1. Introduction-Global Economy
As a showcase of perseverance and progress, the global economy achieved
a growth rate of 3.4% in F.Y 2022-23, propelled by economic rebound even amid headwinds.
There were challenges in the form of geopolitical tensions in Europe, rising fuel and
input costs, interest rates, and supply-side shocks, globally. Therefore, measures were
undertaken by major central banks across the world to tackle this global headline
inflation. The prices of fuel and non-fuel commodities then subsequently declined. During
the year 2022, the inflation rate stood at 8.7%, and it is forecasted to decline slowly to
7.0% in 2023.
Although the economy was recovering from the setbacks during the COVID
period, the Russia-Ukraine conflict brought additional challenges. Inflation remained
above the upper range of the RBI at 6.5% throughout the financial year 2022-23, primarily
due to a sharp rise in commodity, food, and fuel prices. Moreover, the RBI after
increasing key benchmark policy rate for six consecutive times, finally paused in April
2023, effectively bringing the interest rate to 6.5% as the benchmark. This helped the
country stabilise the inflation. Despite these challenges, the economy grew by 7% in F.Y.
2022-23, making it the fastest-growing economy globally.
2. Industry Structure & Development
Packaging plays a pivotal role in consumers experience with respect to
the brand and the overall purchasing experience. There are four major functions of
packaging- containment, protection, communication and utility-that are intended to
maximize sales and profits while reducing losses and wastage; and all of them are critical
for enhancing consumer experience.
In todays globalised world, the Paper & Packaging Industry is
vital. The industry of paper, printing, and packaging (PPP) accounts for 4% of GDP. In
other words, PPP products bring in more than $80 billion to Indias GDP each year. This
money supports thousands of jobs and raises the living standards of millions more. Its no
surprise that investors want to know how to get started investing in PPP stocks and which
industries are the most rewarding.
India is one of Asias largest market places for paper and packaging
materials. Over the next decade, this big market is predicted to develop at a rate of 7-8
percent per year, resulting in increased demand for paper and packaging materials. During
the forecast period, Paper & Packaging Industry in India is predicted to grow at a
CAGR of around 26.7 percent (2022-2027). The rising population, rising income levels,
changing lifestyles, increased media penetration through the internet and television, and
a growing economy are all driving up packaging demand. Furthermore, it is one of the
fastest-growing industries in the country. The pharmaceutical and food and beverage
industries are driving the markets rapid expansion.
3. Review of Operations
During the year, the Company has incurred pre-tax Loss of Rs 441.85
Lakhs as compared to pre-tax loss of Rs 556.49 Lakhs in the previous year. The Revenue
from Operations (Net) of the Company was higher at Rs 171.72 Crores for
the year as against Rs 160.47 Crores in previous year, registering an
increase of 7.01%.
The Revenue from Operations (Net) of different divisions of the Company
was as under:
(.In Crores)
| Division |
Current Year |
Previous Year |
| Printing Division |
53.27 |
54.32 |
| Flexible Packaging Division |
99.07 |
89.68 |
| Paper Board Carton Division |
19.38 |
16.47 |
4. Segment Wise Performance
The Business of Company falls under three Segments
as following:
(a) Printing Division: The Revenue from Operations (Net) of the
Printing Division of the Company has decreased by 1.93% compared to the previous year.
Decreased in sales due to downfall in IPO forms printing, Annual reports printing, diary
printing business. In the current year turnover of this division should improve.
(b) Flexible Packaging Division: The Revenue from Operations (Net) of
the Flexible Packaging Division of the Company increased by 10.47 % compared to the
previous year. In the current year turnover of this division should improve.
(c) Paper Board Carton /Rigid Box Division:
The Revenue from Operations (Net) of the Paper Board Carton & Rigid
Box Division of the Company increased by 17.67 % compared to the previous year. In the
current year turnover of this division should improve.
The Company is keenly interested in inducting new technology aimed at
upgrading its existing facilities to remain as one of the leading players in the printing
and packaging industry. The Companys main thrust now is in paper and paper board related
printing and packaging business to safeguard its business interest against any government
legislation to curb plastic related packaging on the ground of environmental pollution.
The Company is committed to promote eco-friendly packaging for which it has installed
automatic Board to Kraft fluting Lamination Machines. All these machineries and equipment
will help the Company to enhance its business opportunity in value added printing and
packaging sector and in export market.
5. Future Prospects / Outlook
The growth in the printing and packaging sector is being driven by a
surge in e-commerce, food processing, pharmaceuticals, FMCG, the manufacturing industry,
and the healthcare sector. The significant upsurge is fuelled by a growing demand for
paper-based products, evolving consumer preferences, and increasing emphasis on
sustainable packaging solutions. This industry has become a cornerstone of Indias
manufacturing and logistics sectors, contributing to both domestic consumption and export
markets.
Additionally, the rising literacy rates, expanding education sector,
and government initiatives promoting education for all have resulted in a surge in demand
for paper products. From textbooks and notebooks to stationery and printing papers, the
Indian paper industry plays a vital role in supporting the education system and knowledge
dissemination. This growing demand for paper- based educational materials has contributed
significantly to the industrys expansion. Moreover, technological advancements and
investments in advanced machinery and equipment have enhanced production capabilities,
efficiency, and product quality in the industry. The adoption of cutting-edge technologies
has not only improved manufacturing processes but also enabled customization and
specialization, allowing the industry to cater to diverse customer needs effectively.
Additionally, numerous government initiatives including Make in India had a positive
impact on the packaging industry.
6. Financial Review
Key Financial Ratios pursuant to Notification dated 9th May,
2018 of Securities & Exchange Board of India (Listing Obligations and Disclosure
Requirements) (Amendment) Regulations, 2018 are as under:
| Ratios |
F.Y.2022-23 |
F.Y.2021-22 |
Change % |
| Debtors Turnover |
4.42 |
4.13 |
7.02 |
| Inventory Turnover |
1.75 |
1.81 |
(3.31) |
| Interest Coverage Ratio |
0.25 |
(0.10) |
(350.00) |
| Current Ratio |
1.18 |
1.22 |
(3.28) |
| Debt Equity Ratio |
1.00 |
0.80 |
25.00 |
| Operating Profit Margin % |
2.82 |
0.60 |
370.00 |
| Net Profit Margin % |
(1.97) |
(2.24) |
(12.05) |
| Return on Net worth % |
(4.89) |
(4.96) |
(1.41) |
7. Industry Structure
Though the printing and packaging industry is one of the biggest
employers in the country, the nature of the industry is not organized and it has not been
termed as an "Unorganized Industry" by the Government of India. The number of
players in our industry is close to 1,20,000 units ranging widely from the highly
organized sector to a very small proprietary units. Due to this diversified structure of
the industry, growth and profitability are affected by unhealthy competition.
The packaging industry enjoys continuous growth in demand year after
year, necessitating large investments for technology up- gradation and automation of
manual operations. However fragmented nature of the industry, consequent unhealthy
competition put pressures on margins, increasing payback periods for investments. As
demand from the larger customers is consistently increasing, it is expected that the
organized segment will secure larger market share and better margins.
8. Opportunities and Threats
(a) Opportunities
India holds the potential to emerge as a leading manufacturing hub on a
global scale, offering ample growth prospects for industry players to grow and expand. The
significance of packaging has grown substantially as brands strive to convey vital
information regarding sanitation, safety, and product quality in an efficient manner.
Indias coding and marking integration software market is projected to grow rapidly
following the rising need for traceability and authentication of products, particularly in
the pharmaceutical industry, plagued by counterfeiting.
The use of packaging for product safety, the rise of blister packaging,
and increased focus on printing drug information on packaging have led to a surge in
demand for these systems among pharmaceutical businesses.
(b) Challenges, Risks and Concerns:
The packaging sector faces rapid technological changes to cater the
need of consumer goods companies who are constantly lookout for ways to improve and
address the demands of its consumers. There will be demand for 3S packaging which mainly
covers safety, security and sustainability of packaging. The packaging sector need to
focus on developing active packaging specially antivirus packaging in future, no touch
packaging, intelligent packaging to track and trace product during the supply chain.
The cost of raw materials, energy, and labour has been rising in recent
years, putting pressure on margins. The printing and packaging industry is highly
competitive, with companies from China and other countries often able to produce products
at lower prices.
Facing the challenges for packaging production successfully requires
producers to not only take a closer look at internal processes, but rather reevaluate the
overall placement of their companies. It is getting more and more important to cultivate a
daily relationship with suppliers and see them as partners. Printers can be connected
directly with manufacturers and suppliers through the internet of things and keep
preventive maintenance going. But services also need to be improved between printers and
customers. Nowadays, customers are used to having a wide array of options at their
fingertips, so its not just about the product anymore: customers want to feel secure and
well cared for by your company, so even printers have to create an online presence,
consultation and quality customer service.
9. Internal Control Systems and their adequacy
The Company has an Internal Control System, commensurate with the size,
scale and complexity of its operations. The scope and authority of the Internal Audit
function is defined in the Internal Audit Manual. To maintain its objectivity and
independence, the Internal Audit function reports to the Chairman of the Audit Committee
of the Board & to the Chairman & Managing Director of the Company. The Internal
Auditor monitors and evaluates the efficacy and adequacy of internal control system in the
Company, its compliance with operating systems, accounting procedures and policies at all
locations of the Company. Based on the report of internal audit function, process owners
undertake corrective action in their respective areas and thereby strengthen the controls.
Significant audit observations and recommendations along with corrective actions thereon
are presented to the Audit Committee of the Board.
10. Material Developments in Human Resources /Industrial Relations
Front
Directly/indirectly your Company is providing employment to more than
500 persons at various levels at its factories and the Corporate Office. Its industrial
relations continue to remain cordial.
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