Parmax Pharma Ltd Management Discussions

Global Economy:

On the surface, the global economy appears poised for a gradual recovery from the powerful blows of the pandemic and Russias unprovoked war on Ukraine. Supply-chain disruptions are unwinding, while the dislocations to energy and food markets caused by the war are receding. Simultaneously, the massive and synchronous tightening of monetary policy by most central banks should start to bear fruit as inflation starts tapering off.

The baseline forecast is for growth to fall from 3.4% in 2022 to 2.8% in 2023, before settling at 3.0% in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7% in 2022 to 1.3% in 2023. Global headline inflation in the baseline is set to fall from 8.7% in 2022 to 7.0% in 2023 on the back of lower commodity prices but underlying (core) inflation is likely to decline more slowly.

The rate hike by the US Fed drove capital into the US markets causing the US Dollar to appreciate against most currencies. This led to the widening of the Current Account Deficits (CAD) and increased inflationary pressures in net importing economies. The rate hike and persistent inflation also led to a lowering of the global growth forecasts for 2022 and 2023. The weakness of the Chinese economy further contributed to weakening the growth forecasts. With inflation persisting in the advanced economies and the central banks hinting at further rate hikes, downside risks to the global economic outlook appear elevated.

Indian Economy:

Indian economy, however, appears to have moved on after its encounter with the pandemic, staging a full recovery in 2021-22 ahead of many nations and positioning itself to ascend to the pre-pandemic growth path in 2022-23. Yet in the bygone fiscal year, India has also faced the challenge of reining in inflation that the European strife accentuated. Measures taken by the government and RBI, along with the easing of global commodity prices, have finally managed to bring some relief on retail inflation. However, the challenge of the depreciating rupee, although better performing than most other currencies, persists with the likelihood of further increases in policy rates by the US Fed. The widening of the CAD may also continue as global commodity prices remain elevated and the growth momentum of the Indian economy remains strong. The loss of export stimulus is further possible as the slowing world growth and trade shrinks the global market size.

Despite these, agencies worldwide continue to project India as the fastest-growing major economy at 6.5-7.0% in 2022-23. These optimistic growth forecasts stem in part from the resilience of the Indian economy seen in the rebound of private consumption seamlessly replacing the export stimuli as the leading driver of growth. The uptick in private consumption has also given a boost to production activity resulting in an increase in capacity utilization across sectors. The rebound in consumption was engineered by the near-universal vaccination coverage overseen by the government. The Capital Expenditure (Capex) of the central government, which increased by 63.4% in the first eight months of 2022-23 , was another growth driver of the Indian economy.

Global growth has been projected to decline in 2023 and is expected to remain generally subdued in the following years as well. The slowing demand will likely push down global commodity prices and improve Indias CAD. Indias economic growth in 2022-23 has been principally led by private consumption and capital formation. However, CAD needs to be closely monitored as the growth momentum of the current year spills over into the next. Growth is expected to be brisk in 2023-24 as a vigorous credit disbursal, and capital investment cycle is expected to unfold in India with the strengthening of the balance sheets of the corporate and banking sectors.

FY 2024 continues to hint at continuing challenges since the volatility in raw material and energy prices persists. Although energy prices have shown signs of softening in the last quarter of FY 2023, we anticipate this trend to continue throughout FY 2024.

Amidst these challenges, we remain steadfast in our commitment to sustainability and compliance. Our focus on these aspects will continue while ensuring timely and complete supplies.

The Way Forward

We are dedicated to embracing change, seizing opportunities and fostering a culture of innovation that propels us forward as a global leader in our industry. So, even as we navigate these unprecedented times, we recognize that the challenges we face are not to be feared.