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Shilp Gravures Ltd Management Discussions

Jul 18, 2024|03:49:00 PM

Shilp Gravures Ltd Share Price Management Discussions



Global economic growth slowed down to 3.4% in 2022 as per International Monetary Fund (World Economic Outlook Apr 2023) compared to 6.2% in 2021. The year saw geopolitical uncertainty with the prolonged Russia-Ukraine conflict and economic challenges leading to disruptions in the global supply chain and elevated inflation with increase in commodity and energy prices. This prompted central banks to aggressively tighten their monetary policy, which further impacted economic activity.


Analysts estimate that 2023 will continue to see the above issues playing out leading to a further slowdown in economic growth and a mild recession in the UK as well as potentially in the Euro area. The UK has been impacted by an increase in cost-of living, dampening households purchasing power and consumption, as well as tighter fiscal and monetary policy. Current estimates project global recovery in the second half of 2023, with moderation of inflation and re-opening of the Chinese economy. We have already started seeing cooling-off of fuel and commodity prices as well as global container freight rates.

However, risks remain to this outlook with the stress seen in banking systems in the US and Europe in the last few months, potentially getting aggravated with extended high inflation levels and triggering further rounds of rate hikes and adversely impacting the business environment. There is also continued uncertainty on a resolution of the Russia-Ukraine conflict further impacting energy markets and disrupting the supply demand balance.


Despite global volatility, the Indian economy grew by 6.8% in 2022 - making it the fifth largest economy globally in terms of nominal GDP (US dollars). This growth has been supported by: (1) reduction in Covid-19 cases leading to opening up of the economy; (2) expansion of manufacturing footprint by both global and Indian firms, aided by Government policies (eg Production Linked Incentive (PLI) Scheme, PM Gati Shakti, corporate tax cuts); (3) capex recovery; and (4) cyclical upturn in many sectors (eg Banking, Auto). Indias digital infrastructure has strengthened in the last few years and the widespread adoption of real-time digital payments is estimated to have unlocked 0.56% of GDP.

However, we saw interest rate hikes done were by the Reserve Bank of India to control inflation. The Indian rupee weakness against the US dollar also added to the inflationary pressures.


According to the International Monetary Fund, Indian economy is projected to deliver robust growth of 5.9% for 2023, highest amongst the emerging economies, driven by strong domestic demand and healthy consumption growth supported by an improvement in labour market conditions, increasing consumer confidence, an expected recovery in rural demand and higher purchasing power with moderating of inflation. In the Union Budget for FY2023-24, the government announced a 33% increase in capex allocation to INR 10 trillion, which is expected to boost private investments. The Budget has also targeted a lower fiscal deficit in FY2023-24 at 5.9% and the government has committed to bring it down to below 4.5% by FY2025-26.

Risks to the outlook remain with weakness in the global economy impacting exports, volatility in food and crude oil prices, slowdown in private consumption and aggressive monetary tightening by global central banks to moderate inflation.



Packaging is an essential component of almost every product. A products packaging acts as an eye catcher, allowing it to stand out from competing goods in todays market environment, which faces stiff competition, and therefore, an edge is required for the product to outshine its rival. Packaging is also instrumental in conveying the products message to consumers and helps in establishing the visual appeal of a brand; hence, marketers view product packaging as the best possible opportunity to attract consumers to their product. Moreover, the products packaging is designed to capitalise on the impulse shopping behaviour, especially in large supermarket chains that account for a significant proportion of purchases made by an average consumer. The main functions of packaging besides marketing is to transmit information, protect the product, provide convenience and add security.

The Indian packaging market is expected to register a CAGR of 12.60% during the forecast period (2022 - 2027). The demand for packaging in India has expanded drastically, spurred by the rapid growth in consumer markets, especially in processed food, personal care, and pharmaceutical end-user industries. Packaging is Indias one of the fastest growing sectors. Over the last few years, the industry has been a key driver of technology and innovation, contributing to various manufacturing sectors, including agriculture and the fast-moving consumer goods (FMCG) sectors. The packaging industry is driven by the factors such as rising population, increasing income levels, and changing lifestyles are anticipated to drive consumption across various industries leading to higher demand for packaging product solutions. Moreover, demand from the rural sector for packaged products is fueled by the growing media penetration through the internet and television.

The rise of the Indian middle class, the rapid expansion of organized retail, the growth of exports, and Indias rising e-commerce sector is further facilitating growth.

Key M arket Trends

The food packaging industry in India witnessed major innovations in terms of branding and packaging. Many popular brands, like Amul, Mother Dairy, Patanjali, and others, use UV-protected films, color-changing films, and holographic films to reduce the chance of adulterating their products.

Packaged food is significantly driving the growth of the Indian packaging industry. It is expected to fuel the demand for plastic packaging, as it ensures food quality, safety, and long shelf life. According to the Federation of Indian Chambers of Commerce & Industry (FICCI), the expenditure on packaged foods is increasing (at inflection point) due to an increase in per capita income, urbanization, and an increase in the number of working women.

India has seen a rise in the paper and packaging of food and beverage with an increase in demand, along with new companies in the food and beverage space. The entry and meteoric rise of food delivery service companies such as Zomato and Swiggy have led to growth in the consumption of packaging used for food and beverage. Food packaging has seen significant innovations that focus on highlighting the brand while maintaining the quality and standard of the food product contained within.

Globally, the packaging industry sector has positioned itself as one of the fastest growing industry across all countries. The industry is worth over $ 917 billion (in 2019), growing at CAGR 2.8% to reach to $ 1.05 trillion by 2024. Packaging is an emerging science, an emerging engineering discipline, and a successful contributor to major industries such as pharmaceutical, FMCG and electronics. Packaging is the worlds third largest industry following the food industry (1st) and energy (2nd) and the only industry that has to do with every single product produced in an economy.

In Indias case, packaging is the fifth largest sector in its economy and is one of the highest growth sectors in the country. Over the last few years, packaging industry has been an important sector driving technology and innovation growth in the country and adding value to the various manufacturing sectors including agriculture and FMCG segments. According to the Indian Institute of Packaging (IIP), the packaging consumption in India has increased 200% in the past decade, rising from 4.3 kg per person per annum (pppa) to 8.6 kg pppa.


Gravure is used for labels, cartons, packaging, gift-wrap, wall and floor coverings, and a variety of precision coating applications. In the face of uncertain economic times, the gravure market is striving to maintain margins and market share while focusing on technological advances to drive growth.

Gravure printing is characterized by excellent print quality and high printing speed. Its further advantages are that it involves a simple printing process, accurate ink use, and the flexibility of printing machine structures. Gravure printing, due to several technological innovations, now belongs to innovative technologies. The market of packaging materials is the largest segment of gravure printing, and a further increase is forecast. In this chapter, the bases of gravure printing process (ink transfer, drying, gravure cylinder, doctor blade, impression cylinder, characteristics of the prints) and the characteristics of gravure printing inks are presented. The up-to-date methods of gravure cylinder production and the characteristics of the structure of gravure printing machines are touched on, and finally the areas of the development of gravure printing are dealt with.

The global gravure printing inks market size is expected to reach USD 5.06 billion by 2028, at a CAGR of 4.6% during the forecast period 2022-2028. Liquid inks having a very low viscosity are gravure inks. They can then be transferred onto substrates by being pulled into etched cells in cylinders as a result. The paper is put through gas- or electric-fired dryers to dry the ink and drive out solvents or water. Before the paper gets to the next printing station on the press, the ink has already dried. This is required since its impossible to overprint with wet inks without them smearing and smudging. As a result, a substantial number of air dryers are installed after each printing station.

Your Company serves complete cross-section of the gravure industry such as: Flexible Packaging, Anilox Rollers, PVC Flooring, Decorative Laminates, Specialty Coatings, Artificial Leather, Gift Wrapper, Security printing and Transfer printing etc. India has an advantage of large volume consumption of consumer products and therefore gravure is the most preferred technology to handle such volumes due to economy of scale, availability of skilled manpower and high quality printing.

Your company continues to cater the Indian Packaging Industry with its dedicated endeavors which in turn stimulates the growth of the Company in the future. Your company has been investing in training the manpower and upgrading the technology from time to time to keep the pace with the changing trends.


Flexographic printing is a modern printing technique that creates raised images on a variety of materials by using a flexible printing plate connected to a plate cylinder. The ink is transferred to the substrate by rotating the flexible inked plate at a high speed. Flexographic printing is used to print high volumes of labels and packaging.

The main types of printing equipment in flexographic printing are narrow web, medium web, and sheetfed. Narrow web printing is a rotary method with numerous in-line converting stages that is defined as any web with a width of 16" or less. The technologies involved include automatic, semi-automatic and is used in various applications such as corrugated boxes, folding carton, flexible packaging, labels, print media. It is implemented in several sectors including industrial, print media, food and beverage, consumer electronics, pharmaceutical, others.


The global flexographic printing market size is expected to grow from $5.35 billion in 2022 to $5.70 billion in 2023 at a compound annual growth rate (CAGR) of 6.6%. The Russia-Ukraine war disrupted the chances of global economic recovery from the COVID-19 pandemic, at least in the short term. The flexographic printing market size is expected to grow to $7.10 billion in 2027 at a CAGR of 5.6%.

The increasing demand for packaged food products is expected to propel the growth of the flexographic printing market going forward. The packaged food products are foodstuff pre- packaged in the packaging to offer shelf life and sterility to food unless the packaging is damaged or opened. The growing demand for packaged food goods necessitates the use of flexographic printing to provide packaging that is convenient, attractive, cost-effective, and lightweight. On the label packaging, flexographic printing aids in the effective marketing of food goods and information about them. For instance, in 2021, the Food Industry Association (FMI) estimated that the packaged food and beverages online sales could reach $109 billion. Therefore, the increasing demand for packaged food products is driving the growth of the flexographic printing market.

Technological advancement is a key trend gaining popularity in the flexographic printing market. Major companies operating in the flexographic printing sector are focused on developing new technological solutions to meet consumer demand and strengthen their position. For instance, MPS, a US-based company that manufactures flexo, offset, and hybrid printing presses for label converting and flexible packaging sector, launched E-Sleeve technology to improve print efficiency and quality. The technology includes pressure settings, precise concentric runout properties, increased dimensional accuracy for optimum register, and constant parallelism for the ideal register across the entire print length. The technology enables better speeds to generate results with assured quality tolerances and reliable production cost calculations.

Key Highlights:

Flexographic printing continues to be one of the fastest growing print processer and is no longer reserved for printing specialty items. The ability of flexography to print on a variety of substrates allows the process to be used for a wide range of printed products. Food packaging is an important market because of the ability of flexography to print on non-porous substrates.

This ability makes it useful for printing on plastic bags, as well. The process is ideal for publishing packaging, wallpaper, calendars, books, laminated tetra packs, and food packaging The material that receives the print, known as the substrate, can be paper, cand, polymers, textiles, and even metalized films (polymers coated with a thin layer of metal).

The increasing demand for a printing machine that can be used for a variety of substrates and other products with high versatility and ease of operation, particularly for rather long printing runs on all extensible plastic flims, is expected to fuel the adoption of the flexographic printing machines, as flexographic printing machines can operate at high speeds and have applicability on a different surface and water-based inks, as well as oil-based inks.

Flexo graphic Pr inting Market Trends:

Flexographic printing is quick drying and able to use non-toxic inks. These factors make flexographic printing accessible in the printing of food packaging for food packaging as well It can primarily be used on packaging like milk cartons, food containers, beverage containers, and disposable cups and containers.

To their lightweight nature, folding cartons are witnessing an increased customer demand globally. Quality assurance is essential for the physical carton and the final package print. Printers are looking at multi-site operations to address this growth and meet demand in such a multi-site operation, a critical challenge comes into play print consistency.

The rising consumer demand for packaged products due to changing eating habits and lifestyles may significantly impact the market for flexographic printing of folding cartons in food packaging Due to high barrier properties, shelf life, and consumer safety, a rise in per capita disposable income and a growing population will aid in product demand. Printing used on a variety of packaging materials. Direct printing is possible on plastic, paper, board, and cork.

Flexographic printing has been used to print folding cartons for many years, but it has only been in the last few years that the industry has begun to use central impression presses for this application. Pizza cartons are an example of the type of work that was originally relegated to the flexoprocess. The ability to print multi colors in close registers on the wide web, on the other hand, has made the process more appealing to other point of purchase folding carton applications.


The industry is constantly faced with several challenges in terms of cost, technology, knowledge, regulations, and environment. The changing economic conditions, trade and market preferences imposed by the pandemic have added to the woes of the industry in the form of raw material price rise.

Notwithstanding the challenges, the growth drivers are distinctly defined for the industry even during this current crisis. It is thus, for the industry to leverage the considerable opportunities available in the various spaces and emerge as a significant global player in the sector. Strengthening capabilities in terms of technology, skills, efficiency, and competitiveness will be crucial going forward. Package manufacturing and packaging services are the two potential segments for the Indian packaging sector, where the industry can expand considerably both onshore and offshore.

In coming years, the Indian packaging industry will see substantial growth. The increasing awareness regarding clean water, safe food, and pharmaceuticals along with adoption of next gen digital technologies will aggressively penetrate and drive the Indian packaging industry".

This rise in consumption is driven by key aspects of the rising Indian economy namely, strong favourable demographics, increasing disposable income levels, rising consumer awareness and demand for processed food. The growth of individual end user segments of food, beverages, FMCG and pharmaceuticals will trickle down into rising demand for packaging solutions.

The next d ecad e:

In the coming decade, India will focus on transitioning this industry towards sustainability. The implementation of single-use plastic ban policy along with a focus on recycling and biodegradability will bring about a major transformation in this sector. Currently, the Indian packaging industry consumes more polymers compared to the global average. This creates a unique opportunity for India to drive this industry towards sustainability, bio-based/paper-based packaging.

The packaging sector has a much wider exposure to other sectors of our economy. The growth of these sectors in the coming decade will have a combined effect to take this sector to new heights. The Government of India recognised the potential of this sector and released a slew of policies like the single use plastic ban policy, profit linked tax incentive for food packaging, adoption of the National Packaging Initiative, to further incentivise innovation in this sector. There has also been a rise in material technology research-based start ups to create new sustainable packaging materials.

The presence of large number of players in the market and entry of new entrants in the flexible packaging market is projected to intensify the market competition. The market competition is seen on the basis of price, quality, services, and innovation. The leading players in the market putting efforts by introducing innovative and bio-based packaging materials.

Environm ental Consci ou sness

With environmental awareness rising globally, there is a strong momentum towards sustainable solutions. Stakeholders across the value chain are voicing their concerns regarding the use of plastic packaging and organizations are realigning themselves in this direction. However, there are teething challenges the market is facing in providing these sustainable solutions.

The investment required for the research of these solutions is high. This has limited the number of available eco-friendly options. Also, these solutions come at an added cost which neither the industry nor the consumer is prepared to absorb. This is making manufacturers wary of investing in the production of packaging that might not fetch the markup price. Importing again is cost-intensive.

Solving Industr y Challenges with Technology

Most of these challenges can be solved with technology, to form a tightly knit and integrated system. However, with technology, an all-embracing approach would be necessary. Every stage of the procurement process will need automation. Business leaders can empower their teams with visibility of their supply chain in real-time. This would help them absorb demand fluctuations faster.

The industry has immense potential in terms of manufacturing capacity. This combined with an automated supply chain system can create a sustainable ecosystem that can be used by generations to come. Digitalization of the supply chain is what will enable the packaging industry to operate at full potential. And thats a mission every individual at Bizongo is working towards developing. SEGMENT WISE PERFORMANCE: As on March 31, 2023, the Company has only two reportable segments, that of i) manufacture of engraved copper rollers and ii) energy generation through wind mill. The segment revenue, results, assets, and liabilities include the respective amounts identifiable to each of the segment and amount allocated to it. The figurative parameter in detail is provided in Note no. 43 (Segment Reporting) in the Note to Financial Statements.

FINANCIAL PERFORMANCE: An overview of the financial performance is given in the Boards Report. The Audit Committee constituted by the Board of Directors periodically reviews the financial performance and reporting systems.


Particulars Standalone Consolidated
2022-23 2021-22 2022-23 2021-22
Revenue from operation 7695.24 6771.41 8719.97 7479.04
EBITDA 1481.72 1578.16 1589.45 1554.22
Profit after Tax (PAT) 757.04 870.04 780.92 791.18
Basic/Diluted Earnings per share 12.31 14.15 12.70 12.87


In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018, the Company is required to provide 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:

Ratios 2022-23 2021-22 %change
Debtors Turnover 68.20 (days) 64.37(days) 5.78
Inventory Turnover 105.92 (days) 95.55(days) 10.29
Interest Coverage Ratio 55.70 57.44 3.08
Current Ratio1 5.15 3.82 29.65
Debt Equity Ratio 0.00 2.48% 0
Operating Profit Margin 13.74% 11.40% 18.62
Net Profit Margin 13.40% 12.85% 4.19
Return on Networth 12.02% 11.21% 6.97

1 Company has increased its investment and paid its borrowing during the financial year.


The Company has laid down internal financial controls. The policies and procedures adopted by the Company ensure orderly and efficient conduct of its business, safe- guarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of accounting records and timely preparation of reliable information.

Your Company have an Audit Committee and has met four times in the year. Audit Committee ensures proper compliance with the provisions of the Listing Regulations, Companies Act, reviews the adequacy and effectiveness of the internal control environment and monitors implementation of internal audit recommendations. Besides the above, Audit Committee is actively engaged in overseeing financial disclosures. The recommendations of the Internal Auditors and the Audit Committee are followed up effectively for implementation.


The Company considers its people to be its biggest asset and credits its sustained improvements to their ethics, dedication and energy. It is its endeavour to offer a work environment and HR processes that promote creativity, teamwork, meritocracy, learning and leadership. The Human Resource Management continues to be focused on improving employee productivity, reducing employee cost and building necessary skill sets whilst building employee motivation through varied employee engagement initiatives. Your Company is confident that its Human Capital will effectively contribute to the long-term value enhancement of the organization. The Company continuously nurtures this environment to keep its employees highly motivated, result oriented and adaptable to changing business environment. There exists peaceful and amicable relations with staff and workers at office and plant.

As on 31.03.2023, Shilp employs more than 427 employees directly and indirectly. It believes that the quality of these employees is the key to its success and is committed to providing necessary human resource development and training opportunities to equip employees with additional skills to enable them to adapt to contemporary technological advancement and evolving workplace requirements. The focus of any industry is usually on its men and machinery and if these are looked after well then, any business is sure to succeed.


Statements in the Management Discussion & Analysis Report describing the Companys objectives, projections, expectations, opinion and predictions may please be considered as "forward looking statements" only. Actual results may differ materially from those expressed or implied. Important factors that could influence the Companys operations should be viewed in light of changes in market conditions, domestic demand and supply conditions, prices of raw materials, economic developments in the country, changes in the government regulations, tax laws and other statutes and such other incidental factors which are material to the business operation of the Company.

For and on behalf of the Board of Directors of Shilp Gravures Limited
Ambar Patel Shailesh Desai
(Managing Director) (Director)
Place: Rakanpur (DIN:00050042) (DIN:00169595)
Date: 13th May, 2023

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