stanpacksindia Management discussions

ECONOMIC OVERVIEW

GLOBAL:

Tentative signs in early 2023 that the world economy could achieve a soft landing with inflation coming down and growth steady have receded amid stubbornly high inflation and recent financial sector turmoil. Although inflation has declined as central banks have raised interest rates and food and energy prices have come down, underlying price pressures are proving sticky, with labour markets tight in a number of economies. Side effects from the fast rise in policy rates are becoming apparent, as banking sector vulnerabilities have come into focus and fears of contagion have risen across the broader financial sector, including nonbank financial institutions. Policymakers have taken forceful actions to stabilize the banking system.

As discussed in depth in the Global Financial Stability Report, financial conditions are fluctuating with the shifts in sentiment.

In parallel, the other major forces that shaped the world economy in 2022 seem set to continue into this year, but with changed intensities. Commodity prices that rose sharply following Russias invasion of Ukraine have moderated, but the war continues, and geopolitical tensions are high. Infectious COVID-19 strains caused widespread outbreaks last year, but economies that were hit hard most notably China appear to be recovering, easing supply-chain disruptions.

Global headline inflationis set to fall from 8.7 percent in 2022 to 7.0 percent in 2023 on the back of lower commodity prices, but underlying (core) inflation to target is unlikely before 2025 in most cases. Once inflation rates are back to targets, deeper structural drivers will likely reduce interest rates toward their pre-pandemic levels Financial sector stress could amplify and contagion could take hold, weakening the real economy centralthrough banks sharpdeterioration to reconsider their financingconditions policy paths. Pockets of sovereign debt distress could, in the context of higher borrowing costs and lower growth, spread and become more systemic.

Policymakers have a narrow path to walk to improve prospects and minimize risks. Central banks need to stance, but also be ready to adjust and use their full set of remainsteadywiththeirtighteranti-inflation policy instruments including to address financial stability concerns as developments demand.

In most cases, governments should aim for an overall tight stance while providing targeted support to those struggling most with the cost-of-living crisis. In a severe downside scenario, automatic stabilizers should be allowed to operate fully and temporary support measures be utilized as needed, fiscal space impeding supply could ameliorate medium-term growth. Steps to strengthen multilateral cooperation are essential to make progress in creating a more resilient world economy, including by bolstering the global financial safety net, mitigating the costs of climate change, and reducing the adverse effects of geo-economics fragmentation.

Executive Summary

International

• Inflation: Still High but Falling

The baseline forecast is for global headline (consumer price index) inflation to decline from 8.7 percent in 2022 to 7.0 percent in 2023. This forecast is higher (by 0.4 percentage point) than that of January 2023 but nearly double the January 2022 forecast (Figure 1.16).

Disinflation is expected in all major country groups, with about 76 percent of economies expected to experience lower headline inflation in 2023. Initial differences in the level of inflation between advanced economies and emerging market and developing economies are, however, expected to persist. The projected disinflation reflects declining fuel and nonfuel commodity prices as well as the expected cooling effects of monetary tightening on economic activity. At the same time, inflation excluding that for food and energy is expected to decline globally much more gradually in 2023: by only 0.2 percentage point, to 6.2 percent, reflecting the aforementioned stickiness of underlying inflation. This forecast is higher (by 0.5 percentage point) than that of January 2023.

• Global Trade Slowdown, with Narrowing Balances

Growth in the volume of world trade is expected to decline from 5.1 percent in 2022 to 2.4 percent in 2023, echoing the slowdown in global demand after two years of rapid catch-up growth from the pandemic increases triggered by the war in Ukraine, which caused a widening in oil and other commodity trade balances. Over the medium term, global balances are expected to narrow gradually as commodity prices decline. Over the medium term, elevated positions are expected to moderate only slightly as current account balances narrow.

• Downside Risks Dominate

There is a significant risk that the recent banking system turbulence will result in a sharper and more persistent tightening of global financial conditions than anticipated in the baseline and plausible alternative scenarios, which would further deteriorate business and consumer confidence. Additional downside risks include sharper contractionary effects than expected from the synchronous central bank rate hikes amid historically high private and public debt levels (see Box 1.2). The combination of higher borrowing costs and lower growth could cause systemic debt distress in emerging market and developing economies. In addition, inflation may prove stickier than expected, prompting further monetary tightening than currently anticipated. Other adverse risks include a faltering in Chinas post COVID-19 recovery, escalation of the war in Ukraine, and geo-economics fragmentation further hindering multilateral efforts to address economic challenges. With debt levels, inflation, and financial market volatility elevated, policymakers have limited space to offset new negative shocks, especially in low-income countries. In what follows, the most prominent downside risks to the outlook are discussed.

• A severe tightening in global financial conditions

In many countries, the financial sector will remain highly vulnerable to the realized rise in real interest rates in the coming months, both in banks and in nonbank financial institutions (see Chapter 1 of the April 2023 Global Financial Stability Report). In a severe downside scenario in which risks stemming from bank balance sheet fragilities materialize, bank lending in the United States and other advanced economies could sharply decline, with macroeconomic effects amplified by a number of channels. Depressed activity in the most affected economies would spill over to the rest of the world through lower demand for imports and lower commodity prices. Such an outcome would imply near-zero growth in global GDP per capita. The downturn in global aggregate demand would have a strong disinflationary impulse, with global headline and core inflation lower by about 1 percentage point in 2023.

• Sharper monetary policy impact amid high debt

The interaction between rising real interest rates and historically elevated corporate and household debt is another source of downside risk, as debt servicing costs rise amid weaker income growth. This can lead to debt overhang, with lower-than-expected investment and consumption, higher unemployment, and widespread bankruptcies, especially in economies with elevated house prices and high levels of household debt issued at floating rates (see Box 1.1). In such a case, inflation would decline faster and growth would be lower than in the baseline forecast.

• Stickier inflation

With labour markets remaining exceptionally tight in many countries, the incipient decline in headline and core inflationcould stall before reaching target levels, amid stronger-than-expected wage growth. An even-stronger-than-predicted economic rebound in China could especially if combined with an escalation of the war in Ukraine reverse the expected decline in commodity prices, raise headline inflation,and pass through into core inflation and inflation expectations. Such conditions could prompt central banks in major economies to tighten policies further and keep a restrictive stance for longer, with adverse effects on growth and financial stability.

• Systemic sovereign debt distress in emerging market and developing economies

Several emerging market and developing economies still face sovereign credit spreads above 1,000 basis points. The easing in spreads since October, which partly reflects the depreciation of the US dollar and lower import bills from declining commodity prices, has provided some relief. Some vulnerability are more acute. A higher share of external debt is now issued at variable interest rates and in US dollars, implying greater exposure to monetary tightening in advanced economies. A new wave of debt-restructuring requests could take place, but the creditor landscape has become more complex, making restructuring potentially more difficult than in the past.

• Faltering growth in China

With a substantial share of economies exports absorbed by China, a weaker-than-expected recovery in China would have significant cross-border effects, especially for commodity exporters and tourism-dependent economies.

Risks to the outlook include the ongoing weakness in the Chinese real estate market, which could pose a larger-than-expected drag on growth and potentially leadto financial stability risks.

• Escalation of the war in Ukraine

An escalation of Russias war in Ukraine now in its second year could trigger a renewed energy crisis in Europe and exacerbate food insecurity in low-income countries.

For the winter of 2022 23, a gas crisis was averted, with ample storage at European facilities thanks to higher liquefied natural gas imports, lower gas demand amid high prices, and atypically mild weather. The risks of price spikes, however, remain for next winter (see the Commodity Special Feature). A possible increase in food prices from a failed extension of the Black Sea Grain Initiative would weigh further on food importers, particularlythose that lack fiscal space to cushion the impact on households and businesses. Amid elevated food and fuel prices, social unrest might increase.

• Fragmentation further hampers multilateral cooperation

The ongoing retreat from cross-border economic integration began more than a decade ago after the global financial crisis, with notable developments including Brexit and China-US trade tensions. The war in Ukraine has reinforced this trend by raising geopolitical tensions and splitting the world economy into geopolitical blocs. Barriers to trade are steadily increasing. They range from the impositionof export bans on food and fertilizers in response to the commodity price spike following Russias invasion of Ukraine to restrictions on trade in microchips and semiconductors (as in the US Creating Helpful Incentives to Produce Semiconductors and Science Act) and on green investment that are aimed at preventing the transfer of technology and include local-content requirements. Further geo-economics fragmentation risks not only lower cross-border flows of labour, goods, and capital but also reduced international on vital global public goods, such as climate change mitigation and pandemic resilience. Some countries may benefit from an associated rearrangement in global production, but the overall impact on economic well-being would likely be negative, with costs particularlyhigh in the short term, as replacing disrupted flows takes time.

• Indian Economic Conditions

India to witness GDP growth of 6.0 per cent to 6.8 per cent in 2023-24, depending on the trajectory of economic and political developments globally. The optimistic growth forecasts stem from a number of positives like the rebound of private consumption given a boost to production activity, higher Capital Expenditure (Capex), near-universal vaccination coverage enabling people to spend on contact-based services, such as restaurants, hotels, shopping malls, and cinemas, as well as the return of migant workers to cities to work in construction sites leading to a significant decline in housing market inventory, the strengthening of the balance sheets of the Corporates, a well-capitalised public sector banks ready to increase the credit supply and the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector to name the major ones. As per Economic Survey 2022-23 which was tabled in Parliament by the Honble Union minister for Finance & Corporate Affairs the expected baseline GDP growth of 6.5 per cent in real terms in FY24. The projection is broadly comparable to the estimates provided by multilateral agencies such as the World Bank, the IMF, and the ADB and by RBI, domestically which says, growth is expected to be brisk in FY24 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. Further support to economic growth will come from the expansion of public digital platforms and path-breaking measures such as the National Logistics Policy, and the Production-Linked Incentive schemes to boost manufacturing output. Despite the three shocks of COVID-19, Russian-Ukraine conflict and the Central Banks across economies led by Federal Reserve responding with synchronised policy rate hikes to curb inflation, leading to appreciation of US Dollar and the widening of the Current Account Deficits (CAD) in net importing economies, agencies worldwide continue to project India as the fastest-growing major economy at 6.5-7.0 per cent in FY23.

According to Survey, Indias economic growth in FY23 has been principally led by private consumption and capital formation and they have helped generate employment as seen in the declining urban unemployment rate and in the faster net registration in Employee Provident Fund. Moreover, Worlds second-largest vaccination drive involving more than 2 billion doses also served to lift consumer sentiments that may prolong the rebound in consumption. Still, private capex soon needs to take up the leadership role to put job creation on a fast track. It, however, cautions that 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 in the second half of the current year.

Therefore, the Global growth has been projected to decline in 2023 and is expected to remain generally subdued in the following years as well. The slowing demands will likely push down global commodity prices and improve Indias CAD in FY24. However, a downside risk to the Current Account Balance stems from a swift recovery driven mainly by domestic demand, and to a lesser extent, by exports. It also adds that the CAD needs to be closely monitored as the growth momentum of the current year spills over into the next. The Survey brings to the fore an interesting fact that in general, global economic shocks in the past were severe but spaced out in time, but this changed in the third decade of this millennium, as at least three shocks have hit the global economy since 2020. It all started with the pandemic-induced contraction of the global output, followed by the Russian-Ukraine conflict leading to a worldwide surge in inflation. Then, the central banks across economies led by the Federal Reserve responded with synchronised policy rate hikes to curb inflation. 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 by the IMF in its October 2022 update of the World Economic Outlook. The frailties of the Chinese economy further contributed to weakening the growth forecasts. Slowing global growth apart from monetary tightening may also lead to a financial contagion emanating from the advanced economies where the debt of the non-financial sector has risen the most since the global financial crisis. 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.

• Indias Economic Resilience and Growth Drivers

Major factors like monetary tightening by the RBI, the widening of the CAD, and the plateauing growth of exports have essentially been the outcome of geopolitical strife in Europe. As these developments posed downside risks to the growth of the Indian economy in FY23, many agencies worldwide have been revising their growth forecast of the Indian economy downwards. These forecasts, including the advance estimates released by the NSO, now broadly lie in the range of 6.5-7.0 percent Despite the downward revision, the growth estimate for FY23 is higher than for almost all major economies and even slightly above the average growth of the Indian economy in the decade leading up to the pandemic. IMF estimates India to be one of the top two fast-growing significant economies in 2022. Despite strong global headwinds and tighter domestic monetary policy, if India is still expected to grow between 6.5 and 7.0 per cent, and that too without the advantage of a base effect, it is a reflection of Indias underlying economic resilience; of its ability to recoup, renew and re-energise the growth drivers of the economy. Indias economic resilience can be seen in the domestic stimulus to growth seamlessly replacing the external stimuli. The growth of exports may have moderated in the second half of FY23. However, their surge in FY22 and the first half of FY23 induced a shift in the gears of the production processes from mild acceleration tocruisemode.Manufacturingandinvestmentactivitiesconsequently gained traction. By the time the growth of exports moderated, the rebound in domestic consumption had sufficiently 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. Although domestic consumption rebounded in many economies, the rebound in India was impressive for its scale. It contributed to a rise in domestic capacity utilisation. Domestic private consumption remains buoyant in November 2022. Moreover, RBIs most recent survey of consumer confidence released in December 2022 pointed to improving sentiment with respect to current and prospective employment and income conditions. The Survey also points to another recovery and adds that the "release of pent-up demand" was reflected in the housing market too as demand for housing loans picked up. Consequently, housing inventories have declined, prices are firming up, and construction of new dwellings is picking up pace and this has stimulated innumerable backward and forward linkages that the construction sector is known to carry. The universalisation of vaccination coverage also has a significant role in lifting the housing market as, in its absence, the migrant workforce could not have returned to construct new dwellings. Apart from housing, construction activity, in general, has significantly risen in FY23 as the much-enlarged capital budget (Capex) of the central government and its public sector enterprises is rapidly being deployed. Going by the Capex multiplier estimated for the country, the economic output of the country is set to increase by at least four times the amount of Capex. States, in aggregate, are also performing well with their Capex plans. Like the central government, states also have a larger capital budget supported by the centres grant-in-aid for capital works and an interest-free loan repayable over 50 years. Also, a capex thrust in the last two budgets of the Government of India was not an isolated initiative meant only to address the infrastructure gaps in the country. It was part of a strategic package aimed at crowding-in private investment into an economic landscape broadened by the vacation of non-strategic PSEs (disinvestment) and idling public sector assets.

RBI has projected headline inflation at 6.8 per cent in FY23, which is outside its target range. At the same time, it is not high enough to deter private consumption and also not so low as to weaken the inducement to invest.

• Industry Structure and Development

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 fuelled by the growing media penetration through the internet and television.

• On 11 November 2021, the government announced the production-linked incentive (PLI scheme) to incentivize firms in 10 sectors to drive local manufacturing and improve exports to control the disruption in the supply chain scenario. In addition, there is Atmanirbhar and the structural reforms, which should boost growth prospects for packaging in India. Furthermore, according to Western India Corrugated Box Manufacturers Association, the market for corrugated boxes in India needs to hike prices by 35% to offset kraft paperandconversion cost hikes to survive the current situation.

• According to the Indian Institute of Packaging (IIP), packaging consumption in India is increased by nearly 200% in the last decade, from 4.3 kilograms per person per annum in 2010 to 8.6 kilograms in 2020. Despite the sharp growth over the last decade, this industry remains a large space for growth compared to other developed countries worldwide. Furthermore, India is emerging as an organized retail destination globally. The presence of e-commerce is increasing rapidly and is bringing around a revolution in the retail sector, driving the need for packaging. Retailers are now leveraging digital retail channels, thus enabling wider reach out to customers with fewer amounts of money spent on real estate. Thus, organized retail services and the boom in e-commerce offer enormous potential for the future growth of retailing in India, which in turn is promoting the growth of the packaging sector.

• The market is expected to be significantly challenged due to fluctuation in raw materials pricing, dynamic changes in regulatory standards, growing environmental concerns, limited effective recycling of mixed plastic waste, ineffective plastic recovery, and a lack of modern and advanced machinery in India for the packaging sector. The volatile trend in crude oil and demand for polymers in competing applications has been increasing pressure on input costs that fluctuate raw materials prices. Recent disruptions due to Russias invasion of Ukraine and Chinas stringent Zero Covid policy caused substantial supply chain difficulties and aggravated the challenges for the packaging sector in India.

• The outbreak of the COVID-19 pandemic in March 2020 and subsequent waves of the virus led to a volatile operating environment with stringent lockdown measures across the country, severely disrupting the packaging industry. This compelled market players and many customers to temporarily scale down or halt operations, resulting in decreased revenues in the first half of the year 2020. As the country lifted restrictions, there was an immediate recovery in the overall economy. As operations quickly normalized, for most of the packaging companies, the loss suffered in the first quarter was covered up in the subsequent months, resulting in a positive revenue increase for 2020 and 2021. The spread of the COVID-19 virus side-tracked the forecasts significantly. However, the impact of the pandemic has varied, largely dependent on the end-user industry. Even with the ongoing- pandemic, the packaging industry in the country has continued to grow steadily, though not at the same scale as in pre-COVID times with the emergence of online retail and e-commerce brands.

• As of October 2021, a sharp price increase of INR 5000 per ton of kraft paper within ten days has been sharp. The Federation of Corrugated Box Manufacturers of India (FCBM) suggested that the price is expected to increase in the coming years. The prime reason behind this surge is coal, the main energy source for paper mills, which has increased from INR 5000 per ton to INR 15000 per ton. This has increased the production cost of paper mills by about INR 3500- 4000 per ton.

• India Packaging Industry Segmentation

• The packaging industry is paramount and plays international trade of goods. vitalrole the

Packaging may be classified based on its type of use, which is primary packaging, secondary packaging, tertiary packaging, and ancillary packaging. It is also segregated based on the types of materials used, such as plastic, paper, paperboard, glass, and metals. Packaging is used across different end-user sectors in a wide range of industries, such as food and beverage, healthcare, and cosmetics, among other end-user industries. The study also analyses the packaging machinery sector in the Indian packaging sector landscape.

• The study on Indian packaging tracks demands for the major material types such as plastic (flexible (wraps, pouches, films, stand-up pouches, tubes, etc.) and rigid (bottles, jars, containers, drums, IBC, etc.), metals (cans, container, drums, pails, etc.), glass (glass container, bottles, vials, ampoules, etc.), and paper (folding carton, corrugated boxes, paper bags, liquid board) on the high level while it tracks the market size in terms of revenue for the respective end-user industry verticals from the listed product types. The study factors in the impact of COVID-19 on the packaging market based on the prevalent base scenarios, key themes (growing demand for single-use), and end-user vertical-related demand cycles.

• Strengths and Opportunities

In the coming decade, India will focus on transitioning this industry towards sustainability and smart solutions. 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, Indian packaging industry consumes more polymers compared to the global average. This indicates a major dependence of the industry on upstream feedstock production (ethylene, propylene, styrene, etc). In fact, India currently imports nearly 1.7 MTPA of polyethylene (PE) in addition to utilizing around 73% of its domestic ethylene production towards PE. A major portion of this demand for PE is generated by the Indian packaging sector.

This creates a unique opportunity for India to drive this industry towards sustainability, bio-based/ paper-based packaging and in effect reduce the import bill and divert the valuable domestic ethylene production towards import substitution of other crucial chemicals/polymers like methyl ethyl ketone, PVC and ethylene oxide.

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. 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 National Packaging Initiative, to further incentivise innovation in this sector. As a result, there are numerous champions which have come up to the task and have posted significant profits in the last 5 years. There has also been a rise in material technology research-based start-ups to create new sustainable packaging materials.

With this growing awareness and governmental push, the research on eco-friendly and sustainable packaging is steadily on the rise in the country. Sustainability has become a key focus area of many of the packaging solutions manufacturers. Globally, Storopack has a new material called rEPS, made from 100% recycled EPS (Expanded Poly Styrene) providing an attractive solution for companies who wish to use environment friendly packages. In India, the corrugated boxes are becoming popular across industries over polymer-based alternatives such as (EPS) foams. Also, the rise of startups like GreendiamzBiotech and Envigreen are tackling different problems across the supply chain of packaging materials to ensure a sustainable and environment friendly growth of this industry in the coming years.

• Weakness and Threats

The volatility in raw material prices is a major challenge impeding market growth . The different types of packaging materials used for the packaging of food include plastic, glass, metals, and paper. For example, the cartons used in food packaging are produced either from recycled fiber mills or virgin fiber. The prices of both recycled fiber mills and virgin fiber fluctuate constantly, which is a major concern for end-users such as carton producers. The instability in the price of raw materials will result in the reduction profit margins of vendors due to the increasing production cost. their product prices due to fluctuating raw material prices. The prices of packaging raw materials such as paper and paper products that are used to manufacture corrugated packaging solutions are also expected to fluctuate companies are expected to increase the prices of corrugated packaging materials in response to the increase in raw material prices. In addition, aluminum, a key raw cans, is also exhibiting continuous price fluctuations. Hence, flepackaging market in focus duringtohinderthegrowthofthe forecast period. India

Financial Performance

Particulars	31.03.2023	31.03.2022
Revenue from Operations	2893.96	3401.99
Total Income	2895.08	3404.48
Profit before Tax	(158.65)	825.60
Profit After Tax	(165.63)	670.31
Earnings per share	(2.72)	11.00

• Key Financial Ratios

In accordance with the SEBI (Listing Obligations and Disclosure Requirements 2018) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year in key sector specific financial ratios.

Particulars	31.03.2023	31.03.2022	Change in % (decrease/ increase)	Reason for Change
Debtors Turnover	6.5	11.30	-42.48%	Change is not more than 25%
Inventory Turnover	2.01	2.06	-2.43%	Change is not more than 25%
Interest Coverage Ratio	-0.16	5.64	-102.84%	Change is due to decline in operating profit
Current Ratio	1.56	2.31	-32.47%	Change is not more than 25%
Debt Equity Ratio	1.67	1.12	49.11%	Change is due to decline in Net Worth (equity) by Rs.165.63 lakhs which is Loss for the current year
Operating Profit Margin	0.11	14.69	-99.25%	Change is due to fluctuations in the cost of raw materials. During the year, cost of raw materials saw an upward trend which resulted in increased cost of materials consumed
Return on Net Worth	-22.23	136.17%	-116.33%	Change is due to significant amount of loss during the year compared to marginal profit stated by the Company during previous year which also resulted in significant fall in Net worth of the Company

• Internal Control System

The Company believes in constant improvement and strives for better system and control at every stage. The Company has adopted various control and monitoring mechanisms, which are audited by an independent Internal Auditor. The Company has a proper and adequate system of internal control to ensure that all the assets are safeguarded and protected against loss from unauthorized use or disposition, and those transactions are The internal control is designed to ensure that financial financial information and other data, and for conducted by M/s. M.R. Ravichandran & Co, Chartered Accountants, Chennai, and their report is placed before the Audit Committee.

The Audit Committee also evaluates the adequacy and effectiveness of the internal control systems and monitors the action taken pursuant to audit observations.Alltheshortcomingsintheregularactivities are brought to the notice of the Committee and the Board based on which

• Human Resources

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. During the period under review, there were no complaints received by the ICC.

The performance of the Company is critically dependent on the knowledge and skills of its people, their alignment and ownership of the organizationalandfunctionalobjectives, an enabling operating environment and the motivation and enthusiasm that comes with employees taking ownership of their responsibilities and tasks. The industrial relations scenario remained harmonious throughout the year. Your Company has designated and implemented a large number of initiatives to build and improve knowledge base and competencies of employees at all levels.

• Outlook

Your Company decided to automate few processes of production during the year in order to tackle the deficiency in available workers. This automation was done not to reduce the number of workers but to improve the production capacity, quality of bags that were produced and it also helped in the reduction of production cycle time. The Company ensures getting new models and designs of its product with the best and unbeatable quality at reasonable prices to cater to the requirements and preferences of its customers. The Company activities participating in many new markets. Your company has continued itsfocusonmarketing introspected with its customer base and greatly recognizes the need for innovationsand new product developments to drive growth and better margins. There is ample scope and opportunity for companies having business in these sectors not to mention the potential of your company and its large presence in these sectors for many years.

Substitutions of Traditional packaging growth. The real opportunity lies in developing nations a fully integrated end-to-end packaging materials solution company, the window of opportunity is promisingly big. Innovation to create value added differentiation; ability to execute any quantum of order; ensuring an enviable speed to market reach puts the company in a good stead to double up its top-line in the next 4-5 years.

• Cautionary Statement

Statement in the Directors Report and Management Discussion & Analysis Report contain forward looking statements. Actual results, performances or achievements may vary materially from those expressed or implied, depending on the economic conditions, Government policies, subsequent developments and other incidental factors.

		For and on behalf of the Board
Place: Chennai	G V Gopinath	G S Sridhar
Date: 24th May 2023	Managing Director	Joint Managing Direct and CFO
	DIN: 02352806	DIN: 01966264