Management Discussion and Analysis
This report forms an integral part of the Directors Report and
should be read in conjunction with the Companys financial statements, the schedules
and notes thereto and other information included elsewhere in the Annual Report. The
Companys financial statements have been prepared in accordance with Indian
Accounting Standards (‘Ind AS) complying with the requirements of the
Companies Act, 2013, as amended and regulations issued by the Securities and Exchange
Board of India (‘SEBI) from time to time.
BUSINESS REVIEW
The demand for packaging in India is being driven by the rapid growth
in consumer markets especially in the HORECA (Hotels, Restaurant and Canteens) Processed
Food, Construction, Personal and Home care segments. Rising population, increasing income
levels and changing lifestyles is driving consumption across various industries which will
lead to higher demand for packaging product solutions. In Processed Food sector, revised
guidelines under Pradhan Mantri Kisan Sampada Yojana scheme -PMKSY in FY 2022-23 will
boost creation of infrastructure for food processing, preservation and supply chain across
the country. Government of India (GOI) has notified guidelines on Extended Producers
Responsibility on plastic packaging to promote development of alternatives to plastics and
move towards sustainable packaging. On a conservative estimate Tinplate is expected to
continue its steady growth of 5-6% CAGR or higher due to its environment-friendly
credentials.
Tinplate is used across a wide range of end uses viz; food (edible oil
& fats, processed fruits & vegetables), non-food (paints & chemicals, aerosol
sprays, battery) and beverages. Tinplate as a packaging medium provides superior product
preservation owing to its excellent barrier properties. Tinplate is preferred over other
packaging alternates in terms of strength, tamper resistance, stack-ability and is the
most environment friendly being recyclable properties. However, Tinplate continues to face
challenges from other packaging mediums in terms of design, consumer convenience &
cost.
In FY 2022-23, demand for Tinplate in domestic market is estimated at
~610KT compared to previous year (630 KT) mainly due to high inflation affecting growth in
two largest end use segments, edible oil and paints. Domestic prime production reached 613
KT which was slightly higher than previous year (596 KT) as capacity utilization remained
a challenge partly due to imposition of export duty in Q2 of FY 2022-23. Imports reduced
by 35% to 90 KT in FY 2022-23 compared to 138 KT in previous year owing to Steel &
Steel Products Quality Control Order (SSPQCO). However, mis-declared imports into
the country have been a concern raised by our customers which your company hopes to
resolve through on-going discussions with regulatory bodies.
Your Companys domestic sales were sustained at 285 KT (281 KT in
FY 2021-22) despite segmental headwinds in H1 FY 2022-23. The Company exported 77KT( 92 KT
in FY 2021-22) of Tinplate to
West Asia, Europe, parts of Africa, South East Asia and neighboring
countries. Your Company had to reduce exports due to export duty levied in Q2 and Q3 of FY
2022-23. Overall sales was 362KT in FY 2022-23; 3% lower than FY 2021-22 (373KT) .
Company continued its efforts in moving closer to Edible Oil brand
owners through the high quality branded 15kg/lit oil can – PAXEL, through its Service
& Solution Partners [SSPs] and improved its footprints in competitively intense
Western markets. PAXEL sales reached highest ever ~ 124lakh cans (117 lakh cans in Fy 22)
despite lower demand of bulk packs due to lower Out-of-Home (OOH) consumption ( hotels,
restaurants, caterers, canteens, bakeries, dhabas and fast-food joints). Demand remained
volatile throughout H1 due to decade high edible oil prices. Your Company was able to
protect its leadership position servicing ~47% of the domestic demand, imports serviced
15% of the domestic requirements in FY 2022-23 (with the balance supplied by other
domestic producers).
OUTLOOK
Global Economy: According to IMFs world economic outlook report,
global growth is projected to fall further to 2.9% in 2023 as central bank raise rates to
_ght inflation and Russias war in Ukraine continue to weigh on economic activity.
In 2023, global steel demand is expected to see a growth of 1% with
stable steel demand in China, strong growth in India in pre-election year and recovery
across key regions barring Europe.
Indian Economy: Indias GDP growth is set to remain healthy in
near future supported by continued government spending on infrastructure and improving
private investments on the back of PLI (Production Linked Investment) scheme
implementation. These factors will lead to a growth of ~6% in FY 2023-24.
Indias steel industry will also continue to grow across key steel
consuming sectors, construction and railways, automotive and consumer durable.
Indias steel demand is expected to grow by ~7.5% in FY 2023-24 to reach at 126
million tonnes. This demand growth would continue to be served largely by domestic output
with estimated crude steel production of 133 million tonnes. Tinplate Industry: Increasing
focus in Food Processing sector by Government, rising capital expenditure on
infrastructure, improvement in housing sales, continued recovery in consumption supported
by urban demand, rising rural incomes and sharp recovery in Travel and Out-of-Home
consumption are all positives for Tinplate growth in FY 2023-24. Overall tinplate demand
is likely to grow ~ 10% in FY 2023-24 to reach 680KT.
However, risks to domestic growth in the near term could stem from
sharp rise in oil prices, rise in commodity prices and consequent inflationary pressures
exacerbating macro stability.
Continued global geopolitical risk scenario, food inflation, decline in
tourism revenue due to security concerns and together with high public debt has
contributed to the forex crisis in our key export markets of Africa (Egypt and Tunisia)
and Neigbours (Sri Lanka and Nepal). We are re-focusing on markets of West Asia and South
Asia to mitigate forex risks while continuing our presence in export markets.
INDUSTRY STRUCTURE AND DEVELOPMENTS
Your Company has pioneered Tinplate manufacturing in India since 1920s
and completed 100 years on January 20, 2020. The Company has its manufacturing facility at
Jamshedpur in the state of Jharkhand with an installed capacity of 379 KT per annum.
Though domestic supply share increased to 85% in FY 2022-23 (78% in FY 2021-22) capacity
utilization of domestic tin-mills remained ~80% of the current installed capacity. The per
capita consumption of tinplate in India is extremely low (0.43 kg per capita) as compared
to many developed countries (8 -12 kg per capita) and developing economies such as China
(4.75Kg per capita). Growth of the packaging industry in India is expected to be augmented
by high growth in modern retail, FDI in multi-brand retail and Governments thrust on
the food processing industries. In addition, Governments focus in the rural economy
and farm sector are expected to boost overall consumption.
OPPORTUNITIES AND THREATS Opportunities:
1. Increasing urbanization, changing lifestyle and more Out-of-Home
(OOH) consumptions will increase demand for tinplate packaging.
2. Growth in infrastructure segment and increase demand for re-painting
with low inflation can boost paints and chemical packaging.
3. SSPQCO is expected to keep non-prime imports at bay while boosting
prime supplies from domestic players.
4. Extended Producers Responsibility - EPR (requiring reuse, recycling
and recycled content in rigid plastics packaging) would require brand owners to evaluate
sustainable packaging options, e.g.: tinplate, aluminum.
Threats:
1. Continued uncertainty amidst geopolitical tensions and high
inflation may affect both export and domestic sales.
2. Continued recessionary conditions can affect both margins and market
share.
3. Prime imports expected to resume in FY 2023-24 as overseas mills
start obtaining BIS license.
OPERATIONAL PERFORMANCE
The Companys agility helped in overcoming the challenges related
to market slow down, imposition of the temporary export duty and Russia-Ukraine war in H1
FY 2022-23. Operational flexibility helped in catering to the stringent market demands,
servicing new product requirements, managing supply chain with changes in product mix,
during the slowdown. Since H2 FY 2022-23, the market started showing signs of returning to
normalcy, with Q3 FY 2022-23 being the highest ever production quarter crossing ~100KT .
Inspite of the challenges and hurdles faced, TCIL achieved the net production level of
362KT in FY 2022-23.
During the financial year 2022-23, the Company spent ~ 81 crores
towards capital expenditure. The following projects has been commissioned at CRM &
ETLs to upgrade the plant and strengthen the infrastructure.
Cold Rolling Mill (CRM): Installation of mill stand motor (MSM) at 6
HI, 4 HI 1 automation upgrade, CRM centrifugal compressor, erection of EOT crane at BAF
& 4 HI 2, replacement of fume exhaust blowers, reversing reels motors at 6 HI 1, drier
upgradation at Electrolytic Cleaning Line 1 (ECL1), Temper Mill 1 (TM1) stand 1 & 2
screw down overhauling etc. at CRM.
Electrolytic Tinning Lines (ETLs): Installation of de_ector rolls
drive, installation of plating heat exchanger, alignment of tanks and anode guides,
electrical tightness checks, tank cleaning, Pay of reel at ETL1 etc at ETLs.
Some of the other major projects which were completed in FY 2022-23 are
induction reflow system at both ETLs, twin head trimmer at CPL1, exit looper at ETL2, 6.6
KV ETL1, upgradation of helper rolls drives and motors at ETL2, upgradation of pin hole
detectors for both ETLs, installation of secondary scrapping system at printing line-1,
upgradation of sterilization facility at Tinplate Hospital etc. The Company continues to
pursue operational excellence through internal improvements and investment in sustenance
and improvement capex. The collaborative work with Tata Steel Europe (TSE) and Tata Steel
Jamshedpur (TSJ) continued leading to improvement in product quality attributes and
consumption efficiency improvement in Tin and Mill Rolls. Endeavor toward improving its
efficiency performance continued with fresh ideas generation, evaluation and
implementation in phases.
Along with driving excellence in current operations various enabling
jobs related to the growth plan also has started. The Environment Clearance related to the
Growth plan has also been received and a dedicated team had been working on technical
specifications of major packages, which have now reached final discussion stage with
suitable vendors.
TCILs commitment towards safety has always been top most for the
management. Reinforcing safety excellence through various initiatives like hazard
prediction (KYT), working toward elimination of commonly accepted unsafe practice (ECAUP),
hands free operations, process safety risk management (PSRM), leveraging "Ghar Se
Ghar Tak" initiative for improving behavioural safety has always been the focal
point. Building safety competency by means of reinforcing training of safety standards,
organizing training of Process Safety Risk Management (PSRM), Management of Change (MOC),
Pre-Startup Safety Review (PSSR) through Tata Steel Limited (TSL), felt leadership
training etc. were some of the initiatives taken in FY 2022-23. Other initiatives on
digitization and ease of operations being set.
TCIL has been accorded Environmental Clearance for a period of 10 years
to achieve annual production of one million Metric Tonne of Tinplate in phases. A
dedicated team had been working on technical specifications of major packages, which have
now reached final discussion stage with suitable vendors.
TCILs commitment towards safety has always been a high priority.
The Company is focused on reinforcing safety excellence through various initiatives like
hazard prediction (KYT), working toward elimination of commonly accepted unsafe practice
(ECAUP), hands free operations, process safety risk management (PSRM) and leveraging
"Ghar Se Ghar Tak" initiative for improving behavioural safety. Building safety
competency by reinforcing training of safety standards, Process Safety Risk Management
(PSRM), Management of Change (MOC), Pre-Startup Safety Review (PSSR) and felt leadership
were training initiatives taken in FY 2022-23. Other initiatives on digitization included
centralized safety surveillance system, digitization of E-work permit system, conversion
of manual temporary gate pass into RFID, Vehicle speed tracking system and use of
artificial intelligence for safety surveillance at some locations. The Companys
focus on the environment is visible through various initiatives undertaken this year
related to solid waste management, implementation of second phase of solar power facility.
The operations of the Company is certified to the standards; namely ISO 9001:2015 (QMS),
ISO 14001:2015 (EMS), ISO 45001:2018 (OH&S); SA 8000:2014, ISO 27001:2013 (ISMS) and
ISO 22000:2018 (FSMS).
FINANCIAL PERFORMANCE
The revenue from operations of _3,95,887 lakh for FY 2022-23 was lower
as compared to _4,24,951 lakh for FY 2021-22, mainly due to lower realization. The profit
after tax decreased to _ 14,282 lakh in FY 2022-23 as compared to _ 35,291 lakh in FY
2021-22, due to lower realization and higher costs. Financial ratios are provided below
along with reasons for significant variance.
| Particulars |
Year ended March 31, 2023 |
Year ended March 31, 2022 |
% Change from 31 March,
2022 to 31 March, 2023 |
Reason for significant
variance (25% and more) |
| Current Ratio (in times) |
2.45 |
1.99 |
23% |
Not Applicable |
| Debt- Equity Ratio (in times) |
0.01 |
0.01 |
17% |
Not Applicable |
| Return on Net Worth Ratio (%) |
11.74% |
34.99% |
-66% |
Decrease in earnings |
| Inventory Turnover Ratio (in times) |
9.92 |
12.19 |
-19% |
Not Applicable |
| Debtors Turnover Ratio (in times) |
107.04 |
65.70 |
63% |
Lower Receivable |
| Net Profit Ratio (%) |
3.61% |
8.30% |
-57% |
Decrease in earnings |
| Interest Coverage Ratio (%) |
6.00% |
1.70% |
248% |
Decrease in earnings |
| Operation Profit Margin (%) |
5.10% |
11.20% |
-54% |
Decrease in earnings |
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The company has established an Internal Financial Controls (IFC)
framework, commensurate with the size, scale and complexity of its operations and is in
line with the requirement of the Companies Act, 2013. The Board of Directors of the
Company is responsible for ensuring that IFC have been laid down in the Company and that
such controls are adequate and operating effectively. It has been designed to provide
reasonable assurance with respect to recording and providing reliable financial and
operational information, complying with applicable laws, safeguarding assets from
unauthorised use, executing transactions with proper authorisation and ensuring compliance
with corporate policies. The continuous internal monitoring mechanisms ensure timely
identification of risk and issues. The Company has undertaken IFC standardisation and
rationalisation- in FY 2022-23 to make the controls more robust and comprehensive. IFC has
been documented and embedded in the business processes and such controls have been
assessed during the year under review. The Internal Audit department monitors and
evaluates the efficacy and adequacy of the IFC in the Company. Audit Committee reviews the
Internal Audit Report every quarter.
Based on the report of the internal audit function, the process owners
undertake corrective actions in their respective areas thereby strengthening control. The
Internal Audit team develops an annual audit plan based on the risk profile of the
business activities. The Internal Audit Plan is approved by the Audit Committee which
regularly reviews compliance to plan.
In compliance with Section 143(3)(i) of the Act, the Statutory Auditors
have issued an unmodified report on the Internal Financial Controls with reference to the
Financial Statements which forms a part of the Independent Auditors Report forming
part of this Annual Report.
RISKS AND CONCERNS
The Companys Risk Management Policy constitutes detailed
objectives and principle of risk management along with the process overview and related
roles and responsibilities. The policy details out the organizational risk management
framework along with risk mitigation approach and objectives. The objective of risk
management at The Tinplate Company of India Limited is to develop a risk intelligent
culture that supports decision making and helps improve performance. The Company is
committed to adopt a proactive approach to risk management which is based on the following
underlying principles: • endeavours to create risk awareness across the organization.
• strives to anticipate and take preventive action to manage or mitigate risks and
deal with the residual risk.
• to develop, implement, review and monitor a uniform risk
management framework across all units and functions such that all employees of the Company
take responsibility for the effective management of risks in all aspects of the business.
• to develop and deploy relevant capability building measures for concerned employees
and relevant stakeholders to ensure effective risk management.
The review of the risk assessment along with the mitigation plan is
done periodically by the Risk Management Committee, constituted by the Board in accordance
with the provisions of the Listing Regulations.
HUMAN RESOURCE DEVELOPMENT
Human resources are the most important contributor to the success of
any organization and your company continues its efforts towards improving employee skills,
engagement and productivity as well as making the workforce agile in the ever-changing
business environment.
During the year, the Company focused on building capacity to become
future ready by providing targeted training to individuals to help them develop the
requisite functional and soft skills. Learning & Development initiatives were
accelerated to enhance functional and organizational excellence. Digitization and
automation will enable operators to work more safely and effectively at the shopfloor. The
Company also for the first time facilitated an Employee Engagement Survey for its
unionized workforce through an external agency and received an exciting overall engagement
score of 85% which is one of the best in Industry. This also made the Company win its
first "Happiest Workplaces Award" by Business World Magazine.
The company also has constructive and cordial relationships with its
Union, reflected in the amicable nature of the wage negotiation process last year. As on
March 31, 2023 the total number of permanent employees of the Company is 1,449.
REWARDS AND RECOGNITIONS
During the year, the Company along with many of its employees received
several recognitions at various forums as detailed below:
• The Company was recognized as the "Fastest Growing
Organization" in the category of >1500 Crores annual turnover at the Economic
Times Corporate Awards 2023 at Kolkata.
• The Company received the "Happiest Workplaces Award"
at Delhi at the Business World People Awards 2023.
• Tinplate Hospital achieved the following two certifications:
- NABH Entry Level Certification, Exemplifying Commitment to Quality
and Patient Safety
- Nursing Excellence Certification, Setting New Standards in Patient
Care
• 4 QC teams won Gold at CCQC 2022 held in Kolkata on 27th
September 2022.
• 2 teams were recognized as "Excellent" and 2 teams as
"Distinguished" in National Convention on Quality Concept (NCQC-2022) on 30th
December 2022 at Aurangabad.
STATUTORY COMPLIANCE
The Managing Director of the Company, at every Board Meeting, after
obtaining confirmation from all the departments of the Company, makes a declaration
regarding the compliance with the provisions of various statutes, applicable to the
Company. The Company Secretary ensures compliance with the relevant provisions of the
Companies Act 2013, Listing Regulations and other corporate laws applicable to the
Company. Tracking of legal compliance status throughout the Company is done by
software-based platform which ensures timely compliance and reporting of compliance status
in an effective manner.
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