TPI India Management Discussions

World Economic Condition:

The year 2022 proved to be a tumultuous period for the global economy. Since the beginning of the year, there were a lot of growing voices about the deteriorating situation in Ukraine, but the beginning of the conflict took all by surprise. While the loss of human life and the sufferings it induced is undeniably unfathomable, its impact on the overall global economy was also profound. The surge in inflation witnessed across commodities in the aftermathof the conflict, added to the already elevated inflationary concerns across economies grappling with the fractured supply chain networks resulting from the COVID fallout. This led to unprecedented, synchronized increases in policy rates across all major economies which not just resulted in monetary policy tightening across the emerging economies but also led to significant forex reserve challenges in many economies, ultimately impacting the business conditions across many markets However, the year 2023 has continued to see bouts of uncertainty that have tested the growth conditions across the world. Headline inflation continues to remain elevated, exceeding the comfort zone of the monetary authorities and it would result in continued uncertainties in the financial markets and a carry-on impact on the economic conditions. While the turmoil appears to be contained for now, risk indicators continue to remain a matter of concern With the pressure on oil prices which is directly linked to the prices of Polymer, we may altogether see a upward movement in prices

Indian Economic Condition:

The usage of polyethylene (PE)/ polypropylene (PP) woven tape products like sacks, bags, Flexible Intermediate Bulk Containers (FIBCs), fabrics, geotextiles etc. has been growing in India. FIBC bags are constructed from woven PP fabric which may be single layered, with extra loose liner, or laminated. PP when treated with ultraviolet acts as insulator. According to a research report, considering increase in demand during 2022 at 4.0 per cent CAGR, The FIBC market size is expected to grow from 7461.4 million USD In 2020, to reach 9848.9 Million USD by 2026. Overall economic activity has rebounded to pre-pandemic levels, with agriculture and agro-based industries being the least impacted sectors. The sector is likely to grow by 3.9% in FY2022, following a growth of 3.6% in FY20213. Furthermore, the gross value added (GVA) of the industry (including mining and construction) is likely to rise by 11.8% in FY20224.

Financial Performance:

After witnessing a sharp decline of 6.6% in FY 2020-21, the Indian economy recorded a growth of 8.7% in FY2021-22 as per the provisional estimates by National Statistical Office. This is the strongest pace among major economies. The economic expansion has been supported by a strong national vaccination drive that enabled easing of COVID-19 related restrictions. During the year, TPI was able to overcome all the pandemic-led difficultiesand was able to successfully complete the OTS with its financial lenders Though the total income of the company decreased marginally, the company was able to be operationally profitable Post the settlement, your company will now focus on achieving maximum capacity utilization to turn profitable and deliver the value to all its stakeholders

Packaging and FIBC Industrial Trend:

The world is witnessing an exponential growth in the usage and consumption of polymers. Production that used to range at 340 million tons p.a. in 2010, crossed 550 tons the turn of the decade (a CAGR of 10%). The completely man-made nature of polymers makes innovation and creation of new materials and applications limitless. The Packaging sector in India is estimated at over $415 billion, and this is expected to exhibit around 6% growth in the next five years. While the size of the Global Polymer industry is expected to reach around 800 billion by 2027 with CAGR of 5.5 %. Despite being one of the worlds largest economies, India lags in per capita the consumption of polymers which is just under 10kgs vis-a-vis 100 kg in developed countries and World Average 30kgs. This shows that there is tremendous scope for consumption and India is just at the brim of it

Strength and Opportunity:

The FIBC industry in India has experienced robust growth in recent years, driven by various sectors such as chemicals, pharmaceuticals, natural resources, and construction. The versatile nature of FIBCs has made them a preferred choice for bulk transportation and storage The Indian governments continued focus on infrastructure development and the growing e-commerce sector create immense opportunities for the FIBC industry. FIBCs are essential for the transportation of bulk materials presenting significant growth potential lndias FIBC manufacturing capabilities are well-regarded globally, and there is a vast untapped export market for our product. TPls strong emphasis on quality and timely delivery puts us in a position to capitalize on international opportunities and expand our global front As we look forward we remain committed to enhancing shareholder value by leveraging these strengths and pursuing the opportunities that the FIBC industry presents. Our dedicated team and customer centric approach will continue to drive our success and position us as a market leader in the global FIBC industry

Threat and Weakness:

The volatility in raw material prices, especially PP remains a significant concern. Fluctuations in these costs directly impact our operational expenses, but we have developed comprehensive risk management strategies to minimize the impact The recent surge in oil prices has had an impact on various aspects of our business, from transportationcosts to raw material expenses. Despite the challenges posed by rising oil prices and other industry threats, we remain resolute in our commitment to deliver value to our shareholders. Our focus on innovation, operational efficiency, sustainability will fortify our position in the FIBC industry

Internal Control System:

The Company has a requisite system of internal controls which are regularly evaluated, tested & revisited by the Management and the Internal Auditors. Further, the report of the Internal Auditors is reviewed by the Top Management and the Audit Committee on a quarterly basis

Material Development in Human/ Industrial Relation:

TPI believes and considers Human Resources as a vital asset for growth of the Company. The Company emphasizes its People Development Processes and strives to upgrade skill sets to motivate the workforce to contribute towards organization goals. The Company focuses on adequate training to empower and encourage employees. A transparent and active line of communication also exists within the organization to enable team work and promote a culture of trust and confidence. As on March 31, 2023, TPI has a team of 150 employees

Risk and Concern:

Risk management is an inherent part of any business, and the management is proactive in terms of managing risks prudently. By virtue of the nature of its business, the Company is susceptible to risks that might arise due to economic, political, legal, environmental, people, operational, currency fluctuation, and so on. A sound risk culture is being prepared that will help your company be more agile, responsible, and accountable with effective governance.

Your Company has a well-defined risk management framework in place. The risk management framework works at various levels across the enterprise. The Company has a robust organizational structure for managing and reporting on risks. A statement of a risk management policy for the Company can be found on its website

Future Outlook:

As we set sight on the future of TPI we are filled with enthusiasm and optimism. Our unwavering commitment to quality, innovation, and customer satisfaction has positioned us as a market favourite. Going forward we will continue to build on this strong foundation and strive to maintain our leadership position by consistently delivering exceptional products and services At TPI, the future outlook is bright and promising. With a clear vision, a focus and dedicated team, we are well prepared to navigate the challenges and capitalize on the opportunities that the future holds