Arunjyoti Bio Ventures Ltd Management Discussions

The contract packaging market is moderately fragmented, with the presence of many domestic and international vendors. The companies in the market are continually expanding their geographical proximity with the help of partnerships and mergers. With the growth of outsourcing activities among various established players, as well as SMB, the market studied has been witnessing significant competition, in terms of providing reliable and speed of services, making it a competitive market. Overall, the threat of substitutes is moderate and is expected to grow during the forecast period. ? June 2020 - Jones Healthcare Group made a major investment in its packaging services offering which includes a fully integrated two-lane Uhlmann blister packaging line. The fully automated equipment will improve the firms capacity to manage surges regarding the demand and unique blister combinations, as more complex pharmaceutical dosage forms and regimesare evolving clinicallyand commercially. India food and beverage packaging market size was worth USD 31.75 billion in 2022. During the forecast period between 2023 and 2029, India food and beverage packaging market size is projected to grow at a CAGR of 14.8% reaching a value of USD 85.9 billion by 2029. Major growth drivers for India food and beverage packaging market include increasing consumption of packaged food, growing awareness and surging demand for high-quality products. Due to initiatives to reduce agricultural crop waste, government investment in the food processing sector is developing new packaging options which are expected to boost the overall market expansion. Additionally, the growth of the market is aided by the expansion of organized retail, high disposable income of the middle-class population, and exports. As a result, consistent packaging is now essential to extend shelf life, maintain manufacturing speed, and ensure quality. A higher standard of living, increased affluence, and the fast-paced metropolitan lifestyle are all contributing to the growing trend of online food delivery paired with packaged food. Investors such as Zomato, Swiggy, and Dunzo, among others, are looking into the online food delivery market as it grows in popularity and packaging innovation. Thus, all these factors fuel the growth of India food and beverage packaging market during the period in analysis.

Opportunities and Threats:

? Opportunities would be growth in beverages consumption in emergingmarkets, increasing demand for healthy food and beverages, further expansion through acquisitions and Bottles water consumption growth.

? Threats for this industry are Changes in consumer tastes and Waterscarcity.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

During the year under review the Company has achieved the income of Rs. 2,043.15 lakhs and incurred a net loss of Rs.34.89 Lakhs as compared to income of Rs. 173.53 lakhs and achieved a net profit of Rs. 22.18 lakhs in the previous financial year. The Company does not have any geographical segment. OUTLOOK: Our Company is a trusted co-packer of beverages for a multinational corporation (MNC). With a strong focus on quality and efficiency, we provide a range of varied co-packing services to meet the unique needs of our MNC customer. Our state-of-the-art facilities and highly skilled team enable us to efficiently and effectively co-pack a variety of beverages, including non- carbonated drinks, juices, energy drinks, and more for our customer as per their demand and specification. We have the capabilities to handle large- scale production runs, ensuring that our MNC partners products are consistently delivered to market on time and to the highest standards. Efficiency and timely deliverable of services is one of our main motto. At our Company, we focus and understand the importance of maintaining the integrity of our MNC partners brand and the demand. We work closely with them to ensure that our co-packing services align with their brand guidelines and quality requirements. We are committed to delivering products that meet our partners exact specifications. As a co-packer for a multinational beverages corporation, we are committed to continuous growth and expansion to ensure that we serve our customers in a better manner and meet the evolving and dynamic needs of the market. We have our manufacturing facility to support our production in accordance to the ever growing client demand and the changes as per the requirement of the evolving and dynamic industry. Our manufacturing facility is situated at:

(Unit 1) Kallem, Jangaon, Telangana. Our plant is spread across 4 Acres where we have a built in plant of 60,000 Sft which has 4 manufacturing lines. (Unit 2) Annadevarapeta, Kovvur, Andhra Pradesh: Our plant is spread across 3.2 Acres where we have a built in Plant of 70,000 Sft which has 3 manufacturing lines. We have dedicated teams actively involved in our regular manufacturing activities. Our manufacturing capabilities enable us to support our growth strategy and to cater to the ever changing dynamic and diversified requirement of the industry. We also intend to add a new 160 CPM juice line in our Unit 1 and anew 120 BPM water line in our Unit 2 shortly to enhance and boost our production capability. For the growth of our business, it is imperative that we enhance our production capacities for us to strategise and ensure that we are able to manufacture higher quantities and are able to cater to the rising demand of our clients. Enhanced production capacities will give us leverage to work towards higher output and also will give us the bandwidth to reach out to more clients and cater to their requirements.

RISKS AND CONCERNS:

Increasing health concerns and unavailability of clean drinking water have led to the growth of the bottled water market in India. The market is expected to reach INR ~403.06 Bnby the end of 2023, from its current value of INR ~160 Bn, expanding at a compound annual growth rate (CAGR) of ~20.75% from 2018. Based on volume, the market is likely to reach ~35.53 Bn liters by 2023, expanding at a CAGR of ~18.25% from 2018 to 2023. The major bottled water brands operating in India are Bisleri, Kinley, Aquafina and Tata. In India, bottled water is sold in four main types of SKUs one-liter bottles, two-liter bottles, 500 milliliter bottles, 250 milliliter bottles, pouches, and barrels of 15-20 liters. Among the different SKUs, one-liter bottles have acquired the largest market share of ~42% in 2021, followed by 500 milliliter bottles and 250 milliliter bottles. Flavored bottled drinking water has become popular in India. Different kinds of flavored water containing fruit essence and artificial sweeteners like soda, cola, juice, and other sweetened beverages often act as a substitute to plain bottled water. At times consumers prefer flavored bottled water to normal bottled water. This shift is developing an opportunity to expand the product line of bottled water manufacturers in India. Apart from individual sales, market players in India have recently inclined towards institutional sales through partnership with airlines, movie theatres, and hotels. Such partnerships are eventually increasing the penetration of the productin the market, followed by rise in the overall sales volume in India.

In recent years, a number of companies selling fake branded bottled water have cropped up in the market. These players do not maintain quality and hygiene standards, which in turn leads to health issues among consumers. As a result, consumers lose faith in bottled water, thus affecting the overall sales. Nearly 67% of the population resides in rural areas. However, the rate of penetration of bottled water is significantly low in these regions. This, as a result, hinders the growth of the market in India.

INTERNAL CONTROLSYSTEMS AND THEIRADEQUACY:

The company’s internal control/supervisory system is established to ensure that the board and management are able to achieve their business objectives in a prudent manner, safeguarding the interest of company’s shareholders and other stakeholders whilst minimizing the key risk such as fraud, misleading financial statements, breach of legal and contractual obligations, unauthorized business activities.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

Financial and operational performance forms part of the Annual Report and is presented elsewhere in the report.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

There are no material developments in the Human Resources area. The Industrial relations have been considered to be satisfactory. The Company constantly reviews the manpower requirements and effective steps are being taken to meet the requirements. Your company follows a strategy of attracting and retaining the best talent and keep employees engaged, motivated and innovative. The company continues to have cordial relations with its employees and provide personnel development opportunities for all round exposure to them. Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore, including:

Details of any change in return on net worth as compared to the immediately previous financial year along with a detailed explanation thereof: There is 5.41 % change on return on net worth as compared to the immediately previous financial year due to increase in the Capex as the Companywas setting up the New Plant at Annadevarapeta, Rajahmundry. Disclosure of Accounting Treatment: The Company has complied all the requirements of accounting standards applicable to the Company and during the year company has not changed any accounting policies.

NOTE:

Readers are advised to kindly note that the above discussion contains statements about risks, concerns, opportunities, etc., which are valid only at the time of making the statements. A variety of factors known/unknown expected or otherwise may influence the financial results. We do not expect these statements to be updated or revised to take care of any changes in the underlying presumptions. Readers may therefore appreciate the context in which these statements are made before making use of the same.