hindusthan national glass industries ltd share price Management discussions

WORLD ECONOMY

The global economy encountered significant challenges in 2022, characterized by weak growth prospects, elevated inflation, and increased uncertainties. However, there were tentative signs in early 2023 that the world economy could achieve a soft landing, mainly due to resilient household spending in developed economies. Although inflation has decreased as central banks raised interest rates and food and energy prices have dropped, underlying price pressures remain stubborn, and labour markets remain tight in several economies.

Despite some indications of improvement, global growth is projected to slow down, reaching its third weakest pace in nearly three decades, with only the recessions of 2009 and 2020 overshadowing it.

INDIAN ECONOMY

Policymakers worldwide currently find themselves in a predicament. Over the past two years, the global economy has been struggling to deal with overlapping crises, with the latest being liquidity troubles following a series of global bank crises.

The World Bank now fears that the ongoing slump in global economic growth will likely result in a "lost decade." Despite this gloom, many market analysts believe that this could well be Indias decade. There are enough reasons and data to back this claim. Recent data revisions by India suggest the economy has fared better than previously believed, despite continuing global uncertainties. The International Monetary Fund (IMF) expects India to grow by 5.9% in FY 2023–24 and by an average rate of 6.1% over the next five years.

While betting on consumption-driven growth is obvious; given Indias large, young, and rising share of the upper middle– income population (with a high propensity to spend), it is believed that investment will play an important role over the next two years. It is investments that will provide India with necessary momentum to embark on a path of sustained domestic demand–led growth for decades to come.

India is on track to become the worlds third largest economy by 2027, surpassing Japan and Germany. India is gaining power in the world order, and these changes imply a once-in-a-generation shift and an opportunity for investors and companies. Indias GDP could more than double from $3.5 trillion today to surpass $7.5 trillion by 2031.

Container Glass Industry – Present & Future

The global container glass market size stood at 63.4 USD billion in 2022 and is anticipated to reach USD 78.4 billion by 2026 at a CAGR of 5.46%. The global glass market is predominantly driven by the increasing demand for Alcoholic Beverages, Food and Pharmaceutical. Asia-Pacific excluding the Japan (APEJ) has the largest demand market, followed by Europe and the Americas. In terms of production too, APEJ is the major producer and exporter of glass containers followed by Europe.

The Asia-Pacific region is expected to register a significant growth rate compared to other nations owing to an increase in demand for pharmaceutical, alcoholic drinks and chemical industries, which prefers glass packaging because of the inert nature of glass bottles. China, India, and Australia among others are the prominent nations majorly contributing to the growth of the Asia Pacific glass packaging market.

Russia - Ukraine War & COVID-19 Pandemic- The "shock" of the war was one of the main factors that had slowed economic growth in 2022 to just 3.1% from expected 5% and it is projected to slow to 2.2 percent in 2023. Headline inflation increased from 2.6% in 2021 to 8.4% in 2022. Russia- Ukraine war has led to elevated energy prices and raw material cost. Supplies from Ukraine has halted whereas with Global sanctions and ban on purchase from Russia has worsened the business economics. Various sanctions are imposed on Russian gas, Crude Oil, Coal, Russian bank, swift transaction, Russian Ships etc. EU, USA and allies gradually phased out import of crucial goods from Russia and want other nations to align with their strategy. Most Private multi-national companies pulled out and disengaged with Russia. This all has led to supply chain disruption of crucial goods of glass industry. Although the world and manufacturing industries have learnt to continue production in COVID pandemic, its business impact is still being felt with intermittent waves such as the one that hit China in end of 2022.

Revenue of the global food industry was 8.27 trillion USD in 2021, which increased to around 9 trillion dollars in 2022 an increase of over 700 billion USD. Food revenue worldwide will continue to increase and reach around 11.1 trillion USD in 2027. Glass packaging growth trend in Cosmetic and Fragrance segment has again got revived. Pharmaceuticals segment witnessed remarkable growth and it is expected to portray CAGR of 5.5% to 6% from 2022 to 2030. Due to increase in severity

of diseases there is upsurge in adoption of container glass for storage and packaging of pharmaceuticals.

Premium Food & Beverage brands mostly prefer container glass over other packaging options such as plastics, as glass is sustainable, chemically inert, non-porous and impermeable.

Some of the factors of Container Glass Industry which limits the growth perspective are volatile prices of Energy and Raw materials, Higher Logistics costs, Issues of Breakage and Growing use of Alternate Packaging like Plastics, Paper, and Flexible packaging etc.

Indian Container Glass Industry

Due to COVID pandemic, Total size of India container glass Market shrunk by approx. 15% in FY21. Thereafter, market recovered, and revenue touched Rs 9,135 Cr in FY23. The Growth of the Indian Container Glass Market will be very robust in the coming 6-7 years owing to limited addition of new capacity and more demand for container glass segment coming from

both domestic as well as export markets.

The Indian Domestic Container Glass Market can be broadly divided into the following segments:

• Liquor
• Beer
• Food & Dairy
• Pharmaceuticals & Vials
• Soft Drinks
• Others

Demand Supply Gap & Growth Projection: Indian Glass Industry is expected to grow at 5.65% CAGR volume-wise to reach 12,959 Cr by FY 27. The present market demand for container Glass in the domestic Market is approx. ~28 Lac MT.

Current running capacities are in tune of 39 Lacs MTPA whereas total installed capacity in India is approximately 49 Lac MTPA. There is no further addition to capacity are planned as all the players are adopting a cautious approach towards capacity expansion due to bitter experience in the past which led to abnormally high excess capacity. Among all container glass players, HNG capacity is highly underutilized due to poor furnace condition.

In view of upsurge in container glass demand in the upcoming years with no further capacity addition, HNG is well placed to cater to rising market demand once furnaces are repaired.

The Indian Container Glass market is primarily driven by Growth from Customer segments. As a result, production capacities are strategically established in specific geographical areas to effectively cater to the demand generated by these customer segments. Also, the specialized capabilities play a crucial role to cater to production requirement of each segment.

• Liquor segment (including Whiskey, Gin, Brandy, Rum, Vodka and Wine) is the largest demand market for container glass in India. Many container glass manufacturers are supplying more than 95% of bottles to the liquor segment.
• Beer & Soft Drink segment require specialized production capabilities, which are only available with a few players in the industry. Both these segments have substantial demand for colored bottles in Amber, Green and Blue. Such colored bottles require specialized technology, which is available with only a few players. The beer segment is expected to have CAGR of 8.17% till 2027 whereas container glass demand from Soft Drinks Segment is expected to experience exponential growth going forward as companies like Coca Cola & Pepsi are switching from alternate packaging to Glass in order to meet their global commitment to sustainability. Given this trend, Beer & Soft Drink present bright opportunities for HNG to increase its sales.
• Zonal Concentration: The production capacities of container glass are strategically installed, taking into account factors such as proximity to raw materials and market demand. As a result, the installed capacity in the North and West regions is higher, while the South and East regions have comparatively lower installed capacities. HNG is the only container glass

player with a pan-India presence, which provides the company with a competitive advantage in catering to pan-India market demand.

• Food and Pharma segment surge is expected to continue. The Indian government increased allocation to the health sector from Rs 86,200 Crore in the last fiscal year to 89,155 Crore in the current 2023-24 fiscal year will further boost Pharma segment.
• Exports Market: The Exports Market for Container Glass is estimated to be approx.~4 Lac MT. The demand for container glass is projected to experience exponential growth due to two main factors: Indias cost advantage and the shifting demand of foreign players from China to alternative sources. The Glass Segment manufactured in specific COSMETIC quality furnaces is expected to see robust growth.

By 2029-30 the demand from the export Market of container glass is expected to touch ~10 Lac MT with HNG in a strong position to take the maximum share from this incremental demand.

• Profitability of the container glass player is critically dependent upon crude oil prices and raw material Cost which hit the roof and adversely impacted glass industry in FY23 specially till Sep-22.

New Opportunity- Stringent Plastic Recycling Norm, demand for sustainable packaging, Plastic Ban in Pharmaceutical, Pharmaceutical Industry Growth & Light Weight Bottle etc

Extended Producer Responsibility for Plastic Packaging

The Ministry of Environment has notified the Guidelines on Extended Producer Responsibility for plastic packaging. The Guidelines stipulates mandatory targets for minimum level of recycling. The year-wise target is as below:

The EPR target for plastic packaging made from compostable plastic is 100% from 2023-24. EPR is applicable for rigid plastic

packaging, Single or Multi-Layer flexible plastic packaging, Multi-Layer Plastic packaging and Plastic sheet or like used for packaging as well as compostable plastic carry bags.

This stringent norm imposed on plastic producers is a big opportunity for glass industry in India as customers are expected to switch from plastic to glass for substantial packaging quantity to meet their packaging requirement as this norm may lead to dearth of plastic supply.

Demand for Sustainable Glass Packaging

Besides increasing awareness about the hazards of using alternate packing like PET/Plastic bottles among the public as well as among the government institutions, this Pandemic of COVID-19 has also showcased glass as the best suited sustainable packaging alternative to various segments producing health and wellness products.

• There is drastic increase in demand for glass bottles for the Soft Drinks segment. Both Coco Cola & Pepsi are globally and in India are moving towards glass and reducing PET Consumption. There is scope to achieve a 10% volume shift from PET to glass in the near future, and HNG would aim to capture 60% of this additional volume.
• Liquor Packaging being a state subject opens a big market for Glass Packaging. Recently UP, Chhattisgarh have restricted usage of PET in Liquor Packaging. Many states are also contemplating restricting PET Usage to stop spurious Liquor. If all the non-glass option in state liquor are converted to glass, there is potential of additional Volume of ~12 Lac MT p.a..
• The proposed regulation of plastic ban on Pharma Liquid formulations will open new market for Glass Industry and incremental demand from above action from would be approx. 3 lacs MT p.a.
• There is also movement in the Food & Milk segment with brands preferring glass over other packagings.

Challenges

1. Russia- Ukraine War: Disruption to two major trade routes, Russia and Ukraine, along with subsequent sanctions imposed on Russia by different economies, had a major impact on global supply chains. Russia and Ukraine are the key suppliers of raw materials that run the worlds of oil, gas energy and metallurgical industries. The Russia-Ukraine lingering

war has halted supplies from Ukraine, and trading with Russia has also become challenging which has made energy and raw material prices volatile. This is heavily impacting crude oil and raw material prices related to glass industry intermittently.

This might enforce container glass industry to increase bottle price depending on business economics.

2. Soda Ash Prices skyrocketed in FY-22 and this trend continued till Jul-22. From Aug22 though price saw gradual drop but always remained very high due to global logistics challenges and high domestic demand. Its price is not showing any sign of substantial drop in immediate future. Soda Ash constitutes more than 60% of raw material cost and with such immensely high price; glass industry production cost is hitting the roof.
3. Uncertainly in Crude Oil prices and its direct impact on Power and Fuel cost in Glass industry - Brent crude oil price rose from 37.5 $/bbl. in Oct20 to 66.5 $/bbl. (in Apr-21). However, during FY22 it saw continuous leapfrog jump and skyrocketed to 115.6 $/bbl. in May22 due to Russia-Ukraine war. In FY23 the price has fluctuated several times and over the past 8 month it has been hovering around 85 $/bbl. price going up and down frequently. This is true for all other grades of crude Oil as well. Glass industry being energy-intensive industry, it is posing serious challenges for the coming times as well.
4. Indian Rupee has depreciated significantly during in FY22-23 due to Russia-Ukraine war and US Federal reserve rate hike. It reached value of Rs 81.9/ USD in Apr23 from Rs 76.5/ USD in Apr22. It has direct bearing on the import of all chemicals and commodities.

Threat

1. Threat from alternate packaging like PET, Multilayer Brick, Metal Cans, etc.
2. Threat from increasing regulations like ban of use of furnace oil
3. Domestic Soda Ash players – All the Major Soda Ash Players keep filing for Anti-Dumping Duty (ADD) imposition against soda ash Imports. Soda is one of the key ingredients for glass bottle production and any imposition of ADD & Anti- subsidy will have direct impact on Company bottom line. Due to Demand supply gap the pricing policy of Soda Ash players are super profit seeking.

Sectoral Analysis Liquor

The Liquor Market is the largest demand market for container glass in India. This segment accounts for approx. ~58% of the total container glass market in India. The demand from this segment is expected to grow to ~26 Lac MT by 2029-30.

The sales of alcohol touched four-year high by the end of this fiscal, rising 12% to 388 million cases as compared to previous year. Industry is on the road to recovery with demands increasing in all the key segments of whisky, brandy, rum, gin and vodka. Liquor segment is expected to have 6.53% CAGR for upcoming 7 years.

The market, specially for premium products across categories, saw a sharp recovery in 2022 after a slump during the covid-19 pandemic. The premium portfolio now accounts for a fifth of all whisky sold in the country. Consumer are shifting to the

higher price tipple. The growth last year, however, was slower than 2021 which saw a 15% expansion on low base.

Diageo, the maker of Johnnie Walker and McDowells whisky, saw its sales rise by 34% in Q1-23 over the last year, net profit increase of 91.2 % in Q2 with sustained Q2 revenue year on Year Basis. While their rival Pernod Ricard, maker of Absolut vodka and Chivas Regal Scotch, said sales grew by 17% in H1 FY23. For Bacardi India, which sells Bacardi rum and Dewars Scotch, India is the most important emerging market Bacardi is focusing on.

Sales of whisky, which account for two-thirds of the overall market, grew 11% despite a high base while sales of brandy, the second biggest category expanded 11%. Rum and Vodka sales grew 18% and 25%, respectively, and gin sales surged 65%, although on a low base.

In India, there has never been issue from a demand point of view, but it has suffered in the past due to either supply issues, changes in taxation or route-to-market models. In 2022, there was no supply side disruptions which helped sales momentum. However, for most companies, reversal in Delhis liquor excise policy impacted sales. Consumers are experimenting and even white spirits are growing strong. The premiumisation story and growth is going quite robust and it is expected that fundamental growth trend will continue.

While in-home consumption of liquor increased during the pandemic, sales of alcoholic beverages in bars and restaurant reach pre-covid 19 levels for the first time in two years. With rising income, people have moved towards drinking better and premium and frequent social occasions ensure high volumes as well.

There is a tilt toward innovative offerings and premium products. As the pandemic pushed people to live it up, they were ready to embrace quality and experimentation. The industry also responded to this sentiment with ready-to-drink beverages, new flavour profiles or even smarter packaging with mixers or accessories. The emergence of Indian craft gins earlier and now the RTD segment is witnessing brand launches with diversified offerings.

Taxation and duties (which vary in every state) in India is on an average between 65% and 80% of the product price, the highest in the world and the time is high that taxes are reduced.

Share of glass packaging in IMFL is expected to increase due to following factors.

1. Premium segments which constitute more than 40% of IMFL volume uses 100% glass packaging. The share of this segment is expected to grow to 67% of volume by 2027 and hence the overall share of glass packaging in IMFL will also increase.
2. In the Mass/ Popular segment, the share of glass bottles has reduced due to emergence of cheap alternate PET bottles. However, revenue leakages and ill effects on health are forcing state governments to turn back to glass packaging in liquor in phased manner.

Beer

The Beer Segment is one of the largest segments for the Indian Container Glass Market. With increase in the average temperatures in India and global warming, the consumption of beer is expected to increase drastically in the coming years. The Total Beer (New Glass Bottles) market in 2022-23 stood at ~ 6 lac MT. The share of HNG could have been higher if the three colored furnaces (under shutdown) were available with HNG. The Beer Market (New Bottles) is expected to almost double in the next 6-7 years to ~11 lac MT.

Beer Sales have surged this year after a two-year gap due to the pandemic. Beer sales have risen for the first time in two years after the Covid-19 pandemic hit the country. They said that sales in FY23 have been exceptional after having plummeted in 2020, when Covid first hit India. The beer market is expected to grow at a CAGR of 8.17

Heineken India (United Breweries) Q2 FY23 revenue was up by 11.5% to Rs 3,673.5 Cr from 3,294.7 Cr in the corresponding period in the previous fiscal and Q3 saw growth of 2%. Brewer Anheuser-Busch InBev (AB InBev) expects India to be among the top three markets for Budweiser in the next three years, led by double-digit growth in the premium beer segment. Danish brewing major Carlsberg India witnessed a "strong recovery" in the first half of 2022 as its business grew 50 per cent during the same period.

Beer companies are on tenterhooks as there seems to be no respite for Indias beer industry as costs of raw materials trend north and state governments continue to increase taxes. Indeed, its becoming a struggle for the industry to stay afloat and continue to remain profitable amidst the high excise duty on beer.

Brewers across the country are grappling with a plethora of issues, including a host of regulatory concerns and MRP linked to state taxes new rules related to licensing, pricing, manufacturing processes, operating facilities, marketing, advertising, and distribution. It is important to note that beer in India is taxed according to volume and not alcohol strength as is the case elsewhere.

The lockdown and subsequent changes in various policies related to distribution and opening saw changes in consumption and sales patterns. Consumption patterns, too, saw a shift with consumers diversifying their choices and expanding their palate horizons. This has also resulted in a sharp rise in demand for premium offerings.

However, looking ahead to the summer, there is optimism as the price of barley which is key input cost for Beer has been on decline since Jan ‘23 which will boost beer industry financials.

South India accounts for the largest market share of the India beer market due to hot weather condition. North India and Western India are expected to be the fastest growing markets. Drinking in bars is fast becoming a social phenomenon in Metro and Tier 2 cities and same is leading to increased beer consumption. Besides, the rising number of pubs and bars are another factor which increase beer consumption.

New players have also entered the vibrant Indian market. One of the most prominent global names to mark its entry into India is Brew Dog. The carbon-negative Scottish craft brew brand currently has three outlets in the country, two in Mumbai and one in Delhi-NCR, and expansion plans are underway in full swing. Coopers is now available in the Indian beer market, following the South Australian brewery securing a new distributor. All Leading companies are increasing their manufacturing footprints to ensure product availability to its customer and increase in their market share.

The potential for beer growth in India is strong with emergence of Craft Beer. the Indian craft beer industry is at budding stage and has a share of 2-3% in Indias beer market. Craft beer volume is expected to rise at 108.6% whereas its sales are expected to see a hype of 20% which is more than 5-7% in the beer. B9 Beverages & Simba is leading player in this segment. Japanese beverages group Kirin Holdings has increased its stake in B9 Beverages, the maker of Bira 91 beer, close to 20% from 10% by investing an additional ?570 crore in the company, valuing the beer maker at $550-600 million post the fundraise. The fresh funding indeed boosted Bira 91s confidence and growth plan.

Share of glass packaging in Beer is quite high i.e., ~ 85% and is likely to continue in the future also. Reuse of Old bottles are likely to reduce going forward as the market is mainly led by MNC players. Increase in Manufacturing footprints leads to Increased creation of Glass pool, which ultimately increased Glass bottle demand.

Food

The Food & dairy Segment accounts for ~3 Lac MT of the total Container Glass Market in India. This market is projected to grow to around ~5 Lac MT. If there is underutilized capacity available, HNG can increase its supply to this segment

The Indian food industry is continued its growth trajectory and reach $963.6 bn value in FY23, a 11.2% increase year-over-year despite the significant growth of 9.75% in FY22.

Statistics show the Indian food industry is expected to continue growing at brisk pace. It is expected to grow at CAGR of 7.23% between 2023-2027. HUL FY23 3rd Quarter, revenue rose by 16.2% YOY whereas during Q2 revenue growth stood at 14.1%. For Q3-FY23, Nestle Indias revenue up by14.2% year on year basis and in Q2-FY23, revenue jump happened by 17.6%.

The India food processing market size reached INR 25,455 billion in 2022. Looking forward, IMARC Group expects the market to reach INR 45,345 billion by 2028, exhibiting a growth rate (CAGR) of 9.5% during 2023-2028.

The Government has allowed 100% Foreign Direct Investment (FDI) in food processing and single-brand retail and 51% in multi-brand retail. The Government of India (GoI) has acknowledged the food processing sector as a high-priority industry and is currently promoting it with various fiscal reliefs and incentives. It is undertaking multiple efforts to encourage investments in the sector. It is also approving proposals for industrial licenses, joint ventures (JV), foreign collaborations, and export-oriented units. Besides this, the Government has introduced an investor- friendly portal, known as Nivesh Bandhu, which integrates Central and State Government incentives and policies for all stakeholders operating in the food processing sector. The online food ordering business in India is witnessing an exponential

growth. The Governments ‘Atmanirbharat Bharat initiative places priority on this sector and offers support through various policies. By 2025, Indias food processing sector is expected to be worth over half a trillion dollars.

Evolving consumer preferences, rising income, growing rural opportunity, digital channels & E-commerce, Improved Retail chain and customer preference for home delivery has given further impetus to this segment. Indian food aggregator platforms Swiggy and Zomato are now in the top ten e-commerce food delivery companies. Zomato already is listed company now whereas Swiggy is gearing up for an IPO expectedly by Sep-23. Indian e-commerce market is expected to reach US$ 120 billion by 2026 from US$ 38 billion in 2021.

In 2021 Rs 10,900 Cr PLI scheme got approved for the food processing. The government has sanctioned 37 food parks funded under the Mega Food Parks Scheme, 22 are operational and 15 are under implementation. These initiatives by Union Cabinet are boosting growth in this sector.

The Indian organic food market has also seen a surge with a market size touching $1238 million in 2022, which was just about

$200 million in 2018, as per the report, and is likely to grow at a CAGR of 22% during 2022-2028 and will reach a value of US$ 4,082 Million by 2028.

The Indian dairy market attained a value of USD 203.3 Bn in 2022 as per IMARC, driven by the food and beverage industry. As per government website Investing India, it is expected to reach value of USD 314 Bn by 2026, exhibiting at a CAGR of 11.5% during 2022-2026. Along with offering profitable business opportunities, the dairy industry in India serves as a tool of socio- economic development. The private participation in the Indian dairy sector has also increased over the past few years. Both national and international players are entering the dairy industry, attracted by the size and potential of the Indian market. The focus is being given to value-added products such as cheese, yogurt, probiotic drinks, etc. These players are also improving their milk procurement network which is further facilitating the development of the dairy industry in India.

Share of glass packaging in food segment is ~ 10% and in dairy is ~15% and is not expected to change significantly in future, though it is the most preferred choice for premium milk shakes, yogurts and flavoured milk. Government is pushing the food processing segment aggressively and taking all needful measures to provide impetus to this segment. This will ultimately lead to increase in Glass bottle demand. COVID-19 pandemic impact has further grown awareness for usage of glass packaging in health products.

Pharmaceuticals

The demand of container glass from the Pharmaceuticals & Vials Segment is approx. ~1.50 Lac MT. The Government of India are considering restrictions on alternate packaging in some segments of this sector. This could lead to much higher demand from the segment. With the present trend of increase in demand for the segment, it is expected that by 2029-30 the demand would increase to ~2.50 Lac MT

Currently, the Indian pharmaceutical market is valued at around $50 billion, out of which almost $25 billion constitutes the export market. The domestic market at a CAGR of 12% will touch $130 billion by 2030 and out of which over 60% will only be exports. Indian pharmaceutical exports have recorded an impressive growth of around 5% in 2022. Despite having global challenges, export volume was over $25 billion in the biggest market, which means about 30% of exports are going to the US. Indias pharmaceutical market grew by 8% year-on-year to ?1.8 lakh crore in 2022, mostly driven by price increases even as volumes remained muted.

Indias pharmaceutical sector has emerged as a life sciences leader within the post-pandemic order. The government is also developing new strategies to strengthen the sector which has led to the creation of innovation hubs making India an ideal.

The Indian pharmaceutical industry ranks third globally in pharmaceutical production by volume and is known for its generic medicines and low-cost vaccines. India is a major exporter of Pharmaceuticals, with over 200+ countries served by Indian pharma exports. India supplies over 50% of Africas requirement for generics, ~40% of generic demand in the US and ~25% of all medicine in the UK. India also accounts for ~60% of global vaccine demand, and is a leading supplier of DPT, BCG and Measles vaccines. 70% of WHOs vaccines (as per the essential Immunization schedule) are sourced from India. The pharmaceutical industry in India is expected to reach $65 bn by 2024. Sun Pharma FY23 - Q3 revenue rose by 20.7% YoY whereas in Q2 it jumped by whopping 27.6%. Dr Reddy Laboratories had revenue jump of 12% and 27.3% in FY22- Q3 and Q2 respectively.

Government has introduced a US$2 billion incentive program which will run from 2021-22 to 2027-28 to foster an Atmanirbhar Bharat by enhancing the R&D, make in India product development, high-value production capabilities, import substitution and domestic manufacture of active pharmaceutical ingredient (API).

In terms of the global market, India currently holds an accountable share and is known as the pharmacy of the world and as the biggest generic supplier. India gained its foothold on the global scene with its innovatively engineered generic drugs and active pharmaceutical ingredients (API). Growth in other fields notwithstanding, generics are still a large part of the picture. India is the largest provider of generic drugs globally.

According to the Economic Survey, a significant raw material base and availability of a skilled workforce have enabled India to emerge as an international manufacturing hub for generic medicines. Further, India is the only country with the largest number of US-FDA compliant pharma plants outside of the USA.

Indias cost of production is significantly lower than that of the US and almost half of that of Europe. It gives a competitive edge to India over others. Increase in the size of middle-class households coupled with the improvement in medical infrastructure and increase in the penetration of health insurance in the country will also influence in the growth of pharmaceuticals sector.

Indias pharmaceutical exports totalled $25.4 bn in FY23, a shade better than the previous fiscal value of $24.6 bn but short of the $27 billion target as headwinds, including impact of the Russia-Ukraine war, hampered the pace of growth.

The India pharmaceutical packaging market was valued at $1573 million in 2021 and is projected to reach $3027. million by 2030 at a CAGR of 7.5% from till 2030 driven by growth in pharma industry and its need for bulk drugs, formulations, Vaccine, and trial drug packaging.

Share of glass packaging in liquid formulations is still high given potential risks of storing medicines in plastic bottles.

However, overall share of glass packaging came down from 34% in 2009 to around 20% and is further expected to fall in future until government brings some regulation to curtail plastic usage in Oral formulations and Suspensions due to plastic ill effect. Some glass players in India are optimistic about phasing out of plastic usage.

Soft Drinks

The container glass demand from Soft Drinks Segment is expected to experience exponential growth going forward as companies like Coca Cola & Pepsi are switching from alternate packaging to Glass owing to their global commitment towards sustainability and SDG Goals. Already 200 ML PET has been converted 100% into glass. The present Demand for container glass in the Soft Drinks Segment is approx. ~0.65 Lac MT. Based on the present trend the demand is expected to reach ~1.00 Lac MT by the year 2025. This demand can increase even more if the market stays with the present trend.

Consumers changing preferences, coupled with innovations in product packaging and sizing to improve affordability, has led to a rise in the consumption of non-alcoholic beverages in the country. Indias non-alcoholic beverages market may expand at a compound annual growth rate of 8.7% to reach Rs1.47 trillion by 2030. In 2019, the size of the overall beverages market that includes carbonated soft drinks, juices, bottled water, and fruit-based beverages was ?67,100 crore.

While carbonated soft drinks (CSDs), ready-to-drink teas (RTDs), energy drinks, and sports drinks accounted for more than 60% of the global market, in India, carbonated beverages are the most popular, followed by bottled water, fruit beverages, and juices. However, the report pointed to a shift in consumption patterns, indicating that CSDs are growing at a lower rate, while consumption across segments such as packaged water, sports drinks, and tea and coffee-based drinks is increasing. Between 2010 and 2019, Indias non-alcoholic beverages market grew at 14.5% in terms of total sales volume, and 13.72% in terms of total sales value. The market size was valued at $12.15 billion in 2019 compared to $3.5 billion in 2010.

Existing companies are diversifying their product portfolio and many startups and small and medium-sized enterprises have entered this sector in the last 10 years. The survey found that 35% of the companies have introduced new products in the Indian market, which include zero-sugar or sugar-free products and other products like tea and coffee-based drinks, and organic drinks.

Cosmetics

The Indian beauty and personal care (BPC) market is the 8th largest in the world with a total value of $15 Bn and is growing at

~10%, as reported by Euromonitor International study. Online sales are also expected to grow by 18.2% in the next few years. The study further suggests that the market is expected to double by 2030 with skin care and cosmetics driving this growth.

Despite having the same demographic advantage as China, the size of the Indian market is 1/5th the size of the Chinese BPC market, primarily due to lack of penetration outside metros and tier 1 cities. This offers the Indian industry significant headroom to scale. As the sector grows, there will be several structural shifts that will influence the shape of demand and impact growth strategies in the sector.

The online BPC market in India expanded significantly in the last few years driven by a steep increase in e-commerce adoption. If you look at fashion with the size and scale that the fashion market has in India, it is the third largest market in the world and a lot of it is unorganised, but it has shifted. At the beginning 80-85 per cent of the market is unorganised but it is getting very rapidly organised. Indias Tata Group is planning to open at least 20 "beauty tech" stores where it will use virtual makeup kiosks and digital skin tests to convince young, wealthy customers to buy high-end cosmetic products.

Emergence of online retail, rising awareness of beauty products, increasing premium on personal grooming, changes in consumption patterns, lifestyles and improved purchasing power among women are expected to boost the industry. The market will maintain healthy growth due to rising preference for specialised cosmetic products such as organic, herbal and Ayurveda products. Principal areas that are expected to grow include colour cosmetics, fragrances, specialised skin care and make-up cosmetics.

India is likely to overtake some of the European markets and become fifth largest in the world very soon.

Others

The General Market for Container Glass for Household and other usage accounts for approx. ~1 Lac MT. This market is expected to grow to ~2.00 Lac MT by 2029-30

Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with the detailed explanations. The key financial ratios are as below: -

Management Discussion and Analysis Report

Ratios	2022-2023	2021-2022	Reason for Variance
(i) Debtors Turnover Ratio	7.59	6.01	Due to increase in Sales and increase in realisations of Trade Receivables as compared to previous year.
(ii) Inventory Turnover Ratio	5.77	4.76	Due to increase in Revenue as compared to previous year.
(iii) Current Ratio	0.29	0.31	No Major Movement
(iv) Debt-Equity Ratio	(2.27)	(2.95)	No Major Movement
(v) Operating Profit Margin (%)	-8%	-11%	Due to increase in Net Realisation value and decrease in price of Raw Materials as compared to previous year.
(vi) Net Profit Margin (%)	-10%	-17%	Due to increase in Net Realisation value and decrease in price of Raw Materials as compared to previous year.
(vii) Details of any change in Return on Net worth as compared to the immediately previous explanation thereof.			The company has a negative net worth due to accrued Losses