Sejal Glass Ltd Management Discussions

Sejal Glass Limited is a prominent player for Architectural Glass manufacturing in Indian glass industry, known for its high-quality glass products and innovative solutions. Our product portfolio serves diverse sectors including architecture and interior design. We remain committed to excellence, leveraging cutting-edge technology and sustainable practices to drive growth and customer satisfaction. We have our factories in Silvassa (U.T.), India and Ras al Khaimah, UAE.

The objective of this report is to convey the managements perspective on the external environment and Architectural Glass industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during FY2023-24. This should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in this Annual Accounts 2023-24. 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.

On a Standalone basis the Company has in the FY 2023 - 24 grown on sales by 28.21% to 5952.51 Lakhs. The other income during the period under review stood at Rs. 147.18 lakhs as compared to the previous financial year figures of Rs. 17.61 lakhs.

The reported Profit before Tax for the year was Rs. 50.70 lakhs as compared to Loss before Tax (after exceptional item) of Rs. 44.32 lakhs in previous financial year.

The Net Profit after Tax was Rs. 50.70 lakhs as compared to Rs. 858.68 lakhs in the previous financial year.

On a Consolidated basis the Company achieved a revenue of Rs. 16379.93 lakhs during the year under review as against Rs. 4642.70 lakhs for the previous financial year. The other income during the period under review stood at Rs. 92.98 lakhs.

Consolidated Net Profit was positive at Rs. 317.08 lakhs as against Rs. 63.67 lakhs in previous financial year.

The share of profit from Associates was to the extent of Rs. 16.23 lakhs as against loss Rs. 88.99 lakhs in the previous financial year.

Profit from operations before and after exceptional items was to the extent of Rs. 333.31 lakhs.

A. INDUSTRY STRUCTURE AND DEVELOPMENTS

Macroeconomic Conditions:

The global economy remains remarkably resilient, with growth holding steady as inflation returns to target. The journey has been eventful, starting with supply-chain disruptions in the aftermath of the pandemic, a Russian-initiated war on Ukraine that triggered a global energy and food crisis, and a considerable surge in inflation, followed by a globally synchronized monetary policy tightening.

Yet, despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops. Moreover, the inflation surge despite its severity and the associated cost-of living crisis did not trigger uncontrolled wage-price spirals. Instead, almost as quickly as global inflation went up, it has been coming down.

On a year-over-year basis, global growth bottomed out at the end of 2022, at 2.3 percent, shortly after median headline inflation peaked at 9.4 percent. According to latest projections of the International Monetary Fund (IMF), growth for 2024 and 2025 will hold steady around 3.2 percent, with median headline inflation declining from 2.8 percent at the end of 2024 to 2.4 percent at the end of 2025. Most indicators point to a soft landing.

Markets reacted exuberantly to the prospect of central banks exiting from tight monetary policy. Financial conditions eased, equity valuations soared, capital flows to most emerging market economies excluding China have been buoyant, and some low-income countries and frontier economies regained market access. Even more encouraging, it is now estimated that there will be less economic scarring from the pandemic the projected drop in output relative to pre-pandemic projections for most countries and regions, especially for emerging market economies, thanks in part to robust employment growth. (Sources: international monetary fund. imf.org)

Economic Scenario - India & UAE:

Rating agency Moodys recently in its recent report upgraded its forecast for Indias GDP growth in 2024, reflecting both global and domestic optimism in the countrys economy on the back of robust manufacturing activity and infrastructure spending.

Indias economy has performed well and stronger- than-expected data in 2023 has made the rating agency to raise the 2024 growth estimate to 6.8% from 6.1%.

India is likely to remain the fastest-growing among G-20 economies. The Indian economy soared ahead in the December quarter (the third quarter of FY24) with a surprise growth of 8.4%, belying fears of tempering as the manufacturing, electricity and construction sectors put up a robust show.

The statistics ministry also raised its GDP growth estimate for FY24 to 7.6% in its second revised estimate, up from 7.3% in its first advance forecast.

The Reserve Bank of Indias GDP growth estimate for FY24 is 7%, while the International Monetary Funds forecasts 6.7%.

Capital spending by the government and strong manufacturing activity have meaningfully contributed to the robust growth outcomes in 2023.

Additionally, rising capacity utilization, robust credit growth and upbeat business sentiment point to an improving outlook for private investment.

According to RBI, the total cost of private corporate projects sanctioned by major banks and financial institutions was up 23% annually during the April-December period as compared with the same period a year earlier, suggesting that the private capital expenditure cycle is gaining steam.

It is expected that Indias urban consumption demand shall remain resilient, based on robust goods and services tax collections, rising auto sales, consumer optimism and double-digit credit growth, while expanding manufacturing and services PMIs are expected to add to economic momentum.

The Indian economy, which expanded at a four- month high in January, continued to strengthen in February, seeing accelerations in both manufacturing and services sectors during the month. While services sector growth climbed to a seven-month high in February, manufacturing sector growth reached a five-month high, firming Indias position as one of the fastest-growing major economies. Indias headline inflation also eased in January to 5.1% from 5.7% in the preceding month. Core inflation moderated to 3.5% from 3.8%. (Sources : Rating agency Moodys)

A pick-up in UAE economy to a real GDP growth to 4.2% is expected this year, supported by strong construction activity, tourism benefiting from the National Tourism Strategy 2031, and government investments in infrastructure and green energy, given its commitment to reduce emissions. The reversal of last years oil production cuts should boost growth, as production cuts slowed real GDP growth to 2.8% in 2023. The real estate sector grew strongly in 2023, reaching a record high residential transaction volume of 112356 for January-November 2023. International events, including the COP28 climate summit in Dubai in late 2023, boosted inbound visitor numbers. Visitors to Dubai were 20% higher year-on-year at 15.4 million in January-November 2023. Business confidence is also high, the S&P Global Dubai Purchasing Managers Index (PMI) rising to 57.7 in December 2023 (56.8 in November). The largest sub-component of the index, new orders, expanded by the most in four years. While the growth outlook is positive, downside risks may come from a global slowdown, oil production outlook and geopolitical risk. Conflict in the region would adversely affect tourism and investments, if escalated.

Global Flat Glass Industry Trends And Drivers:

The global flat glass market size was valued at USD 305.81 billion in 2023 and is projected to grow at a compound annual growth rate (CAGR) of 4.3% from 2024 to 2030. New solar capacity expansions will positively impact the demand for glass. The growing trend of floating solar farms is further anticipated to boost requirement for solar panels. This, in turn, is expected to boost growth over the forecast period. Also, the increasing adoption of electric vehicles is anticipated to increase flat glass demand.

The U.S. is one of the leading producers of automobiles, including commercial and passenger vehicles, with the presence of several global leading manufacturers such as General Motors, Stellantis North America, and Ford Motors. Volkswagen is targeting 50% of the automobile sales to be of EVs by the year 2030. Increasing incentives to promote usage of EVs are expected to drive the production of EVs and thereby increase the demand for flat glass over the forecast period.

The governmental push toward aligning itself with the global decarbonization goals, in line with the 2021 Paris Agreement, has accelerated the production of EVs across the world. Several incentives have been provided for its sales and purchase. By 2035, automakers have committed to converting their existing production lines into EV production facilities.

Further, the building & construction industry is amongst the largest end users of glass, where it is extensively used in various applications such as fagades, doors, partitions, floorings, and windows. It is used for its utilitarian and aesthetic uses. Moreover, glass is utilized in buildings as an energy saving solution, owing to its ability to reduce need for air conditioning, which lowers the heating/cooling costs of the building.

There is growing emphasis across the globe to increase the energy efficiency of buildings. According to the IEA, commercial, residential, and public buildings account for 36% of the global final energy consumption. As a result, they represent unparalleled opportunities for energy savings, and hence glass consumption across the world.

There has been a rising implementation of building codes across the globe to enforce energy savings in buildings over the last two decades. For instance, a building code in China called Design Standard for Energy Efficiency in Residential Buildings in the Hot Summer and Warm Winter Zones was established in 2003, especially for the warmest southern regions of China. The standard is aimed to reduce the energy consumption of HVAC systems by 50% by improving energy efficiency, passive cooling, and natural ventilation.

Similarly, investments in the development of smart cities are projected to further drive the growth of the glass market over the forecast period. For instance, the Government of India has launched a Smart Cities Mission for the development of 100 smart cities. The mission includes the improvement, renewal, and extension of cities, for which the government has allocated USD 9.62 billion in its 2023-24 budget. As of November 2023, the total utilized fund stood at USD 8.55 billion, i.e., 90% of the allocated fund has been utilized. Such developments are anticipated to boost the demand for the product across the world over the forecast period.

Various technologies are being adopted to contribute to the energy efficiency of buildings.

One such technology is the low-emissivity (low- E) window which is estimated to play a critical role in contributing to energy savings. Low-E glasses are coated with metallic and/or metal oxides to exhibit better solar control performance and promote energy efficiency. The renewed investment in the global building & construction industry and strict enforcement of building codes across the globe is predicted to significantly boost the flat glass market.

Product wise insights;

Tempered glass dominated the flat glass market and accounted for a revenue share of more than 36.0% in 2023. It is used in various applications including household appliances, commercial refrigeration, vehicles, and other industrial areas. As tempered glass is safer in comparison to basic float glass, it is widely used in passenger vehicles to reduce the chances of injury in case of accidents. In architectural segment, it is used in building and construction projects for windows, doors, and walls in some cases. Furthermore, it is used in the manufacturing of mobile devices and in the food service industry to produce equipment for cooking and baking activities.

Laminated glass accounted for a revenue share of 29.0% in 2023. This is virtually a safety glass comprising two pieces of glass, held together by one or several transparent plastic films. The use of laminated glass is increasing in automotive sunroofs due to increasing emphasis on safety and changing regulatory norms. Companies such as Tesla, Volvo, and Ferrari use laminated glass in all their cars that have panoramic sunroofs. However, the usage is less, as majority of manufacturers still use tempered glass.

Application wise insights:

Architectural segment accounted for the largest market revenue share in 2023. Applications pertaining to the building & construction industry are major contributors triggering the growth of this segment. The segment also includes the consumption of flat glass in furniture and other indoor applications. Increasing construction activities in developing countries such as India and ASEAN countries is expected to have a positive impact on the flat glass market.

Besides, growing awareness regarding environmental protection and greenhouse gas reduction is expected to have a positive impact on green building projects, which is expected to augment demand for flat glass over the forecast period.

Other applications such as solar panels in renewable energy is anticipated to witness the highest CAGR across the forecast period. Advancements in solar panel technology and its declining prices are boosting the demand for solar panels.

Automotive was the second-largest application segment of the global flat glass market in 2023. The segment is inclusive of flat glass consumption in automotive, aerospace, and marine applications. The consumption of flat glass is quite evident in automotive applications. Tempered glass and laminated glass are the major types of flat glass used in this segment.

Flat glass mainly finds applications in windows, windshields, side panels, sunroofs, and lights. The production output of automobiles has a direct impact on the consumption of glass. The increasing demand for lightweight vehicles and EVs is anticipated to propel the consumption of flat glass in automotive applications over the forecast period. (Sources: Grand View Research)

Indian & MENA Flat Glass Industry Trends and Drivers:

The Indian Glass Market is witnessing significant growth and transformation, driven by a myriad of factors such as rapid urbanization, rising disposable incomes, and increasing demand from the construction and automotive industries.

In 2022, the India Glass Market experienced substantial growth, fueled by the burgeoning construction industry, which emerged as the largest consumer of glass in the country. The demand for glass in construction applications such as windows, doors, mirrors, and facades is being driven by factors like rapid urbanization and increasing focus on climate, safety, sound attenuation, energy conservation, and aesthetics in building design. Uptil FY28, it is estimated to grow by a CAGR of 12%.

The construction industry in India is witnessing robust growth, propelled by rapid urbanization and infrastructure development. Major metropolitan cities like Delhi, Mumbai, and Kolkata are witnessing significant demand for glass products, contributing to the expansion of the India Glass Market. The share of residential properties is rising because of a shift in housing stock from rural to urban areas. The urban areas also have a higher glass to wall ratio resulting in increased demand.

The commercial properties glass demand is also expected to rise significantly. India is being seen as a global capability centre hub of the world and this has resulted in demand for larger office complexes which have higher usage of glass facades and partitions particularly in metro and two tire cities.

The rapid development of new infrastructure in India like airports, stations, metros have contributed to increased demand for value added glass. The modernisation plan of the railways is expected to generate huge demand for value added glass products like laminated glass and insulated glass for the new trainsets.

The automotive industry is also experiencing a glass revolution, driven by factors such as an 8% cut in excise duty on vehicles and the easy availability of flexible automobile loans. The demand for glass in automotive applications is expected to surge, further bolstering the growth of the India Glass Market.

Increasing disposable incomes among the Indian population is driving demand for luxury properties which incorporate glass in higher proportions.

The Middle East and Africa market is expected to grow at 6.9% CAGR and reach a market size of USD 25.19 Billion by 2029. It has experienced a steady growth over the last few years and it can be attributed to several factors, including population growth, urbanization, infrastructure development, and increased construction activities in the region. The primary driver has been construction.

Many countries in the region, such as the United Arab Emirates (UAE), Saudi Arabia, and Qatar, have been investing heavily in large-scale construction projects, including residential buildings, commercial complexes, and infrastructure development. It has created a significant demand for flat glass products for windows, doors, facades, and interior applications.

Etihad Rail, the flagship rail network of the UAE is also expected to be fully operational in the next few years. This rail connecting the major cities in the GCC would create huge demand for railsets.

Additionally, the Govts of Saudi Arabia, Bahrain, Qatar and the UAE have committed huge tens of billions of dollars for mega infraprojects which are expected to led to huge demand of processed glass in the next few years.

B. OUTLOOK

Global growth is projected to stay at 3.1 percent in 2024 and rise to 3.2 percent in 2025. Elevated central bank rates to fight inflation and a withdrawal of fiscal support amid high debt weigh on economic activity. Inflation is falling faster than expected in most regions, amid unwinding supply- side issues and restrictive monetary policy. Global headline inflation is expected to fall to 5.8 percent in 2024 and 4.4 percent in 2025, with the 2025 forecast having been revised down. (Sources: international monetary fund. imf.org)

Domestic Outlook :

The Indian economy is predicted to grow at a rate of 7% in the next fiscal year, according to a report

by the finance ministry. This comes after a projected growth of 7.3% for the current fiscal year, marking the third consecutive year of growth exceeding 7%. The optimistic outlook is attributed to a strong performance in Q2 and positive growth projections for FY24.

Numerous global agencies have subsequently revised Indias growth projection upwards, highlighting the economys resilience against global geopolitical challenges. The Interim Union Budget FY25s measures are expected to play a significant role in supporting Indias future growth. (Source: Business Standard)

The Glass Industry is projected to grow at an even higher rate.

C. RISKS & CONCERN:

1. Raw Material Risk

2. Information Technology Risk

2. Financial Risk

3. Evolving competition

4. Global crisis including war

5. Government Policies

D. HUMAN RESOURCES:

At Sejal, the HR strategy aims to create a work environment which nurtures performance driven culture focusing on employee well-being and strengthening employee capabilities in alignment with company business objectives. During the year, your company had put great emphasis on employee health. The companys focus was to scale up business operations alongside protection of workforce with possible medical assistance. The workplace safety has always been of utmost importance and carrying out safe work practices has become a norm with a view to develop safe behaviour as well as safe workplace. The total employee strength as on March 31, 2024 including contract workers was AROUND 300.

To improve the skill gap and deploy trained manpower at workplace, there has been a constant focus on building the capability of our workforce and of newly engaged contract labourers. Numerous functional skill development initiatives, as well as workplace training programs were delivered throughout the year, for both direct employees and contract labourers.

The Industrial Relation during the year was harmonious because of manpower being positively engaged and collaborative work approach in place. All employees, contract labourers & vendor partners have contributed significantly to the growth of the organization.

E. OUTLOOK

The company is optimistic about the coming times. Necessary capital expenditure required to ramp up production to meet the expected demand has been made. Human resource required to cope with the increased volumes is continuously being put in place. The company is continually increasing the capacity utilization ratios of the machines on a month on month basis and working with partners to identify new value added products for the market.

F. INTERNAL CONTROL AND ADEQUACY

The Company has in place a well-established framework of internal control systems which are commensurate with the size and complexity of its business. The Company has an independent internal audit function covering major areas of operations and the same is carried out by external Chartered Accountant firm engaged for this purpose.

For and on behalf of the Board
	Sd/-	Sd/-
	Jiggar L. Salva	Surji D. Chheda
Date : April 19, 2024	Whole-time Director	Chairman & Director
Place : Mumbai	DIN:09055150	DIN: 02456666