicted to grow at 18% annually, with flexible packaging growing at 25% and rigid packaging at 15%. Packaging Gateway dives into this billion-dollar market to investigate the future of packaging industry in India.

The global pharmaceutical packaging market has been predicted to double to $149bn in a decade, with India one of the markets currently producing a large quantity of plastic pharmaceutical packaging. Large multinational pharma packaging companies, such as Amcor, Huhtamaki, West Pharma and SGD Pharma, along with Indian companies, including UFlex and EsselPropack, lead the way within the countrys pharma packaging market.

(Source: PIAI, businesswire)

Outlook

As the requirement for packaging is rising across sectors and with traditional businesses preferring to package products, the sector is expected to continue growing at a robust pace, presenting potential growth opportunities for new entrepreneurs, and small and medium enterprises.

The packaging sector is witnessing double-digit growth and it will only grow further as packaging is essential for all sectors right from processed foods and food grains to fertilisers and pharmaceuticals. Even traditional sectors that were hitherto not focusing much on packaging are now spending a lot on packaging, thus increasing the market for the sector. The sector is expected to reach USD 73 billion by 2020 from USD 32 in FY 15. With 60% of the plastic and polymers produced in the country being consumed by the packaging sector as raw material, thus pointing to the huge size of the market. Demand is expected to grow at a CAGR of 8.9% to reach 9.7 million tonnes in FY19 due to factors such as increased urbanisation, requirement of better quality packaging for FMCG products marketed by organised retail chains and an increasing preference for ready-to-eat foods. Even by modest estimates, the packaging sector will grow by at least 20% over the next few years. The industry is driven by key factors like rising population, increase in income levels and changing lifestyles. Demand from rural sector for packaged products is being fueled by increasing media penetration through the means of internet

Indian packaging sector sub-divisions

By function	By methods	By contents	By materials
Heavy packaging (Large)	Vacuum	Food	Rigid packaging
Containers	Aseptic	Cosmetics	Bottles and metal cans
Wooden packs	Retortable	Powders	Wooden boxes
Medium packaging (Middle)	Shrink	Toiletry	Metal boxes
Carton boxes	Strip	Drugs	Semi-rigid packaging
Woven bags	Gas flush	Liquids	Carton boxes
Cans, barrels and tubs	Moisture-proof	Clothing	Plastic bottles
Light packaging (Small)	Blister packaging	Others	Flexible packaging
Flexible packaging	Skin packaging		Paper, plastic
	Others			Film, aluminum foil
			Cellophane

and television. Organised retail and boom in e-commerce will fuel growth of plastic packaging and per capita consumption to be doubled in five years. The per capita packaging consumption in India is quite low at 8.7 kilograms compared with countries like Germany and Taiwan where it is 42 kilograms and 19 kilograms, respectively.

(Source: Indian Express, Indian Institute of Packaging, Economic Times, FICCI. TSMG)

Indian caps and closures market overview

The Indian caps and closures market is steadily growing propelled by factors such as rise in disposable incomes in the nation have led to an increased spending on fast-moving consumer goods. There is also an increased adoption of westernised styles of living due to which the demand for fast food and packaged beverages has also witnessed a

Advantages of using aluminum as a packaging material

Inert: Aluminum is non-reactive and does not affect the taste or aroma of products stored in it

Lightweight: With a density of 2.70 grams per cubic centimetre, aluminum products are easy-to-transport

Impermeable: The metal is renowned for being non- corrosive and it helps prevent rusting and keeps out air, light, liquids and microorganisms

Conductivity: The metal is also an excellent conductor which makes it ideal for use as containers or seals

Flexible: Aluminum can be rolled into extremely thin foils, cast and joined and still retain much of its strength

Recyclable: Aluminum is 100%-recyclable and uses only 5% of the energy used to make the original product

Processable: A low melting point means aluminum requires much less energy to be processed and recycled strong growth. This is leading to an increased demand for innovative rigid packaging solutions causing a rise in demand for caps and closures. There has also been an improvement in the manufacturing industry which has resulted in the growth of the caps and closures market due to high demand for packaged products that require metal caps and closures. Besides plastic, metal caps and closures are also witnessing an increased demand as usage of metal eliminates random oxidation, leakage, tainting and change in flavour of the product.

(Source: Mordor Intelligence)

Internal controls systems and their adequacy

The internal control framework is designed to ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable financial information and other data. This system is supplemented by internal audit, reviews by the management and documented policies, guidelines and procedures. The Company has a well-defined organisation structure, authority levels, internal rules and guidelines for conducting the business transactions. The Company intendsto undertake further measures as necessary in line with its intent to adhere to procedures, guidelines and regulations as applicable in a transparent manner. An external audit firm carries out the internal audit of the Company operations and reports its finding to the Audit Committee. Internal Audit also evaluates the functioning and quality of internal controls and provides assurance of its adequacy and effectiveness through periodic reporting.Internal Audit is carried out as per risk based internal audit plan which is reviewed by the Audit Committee of the Company.The Committee periodically reviews the findings and suggestions for the improvement and is apprised on the implementation status in respect of the actionable items.

Financial analysis

Due to changes of Policy by RBI in Feb 2018 Company Faced liquidity mismatch and could not procure raw material in time so during 2018-19 Company Turn over decreased to 4,152 lakhs on standalone basis.& during 2019-20 Company Turn Over decreased to 868 lakhs,To overcome this situation.Company has submitted Loan a rephasement proposal to Banks for revival of business.after this covid – 19 we are expecting Banks will agree to our rephasement proposal for revival of the company.

Human resources

Employee relations continued to remain cordial during the fiscal gone by. The management pays specific attention to employee needs and takes decisive steps to ensure a comfortable working environment across all its facilities. During the year, the Company did not face any disruptions. New members were recruited wherever deemed necessary. The Companys employee strength as on 31st March 2020 stood at 60.

CSR

Founded in 1972, BKM Industries Limited (erstwhile Manaksia Group) evolved under the able leadership of Mr. Basant Kumar Agrawal and believed ever since in creating sustainable value through responsible business activities for all our stakeholders, thereby enhancing trust and facilitating the sharing of our progressive vision and strategy to build a more cohesive society. We accept that in this dynamic and interconnected world, all businesses need to be empathetic and aware of its economic, social and environmental responsibilities.

At BKM Industries, corporate social responsibility is ingrained into our core company strategies and functions that not only encompasses our purpose but also emphasises the importance of our culture and investments into our resources. While our focus is primarily on issues that are most relevant to our business, we also believe in our potential and intent to have the greatest impact wherever and however possible. BKM Industries Limited is committed towards creating meaningful impact in four key areas: People, Society, Economy and Environment. Our people are our greatest strength, and we believe that by honing their skills and enabling them to reach their full potential, we would only grow as a successful organisation. At BKM Industries, we empower our people to innovate and lead. We encourage them to take active interest in the proceedings of the organisation, share their perspectives and bring more creativity to the table. We understand the significance of this mutually benefitting practice and a simplified cultural arrangement, thereby fostering an unrestricted, trusting, impartial, and all-encompassing convergence through which diverse thoughts, obstacles and ideas are shared and heard.

At BKM Industries, we are committed towards the development of a healthy society through the creation of a sustainable and long-term environment. Thus, we consider the reduction of our carbon footprint and consumption of depleting resources, a major priority, thereby cutting-back on the environmental impact of our products and operations. Last, but not the least, our sustainable people and environmental practices collectively contribute towards the growth of the national economy through strategic investments and innovations. Our key CSR goals and progress are aligned to our core values of ensuring ethical business practices and responsible corporate governance. And our mission is to constantly evolve as an organisation thereby enhancing value for all our stakeholders and the society as a whole.