Gelatin is a nearly odorless and colorless ingredient in producing edibles, medicines,
and cosmetics. Gelatin is mostly extracted from animal tissues (fish, cattle, pigs, or
chicken) that contain high amounts of Collagen. Gelatin is not available in nature; it is
derived by hydrolyzing Collagen. Pharmaceutical companies widely use Gelatin for capsules
and as a gelling agent in the food & beverage and cosmetic industries. Gelatin is a
mixture of proteins and Peptides made from Collagen. Gelatin has multiple qualities, such
as binding, film forming, and sol-gel. Gelatin contains several antioxidants that protect
healthy cells in the body and keeps the digestive tract healthy with the presence of
glutamic acid in it. The cosmetic industry uses Gelatin in various products such as face
creams, lipsticks, sunscreen lotions, bath scrubs, and body creams. Gelatin acts as an
excellent gelling agent in cosmetic products, which has resulted in increased demand for
Gelatin. Gelatin is free of any preservatives or chemicals; thus, it is a preferred
clean-label product.
The global Gelatin market is projected to grow during the forecast period of 2023-2032
due to the rising demand for Gelatin in the cosmetics, drug, and food industries. Growing
awareness for clean-label products among the population has surged the growth of the
industry. The demand for well-being products and nutritional supplements for better health
care has increased after the uncertain spread of the Coronavirus. This demand has resulted
in the invention of new supplement products in the market, which has shown significant
growth for the Gelatin market. The widespread market of Gelatin across the globe results
from a huge demand for Gelatin in various products. Increasing demand for packed or
ready-to-eat food is a major driving factor for the market. Along with this, the
increasing utilization of Gelatin in skin care, beauty, and other cosmetic products has
fuelled the growth of the market. Using Gelatin in personal care products such as hair and
skin care products will drive consumer inclination. Gelatin, due to the presence of
protein sources, is used in nutrition products. Growing consumption of health drinks such
as meal replacements, protein shakes, and diet supplementary drinks is seen as a major
driver for the growth of the global Gelatin market. The global Gelatin market size was
evaluated at USD 7.24 Billion in 2022 and is projected to reach around USD 16.93 Billion
by 2032, growing at a CAGR of 8.87% during the forecast period 2023 to 2032. Gelatin is
the popular excipient for capsule shells and softgel capsules. Capsules are the second
most preferred delivery format after tablets and account for 12.5% of dosage forms of the
new drugs approved by FDA in 2021. The empty capsule market projection estimate the market
to rise at a CAGR of 7% during the period 2019-2027. The global empty capsules market size
is likely to attain valuation of USD 3.7 Billion by 2027, while the global softgel
capsules market size was valued at USD 8.2 Billion in 2022 and is estimated to grow to
USD 14.73 Billion by 2030, at a CAGR of 7.6% from 2022 to 2030. Softgels make up 25% of
the total market for nutritional supplements and can be used to deliver oils and
oil-soluble materials, such as Omega-3s, Vitamin E and Carotenoids and offer advantages in
tolerability, ease of swallowing, assimilation and potency. Great strides have been made
with challenges such as oxidation, shelf stability and cost-effectiveness in the quality
of Gelatin. Although animal Gelatin-based shells are most common, vegetarian alternative
are also on the rise. Increasing veganism among the population is a major restraining
factor for the market, as Gelatin is derived from animal tissues and the concept of
veganism does not allow the consumption of products like Gelatin of animal origin.
Furthermore, the increased availability of alternative products for Gelatin, such as
petcin, agar-agar & HPMC has negatively affected the markets growth.
The global Collagen Peptide market size was valued at USD 897 Million in 2022 and is
anticipated to expand at a CAGR of 5.7% from 2023 to 2028. This is attributable to the
rising use of the product in various industries such as cosmetics, which is expected to
propel market demand. Additionally, the demand is driven by increasing consumer investment
in healthcare and well-being. Moreover, the rising importance of improving immunity
post-pandemic has further strengthened the industrys growth. The global socio-economic
dynamics, along with the growing geriatric population, increased budgetary allocation to
the healthcare sector. The growing popularity of a preventive approach to lifestyle
diseases and the growing nutraceutical segment, have been complementing the demand for
Collagen Peptide products.
The COVID-19 Pandemic, global lockdown and quarantine measures have led to a change in
consumer buying habits. On one hand, this change has impacted negatively on retail sales,
with some health categories seeing a short-term decline in growth. On the other hand,
however, its had a positive effect on the sales of vitamins and dietary supplements, with
a strong focus on immunity and prevention. Further, Collagen Peptide is one of those
ingredients which has gained an excellent reputation in the market among food innovators,
finding novel ways to make it accessible to an even wider audience owing to its functional
benefits.
Collagen Peptide is also blended in various drinks, shakes, smoothies, and ice creams
to give an anti-inflammatory protein boost, as the ingredient has the tendency to dissolve
in the cold liquid medium easily. Collagen Peptide has good organoleptic properties,
taste, and is odor-free, while at the same time enabling the food product to maintain its
organoleptic characteristics. It is used in various formulations due to its property to
mix and blend with other food forms.
Segment-wise Performance
Gelatin demand in India has shown growth for pharmaceutical applications due to growth
in the pharmaceutical industry. The Company was able to operate its Gelatin plant at more
than its rated capacity during the year 2022-23. Though the effects of COVID-19 as well
the issues post the Ukraine war affected all industries across the spectrum, the Company
has witnessed a robust demand for its Gelatin. As the Indian Gelatin industry caters to
the pharmaceutical and nutraceutical sectors, there is a strong demand for Gelatin. The
increase in demand for many immunity-building products like nutritional supplements is one
of the growth drivers for the surging Gelatin demand. Drop in production of certain raw
materials and supply chain issues in Europe have also positively contributed in demand
growth for Bone Gelatin. The increase in demand for many immunity-building products like
nutritional supplements is one of the growth drivers for the surging Gelatin demand. The
domestic market for Gelatin and Collagen Peptide was on the uptrend causing an improved
sales over the period in this market. However, the onset of recession in the second half
of 2022-23 impacted the global Collagen Peptide market causing the demand to come down in
overseas market particularly North America and Asia.
Exports
Export of Ossein to Japan in 2022-23 quantity wise was almost equal to previous year
due to stable requirement of the raw material for Gelatin. Ossein Export revenue increased
vis-a-vis previous year due to better market prices. In the case of Gelatin, exports for
the year grew compared to previous fiscal due to higher demand and market prices. Collagen
Peptide export revenue was lower than the previous year due to the economic slowdown in
some markets.
Domestic Market
The domestic demand for Gelatin is showing high growth trend as India is strengthening
its identity as a pharma manufacturing hub for the World. The competition from imports was
higher especially from Chinese based cheaper Gelatin. We were able to increase the
domestic sales of both Gelatin & Collagen Peptide in 2022-23. For our DCP, the poultry
industry saw both ups and down during 2022-23 as there were spikes in feed prices leading
to demand fluctuations. First half of 2022-23, Di Calcium Phosphate (DCP) demand was lower
and there were pricing pressures. In the second half, market condition improved and DCP
price realization was higher which helped the Company to improve upon the revenue compared
to last year.
Opportunities and Challenges Growing Pharma Market in India
As the Pharma sector grows, Gelatin demand is likely to continue hand in hand. Gelatin
is a preferred excipient for the Pharma industry. Gelatin capsule industry consumes
roughly 70-75% of all bovine bone Gelatin production in India and as per the latest
estimates about 750 Billion Gelatin capsules, both soft and hard, were produced. Indian
pharma companies are focusing on regulated markets and such markets demand capsules of
excellent quality and dissolution properties. Hence there is high demand for Gelatin
manufacturers who are focusing on providing superior quality Gelatin. The endeavor to make
special grade of Gelatin has given birth to products like Gelatin with reduced cross
linking for long shelf life capsules, Gelatin for capsules with faster and delayed
disintegration properties, Gelatin for enteric capsules etc. Manufacturers are continuing
their efforts to add value to Gelatin in line with the emerging industry trends.
Expanding Indian Nutraceutical Industry
The nutraceutical industry in India is poised to achieve the 100 Billion-dollar dream.
The year 2016 turned out to be the year that the nutraceutical industry began to take off
in India and both the trajectory as well as the industry have since undergone impressive
changes. Apart from an impressive trajectory, the industry underwent a holistic change,
underpinned by science. This resulted in a surge in clinical trials with consumers,
finally validating the claims of the producers. The change is now irreversible, and the
shift is positive. Market accessibility was another factor to the industrys growth. The
biggest game changer was an increase in the overall number of Indians consuming basic
nutraceuticals during the Pandemic. The ‘Nutraceutically Dormant Indian community
had finally woken up and so had the industry.
International companies want to access the Indian market swiftly and responsible
evidence-based nutrition is at the center of all these conversations. International Trade
Administration, Department of Commerce, United States report estimates that Indian
Nutraceutical market is expected to reach USD 18 Billion by 2025.
Growth and establishment of Nutraceutical industry in India is likely to support growth
of Collagen Peptide business. Collagen Peptide is the trending ingredient for new product
development for Healthy Ageing, Beauty from within, Womens Health, Fitness nutrition etc.
The need for an ingredient which has multiple health benefits and sufficient clinical
evidence opens up ample opportunities for Companys Wellnex range of products. A greater
focus on health consciousness is leading to an increase in consumer spend on nutritional
supplements to boost immunity and support their overall health. Collagen protein, once
considered a cheap protein, is now gaining popularity due to its functional benefits in
skincare, bone and joint health and sport nutrition. Collagen derived Peptides are one of
the key ingredients in the Nutraceutical formulations in these segments. Several studies
are going on to explore other potential benefits of Collagen derived bioactive Peptides.
Considering the immense potential of Collagen Peptide several manufacturers have already
scaled up their manufacturing facilities.
Raw Material Sourcing
The availability of Crushed Bone which is a major Raw material of the Company has been
stable in the year though the availability has not yet touched Pre Pandemic level. There
are signs of improvement in the slaughtering rate which may help in improving the
availability of crushed bone in the coming period. Slow movement of Bone meal which is a
byproduct of crushed Bone leads to price pressure in domestic Market. Quality Improvement
due to stringent PCB norms has also been a challenge during the period. Import of gel
bones helped to reduce our dependency on domestic raw materials. We have been able to
maintain adequate levels of raw material inventory at all our manufacturing locations.
The Company is exploring more sources for importing gel bones in the coming year too.
Reducing Carbon Foot Print
The activities towards Carbon footprint reduction carried out during the year 2022-23
are as under:
1. Ossein Division-a. Installed biogas generation systems reduced furnace oil
consumption. By this, fossil fuel consumption is reduced significantly. b. Solar lighting
introduced on plant premises. c. Specific Power reduced by 25 units/MT of CB from 2019-20
through improved motor efficiencies, installing LED lights, etc.
2. Gelatin Division-a. Specific power consumption reduced by 300 units / MT of Gelatin
from 2019-20 through the installation of high-efficiency motors, improved consumption
efficiency, installation of LED lights, etc. b. An anaerobic digester was installed in the
effluent stream for converting effluent (biomass) to biogas which reduced fossil
consumption and reduced solid waste generation. c. Retrofitting was implimented in the GD
boiler to improve fuel efficiency and the work environment.
3. Online meetings - Inter-division travel by employees for meetings is avoided where
possible by using digital media for online meetings.
Outlook
The war between Russia and Ukraine has disrupted the chances of global economic
recovery from the COVID-19 pandemic, at least in the short term. The war has led to surge
in commodity prices and supply chain disruptions, causing inflation across goods and
services and affecting many markets across the globe. Rising energy prices and supply
disruptions have resulted in higher and more broad-based inflation than anticipated,
notably in the United States, Europe and many other emerging and developing economies.
Global economic activity is experiencing a broad-based and sharper-than-expected slowdown,
with inflation higher than seen in several decades. Shifting consumer preferences in a
projected economic downturn scenario, amendments to industrial policies to align with
growing environmental concerns, fluctuations in raw material costs triggered by prevailing
geo-political tensions and expected economic turbulences are noted as key challenges to be
addressed by the Collagen industry players during the short- and medium-term forecast. We
will be orienting our investments towards acquiring new technologies, securing safe and
sustainable raw materials, efficient procurement/inventory, strengthening product
portfolios, and leveraging capabilities to maintain growth during challenging times. The
economic and social challenges are noted to be highly varying between different
countries/markets and Collagen manufacturers and associated players are focused on
country-specific strategies. Uneven recovery in different end markets and geographies is a
key challenge in understanding and analyzing the Collagen market landscape.
The impact of war in Ukraine and the risk of stagflation envisaging numerous market
scenarios are pressing the need for Collagen industry players to be more vigilant and
forward-looking. Changes brought in by the Pandemic COVID-19 in the Collagen supply chain
and the burgeoning drive for a cleaner and sustainable environment are necessitating
Companies to alter their strategies. The Company with its new innovative manufacturing
process is trying to control the cost of production and thereby tap new markets for
increasing the sales. Our major market segments will be beauty from within, joint health,
sports nutrition, general wellness and other new functionalities. High functional Collagen
Peptide are the new products under development.
Financial Performance
The financial results of operations of your Company for the year under review are
detailed under the caption Performance forming part of the Directors Report. The
Companys operations have resulted in a pre-tax profit of 78.08 Crores for the current
year as against pre-tax profit of 37.61 Crores for the previous financial year. The
post-tax profit for the current year is 58.76 crores as against post tax profit of
26.60 crores for 2021-22. Other comprehensive income (net of tax) for the current year is
0.09 crores as against other comprehensive loss of 2.26 crores for the previous
year. During the year, the Company has continued its efforts to optimize financial costs
through availing loans in foreign currency thereby resulting in substantial reduction of
financial costs. The basic and diluted earnings per share during the year was 64.72 per
share as against 29.29 per share during the previous fiscal year.
Human Resources Development
The Company undertook the following HR initiatives during the financial year:-
1. Succession planning:
We have identified the critical positions in the Company for the next 3 years against
retirement and initiated action plans to develop the next level executives in critical
positions.
2. Training and development
The employees of the Company have been given training based on their requirements in a
time bound manner to improve their skill sets to meet emerging challenges. Training
calendar has been prepared well in advance in consultation with functional heads to meet
the organisational requirements.
3. Organization culture
The Company is focussing on the culture development initiatives such as Leadership
culture, Safety culture, Food safety culture, TPM culture and knowledge culture to improve
the overall employee capabilities including a 7-day Leadership training programme for our
Functional heads last year.
4. Unique Initiative Award
The Company has rolled out a new reward scheme for its employees which provide special
unique initiatives that will fetch considerable benefits to the Company. The identified
employees are rewarded by way of cash awards for their initiatives and become a model for
others to emulate.
5. Employee Feedback Survey:
Human Resource Department of the Company had conducted an employee feedback survey on
HR practices in the Company. The feedback analysis was completed and the
suggestions/feedback received in the survey is being addressed in a time bound manner.
6. HR Automation:
As part of Paper reduction and Digitalisation initiatives, the Company has implemented
Leave and Attendance Management System for its Executive Staff and is planning to extend
the same to the blue collar level also in the coming year.
7. Revamping of Performance Management System The Company is planning to
standardise the role based Job Description and for revamping the existing Performance
Evaluation system with more focus on result oriented performance to meet emerging market
situations.
8. Competency Development Programme:
Competency assessments have been completed for identified employees at senior levels
and they have started initiatives to bridge the gaps identified in the competencies of
employees. a. Role development Training program on Theory of Constraints for 30 top level
executives: The Company has conducted TOC (Theory of Constraints) training program for its
top leadership. It was a very effective training program that has helped the Company in
identifying the bottlenecks that impact the operations of the Company in a significant
manner and frame action plans for debottlenecking them enabling focussed growth. b. Online
programme: The Company has conducted online training programmes for executives and
non-executives. The benefits of the program were assessed using various tools such as
quizzes, weekly assignments, and general feedback.
c. E-learning courses: The Company prescribed e-learning modules from Udemy, Coursera,
Edx, etc. to expand on the training modules for executives. In addition to general
programs like Excel/Presentation skills, specific programs like project management were
also covered. d. Competency Enhancement at subsidiary Company Bamni Proteins Limited
(BPL): The Company conducted a training program for the executives at BPL to help them
assess and improve their presentation skills. As a continuation of the program, the
Company has arranged for basic excel classes for the lower management executives for the
next financial year. e. Skill Assessment and Development for Workmen: The Company
conducted skill assessment of workers belonging to all disciplines in areas such as job
knowledge, hazard identification, abnormality identification, and 5S awareness. In-house
training modules have been developed and are being rolled out for those workmen who have
skill gaps in the area mentioned. f. Kirkpatrick Evaluation Method: The Company has
revamped the Kirkpatrick Evaluation Methodology to assess the effectiveness of training
programmes conducted. The method assesses the impact that each programme has had on the
employees at three phases and ensures due diligence prior to the conduct of each
programme. g. Mentorship Programme: The Company completed the first phase of the
mentorship program as per plan. Consequently, a feedback of the program was taken from
both mentors and mentees and modifications to the scheme are being made based on the
feedback h. Health & Wellness Programme: The following programmes were conducted with
the objective of helping employees to enhance their health and wellness and to promote
better engagement among employees.
i. Yoga and Zumba Classes: Online classes on Zumba and Yoga were conducted to teach
employees healthy exercise options that can be used by them to achieve various health
goals. j. Covid Awareness Sessions: The Company conducted online sessions by engaging
reputed experts to spread awareness among employees about the COVID-19 Pandemic and to
help employees and families protect themselves against the disease. k. Chronic disease
awareness programs: To further spread awareness among employees regarding various common
ailments like heart disease, diabetes, Spinal/back problems, etc. the Company conducted
live interactions with health experts in the field. l. Badminton court - A new Badminton
Court was inaugurated inside the Ossein Division for employees
9. Vision-Mission-Values (VMV): The Company conducted programmes to help the employees
imbibe the Vision, Mission and Values of the organisation better a. Competitions:
Competitions are being conducted to help employees think more about the influence of each
Value in their personal and professional lives and to engage them better in the VMV
programme. b. Online Value awareness sessions: The Company invited eminent professionals
to talk to the employees on how companies demonstrate their corporate values and how the
Companys values can be demonstrated at the workplace.
Key Financial Ratios
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 detailed
explanations therefor, including:
Key Ratios with a variance of more than 25 % compared to the previous year -
Sl. Particulars No |
As at 31.03.2023 |
As on 31.03.2022 |
Variance |
Reason |
1 Current Ratio |
2.41 |
1.53 |
57% |
The working capital loan balance has come down significantly by 67%
resulting in overall increase in Current ratio. |
2 Debt Service Coverage Ratio |
11.87 |
5.32 |
123% |
Increase in profits and repayments during the year. |
| 3 Return on |
0.24 |
0.14 |
70% |
There is a 121% increase in PAT and hence the increase |
| Equity Ratio |
|
|
|
in ROE |
4 Net profit Ratio |
12% |
6% |
91% |
121% increase in PAT resulting in increased NP ratio |
5 Return on Capital Employed |
33% |
21% |
54% |
EBIT increased by 93% resulting in overall increase in ROCE |
6 Return on Investment |
105% |
39% |
169% |
Increase in dividend received from Bamni |
CAUTIONARY STATEMENT
The Management Discussion and Analysis Report containing your Companys objectives,
projections, estimates and expectation may constitute certain statements which are forward
looking within the meaning of the applicable laws and regulations. Actual results may
differ materially from those expressed or implied in the statements. Your Companys
operations may inter-alia be affected by the supply and demand situation, input price and
availability, changes in Government Regulations, Tax Laws, foreign exchange rate
fluctuations and other factors. The Company cannot guarantee the accuracy of assumptions
and perceived performance of the Company for the future.
The Management believes that the strategic direction of your Company is sound and will
fulfill the Shareholders expectations, both short term and long term.
For and on behalf of the Board of Directors Sd/- APM MOHAMMED HANISH IAS CHAIRMAN DIN:
02504842 Kochi 08.05.2023
+91-9892691696
