Page 145 - Tata Chemical Annual Report_2022-2023

Integrated Annual Report 2022-23 01-83 84-192 193-365
Integrated Report Statutory Reports Financial Statements
Management Discussion
& Analysis

Management Discussion & Analysis 2. Chemical Industry economy. Of the numerous trends impacting this industry,
a. Global Chemical Industry the most significant are Sustainability, Digitalisation and
Supply Chain Resilience.
Global chemical growth moderated in 2022 due to
lockdowns in China, supply chain bottlenecks, and Sustainability is the key trend shaping the way chemicals
1. Business Environment in 2022 to 4.0% in 2023, and further to 4.2% in 2024. disruptions caused by the Russian invasion of Ukraine. are produced and used. While the chemical sector has
As a result, global chemical output grew by only 2.0% in
a. Global Economic Outlook However, half of these economies will have a slower 2022. In 2023, production is expected to expand at 2.9% been under increasing pressure to reduce its environment
growth rate in 2023 compared to 2022. China's growth footprint, promote sustainable practices and mitigate ESG
Global growth is projected to moderate from an estimated amid rebound in Western Europe and the Asia-Pacific. exposure, it also plays a critical role in providing sustainable
3.4% in 2022 to 2.9% in 2023, then rise to 3.1% in 2024 rate is estimated at 5.2% in 2023, while India's growth The industry is focussing on meeting the growing global products and services to the various sectors it services.
- lower than the historical annual average of 3.8%. is projected to decline, from 6.8% in 2022 to 6.1% in demand and enhancing sustainability through carbon
The lower growth in 2023 is due to the rising central bank 2023, before rebounding to 6.8% in 2024, due to strong reduction projects and advanced recycling and recovery. Considered as a ‘hard to abate’ sector, access to
rates to combat inflation and the war in Ukraine. Emerging domestic demand. The biggest risk to the outlook is persistent inflation clean energy is essential for this industry to become
market and developing economies are expected to Source: International Monetary Fund, Chief Economist Outlook by and continued increase in interest rates that could sustainable. Led by the commitment of the Paris
recover in 2023 and 2024, while advanced economies will World Economic Forum, January 2023 prolong and deepen the downturn, but other risks may Climate Accords, almost all leading global chemical
experience a decline in growth. The world trade growth is include escalation of wars, financial instability, and supply companies have prioritised reduction of their carbon
forecasted to decline to 2.4% in 2023 before rising to 3.4% b. India Economic Outlook chain disruptions. emissions in a phased manner and eventually become
in 2024. In 2023, oil prices are projected to fall by about India’s economy recovered quickly from the pandemic carbon neutral. The chemical industry is one of the key
16%, while non-fuel commodity prices are expected to and further growth is expected to be supported by solid The US chemical industry had a strong start in 2022, with contributors of the US$ 1.1 trillion investments made
fall, on average, by 6.3%. domestic demand and increase in capital investments. The output growing by 3.9%. However, in 2023, this growth in low carbon energy technologies in the year 2022.

The global inflation rate is expected to decrease from 8.8% International Monetary Fund (IMF) and Reserve Bank of is expected to marginally decline due to deceleration In addition to carbon emission, reducing water
in end-use markets, a stronger dollar, and lower global
in 2022 (average) to 6.6% in 2023 and 4.3% in 2024, due to India (RBI) estimate real GDP growth of 6.8% in 2022-23 and growth. Many manufacturers have increased inventories footprint is also a key imperative for the sector.
the declining international fuel and commodity prices as 6.1% in 2023-24. The agriculture sector has been growing of raw materials and products due to supply chain issues, Companies are gradually becoming water neutral
well as the cooling effect of monetary policy tightening on at an average annual rate of 4.6% over the past six years, which resulted in higher-than-normal inventories at the through various interventions, such as water recycling,
underlying (core) inflation. The inflation forecast for 2023 and the industrial sector is estimated to grow at 4.5% in end of the year. US chemicals remain advantaged due to reducing (low water technologies) and recovering
is 4.6% for advanced economies and 8.1% for emerging FY 2022-23. The services sector saw quick recovery in abundant domestic production of natural gas. Capital (ZLD technologies & harvesting).
market and developing economies. FY 2021-22, growing 8.4% Y-o-Y, and continued to grow in spending grew 9.0% to US$ 33.5 billion in 2022 and is
FY 2022-23. expected grow at 3.6% in 2023.
The energy crisis of 2023 is expected to be less severe Developing sustainable chemicals and materials
than previously seen, due to efforts in stress-testing and RBI’s enterprise surveys point to some softening of After declining by 3.2% in 2022, chemical production aligned to the principles of Green Chemistry is a
improving energy systems, diversifying energy sources, and input cost and output price pressures in manufacturing. in Western Europe is expected to marginally grow at leading sustainability trend in this industry. Under the
improving energy efficiency and consumption patterns. Considering these factors, and assuming an average crude 0.8% in 2023. This is mainly due to an uncertain energy umbrella of green chemistry, companies are focussing
Despite the decline in oil prices to pre-war levels, global oil price (Indian basket) of US$ 95 per barrel, inflation is price outlook and depressed economic growth outlook. on developing renewable or circular feedstock,
gas prices have remained high. Policymakers, particularly projected at 6.5% in FY 2022-23, with Q4 at 5.7%. On the However, the silver lining is that natural gas prices have innovating sustainable processes that consume
in Europe, will be focussed on controlling energy costs and assumption of a normal monsoon, CPI inflation is projected dropped to their pre-war levels and are expected to low energy, generating zero waste, and ensuring
ensuring stable energy supplies. The ongoing impact of the at 5.3% for FY 2023-24, with Q1 at 5.0%, Q2 at 5.4%, Q3 at remain below the 2022 levels. such waste is harmless to the entire ecosystem.
Russia-Ukraine war will continue to affect global energy 5.4% and Q4 at 5.6%, and the risks evenly balanced. Bio-based chemicals derived from renewable sources,
security, economy and energy mix. China’s chemical industry is expected to recover after biodegradable polymers, carbon capture & utilisation
The capital expenditure for FY 2022-23 stands at 2.9% of technologies, and fermentation & extraction
For advanced economies, growth is projected to decline GDP, indicating the Government's commitment to investing the lifting of COVID-19 restrictions. Sectors such as technologies are some leading examples of green
sharply from 2.7% in 2022 to 1.2% in 2023, before rising in the country's growth. Moreover, the Government has pharmaceuticals and agricultural chemicals are expected chemicals and processes. The demand for green
to 1.4% in 2024. About 90% of the advanced economies announced an even larger allocation of ` 10 lakh crore for to lead the growth. chemicals and materials is estimated to outpace the
are projected to see a decline in growth in 2023, with the next fiscal year, which demonstrates their long-term Source: Chemical Processing, American Chemistry Council, C&EN global chemical industry by 3x in the next 5 to 7 years.
the UK experiencing a negative growth rate of 0.6%. vision for the economy. Of this amount, a considerable sum
The United States and Europe are expected to see growth of ` 1.78 lakh crore has been earmarked for the Ministry b. Key Global Trends Digitalisation is transforming the chemical industry by
rates of 1.4% and 0.7%, respectively, in 2023. The decline of Chemicals and Fertilisers, reflecting the Government’s The chemical industry is an integral element of the global making manufacturing facilities and workplace safer,
in growth is attributed to factors such as tighter fiscal and emphasis on promoting the chemical and agriculture economy. It serves numerous sectors such as agriculture, improving operational efficiency, increasing productivity,
monetary policies, financial conditions, and high energy construction, automotive, FMCG, consumer durables, and enabling new business models. Smart Factories or
retail prices affecting household budgets. sectors. Overall, these budgetary allocations signal the electronics, healthcare and many more. The industry is at Industry 4.0 are integrating advanced technologies such
Government’s determination to accelerate economic as automation, analytics, Artificial Intelligence (AI) and
The growth rate for emerging market and developing growth and create a more prosperous and resilient India. the cusp of significant transformation, driven by various Industrial Internet of Things (IIoT) to drive efficiencies and
mega trends that are shaping the future of the world
economies is expected to increase marginally, from 3.9% Source: Budget 2023, RBI, Economic Survey 22-23, Ministry of Finance

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