With the latest Q4 FY2023 (January-March 2023) results, PRIDEX has dropped 3.2% (5.5 points), and CARDEX recorded a decline of 0.3% (0.4 points) quarter on quarter. During October 2022 to March 2023, both indices have recorded southward correction at -8.2% (14.8 points) for PRIDEX and -2.2% (3.5 points) for CARDEX.

However, both indices peaked in Q2 FY2023 (July-September 2022) at 179.70 points (PRIDEX) and 161.20 points (CARDEX). The decline reflects inflation correction at the macroeconomic level and price corrections in principal cost inputs, such as some paper grades, plates, inks, and logistics.

“It must be noted that both the indices have marginally risen year on year between the Q4 FY2022 (January-March 2022) and Q4 FY2023 (January-March 2023)—PRIDEX by 5.64% (8.8 points) and CARDEX by 1.15% (1.8 points).”

The input costs have remained volatile for the past two years, since 2021. PRIDEX has been more volatile when compared with CARDEX, primarily due to price fluctuations for paper and labour. CARDEX, in comparison, has recorded steady growth without much volatility in input costs.

As these indices are maturing, they more accurately reflect the input costs for the two verticals of our industry—commercial printing and carton packaging. A closer look at the trajectory of these indices and overlaying them with other macroeconomic trends reveals that they are also in tandem with some important global economic trends. For example, both indices are in-sync with the global crude oil and coal prices, making global energy prices dearer. We can also look at India’s growing product exports since 2020. It has created a rapidly growing demand for mono-carton packaging and labels.

There is much concern over the global macroeconomic events, especially in the developed markets, including the US and Europe. With increasing interest rates, the exports from India to these regions will slow down. The services exports may also take a hit from India.

Our economy has also shown declining GDP growth in the past year. In the current fiscal (FY 2023-2024), our economy is projected to grow at ~6%. Though we shall still be a large economy growing at that pace, it is far too low for wealth and job creation considering the size of our population.

I expect demand, and thereby input prices, to further correct themselves in the current and the subsequent quarter. I am closely monitoring the trends and input costs that contribute to the twin indices. Considering the latest numbers and drawing insights from the past, printers and packaging converters should use input cost corrections to enhance their profitability before passing on the price benefits to their clients and customers.

With the base value as 100 for the fiscal year 2013-2014, these indices were updated from quarter to quarter on the AIFMP-Crisil indices’ page: https://tinyurl.com/yayqnp2k

The detailed methodology used for computing PRIDEX and CARDEX is available at https://tinyurl.com/yaqrr65m.

Besides being director at Param Packaging, Sanjay Patel is project in-charge of the AIFMP-Crisil Indices