G M Polyplast Ltd Management Discussions

Global Market Scenario of Economy: 2023-2024

The global economic outlook for 2023-2024 indicates a period of slow growth and considerable uncertainty, influenced by various macroeconomic factors and regional disparities. According to the International Monetary Fund (IMF), the global economy is projected to grow by 3.0% in 2023, down from 3.5% in 2022, and is expected to decline further to 2.9% in 2024. This slowdown is driven by tightening monetary policies aimed at controlling inflation, which, while necessary, are expected to dampen economic activity across many regions.

Advanced economies are forecasted to experience significant deceleration, with growth dropping from in 2023 and further to 1.4% in 2024. This reduction reflects fiscal support measures that were initially introduced to combat the economic fallout from the COVID-19 pandemic. In contrast, emerging market and developing economies (EMDEs) are projected to maintain relatively stable growth rates, albeit at a slower pace. Growth in these regions is expected to moderate from 4.1% in 2022 to 4.0% in both 2023 and 2024.

Inflation remains a significant concern globally. The IMF forecasts that global inflation will in 2023 and further to 5.8% in 2024. The decline in inflation is attributed to tighter monetary policies and easing supply chain disruptions. However, core inflation is anticipated to fall more gradually, particularly in emerging markets where inflationary pressures are more entrenched.

Regionally, the economic outlook varies considerably. The World Bank highlights that growth in South Asia is expected to slow slightly from 6.6% in 2023 to 6.2% in 2024, primarily due to a moderation in Indias economic expansion. Sub-Saharan Africa is projected to see a modest recovery, with growth increasing to 3.5% in 2024, driven by improvements in private consumption and investment. However, the region faces significant downside risks, including political instability and climate-related challenges.

In contrast, Europe and Central Asia are likely to struggle with slow growth due to geopolitical tensions, particularly the ongoing conflict in Ukraine, which continues to disrupt economic activity and create uncertainty. The Middle East and North regions growth is expected to remain subdued, influenced by fluctuating oil prices and geopolitical risks.

The global economic landscape is also shaped by the need for substantial public and private investment to foster long-term growth, particularly in EMDEs. Investment in infrastructure, human capital, and climate resilience is crucial for sustainable development. However, many of these economies face fiscalconstraints and elevated debt levels, which complicate efforts to increase investment without jeopardizing financial stability.

Indian Plastic Industry: 2023-2024 Overview

The Indian plastic industry has shown significant growth and transformation over the fiscal year substantially to the economy. This sector is pivotal, both as a standalone industry and as a supplier to various other sectors such as automotive, construction, healthcare, electronics, FMCG and packaging.

In the fiscal year 2022-2023, the Indian plastics market was valued at approximately USD 12.5 billion. This growth trajectory continued into 2023-2024, with the market expected to witness a compound annual growth rate (CAGR) of around 10% over the next five years. The expansion is driven by increased domestic consumption, export demand, and significant investments in technology and manufacturing capabilities. The sectors growth is also attributed to favorable government policies and initiatives aimed at boosting manufacturing and exports.

The industry encompasses a wide array of products, including packaging materials, construction materials, automotive components, medical devices, and consumer goods. Packaging remains the largest segment, driven by the booming e-commerce and retail sectors. The demand for lightweight, durable, and cost-effective packaging solutions has pushed manufacturers to innovate and expand their production capacities. The automotive sector also relies heavily on plastic for parts and components, emphasizing the need for fuel efficiency and lightweight vehicles.

In terms of trade, the Indian plastic industry has seen a mixed performance. While exports have been robust, certain segments have faced challenges. For instance, imports of artificial resins and plastic materials showed a slight decline of 4.55% during April-November 2023 compared to the same period in the previous year. This dip can be attributed to various factors, including fluctuating raw material prices and changes in global demand dynamics. Despite these challenges, India continues to be a significant of plastic products, with substantial markets in Europe, the United States, and the Middle East.

Government policies have played a crucial role in shaping the plastic industrys landscape. The government has implemented several initiatives to promote sustainable practices and reduce the environmental impact of plastic waste. The Extended Producer Responsibility (EPR) policy mandates producers to manage the disposal of plastic waste, encouraging recycling and the use of biodegradable alternatives. Additionally, the governments focus on the ‘Make in India initiative has spurred investments in domestic manufacturing, reducing dependency on imports and boosting export potential.

The MSME sector is a vital component of the plastic industry, contributing significantly to production and employment. According to the Ministry of Micro, Small, and Medium Enterprises (MSME) annual report, the sector has been a key driver of growth, particularly in rural and semi-urban areas. The report highlights the sectors resilience and adaptability in the face of global economic challenges, emphasizing the need for continued support and investment in technology and infrastructure to sustain growth.

In conclusion, the Indian plastic industry in 2023-2024 is on a positive growth trajectory, supported by robust domestic demand, strategic government policies, and a focus on sustainability. The industrys future looks promising, with continuous advancements in technology, increased investments, and a commitment to sustainable practices paving

Company Outlook And Performance:

Over the past year, our teams unwavering dedication and commitment to excellence have been vividly reflected in our outstanding financial results and enhanced market position. In the face of a highly competitive landscape, our strategic initiatives and customer-centric approach have empowered us to establish a formidable foothold in the industry. By seizing emerging opportunities and streamlining operational efficiencies, we have not only reinforced our current standing but also laid a solid foundation for an even more promising future. The Company has experienced a significant increase in turnover, reaching INR 92.01 Crores for the Financial Year 2022-23, compared to INR 82.25 Crores in the previous year. Additionally, profit after tax surged to INR 7.09 Crores for the Year 2023-24, up from INR 4.92 Crores in the Financial Year 2022-23. The earnings per share (EPS) for the financial year stood at INR 5.27.

Further during the Financial Year 2023-24 the company had declared an Interim dividend on November 07, 2023 of INR. 0.50/- (Indian Rupee Fifty Paisa Only) (i.e. 5%) per equity share of face value Rs.10 each.

The prospects for our company are exceptionally bright. In the past financial year, we have expanded our fixedasset base by introducing new machinery, which has significantly increased our production capacity and turnover. With a robust track record and a solid market reputation, we are well-positioned to capitalize on further growth opportunities.

Our keen focus on innovation and adaptability enables us to stay ahead of market trends and customer preferences, ensuring that our products and services remain relevant and in demand. Moreover, our commitment to responsible expansion and strategic partnerships will open new avenues for exploration, diversifying our offerings and reaching a broader customer base.

As we embark on this exciting journey, our entire organization remains united in our vision of delivering unmatched value to our customers and stakeholders while cementing our status as a trailblazer in the industry.

Opportunities and Threats of the Plastic Industry in the Indian Market

The plastic industry, which holds a significant position in the global market, is facing a dynamic mix of This sector, integral to Indias economy, is influenced by various factors including government policies, environmental concerns, and market demands.

Opportunities:

The Indian plastic industry is poised for substantial growth driven by several key factors. Firstly, the burgeoning packaging sector, the fifth largest in Indias economy, is experiencing a rapid increase in demand. This growth is fueled by rising consumer awareness and the increasing need for packaging in industries like pharmaceuticals, food processing, and FMCG.

The industry is expected to expand significantly, supported by favorable demographics, increasing disposable incomes, and urbanization, which are driving the demand for packaged goods.

Government initiatives play a crucial role in creating opportunities for the plastic industry. The Indian governments focus on promoting manufacturing and investments through schemes like "Make in India" and the "Production Linked Incentive" (PLI) scheme encourages the growth of the domestic plastic manufacturing sector. Additionally, the ban on single-use plastics has led to innovations in biodegradable and sustainable plastic alternatives, opening new markets for environmentally friendly products. The adoption of advanced technologies in production processes also presents opportunities for the industry. Investments in automation, digitalization, and research and development can enhance productivity and quality, making Indian plastic products more competitive globally. Moreover, the export potential remains robust, with India being a significant products to various countries.

Threats:

Despite these opportunities, the Indian plastic industry faces several significant regulatory pressures are at the forefront. The global movement towards reducing plastic waste and the implementation of stringent regulations on plastic usage pose challenges to the industry. Compliance with these regulations requires substantial investments in recycling and waste management infrastructure, which can be a financial burden for manufacturers.

The volatility in raw material prices is another critical threat. The industry heavily depends on petroleum-based raw materials, and fluctuations in crude oil prices can significantly impact production costs. This volatility can affect the profitability and sustainability of plastic manufacturing operations.

Competition from alternative materials also threatens the plastic industrys growth. With increasing awareness of environmental issues, there is a growing shift towards materials like paper, glass, and metal for packaging and other applications. This shift could reduce the demand for plastic products unless the industry adapts by focusing on sustainable and recyclable plastic alternatives. Furthermore, the industry faces challenges related to infrastructure and logistics. Inconsistent power supply, inadequate transportation networks, and high logistics costs canhindertheefficientoperation and competitiveness of the plastic manufacturing sector in India. Addressing these infrastructure bottlenecks is essential for the industrys sustained growth.

Risk and Concerns of the Plastic Industry in the Indian Market

The plastic industry, a key sector in the countrys economy, faces several risks and concerns. One of the foremost risks is the growing environmental scrutiny and regulatory changes. The Indian government has been increasingly stringent about plastic waste management and reducing single-use plastics. The implementation of the Plastic Waste Management Rules, 2016, and its subsequent amendments aim to reduce plastic pollution by mandating the recycling and proper disposal of plastic waste. This has added compliance costs for plastic manufacturers and forced the industry to innovate towards more sustainable practices.

Another significant concern is the fluctuating raw material prices. The raw materials like polyethylene and polypropylene. Global market volatility, influenced by geopolitical tensions and economic fluctuations, directly impacts the cost and availability of these essential inputs. This volatility can squeeze profit margins and make it challenging for businesses to plan long-term investments.

Moreover, the industry faces competition from alternative materials. With the push towards sustainability, there is a rising preference for biodegradable and eco-friendly materials. The packaging sector, a major consumer of plastics, is gradually shifting towards paper-based and other biodegradable alternatives. This shift is driven by both consumer preferences and regulatory pressures, which could erode the market share of traditional plastic products.

Economic factors also pose a threat. Inflation and rising interest rates can lead to higher operational costs and reduced consumer spending. For an industry that supplies products to various sectors, including FMCG, automotive, and electronics, economic downturns can result in decreased demand. Additionally, the global economic slowdown could affect exports, which are a significant revenue stream for the Indian plastic industry.

Technological advancements, while offering opportunities, also present risks. The industry needs to continually invest in new technologies to stay competitive, which can be capital-intensive. Small and medium enterprises, which form a large part of the industry, may struggle to afford these investments, risking obsolescence and loss of market share.

Labor issues and workforce management are other areas of concern. The industry requires skilled labor to operate advanced machinery and innovate in product development. However, there is often a mismatch between the available workforce and the skills required, leading to productivity challenges and higher training costs.

Internal Control Systems and their Adequacy:

The Company has a documented internal control policy. In line with the Internal Control policy, the Company prepares annual business plan and detailed budgets for revenue and the capital for each quarter is determined. The actual performance is reviewed in comparison with the budget and deviations, if any, are addressed adequately. The Company has appointed a firm of Independent

Chartered Accountants who conducts internal audit. The internal audit program covers all the functions and activities of the Company. The Internal Audit Reports are submitted every half yearly to the Audit Committee of the Board of directors for review and ensuring compliance

Discussion On Financial Performance with Respect to Operational Performance:

The Directors confirm that there have been no events or circumstances since the date of the last financial statements which materially or adversely affect or are likely to affect the profitability of our Company, or the value of our assets, or our ability to pay liabilities within next twelve months except as below: The company achieved Net revenues for the year 2023-24 at INR. 92.01 Crores as against INR. INR. 82.34 Crores during the previous year.

Details of Significant Changesin key financial ratios, along with detailed explanations therefor, including:

The following are the ratio during the year under review

Sr. No. Particulars	Ratio/ % for the year 2023-24	Percentage Change	Explanations for significant the Ratios
1 Debtors Turnover	5.36	6	The variation is due to increase in revenue, resulting an increase in trade receivables.
2 Inventory Turnover	7.21	1
3 Debt Service Coverage Ratio	31	19	The variance is due to increase in EBITDA for the year.
4 Current Ratio	3.99	46	The variation in the ratio is on account of decrease in accounts payable and increase in revenue from business.
5 Debt Equity Ratio	0.03	90	The variance is due to increase in borrowings for purchase of machinery.
6 Operating Profit Margin (%)	10.72		NA
7 Net Profit Margin (%)	7.69	29	The ratio has improved on account of increase in revenue from business and improved margins.

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof – Current year RONW is 22.31% as compared to previous year 26.43%;

Cautionary Statement: in the Management Discussion and Analysis and Boards Report describing the Companies Strengths strategies projection and estimate are forward looking and progressive within the meaning of all applicable laws and regulation. Actual results may vary depending upon the various aspects of the economic such as Government policies Rules and Regulations economic conditions and other incidental factors. Important factors that could make a difference to our Companys operations include raw material availability and prices cyclical demand and pricing in our principal markets changes in government regulations, tax regimes, economic developments within India and other incidental factors Management will not be in any way responsible for the actions taken based on such statements.