Global Economic Overview
In calendar year 2022, the global economy continued to recover from the
e ects of geopolitical tensions and the COVID-19 pandemic. The impact of the liquidity
issues following a succession of global bank crises appears to have been contained by the
quick intervention of central banks. Businesses worldwide are already reeling under the
impact of the energy crisis, rising in ation, tight nancial conditions in most parts of
the world and a hike in commodity prices. The con ict between Russia and Ukraine has
exacerbated the problem. Poor consumer demand following the epidemic and rising prices
continue to weigh severely on 2023 growth prospects. Policy paths in the largest economies
could continue to diverge, leading to further US dollar appreciation and cross-border
tensions in the days ahead. Energy and food price shocks might also add to in ationary
pressures. Global tightening of nancing conditions could trigger widespread distress for
emerging market debt. However, the global macro-economy is showing signs of stabilising,
leading to expectations of improved growth momentum in CY24. Global Central Banks are
closely monitoring liquidity positions and aiming to boost sentiments.
Indian Economic Overview
India has reclaimed its position as the fastest growing large economy
in the world following the disruption due to the COVID-19 pandemic and its economic
momentum has proven to be highly resilient, even amidst the global interest rate
tightening cycle and the resultant volatility in foreign exchange rates. According to the
NSOs Second Advance Estimates, the Indian economy has been estimated to grow by 7.0% in
FY23 as against 9.1% in FY22.
Despite the worldwide economic downturn, there is a cautious sense of
optimism in India. India is on track to maintain its position as the fastest-growing
nation among the G-20 countries due to favourable economic conditions and overall
macroeconomic stability. Its presidency of the G20 Summit in 2023 further strengthens its
global positioning. With increased economic activity, a conducive demand environment, and
positive outlook for the manufacturing, services and agricultural sectors, Indias growth
momentum is likely to attract signi cant investments. The Reserve Bank of India predicts a
growth rate of 6.5% in FY24, aided by increased consumer sentiment, investor con dence,
credit expansion and the governments infrastructure and productive capacity investment
incentives, which are expected to spur employment opportunities.
Economic Outlook
The easing of global in ationary pressure led by falling international
commodity prices and strong government measures is expected to aid economic growth in
India. An increase in export demand, a rebound in consumer spending and public capital
expenditures have contributed to a recovery in the investment/manufacturing activities of
companies. Startups are achieving success and gaining a rm foothold in the expanding
Indian markets. In the near future, the increasing use of dynamic technologies such as
data analytics, arti cial intelligence and the cloud will transform the Indian economy
into one that is digitally oriented, making it one of the most attractive business markets
in the world.
IMF estimates India to be one of the fast-growing signi cant economies
in 2022. The growth of exports may have moderated in the second half of FY23. However,
their surge in FY22 and the rst half of FY23 induced a shift in the gears of the
production processes from mild acceleration to cruise mode. Manufacturing and investment
activities consequently gained traction. By the time the growth of exports moderated, the
rebound in domestic consumption had su ciently matured to take forward the growth of
Indias economy. Private Consumption as a percentage of GDP stood at 58.4 per cent in Q2
of FY23, the highest among the second quarters of all the years since 2013-14, supported
by a rebound in contact intensive services such as trade, hotel and transport, which
registered sequential growth of 16 percent in real terms in Q2 of FY23 compared to the
previous quarter.
Packaging and FIBC Industrial Trend
The global market for Flexible Intermediate Bulk Containers is expected
to witness market growth at a rate of 5.97% in the forecast period of 2021 to 2028.The
expansion of food, agriculture, chemical and pharmaceutical industries is escalating the
growth of exible intermediate bulk container market. North America dominates the exible
intermediate bulk container market due to the growing pharmaceutical industry, high FIBC
adoption by the large-scale chemical and manufacturing industries steady growth rates of
food processing and agricultural markets in the region. Asia-Paci c is expected to witness
signi cant CAGR during the forecast period of 2021 to 2028 because of the high agriculture
production.
(https://www.databridgemarketresearch.com/reports/global-
exible-intermediate-bulk-container-market)
Furthermore, a report by Allied Market Research indicates that the
demand for FIBCs is expected to increase in developing countries such as India, China, and
Brazil, due to the growth of industries such as agriculture, construction, and chemicals.
The report estimates that the global FIBC market will reach USD 6.3 billion by 2027,
growing at a CAGR of 6.1% from 2020 to 2027. Looking ahead to 2023, the FIBC trend is
expected to continue its growth trajectory. The demand for FIBCs is projected to increase
due to their versatility and suitability for various applications. With the demand for
FIBCs on the rise, manufacturers are also expected to focus on developing new and
innovative products that cater to the speci c needs of various industries. Looking ahead
to 2024, the FIBC market is expected to maintain its growth momentum. The growth in FIBC
market is driven by factors such as the increase in industrialization, growing demand for
food and pharmaceutical products, and the rise in construction activities. With the
emergence of new technologies and the demand for sustainable and eco-friendly packaging
solutions, the FIBC market is poised for signi cant growth in the coming years.
Strengths and Opportunities:
The demand for FIBC is growing due to the rising logistics demand due
to increase in population, consumptions, increased media penetration through the internet,
and growing economy. The rise in e-commerce is expected to increase the demand for FIBCs
as they are ideal for shipping and storing large quantities of products. Furthermore,
Advancement in technology and materials are expected to lead to the development of new and
innovative FIBC products, providing new opportunities for manufacturers and suppliers. As
the demand for sustainable and eco-friendly packaging solutions increases, FIBCs o er a
viable alternative to traditional packaging materials such as plastic and paper.
The above mentioned opportunities and market strength for FIBC Bags and
your Companys vast experience for more than 14 years together with a strong supply chain
network and reputed customers in international market provide the opportunity to serve its
customers in diverse sectors from di erent geographical regions in accordance to their
requirements.
Weakness and Threats:
Due to the ongoing geopolitical tension in Europe over Ukraine war,
Cost of crude oil has increased and exchange rates have been too volatile which might have
an adverse impact on the Company, Since exports to various countries will carry the risk
of uctuation in currency value which may a ect the realization. The price of raw materials
used to manufacture FIBCs, such as polypropylene, can be volatile, which can a ect the pro
tability of manufacturers and the price of FIBCs for customers.
Internal Control System
Your Company has an e cient inbuilt system to monitor the compliance of
standards at each stage of the production process. The system enables the management to
quickly identify any deviations from the required standards and to take appropriate action
for correction. The compliance to the standards is also reviewed by the management at the
monthly meetings. The system helps the company to identify the risks at an early stage so
that required action is taken for control. The Company conducts its business with
integrity and high standards of ethics, and in compliance with the laws and regulations
that govern its business. The Company has a well established system of internal controls
in operations, supported by suitable monitoring procedures and self-assessment exercises.
Material developments in Human Resources / Industrial Relations front,
including number of people employed.
The FIBC industry is highly labor intensive and attrition rate is also
high, hence recruiting right talent, providing quality training and retaining them is the
primary focus of the Company. Your Company is equipped with inbuilt infrastructure to
provide continuous training to the workers for achieving e ciency in production. For the
professional skill development of its people, the Company is committed towards conducting
frequent training programmes to improve technical and behavioural skills, foster business
excellence, management and leadership skills. Along with o ering numerous opportunities to
promote career growth, it also raises awareness of the Companys values and code of
conduct. The business upholds a safety culture and implements programmes and procedures to
protect the health and welfare of its employees. Additionally, it aims to establish a
diverse and inclusive workplace that accepts individuals from distinct backgrounds,
acknowledges individual preferences, cultural or gender preferences and so on. The total
employee strength as on 31 March, 2023 was 600.
Risks and Concerns
The Company has in place a Risk Management Policy duly approved by the
board which is periodically reviewed by the management. The main objective of the
companys risk management policy is to ensure the e ective identi cation and reporting of
risk exposures, involvement of all departments and employees in risk management, to ensure
continuous growth of business and protect all the stakeholders of the Company. Based on
the current business environment below are the major risks and its impact identi ed by the
Company and the measures taken for mitigation.
| RISKS |
IMPACT ON THE COMPANY |
MITIGATION STRATEGY |
| Uncertainty in the business environment |
FIBC is a labour intense industry. |
The company is trying to collaborate with
various skill devcelopment programmes. |
| Exchange Risks |
The Company is into export
of FIBC bags to different countries. There is high risk of forex loss due to volatility in
currency market caused by ongoing geopolitical tension around Ukraine war. |
Company follows a
comprehensive Forex Policy for hedging against such volatility in the currency market.
Forex Contracts will be executed based on the current market conditions and future
outlook. |
| Supply Chain Disruption |
There is also the risk of
the supply chain disruption due to geopolitical and various other factors. |
Company has engaged
multiple entities in the supply chain to ensure that there is no disruption in the network
and there is always an alternative. Further, the company is working with multiple
suppliers and trying to encourage suppliers from nearby suppliers to avoid
non-availability of materials. |
Future Outlook:
FIBC manufacturing companies are poised for growth in the coming years,
with increasing demand from various industries for bulk packaging solutions. Few of the
factors that will likely contribute to the future outlook of FIBC manufacturing companies
are Increasing Demand for Sustainable Packaging Solutions, Growth in Emerging Markets,
Advancements in FIBC Technology, Increasing Regulations and Standards. Your company has a
promising future outlook, driven by increasing demand for sustainable packaging solutions,
growth in emerging markets, advancements in FIBC technology, adoption of automation and
Industry, and increasing regulations and standards. Your company can leverage these trends
and adapt to changing market conditions will be well-positioned for success in the future.
Cautionary Statement:
The report contains forward-looking statements that may be identi ed by
their use of words such as plans, expects, will, anticipates, intends,
projects, estimates or other words of similar meaning. All statements that address
expectations or projections about the future, including statements about the Companys
strategies for growth, market position, expenditures and nancial results are
forward-looking statements. Forward looking statements are based on certain assumptions
and expectations of future events. The Company cannot guarantee that these assumptions and
expectations are accurate or will be realised.
|
For and on behalf of the Board |
|
Binod Kumar Agarwal |
Date: 02 September, 2023 |
Chairman & Managing Director |
Place: Pithampur (Dhar) DIN:00322536 |
|
+91-9892691696
