About Shree Tirupati Balajee Agro Trading Company Limited

Shree Tirupati Balajee Agro Trading Company is engaged in the business of manufacturing and selling of Flexible Intermediate Bulk Containers (FIBCs) i.e. large flexible bags and other industrial packaging products such as woven sacks, woven fabric and narrow fabric, tapes in the Indian domestic market and overseas. They offer customised products and cater to the bulk packaging solutions of their clients from diverse industries like chemicals, agrochemicals, food mining, waste disposal industry, agriculture industry, lubricants and edible oil by supplying them their FIBC products for transportation purposes and their packaging requirement. They offer an alternative for packaging and transportation, streamlining the loading and unloading processes of vessels, containers, or trucks, thereby reducing labor requirements.

In terms of competence, their core competencies include a wide product range, multi-location facilities, recurring orders, global presence, scale of production, technical expertise, environmental contribution, and recycling efforts. They have established their services for more than 20 (twenty) years and operate out of five (5) manufacturing units. They operate and manage their business through their subsidiaries viz. Honourable Packaging Private Limited (HPPL), Shree Tirupati Balajee FIBC Limited (STBFL) and Jagannath Plastics Private Limited (JPPL) as well.

While carrying out their operations, they focus on sustainability in all aspects of their operations. They focus on reusing and recycling plastic products to reduce carbon emissions. Their Company is dedicated to environmental stewardship, exemplified by the establishment of a 2 MW Solar Power Plant in Village Khodri Nipania, Tehsil Tarana, Dist. Ujjain, Madhya Pradesh for captive consumption. Installed in March 2021, this project is supplemented by a rooftop solar plant in Unit 2, generating 300 KW and an estimated annual production of approximately 32 lakh units. The energy generated from these sources is renewable, green, and clean sources of energy. Also, a solar power plant in Unit IV and Unit V for 142 KW and 650 KW respectively is installed in year 2021 for captive use. The solar power plant is not integral to their core business operations. However, its major benefits lie in cost reduction for production and captive use.

Despite not being a core aspect of their Company's operations, the solar power plant was established to mitigate power costs. Solar energy proves to be a more cost-effective alternative compared to the supply provided by M.P. Paschim Kshetra Vidyut Vitaran Co. Ltd. (MPPKVCL). While the solar power plant may not be integral to the company's primary business model, its benefits are undeniable. By enhancing cost competitiveness and facilitating captive power consumption, the plant contributes to the company's operational efficiency. Furthermore, its provision of safe, green, and clean energy aligns with the nation's current emphasis on sustainable practices. This solar plant powers their own operations, and they believe they are one of the very few companies in their industry with such a large solar power plant for their captive consumption. They installed this project in March 2021. The units generating from these plants are renewable, green, and clean sources of energy. Also, a solar power plant in Unit IV and Unit V for 142 KW and 650 KW respectively is installed in year 2021 for captive use. The solar power plant is not integral to their core business operations. However, its major benefits lie in cost reduction for production and captive use.

Indian FIBC Industry
Flexible intermediate bulk containers (FIBCs) were first introduced in India in the early 1990s. Since then, India has developed into one of the world's key producers. Accordingly, the country is eager to globalize and export FIBC goods, given its sustainably expanding sizable local market. 

For a nation, participating in international trade has its own advantages. These include studying best practices, foreign exchange, manufacturing efficiency, and undiscovered markets. The Indian exchequer benefits in terms of foreign exchange profits. 

According to IFIBCA (Indian Flexible Intermediate Bulk Container Association), nearly 85% of production in the industrial sector is exported, with acceptance for exports in close to 65 nations across 6 continents. It is anticipated that domestic demand and exports will both see exponential growth throughout the ten-year period from 2020 to 2030.

The industries where FIBCs are widely used are Chemicals, Food Products, Pigments, Waste Management, Pharmaceuticals & Aggregates, Fertilizers, etc. Food products include grains and seeds, among others. These are also used in the mining and construction industries. In 2023, chemicals and petrochemicals accounted for around 32% of the market share, while construction materials stood at around 26%, and food and Agriculture stood at around 25%.

Moreover, the growth of several sectors and rising trade activities are driving up the demand for FIBCs. Food and agricultural goods, medicines, chemicals, and fertilizers are just a few of the industries that have undergone industrialization. This is due to expanded international trade and various helpful government policies in India. Furthermore, several manufacturing businesses are springing up in India accredited to Make-in-India initiatives and sector-specific incentives. With the expansion of end-user industries, the need for FIBC for efficient product storage and transportation is rising.

The installed capacity of the FIBC Industry grew by around 3.4% y-o-y (year-on-year) in 2023. It is expected to reach around 212.5 million units by the end of 2024. Growing demand over the years, especially from the chemicals, construction, and food agriculture sectors has helped the FIBC sector reach healthy capacity utilization levels resulting in players going for capacity expansion. In addition, steady export growth has further supported this capacity expansion. The United States, Germany, and the United Kingdom are a few of the countries importing FIBCs from India.

The consumption of the FIBC Industry improved by around 7.3% y-o-y in 2023. It is expected to reach around 69.1 million units by the end of 2024. In 2022, there was a decline in the consumption pattern on account of the high base effect in the pharmaceutical industry. The chemical & petrochemicals sector had around 31.6% market share in 2022. The subdued demand was on account of geopolitical tensions as it increased the raw material costs for many chemicals, increased inflation, and lower margins as chemical prices declined globally due to increased competition from China post-revival of the economy. Additionally, the exports from China have increased over the period– a cause of concern for Indian manufacturers.

Further, the food grade FIBCs are becoming an ideal choice for the commercial food industries. The food & agriculture sector had around 25% market share in 2023. The low demand was attributed to disrupted food supply chains due to the pandemic, climatic changes like heat waves damaging the crops and decreasing the yields, low rainfall owing to low production, and increasing cost of inputs like fertilizers and fuel. 

The minerals and ores sector had seen a y-o-y increase of 3.1% in 2023 after a y-o-y decline of around 9.5% in 2022 due to a decline in exports. The fall in exports was mainly observed during the months of June-November 2022 because of the imposition of export duties. For instance, in May 2022, the duty on iron ore concentrates was increased to 50% from 30%. This duty was subsequently reversed in November 2022. 

The iron ore produced in India is primarily used for domestic steel production and India’s steel production has increase from 2023 backed by infrastructure growth in the country. Also, increased activities in the construction sector alongside the thriving real estate and automobile sectors are expected to boost the demand from this sector. 

Moreover, the FIBC industry’s consumption is likely to reach 69 million units at the end of the 2024. It has been growing at a CAGR of 5% during 2020-2023, owing to the increasing consumption from the chemicals & petrochemicals, food & agriculture, construction & mining sectors. In addition, the government has included the chemicals sector as a priority sector under the ambitious ‘Make in India’ initiative of the government. 

‘Make in India’ has played a pivotal role in driving some of the key initiatives to stimulate growth in the chemicals industry (organic and inorganic). The government has already taken some crucial steps to create favourable conditions, in terms of policies and infrastructure, to attract global and domestic investments in the Indian chemicals industry. Similarly, likely growth in various industries in the domestic market is expected to support the inorganic chemicals market going forward. 

Furthermore, the retail industry is developing in Tier-1 and Tier-2 cities, in addition to major cities and metros in the country. The growing retail sector in India will increase the demand for flexible packaging. Additionally, transitioning demographic profiles, rising disposable incomes, growing urbanization, and changing consumer tastes & preferences are driving the growth of the organized retail market in India. Besides, the disposable income in India has increased at a CAGR of 10.7% in the last decade and is exhibiting a good growth trajectory.

According to IFIBCA, the FIBC market in India has grown by almost 38% in the last 10 years. FIBCs offer a convenient way to store and transport food products. This is because they are lightweight, easy to handle, and can be stacked to save space. India is a major exporter of food products. Food-grade FIBCs are used to transport food products to overseas markets. However, the production of the FIBC industry declined by around 3.3% y-o-y in 2022 but increased by 8% yo-y in 2023. It is expected to reach around 151.1 million units by the end of 2024. The FIBC market was valued at 926 USD million in 2023 and has grow at a CAGR of 6.7% during the period, 2020-2023.

Food-grade FIBCs are typically used to transport dry, flowable food products, such as flour, sugar, rice, and cereal. They are also used to store food products in bulk quantities. The food-grade FIBC Production was nearly 28% of the total production of FIBC in India in 2021. 

Food-grade FIBCs, also known as food contact FIBCs, are bulk bags specifically designed for the storage and transportation of food products. They are made from virgin polypropylene resin and manufactured in clean & hygienic facilities. Food-grade FIBCs are also subject to rigorous testing and certification to ensure that they meet the highest safety and quality standards. Another growth driver is the surging e-commerce, which has led to an increased demand for food delivery services. 

Moreover, the food-grade FIBC grew at a CAGR of 11.5% during 2017-2021. The growth is attributable to rapidly growing Indian and global food industries, driven by population growth and rising incomes. 

India has taken over China to become the most populous country in the world. Food is a basic human necessity. As a result, the growing food demand has raised the demand for food packaging. Besides, there is a rising awareness about food hygiene and safety among consumers. Furthermore, technological advancements in FIBC manufacturing are giving rise to the development of stronger, lighter, and more durable FIBCs. This is making FIBCs more attractive to users and is expected to drive demand. Similarly, the FIBC industry is attracting increased investment from both domestic and foreign investors. This is expected to lead to the expansion of existing production facilities and the establishment of new ones.

According to IFIBCA, India has a 75% share in European FIBC imports and a 72% share in the US import market. India’s dominance in the export market is attributable to a growing focus on quality, excellent engineering capabilities, backward integration, and ethical business practices. Further, the growth is supported by the increasing demand from sectors like food and agriculture, chemical and petrochemicals, construction materials, etc. 

The exports of the FIBC industry grew by 8.6% y-o-y in 2023, however it had marginally declined around 1.1% y-o-y in 2022. It is expected to reach around 82.1 million units by the end of 2024. Over 50% of the units produced in India are exported. The top five countries are the United States, Germany, the United Kingdom, France, and Spain. The export numbers grew at a CAGR of 8% during 2020-2023 and reached around USD 493 million in 2023.

SHREE TIRUPATI BALAJEE AGRO TRADING COMPANY LIMITED COMPETITIVE STRENGTHS
1. Diverse customer base
2. Cost-Effectiveness of FIBCs
3. Multi- product portfolio
4. Integrated Manufacturing Facility
5. Quality Standard Certifications & Quality Tests
6. Experienced Promoter and senior management team
7. Multi-market Company
8. Our Product Development Capabilities
9. Growing Demand for Sustainable Packaging Solutions

SHREE TIRUPATI BALAJEE AGRO TRADING COMPANY LIMITED STRATEGIES
1. Focus on core competence
2. Multi- Location Facilities
3. Developing the new product line
4. Global and Domestic Presence

SHREE TIRUPATI BALAJEE AGRO TRADING COMPANY LIMITED RISK FACTORS & CONCERNS
1. All their manufacturing facilities are situated at Pithampur, Madhya Pradesh resulting in concentration in a single region and the is dependent on that manufacturing facilities.
2. There is an increased awareness towards controlling pollution and many economies including India have joined in the efforts to ban plastic product.
3. Increased revenue may not necessarily lead to higher margins, as they are affected by raw material costs, finance expenses, and other operational costs.
4. Poly Propylene granules, Poly Propylene (LDPE) and High-Density Polyethylene (HDPE) of different grades is their primary raw material constituting a significant percentage of their Company’s total expenses.
5. Heavy reliance on short-term raw material contracts, coupled with exposure to price fluctuations and lack of hedging policies, poses a significant threat.
6. Majority portion of their domestic sales are derived from the western zone and any adverse developments in this market could adversely affect their business.
7. The volatile fluctuations in crude oil prices, particularly during events like COVID-19 and the Russia-Ukraine war, can result in substantial changes in manufacturing costs and gross profit margins within the FIBC market, ultimately impacting the company's financial position.
8. The Business is highly concentrated on the sale of bulk packaging products, particularly FIBC, exposes the company to vulnerability, as any downturn or disruption in this segment could significantly impact overall financial performance and stability.
9. A significant portion of their revenues are dependent on their exports to their international customers.
10. The Company primarily manufactures plastic products such as FIBC Jumbo bags, woven sacks, woven fabric, and narrow fabric and they may not be able to produce bags using alternative materials to plastic.