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ECONOMIC REVIEW

World

The global economy is yet again at a highly uncertain moment, with the cumulative effects of the past three years of adverse shocks—most notably, the COVID-19 pandemic and Russias invasion of Ukraine - manifesting in unforeseen ways. Further, the global economic unexpected failures of two specialized regional banks in the United States in mid-March 2023 and the collapse of confidence in Credit Suisse - a globally significant bank—have roiled financial markets, with bank depositors and investors re-evaluating the safety of their holdings and shifting away from institutions and investments perceived as vulnerable.

IMF during its recent review towards "World Economic Outlook" has forecasted that growth to fall from 3.4% in 2022 to 2.8% in 2023, before settling at 3% in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7% in 2022Rs to 1.3% in 2023. In a plausible alternative scenario with further financial sector stress, global growth declines to about 2.5% in 2023 with advanced economy growth falling below 1%. Global headline inflation in the baseline is set to fall from 8.7% in 2022 to 7% in 2023 on the back of lower commodity prices but underlying (core) inflation is likely to decline more slowly. Inflations return to target is unlikely before 2025 in most cases.

Despite rapid monetary tightening, inflation is proving persistent in many key economies, particularly on the back of strength in job markets amid severe labour shortages. Therefore, monetary policy is likely to remain restrictive throughout most of 2023. This will act as a break on economic activity and will likely lead to increases in unemployment rates in various economies, particularly in Europe and the US. Despite various inflation concerns raging various economies, Asian economies are expected to drive most of global growth in 2023, backed by Chinas recovery from pandemic and strong demand in India. As per a recent forecast by Asian Development Bank, the Asian region economy is likely to expand by 4.8% this year, up from 4.2% in 2022. Thus for the resurgence of a positive global recovery, well-designed policy measures are required to reduce inflation pressures, ensure better-targeting of fiscal policy support, and revive sustainable growth.

India

As per the recent economy survey, India had a good monsoon, and reservoir levels are higher than last year and the 10-year average. The fundamentals of the Indian economy are sound as it enters its Amrit Kaal, the 25-year journey towards its centenary as a modern, independent nation. Policies pursued carefully and consciously have ensured that the recovery post covid pandemic is robust and sustainable. Indias economic in FY23 has been principally led by private consumption and capital formation. It has helped generate employment as seen in the declining urban unemployment rate and in the faster net registration in Employee Provident Fund. Recovery of MSMEs was evident in the amounts of Goods and Services Tax (GST) they pay, while the Emergency Credit Linked Guarantee Scheme (ECGLS) have helped easing their debt servicing concerns. The Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) has also been directly providing jobs in rural areas and indirectly creating opportunities for rural households to diversify their sources of income generation. Schemes like PM-Kisan and PM Garib Kalyan Yojana have helped in ensuring food security in the country, and their impact was also endorsed by the United Nations Development Programme (UNDP).

As per the estimates of Asian Development Bank, Indias gross domestic product (GDP) is expected to moderate to 6.4% in fiscal year (FY) 2023 ending on 31 March 2024 and rise to 6.7% in FY2024, driven by private consumption and private investment on the back of government policies to improve transport infrastructure, logistics, and the business ecosystem.

Going forward private consumption is expected to rise as employment opportunities and consumer confidence strengthen. Demand will also be boosted by the central governments determination to significantly expand capital spending in FY2023, despite its reduced fiscal deficit target of 5.9% of GDP. Services sector is also projected to expand rapidly in FY2023 and FY2024, helped by a revival in tourism and other contact services. However, manufacturing growth in FY2023 is expected to be tamped down by a weak global demand, but it is expected to improve in FY2024. Recent announcements to boost agricultural productivity, such as setting up digital services for crop planning and support for agriculture start-ups will be important in sustaining agriculture growth in the medium term.

Inflation will likely moderate to 5% in FY2023, assuming moderation in oil and food prices, and slow further to 4.5% in FY2024 as inflationary pressures abate. As core inflation continues to persist, monetary policy is anticipated to tighten in FY2023 before easing up in FY2024. According to estimates, the current account deficit is expected drop to 2.2% of GDP in FY2023 and 1.9% in FY2024. Growth in merchandise exports is expected to grow at a moderate pace of 2-4% in fiscal 2024 after an estimated 5-7% increase in fiscal 2023 (Source: Current Affairs Aadda247/CRISIL), as production-linked incentive schemes and efforts to improve the business environment, such as streamlined labour regulations, improve performance in electronics and other areas of manufacturing growth. The expansion of services exports has been strong and is anticipated to continue improving Indias overall balance of payments position.

However, geopolitical tensions and weather-related shocks are key risks to Indias economic RI. Despite such challenges, the government of India recently announced a capital expenditure programme of Rs.10 lakh crores in the Union Budget which also constitutes 3.3% of the current GDP will continue to support the domestic economy (Source: Economictimes.com).

INDUSTRY STRUCTURE AND DEVELOPMENT

Lead application and global lead industry overview

Lead is a type of heavy metal which has several useful mechanical properties such as low melting point, high density, ductility and relative inertness. It is a chemical element and has a highest atomic number of any steady element. Lead is flexible and soft, and has a comparatively low melting point. When newly cut, lead is bluish-white and gets tarnishes to a dull grey colour when exposed to air.

The lead market is rising in demand due to increasing usage of lead products for architectural metals for gutters and gutter joints, roofing materials and on roof parapets. The rapidly increasing demand for cost effective and reliable power supply across various critical applications counting hospital, commercial facilities and industries is also highly impacting the growth of the lead. The rapid urbanization and industrialization as well as increasing demand for lead-acid batteries for automotive application are also anticipated to flourish the demand of the lead market owing to the above mentioned reasons and is also is projected to grow substantially. Furthermore, the constant expansion of building infrastructure backed by government investment along with rapid growth of commercial facilities across emerging economies are also expected to push the growth of lead market.

The major factor which actively drives the demand of lead market is the growth in absorbed glass mat (AGM) lead acid batteries on account of their flattering characteristic of being maintenance-free. Likewise, the strong investment in improving the telecom network along with significant development in data centres as well as increasing number of solar power projects will further offer various growth opportunities for the growth of lead market.

However, the high production cost with severe challenging process and easy availability of substitutes are expected to impede the growth of the lead market, whereas the increasing competition from the lithium-ion battery in many other lead batteries have the potential to challenge the growth of the lead market.

Various government regulations also have a significant impact on the lead market. The US Environmental Protection Agency (EPA) regulates lead in paint, dust, soil, air, and water, and issues and enforces regulations to address lead contamination and resulting hazards. The EPA regulates lead as a toxic air pollutant by limiting the emissions that come from some industrial sources, and the regulations that limit toxic air pollutant emissions are called National Emission Standards for Hazardous Air Pollutants (NESHAPs). The governments focus on improving the refining capacities and abilities of lead production facilities is also a factor driving the growth of the lead market. The regulations and policies set by the government can affect the demand and supply of lead, which can impact the market.

GLOBAL LEAD PRODUCTION AND CONSUMPTION OVERVIEW

The global lead proven resource is estimated to be around 2 billion tonnes (Source: USGS) and reserves to be around 85 million metric tons, with Australia having the largest reserves of lead, amounting to 37 million metric tons in 2022 and followed by China, Russia, Peru, Mexico, USA and India (Source: Statista). The global lead market size is expected to grow from USD 16.74 billion in 2022 to USD 19.07 billion in 2023 at a compound annual growth rate (CAGR) of 14%. The Russia-Ukraine war disrupted the chances of global economic recovery from the COVID-19 pandemic, at least in the short term. The war between these two countries has led to economic sanctions on multiple countries, a surge in commodity prices, and supply chain disruptions, causing inflation across goods and services and affecting many markets across the globe. The lead market size is expected to grow from USD 35.37 billion in 2027 at a CAGR of 16.7% (Source: The Business Research Company).

The global demand for Refined Lead Metal exceeded supply by 99kt and it is anticipated that global market for Refined Lead will increase by 1.7% during 2022-23 to 12.53 million tonnes. European usage fell by 1.9% in 2022, mainly on consequence of reductions in Austria, Poland, the Russian Federation, Spain and Ukraine. In 2023, a modest growth of 0.4% is expected, despite a significant reduction in Italian demand. After rising by 0.9% last year, Chinese demand is forecast to increase by a further 0.7% in 2023. Rises are also expected in India, Japan, the Republic of Korea, Mexico and the United States. Global supply of world lead mine production is forecast to grow by 2.8% to 4.56 million tonnes in

2023 principally due to an expected significant increase in Australia, where Galena Mining successfully commissioned their 95,000 tonne per year Abra mine in January. Output of refined lead metal from secondary (recycled) raw material accounted for 65.5% of global production in 2022 compared to 65.1% in 2021. Further rises are also expected in China, India, Kazakhstan and Mexico.

An anticipated increase in world refined lead metal output of 2.8% to 12.51 million tonnes is expected to be influenced by a rise in Germany, where Trafiguras Stolberg smelter was recently reopened after a flooding event forced its closure in 2021. Output is also anticipated to increase in Australia, India, Kazakhstan, the Republic of Korea, Mexico, Taiwan (China) and the United Arab Emirates, where new capacity is expected to be commissioned. These rises will, however, be partially balanced by significant forecast falls in production in Bulgaria and Italy.

World lead supply and usage from 2018 to 2022

(in thousand tonnes)

Particulars						Jan-Dec		2022
	2018	2019	2020	2021	2022	2021	2022	Sep	Oct	Nov	Dec
Mine	4,571	4,678	4,474	4,563	4,495	4,563	4,495	387.90	392.80	400.70	412.40
Production
Metal	12,301	12,342	11,961	12,379	12,296	12,379	12,296	1,029.10	1,051.20	1,055.50	1,071.10
Production
Metal Usage	12,346	12,299	11,778	12,335	12,395	12,335	12,395	1,037.30	1,032.00	1,064.70	1,077.20

Global lead prices

Global uncertainty once again dominated the lead market in 2022, with prices staying volatile throughout the year. Lead prices performed in a choppy fashion for most of 2022 after seeing high levels and instability in 2021. The base metal kicked off 2022 trading at USD 2,337, climbing through the first quarter to begin Q2 at USD 2,450. But even with frequent ups and downs, the metal almost broke the USD 2,500 per metric ton (MT) level early in the year of 2022.

Despite the outbreak of the Russia-Ukraine war, which brought uncertainty to the world markets due to strict economic sanctions on Russia, lead prices fell due to weaker consumption growth. The drop came amid reports of an increased supply of primary lead, which was somewhat tempered by tighter supply from secondary sources — smelters of scrap lead faced an increased cost following recent imposition of a VAT in China. During the second quarter, lead prices fell sharply below the USD 2,000 threshold and continued their decline in the third quarter to reach their lowest level of the year in September, when the metal was changing hands for USD 1,737.50. Increased volatility continued to take a hold of the lead market in the last quarter of 2022, but prices climbed to end the year at USD 2,336.50 - almost neutral compared to their 2022 starting point.

Lead and its growing usage

The high public awareness of the numerous benefits of employing lead batteries in sophisticated cars, comprising stop-start and hybrid vehicles paired well with renewable energy generation, is expected to boost demand for lead in the future years.	According to the information extracted from various government sources of several developed and developing economies, it has been revealed that their nationwide demand for energy is predicted to be doubled within the next decade.	The growth of the global lead market is increasing since various countries such as China and India have started making huge investments in smart grid technology in order to meet the huge demand for power over the projection period.	The potential investments in efficient smart grid technology have further led to the massive growth of lead-acid batteries, which are mostly utilized in electrical vehicles (EV), this factor further serves as one of the major components within the smart grid technology.
In addition to that, the surging adoption of advanced vehicle technologies including stop-start & hybrid vehicles and renewable energy generation is contributing towards the innovation in the lead-based battery segment over the projection period.	Lead acid batteries are known to be based on modern technologies which are also gaining immense importance in applications where batteries are considered extremely important for their efficient mechanism, as well as in new applications such as grid storage for renewable energy generation.	The surge in the building construction industry is predicted to be one of the crucial factors driving the demand for the lead over the assessment period. Lead is widely used in the construction industry as an architectural metal for roofing materials and gutter joints, and roof parapets.	In addition to that, the surging demand for lead-acid batteries for several automotive applications on the account of the surging automotive industry is anticipated to contribute to the growth of the market.

GLOBAL LEAD RECYCLING INDUSTRY

The global recycled lead market size is projected to hit around USD 20.4 billion by 2030 with a registered growth rate of 3.5% over 2020-2026 (Source: Precedence Research and GM Insights). Overall, it seems that the global lead recycling market is growing and expanding, with a particular focus on lead acid battery recycling. Additionally, there is an increasing emphasis on environmental protection norms and regulations, which may be driving the growth of the lead recycling industry.

North America: The recycling rate of lead acid batteries in North America was 96%, which was the highest among other economic products. North America controls the global recycled lead market.

Europe: Europe leads the market after North America. According to a report, it is the second fastest-growing market for recycled leads. Europe recycles more than 95% of the lead there in the market.

Asia-Pacific: Asia-Pacific dominates the recycled lead market with China being the largest consumer and producer of recycled lead.

Rest of the world: The recycled lead market is also present in regions such as Latin America, Middle East & Africa and South America.

Overall, it seems that the demand for recycled lead has been increasing globally, with Asia-Pacific being a booming market due to its expanding population.

Opportunities for the growth of the lead recycling industry:

The increasing demand for batteries from electric vehicles and energy storage systems is anticipated to augment market growth.

Lead is the only metal that can be recycled several times without having any diminishing impact on its quality. As a result, the production of secondary (recycled) lead is increasing over primary, which is anticipated to have a positive impact on market growth.

Recycling lead used in batteries improves the utilization of the metal, reduces greenhouse gas emissions, and conserves natural resources.

Recycling lead helps reduce the amount of toxic waste produced while also lowering the demand for new lead materials. This helps preserve natural resources and reduce the impact of lead production on the environment

Challenges faced by the lead recycling industry:

Labour and supply chain challenges, exacerbated by the pandemic, have made it harder for smaller operators to keep up.

The global metal recycling industry is growing at an unprecedented rate due to factors such as urbanization, the spread of industrialization, concerns over resource depletion, and environmental awareness. However, this growth also brings challenges such as increased competition and the need for digitalization to improve efficiency.

INDIA LEAD RECYCLING INDUSTRY

India has a growing lead recycling industry, with several facilities dedicated to the recycling of lead-acid batteries. The demand for lead in India is met by primary and secondary sources, with the recycling industry playing a significant role. The global metal scrap recycling market is worth over USD 500 billion, wherein Indias share is USD 11 billion or 2.2% of the market (Source: Business world). There are about 500 authorized recyclers of lead wastes in India with a total recycling capacity of around 1 million tonnes per year (Source: Battery News). The recycling industry provides an eco-friendly solution to the disposal of used lead-acid batteries and helps to reduce environmental pollution. However, lack of formal regulations and licensing has led to the operation of unlicensed backyard smelters, which can pose environmental and health risks.

GLOBAL LEAD ACID BATTERY INDUSTRY

A lead acid battery refers to a cost-effective rechargeable energy storage device, which includes an anode as the positive and a cathode as the negative terminal. They are further connected by the electrolyte to produce electricity through electrochemical reactions. The battery contains toxic lead metal, which can be recycled and prepared for reuse in other products. Apart from this, it involves oxide and grid production, pasting, curing, assembling, formation, filling, charge-discharge proceedings, inspection, and product dispatching as standard processes. The lead acid battery is tolerant to overcharging and relatively affordable and offers a larger current capacity and better performance in low or high temperatures. As a result, it is extensively used in grid storage and other commercial applications. Currently, the lead acid battery is commercially available in varying sizes and types, including flooded and sealed.

Due to superior cranking power and skyrocketing demand for sophisticated automotive technology, the SLI category is seeing a cyclical demand increase. In the winter, major regions such as North America and Europe are subjected to extreme weather conditions, necessitating the use of a power supply system with high cranking performance. Low cost and operational reliability are two of the most important characteristics that encourage people to use SLI batteries over other options. Furthermore, as the telecom industry expands in nations like the US, Brazil, India, and the UK, there is a growing demand for UPS systems as a backup power source, resulting in higher usage of lead-acid batteries as a cost-effective energy source. Growing demand for e-bikes and electric vehicles, cheaper repair and repair costs and a reduction in reliance on traditional fuel technologies are some of the primary factors recognized as drivers of the worldwide lead-acid battery market.

The global lead acid battery market size reached USD 33.0 billion in 2022 and it is expected that the market size would reach to USD 41.5 billion by 2028, exhibiting a growth rate (CAGR) of 4% during 2023-2028 (Source: Imarc).

Restraints: However, the lead acid battery industry growth could potentially be limited due to the constantly fluctuating prices of the raw material along with the rising development and market launch of low-cost substitutes. Additionally, the existence of the strongest regulatory laws surrounding the use and manufacturing of lead-acid batteries as well as their transportation could cause a loss of revenue.

Opportunities & Challenges: The growing application interest in renewable energy could provide growth opportunities whereas the associated risk of a safety hazard may challenge the market expansion.

Asia-Pacific to emerge as the indisputable leader: Asia-Pacific is projected to lead the global lead acid battery market with India and China acting as the major regional growth propellers. China is currently the largest manufacturer and supplier of lead acid batteries and is constantly registering a number of strategic tie-ups with other small and large-scale companies operating in the segment to enter new markets. Growth in

India is anticipated to be led by the growing need for constant power supply as the country rapidly moves toward higher industrialization. Asian countries are the largest consumers of backup power supply devices like inverters and generators which use lead-acid batteries to operate. The inexpensiveness and higher life cycle make lead-acid batteries a preferred choice amongst the regional population. North America could register the highest growth in the US as the automotive segment in the country reaches new revenue records. The electronic segment of the country could also offer higher growth opportunities.

Rapid technological advancement and expansion in telecom industry: Telecom industry across the globe is expected to witness a boom as a new generation of connectivity comes into existence. The telecommunications sector is one of the very few industries experiencing rapid technological development and improvement even during the tough times of recession. This sector continues to be an important force for innovation, growth, and disruption across multiple sectors. The major telecom players in the industry continue to invest in the expansion and development of their processes and operations to capitalize on the increasingly apparent opportunity for bolstered revenue generation streams. Already evaluated in excess of USD 270 billion in the fiscal year 2017, according to numerous industry experts, the reason for the growth of the wireless telecom space is the growth of multiple technological innovations. With several advancements in the communication technology and increasing interconnectivity of devices, the wireless telecom industry is prepared to continue serving as the primary support source for the overarching technology world.

One of the biggest telecom major has recently announced its companys tie-up with Microsoft to bring into existence several data centers in India. These data centers eventually require a central power backup facility; even the UPS used in the systems is of basic lead acid batteries. Thus, with more data centers coming into existence, the usage of this battery is expected to increase considerably.

Usage in renewal energy industry: As per the IEA, renewables are expected to have the fastest growth in the electricity sector, resulting in catering to about 30% of the power demand in 2023, up from 24% in 2017. During this period, renewables are estimated to contribute to more than 70% of the global electricity generation. This growth would be led by solar (both photovoltaics and ground mount modules) followed by wind, hydropower and bioenergy .Hydropower, however, remains the largest renewable source, catering to about 16% of the global electricity demand by 2023, followed by wind catering to a further 6%, solar Photovoltaics (PV) (4%), and bioenergy (3%). In developing regions such as India, the renewal energy generation target of 500 GW of installed renewable energy by 2030, which includes the installation of 280 GW of solar power and 140 GW of wind power (Source: Times of India). Thus, with the growing generation, the need for energy storage would also increase significantly as the lead acid batteries are installed in the generation grid. At the same time, these batteries are also installed at the substations where the power generated is fed into the main grid. Thus, with the increase in the generation, the implementation of these batteries is also expected to increase significantly.

Data centre segment: The data centres subsegment is expected to be the largest contributor to the lead acid battery market, by industrial segment. The lead acid battery market is subsegmented, by industrial, into data centres, telecom, oil & gas, and others. Others in the industrial segment include construction, metals & mining, chemical & pharmaceutical, and food & beverage industries. Regions such as Asia Pacific is focussing on increasing the number of datacentres installed across the countries, due to the growth of the IT sector. Lead acid batteries are expected to be used as a backup power solution in these data centres owing to their functionality across a wide temperature range.

INDIA LEAD ACID BATTERY INDUSTRY

The India lead-acid battery market is segmented by application, including SLI (start, light, and ignition) batteries, industrial batteries, and other applications. Growing automotive industry and renewable sector coupled with rapid urbanization and increasing government focus towards promoting use of electric vehicles to fuel India lead acid battery market through 2023 and beyond. Indias lead acid battery market is projected to cross USD 7.6 billion by 2023, on account of growing automotive and telecommunication sectors in the country coupled with the governments ‘Make in India initiative. Moreover, increase in budget allocation by the Government of India on smart city projects and various other housing projects such as AMRUT Yojana and Pradhan Mantri Awas Yojana (PMAY), government mandate to use hybrid energy in the huge and growing telecommunication sector and growing investments in the power transmission and distribution sector are expected to stimulate demand for lead acid batteries in the coming years across the country.

The major drivers of growth in the India lead acid battery market are:

Widespread use of devices like inverters, UPS systems, and switchgear, which fuels the demand for lead acid batteries in the country.

Growing advancement in technology coupled with the strengthening of the telecommunication sector

Rising demand for energy generation and storage.

Increasing adoption of electric vehicles.

Government efforts to boost automotive battery manufacturing in India.

High consumption of electronics and the rising emphasis on reliable power supply to run these devices, which is driving growth in the stationary segment of the lead acid battery market.

The major challenges faced by the India lead acid battery market are as follows:

Competition from alternate technologies, mainly lithium-ion, which are expected to disrupt the market growth, primarily owing to their decreasing costs and technical advantages.

The absence of lithium-ion domestic manufacturing facilities is likely to restrain the market.

The Indian battery market is highly fragmented, with a large number of unorganized players operating in the market, which makes it difficult for organized players to compete.

The lead acid battery recycling process in India faces several challenges such as lack of awareness, inadequate infrastructure, and informal recycling practices that pose a threat to human health and the environment.

Extended Producer Responsibility

As we move towards a more sustainable future, its becoming increasingly important for businesses to take responsibility for the waste they produce. One area where this is particularly critical is the disposal of batteries, which can contain hazardous materials that can harm the environment if not properly disposed of. Thats why many countries have implemented Extended Producer Responsibility (EPR) schemes for batteries, which require manufacturers to take responsibility for the disposal of their products at the end of their useful life.

Under EPR schemes, manufacturers are required to take back and recycle their products at the end of their useful life, rather than leaving this responsibility to consumers or local authorities. This means that manufacturers must develop systems for the collection and recycling of their products and may be required to contribute to the costs of recycling and disposal.

The Government of India has recently introduced new rules on Extended Producer Responsibility (EPR) through Battery Waste Management

Rules (2022) for battery waste management. These rules apply to battery manufacturers and importers, and are designed to ensure that they take responsibility for the collection, recycling, and disposal of their products.

The benefits of EPR schemes for batteries are clear. Firstly, they help to ensure that batteries are properly disposed of, reducing the risk of environmental damage. Secondly, they encourage manufacturers to design batteries that are more easily recyclable, which can help to reduce the environmental impact of battery production. Finally, they can help to create a more circular economy, where materials are reused and recycled rather than being sent to landfill.

Thus by encouraging manufacturers and importers to take responsibility for their products, and by promoting the development of more environmentally friendly batteries, we can help to reduce the environmental impact of battery production and protect our planet for future generations.

Application and global aluminium industry overview

Aluminium – the third most abundant element in the earths crust finds its implementation in many sectors due to its environment and user-friendly nature – in Building and Construction (B&C), power sector, automotive, packaging, household appliances etc. The surge in the demand of this youngest metal of the non-ferrous metal industry is indicated to the escalating infrastructural development of various nations. The global aluminium market is projected to grow from $168.84 billion in 2022 to $255.91 billion by 2029, at a CAGR of 6.1% in the forecast period, 2022-2029 (Source: Fortune Business Insights).

Aluminium is the second most used metal in the world after steel and its annual consumption in India at 2.5 kg per capita is much below the global average of 11 kg per capita. Rise in infrastructure development and automotive production are encouraging development in the metals and mining sector in India. India has nearly 10% of the worlds bauxite reserves and a growing aluminium sector that leverages this. Demand in the domestic market is expected to rise by 8-10% in FY 2022-27. Solid long-term demand fundamentals and expectation of healthy operating margins, despite some moderation this fiscal, will spur domestic aluminium makers to spend around Rs. 70,000 crore over the next five fiscals through 2027 to expand capacity. The domestic market is likely to witness more robust growth of 6-7% in the near term, and 4-5% over the medium term. Increasing green transitions in the economy would lend traction to this demand. Increase in downstream capacities will buff up product portfolios, while backward integration will help sustain cost-competitiveness. India exported more than half of its annual output over the past five fiscals. Consequently, even after significant smelter capacity addition, utilisation is expected to remain above 90% over the next two fiscals. Realisations are expected to remain range bound at $2,400 per tonne next fiscal (~$2,774 on average last fiscal), with low global inventory and recent production cuts in Europe and China partly offsetting easing global demand (Source: Livemint).

Although Aluminium has been used in automobiles for many years, its proportion of new vehicles is for reducing the weight of the vehicle and achieving a better driving range. Various automotive manufacturers are increasingly substituting stainless steel with aluminium as it exhibits similar physical properties and lightweight nature. The above-mentioned factors are estimated to drive market growth.

Key driving factors

Increasing popularity of secondary Aluminium to aid market growth: Aluminium can be recycled into various different products such as car bodies and tractor-trailers. However, aluminium cans generally develop into new cans of the same metal. Additionally, recycling secondary Aluminium does not reduce the metal quality, and thus it can be recycled indefinitely. The continuous demand for such cans results in the increasing metal demand. Recycling cans saves natural resources and energy and reduces the pressure on landfill sites. Making new cans from recycled metal saves almost 95% of the energy used to make cans from the bauxite ore. The production of recycled metal requires only about 5% of the energy required to produce new Aluminium metal. In addition, any scraps left during the production process can be melted down and reused over and over again. As a result, approximately 75% of all Aluminium metal produced is still in use today. Moreover, the rising emphasis on consuming sustainably sourced products is expected to further drive metal recycling operations and is likely to boost the market growth of Aluminium in the world.

Restraining factors

Implementation of stricter environmental regulations to hamper market growth: Many countries across the globe have had to adopt new regulations as a result of expanding environmental-related problems and increasing public expectations for government action to reduce the level of pollution. The implementation of such stringent environmental regulations by governments and associations is expected to limit market growth. Moreover, rising environmental issues and increasing expectations from the citizens toward improving the rising pollution levels have forced several countries to incorporate a new set of rules. The cost of goods has increased due to smelting operations required to meet higher emission requirements. Additionally, in the past decade, consumers have become increasingly aware and concerned about environmental health.

ALUMINIUM RECYCLING INDUSTRY

Total aluminium (primary and secondary) demand in India in fiscal 2022 is estimated at 3.9 million tonnes, logging a CAGR of 4-5% over fiscals 2015 to fiscal 2022. The demand for secondary aluminium in India zoomed at a CAGR of 9-11% from fiscal 2015 and 2022, while primary aluminium demand registered a CAGR of 1-2% only. Demand for primary and secondary aluminium is estimated at 2.25 and 1.66 million tonnes, respectively, in fiscal 2022. The demand for secondary aluminium is primarily led by demand from the auto sector. Rising demand from packaging, consumer durables and construction sectors also led to increased demand. Due to better cost dynamics the share of secondary aluminium in aggregate aluminium market in India rose to 42-43% as of fiscal 2022 from 29-30% in fiscal 2015 (Source: CRISIL).

Key advantages of recycled (secondary) aluminium

Less capital intensity: Manufacturing of aluminium through primary route involves bauxite mining, bauxite refining, smelting of alumina, etc. These activities are capital as well as energy intensive. Setting up of a green-field refinery and smelter of a minimum economic size (typically a refinery of 1 million tonne and a smelter of ~0.5 million tonne) with a captive power plant requires an investment of around Rs. 220-240 billion. As against this, the recycled route involves sorting and segregating scrap, melting of scrap, re-alloying, and casting into ingots. This process is carried out at a cost considerably lower than that of primary aluminium owing to lower energy requirements. Moreover, setting up of a fully mechanised recycling unit of 1 million tonne capacity would typically involve an investment of Rs. 15-20 billion.

Low cost of production compared to primary aluminium: One of the major advantages of recycling is low production costs as against manufacturing through the primary route. This low cost is attributed to significantly lower energy requirements (~90-95% of energy savings in case of secondary aluminium production as per International Aluminium Institute) for recycling than the primary route. Also, pre-existence of required alloyed elements in aluminium scrap further reduces alloying costs.

Perpetual recyclability: The inherent quality of aluminium is not affected irrespective of the number of times it is recycled. The other key characteristics that drive the demand for secondary aluminium are its perpetual recyclability, with an advantage of pre-existence of desired properties (as it is pre-alloyed specific to end-use requirement when in scrap form). Scrap availability: Aluminium scrap is estimated to be available in abundance globally, which further results in increased recycling of aluminium for key end-use products.

Secondary aluminium demand review (fiscal 2015-2022)

Between fiscals 2015 to 2022, the demand for secondary aluminium is estimated to have grown by a 9-11% CAGR to 1.66 million tonnes in fiscal 2022. Better cost economics of secondary aluminium fuelled this growth. There is a healthy demand for non-ferrous castings from the automotive sector, which consumes 40-45% of secondary aluminium in India. Further, demand from the building & construction sector, which consumes 21-22% of overall secondary aluminium, has also increased with rising penetration of recycled extrusions, especially in window frames. The packaging segment too witnessed faster growth (for secondary) during the years, largely as a result of healthy growth in key underlying industries such as food products, beverages and pharmaceuticals.

Secondary aluminium demand segmentation

Secondary aluminium demand expected to log CAGR of 6-7% from fiscal 2022 to fiscal 2027

Aluminium (primary and secondary) consumption in India de-grew in fiscal 2020, because of slow demand from key end-use industries such as power, auto and B&C; and due to the pandemic-led economic slowdown. Recycled aluminium demand, too, was subdued due to slowdown in the domestic auto sector, key consumer of secondary aluminium in India. The impact of pandemic was felt in fiscal 2021 as well and the secondary aluminium grew by 2-3% only. Demand for secondary aluminium revived by 21-22% on-year and the industry increased at a CAGR of 10% to 1.66 million tonnes in fiscal 2022, from 0.86 million tonnes in fiscal 2015. Revival in fiscal 2022 would have been higher if not for the incidence of the second wave, which resulted in lockdowns in all major Indian states in April and May 2021. Moreover, any further increase in domestic demand was limited by semiconductor shortage, which impacted automobile production. Demand is likely to stay healthy in the long term supported by growth in the auto industry, pick-up in execution of construction projects, recovery in consumer durable spending, and increased demand from the packaging segment. Also, stimulus measures by the government are expected to create investment demand in the construction segment. Thus, total secondary aluminium demand is expected to increase at a CAGR of 6-7% to reach 2.2-2.3 million tonnes by fiscal 2027, from current demand of 1.66 million tonnes in fiscal 2022.

Opportunities of recycled aluminium

Rising demand growth from auto sector.

Increasing scrap generation.

Increase in demand due to an expected increase in infrastructure spending.

Key threats:

Competition from the fragmented market.

Heavy reliance on scrap imports.

Application and global plastic industry overview

Plastics refer to polymeric materials made from synthetic or semi-synthetic organic compounds that are malleable and can be moulded into desired shapes using heat and pressure. Some of the commonly used plastics include polyethylene (PE), polypropylene (PP), polyvinyl chloride (PVC), and liquid crystal polymers. Plastics are widely used for manufacturing bags, cups, cases, bottles, food wraps, tableware, wire insulations, and non-stick surfaces. They are cost-effective, lightweight, and durable and offer corrosion resistance, high thermal and electrical insulation, and inertness to biological materials. As a result, plastics find extensive applications across the packaging, construction, agriculture, automotive, electronics, healthcare, and textile industries. The global plastics market size reached USD 615.2 billion in 2022. Looking forward, it is expected that the market will reach to USD 747.9 billion by 2028, exhibiting a growth rate (CAGR) of 3.18% during 2023-2028 (Source: IMARC).

The plastics industry is currently home to about 50,000 industries, most of which are micro, small, and medium-sized enterprises (MSMEs). These enterprises contribute Rs. 3.5 lakh crore (USD 42.89 billion) to Indias economy and employ more than 50,000 people. The country recycles plastic at a rate of 60%, which is higher than that of developed nations. The "Make in India," "Skill India," "Swachh Bharat," and "Digital India" initiatives of the government are increasing plastic production, and by 2027, it is expected that the plastics industry will generate Rs. 10 lakh billion (USD 122.54 billion) annual revenue, with two lakh tonnes of exports (Source: IBEF).

Key driving factors

Expanding Footprint of Engineering Plastics to Propel Growth Potentials: The plastics market share will witness notable traction during the forecast period, largely due to better mechanical and thermal properties. Surging demand for better polymer solutions will encourage leading companies to expedite investments. Prominently, surging demand for metal substitution could play a pivotal role in boosting the material demand. Furthermore, the food industry is poised to be the major recipient of plastics that avoid contamination and minimize food quality degradation. Increased usage of the polymer in fashion, sports, and toy-making will bode well for the industry growth. However, rigorous regulations implementing plastic reduction policies could impede the industry growth.

PLASTIC RECYCLING INDUSTRY

Recycled plastics are the plastics that made from post-consumer or post-industrial plastics instead of the virgin resin. The process of recycling used plastic from consumable products is an efficient means to reprocess the material into useful products. Many different products make great sources of recyclable material, including: soda bottles, plastic packaging, sheets and pellets. Recycled plastic is used to make many different types of products. The type of product that is made out of recycled plastic depends on the type of plastic resin. There are several different types of plastic resin used to make different products, such as PET, PP, HDPE and LDPE. The global Plastic Recycling market size was valued at USD 44,290 million in 2022 and is forecast to a readjusted size of USD 65,050 million by 2029 with a CAGR of 5.6% during 2022-2029. China is the largest market, with a share over 40%, followed by North America and Europe, both have a share about 35% (Source: Market Watch). During FY 2021, Indias market for recycled plastics grew to 8.9 million tonnes. It is anticipated to increase at a compound annual growth rate (CAGR) of 11.30% from FY 2023 to FY 2028, reaching 18.50 million tonnes (Source: Market Research and IMARC). The plastic recycling industry in India is flourishing due to an increase in small-scale processing plants and a greater emphasis on the secondary use economy by non-governmental organizations.

Government initiatives

Several initiatives undertaken by the Indian government in the last few years have directly or indirectly influenced the plastic recycling market in India.

Swachh Bharat Mission assists Gram Panchayats in raising awareness about reducing single-use plastic use and effectively managing plastic waste. In collaboration with Hindustan Coca-Cola Beverages Private Limited, Hindustan Unilever Limited, HDFC Bank, and Coca-Cola India Foundation, UNDP India is broadening existing programs to diminish the impact of plastic waste on the environment in India.

Key growth drivers of the market

With rising concerns over the excessive usage of plastics, there is an increasing demand for alternatives to conventional plastics. Due to rapid innovation and the introduction of new products, manufacturers have shifted toward using recycled plastics since they reduce the carbon footprint used in the manufacturing process. Increasing usage of consumer electronics has driven the demand for recycled plastics in electronics and packaging applications.

Key deterrents to the growth of the market

Virgin plastics are used in various applications, including the packaging of food to produce automotive components. They are superior to their recycled alternatives in terms of quality. The high cost of recycled plastics to the end-user than conventional plastics has also hindered the markets growth.

Key takeaways of the plastic industry in India

Plastic is considered a big contributor to economic growth.	India is expected to export plastic worth USD 8 billion by 2023.	Plastic can be recycled 7-9 times before it is no longer recyclable.	Bangalore has setup material recovery facilities (dry waste collection centres) where recyclable plastic can be sold at pre-decided rates.	Companies can work with municipalities to collect back the packaging waste generated from their products.
				This is known as Extender Producer Responsibility.

BUSINESS AND FINANCIAL OVERVIEW

Gravita India Limited (the ‘Holding Company) is a public limited Company domiciled and incorporated under the provisions of the Companies Act, 1956 applicable in India. The Holding Companys equity shares are listed at the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The registered office of the Company is situated at "Saurabh", Chittora Road, Harsulia Mod, Diggi-Malpura Road, Tehsil-Phagi, Jaipur-303904 and having principal place of business in Jaipur (Rajasthan), Gujarat, Chittoor (Andhra Pradesh), Kathua (Jammu and Kashmir), Mirigama (Sri Lanka), Mozambique, Tanzania, Ghana, Senegal and Togo. The Principal activities of the Company as a whole "Group" including its subsidiaries are - Lead recycling, plastic recycling, Aluminium processing,Pastic recycling, rubber recycling and dealing in Turn-key recycling projects. The Company carries out smelting of used lead battery scrap / Lead concentrate to produce secondary Lead metal, which is further transformed into Pure Lead, Specific Lead Alloy, Lead Oxides (Lead suboxide, Red Lead, and Litharge) and Lead products like Lead sheets, Lead powder, Lead shot etc. The Companys financial statements were prepared as per the Indian Accounting Standards ("Ind AS") as prescribed by Ministry of Corporate Affairs pursuant to Section 133 of the Companies Act, 2013 ("the Act"), read with the Companies (Indian Accounting Standards) Rules, 2015 (as amended), other relevant provisions of the Act and other accounting principles generally accepted in India.

Brief financial performance for F.Y. 2022-23:

Consolidated Financial Summary: (Amount in Rs. Crores)

Particulars	Year ended March 31, 2023	Year ended March 31, 2022
Revenue from Operations	2,801	2,216
EBITDA	286	215
Interest and Financial Charges	39	34
Tax expenses	24	16
Net Profit	204	148

Standalone Financial Summary : (Amount in Rs. Crores)

Particulars	Year ended March 31, 2023	Year ended March 31, 2022
Revenue from Operations	2,524	1,894
EBITDA	156	83
Interest and Financial Charges	32	28
Tax expenses	15	9
Net Profit	101	40

KEY FINANCIAL RATIOS ON STANDALONE BASIS:

Ratios	2022-23	2021-22	% Change	Reason (if more than 25% change)
Debtors Turnover	20.85	22.68	(8)
Inventory Turnover	6.67	6.13	9
Interest Coverage Ratio	3.34	1.71	95	(i) Repayment of borrowings leading to decrease in principal repayments in subsequent years (ii) Increasing operational profits and retained earnings resulting in improvement in companys health and creditworthiness.
Current Ratio	1.45	1.33	9
Debt Equity Ratio	0.90	1.53	(41)	(i) Repayment of current and non- current borrowings.
				(ii) Increasing operational profits and retained earnings resulting in improvement in companys health and creditworthiness.
Operating Profit Margin (%)	3.94	4.13	(5)
Net Profit Margin (%)	4.01	2.10	91	Due to increase in profitability
Return on Net Worth (%)	32.78	19.12	71	Due to increase in profitability

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Companys internal financial controls are commensurate with the nature of its business, the size, and complexity of its operations and such internal financial controls with reference to the Financial Statements are adequate. The controls were tested during the year and no reportable material weaknesses either in their design or operation were observed. To maintain independence and objectivity in its function, the Internal Auditor reports directly to the Audit Committee of the Board.

Further, your Companys Internal Financial Controls (IFC) has been reviewed and all necessary steps have been taken to strengthen financial reporting and overall risk management procedures. Detailed procedural manuals are in place to ensure that all the assets are safeguarded, protected against loss, proper prevention & detection of frauds & error, the accuracy and completeness of the accounting records, and all transactions are authorized, recorded and reported correctly. The scope and authority of the Internal Audit (IA) function is defined in the internal financial control policy. These are monitored and routinely monitor and evaluated by the Statutory as well as Internal Auditors. The Internal Auditor monitors and evaluates the efficiency and adequacy of Internal Financial control system in the Company, its compliance with operating systems, accounting procedures and policies. To maintain its objectivity and independence, the Internal Auditor reports directly to the Chairman of the Audit Committee of the Board, all the significant audit observations and follow up actions thereon. Both Statutory and internal auditor have quarterly sessions with the Audit committee. The Internal audit reports are placed before the Audit committee on quarterly basis and all findings and observation, if any are recorded thereon. The said observation and comments, if any of the Audit Committee are placed before the board. The Internal Auditor is a permanent invitee to the Audit Committee Meetings. The Audit Committee advises on various risk mitigation exercises on a regular basis. Walker Chandiok & Co. LLP, the statutory auditors of the company have audited the financial statements included in this annual report and have issued an attestation report on our internal control over financial reporting (as defined in section 143 of Companies Act 2013). The company has appointed M/s KPMG, Chartered Accountant to oversee and carry out internal audit of activities of the company. In line with companys business & presence, the conduct of internal audit is oriented towards the review of internal controls and risks in the companys operations such as accounting and finance, Interest amount, credit risk, compliance risk, liquidity risk, employee engagement.

The audit committee also reviews reports submitted by the management and audit reports submitted by internal auditors and statutory auditors on periodic basis. Suggestions for improvement are considered and the audit committee follows up on corrective action. The audit committee also meets companys statutory auditors to ascertain, inter alia, their views on the adequacy of internal control systems and keeps the board of directors informed of its major observations, if any, periodically.

Your Board is of the opinion that the Internal Financial Controls, affecting the Financial Statements of your Company are adequate and are operating effectively.

RISK AND CONCERN

The Company has laid down a well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out to identify, evaluate, manage and monitor business and non-business risks. The Audit Committee and the Board periodically review the risks and suggest steps to be taken to manage/mitigate the same through a properly defined framework.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS

Gravita considers employees as the most valued asset, who are at the core of the business. Human capital is the most important business driver. A strong people culture is the soul of the organization and biggest competitive advantage for a sustainable growth.

As an organization, all colleagues, at every level, are part of the organizations growth strategy and are empowered enough to take business decisions. The Company takes care of them much beyond salary, pay and perks and ensures that they get best-in-class learning and career advancement opportunities. The key pillars of the core philosophy are talent care and development, empowerment and decision making at all levels, innovation, agility and digital transformation. The Company understands that internal selection and succession is very critical for the long-term sustenance of the business as it ensures business continuity, preserves corporate culture, enhances knowledge capital and fuels the ambitions of the companys talent leading to better retention. It is ensured that internal talent is groomed for the next level responsibilities.

The Company employed 1950 plus employees on consolidated basis and 1733 employees on standalone basis as on 31^st March, 2023.

INFORMATION & TECHNOLOGY

Company continue to invest in automation and latest technology in its business operations, in order to improve efficiencies and drive down costs. Your Company has in place SAP based ERP system. The system has the latest offering of the world-renowned organization - SAP - S/4 software with its very high end, developed HANA database.

CAUTIONARY STATEMENT

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Forward–looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments.