BOARD’S REPORT 87 Red Sea, which has pushed out policy rate cut expectations deeper into Financial Year 2025. Fortunately, improvement in supply chain conditions has lowered input cost pressures providing households some respite against rising cost of living. In India, El Nino conditions have disrupted agricultural output, but lower input costs and higher construction activity is supporting rural income growth. The growth push in Financial Year 2024 came from services exports, leveraged consumption by wealthier households and public sector infrastructure spending. Continuation of leveraged consumption and an uptick in investments should support growth in Financial Year 2025, even as expectations of above normal monsoons improve agricultural incomes and lower inflation. The economy is benefiting from revival in corporate sector project announcements and improving consumer sentiment, which augurs well for job generation in Financial Year 2025. From the supply side, sustained improvement in growth is likely post general elections in India, led by financial services, manufacturing, and construction sectors. Finance Financial Year 2023-24 saw global geopolitics reaching a pivotal moment, with the tensions affecting international relations on every continent. The global economic recovery proved surprisingly resilient - inflation receded significantly in most major economies, recession was mostly avoided, supply chain disruption eased considerably, and labour markets remained historically tight. Global growth rose by an estimated 3.2% in 2023, up from 2.3% in 2022, largely due to resilience in the United States and several large emerging markets, coupled with more fiscal support in China. The International Monetary Fund (“IMF”) forecasts the world economy to continue growing at 3.2% during 2024 and 2025, as well. Decisive monetary policy actions by central banks around the world led to sharp disinflation process. Headline inflation fell to 6.8% in 2023 from a peak of 9.4% in 2022 and is set to fall further in 2024. However, the path of future rate cuts is not yet clear as commodity price spikes stemming from geopolitical tensions, including those from the war in Ukraine and the conflict in Middle East could, along with persistent core inflation, raise interest rate expectations. Financial market expectations of US policy rate reductions this year have been pared back significantly. The US dollar (DXY) remained strong in the wake of resilient economic growth and hawkish Fed policy commentary. Global equity markets ended the financial year on a high with strongest performance since 2019, led by a bull run in major markets such as the US, India and Japan on the prospect of monetary easing, robust profitability of large corporates and the anticipated productivity gains related to artificial intelligence. With Russia on sanctions, war in Middle East and production cuts by OPEC+, Crude prices remained volatile. India seized global spotlight, emerging as the fastest growing major economy of the world in 2023-24 coupled with navigating diplomatic challenges with finesse. India’s economic activity exhibited resilience with GDP growth for FY 2023-24 pegged at 7.6%, buoyed by strong domestic demand and backed by robust macroeconomic fundamentals. The upturn in the investment cycle, broad-based revival in manufacturing and services sectors and Government’s capex push aided growth. Consumer price inflation (CPI) dropped to 5.4% from 6.7% in previous year on account of base effect, normal monsoon and supply side interventions. The RBI Monetary Policy Committee kept the policy repo rate unchanged at 6.5% since its last rate hike in February 2023. Bank credit growth remained robust with improving economic activity, increasing by 16.3% (y-o-y) as at March 2024. Corporate Borrowing Costs generally hardened, amidst tightening of liquidity conditions. The Indian Rupee largely remained rangebound, depreciating by 1.4% during the year, due to strong macroeconomic fundamentals and improvements in India’s external position with the moderation in the current account deficit (CAD), revival of capital flows, and rising foreign exchange reserves. India’s foreign exchange reserves hit a record high of US$ 645.6 billion on 29th March, 2024. Net FPI inflows at US$ 41.6 billion in 2023-24 were the highest since 2015-16. Amidst the aforesaid backdrop, the Bankers continue to rate your Company as a prime customer and extend facilities/ services at prime rates. Your Company follows a prudent financial policy and aims not to exceed an optimum financial gearing at any time. The Company’s Gross Debt to Equity Ratio is 0.03 as at 31st March, 2024. Further, your Company continued to focus on managing cash efficiently and ensured that it had adequate liquidity and back-up lines of credit. During the year, your Company raised short term trade finance of Rs. 650 crores under RBI’s interest equalization scheme. Sufficient liquidity prompted pre-repayment of some of the long term borrowings. Further, during the year, your Company repaid/prepaid Rs. 3,712.16 crores of long-term borrowings whilst maintaining an optimum liquidity level of Rs. 16,469 crores as at 31st March, 2024. Further, your Company has been rated by CRISIL Ratings Limited (“CRISIL”), ICRA Limited (“ICRA”), India Ratings and Research Private Limited (“India Ratings”) and CARE Ratings Limited
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