ugar sugar works ltd Management discussions

A series of severe and mutually reinforcing shocks — the COVID-19 pandemic, the war in Ukraine and resulting food and energy crises, surging inflation, debt tightening, as well as the climate emergency — battered the world economy in 2022. Against this backdrop, world output growth is projected to decelerate from an estimated 3.0 per cent in 2022 to 1.9 per cent in 2023, marking one of the lowest growth rates in recent decades, according to the United Nations World Economic Situation and Prospects (WESP) 2023.

Global real GDP is forecasted to grow by 2.3 percent in 2023, down from 3.3 percent in 2022. Most of the weakness will be concentrated in Europe, Latin America, and the US. New borrowing costs put in place to fight inflation cause several economies to shrink. According to the British consultancys annual World Economic League Table, the global economy topped $100 trillion for the first time in 2022 but will halt in 2023 as governments continue to struggle against growing costs

Added to growing costs, the financial constraints faced by the following banks in the USA

• Silver gate Bank.

• Silicon Valley Bank.

• Signature Bank.

And Credit Suisse Bank in Switzerland added concern at Global level and increased the volatility in the financial markets

"Unlike the global economy, India would not slow down - it would maintain the pace of expansion achieved in 2022-23. We remain optimistic about India, whatever the odds," RBI said in its State of Economy report released in the Monthly Bulletin for March,2023.. However, The Indian economy has remained resilient amidst high tides of uncertainty and is better positioned than many parts of the world to head into a challenging year ahead, the Reserve Bank of India (RBI) said in its State of the Economy report released in the Monthly Bulletin for March, 2023.

India has emerged from the pandemic years stronger than initially thought, with a steady gathering of momentum since the second quarter of the current financial year, the report said.

The report said a direct impact of the US banking crisis on Indias economic activity could be limited, but markets were bracing for tighter financial conditions. "This could present a trade-off between financial stability concerns and the conduct of disinflationary monetary policy."

Asian economies are expected to drive most of global growth in 2023, as they benefit from ongoing reopening dynamics and less intense inflationary pressures compared to other regions.

Non-Banking Financial Companies played an important role by fulfilling the diverse financial needs of those customers that dont have access to banks and their services.

However we at KFSL being a nonbanking, non- deposit taking systemically Important NBFC, have adopted Risk Management Strategies and ensured that our debtors portfolio remains sound and strong with least defaults and ensure that interest recoveries are up to date.

The main strategies encompass the following key elements to provide a safeguard against RISKS have been adopted by your company.

Recession risk management is the process of developing a set of strategies and tactics to implement if certain economic trigger events occur. It primarily focuses on ways to mitigate the impact on profitability and cash flow from revenue declines caused by depressed customer demand. Typical preparations include establishing a risk management committee and periodically going through "what if" scenarios.

Against these principles the following 5 risk management techniques have been adopted by adopted by KFSL.

1. Identifying risk,

2. Analysing risk,

3. Creating a mitigation plan,

4. Executing the plan and

5. Continuously monitoring how changes in the external business environment influence the risks an organization faces

Amidst this global scenario, Asian Region is having less inflationary pressures compared to other regions and your company has introduced adequate internal controls and significant observations and follow-up are reported periodically to the Board. As a result Industrial relations at all the works of the Company remained cordial and harmonious during the current period under review. Despite severe competition, the enthusiasm and unstinting efforts of the employees have enabled the company to remain at a steady level. There is no transaction conflicting with the interest of the company.

Cautionary statement

Estimates and expectations stated in this Management Discussion and Analysis may be "forward-looking statements" within the meaning of the applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to your Companys operation include economic conditions affecting the interest rate, inflation, changes in the interest rate, changes in the Government regulations, tax laws, other statues and incidental factors. The Company undertakes no responsibility to update or revise any forward-looking statement.