b j duplex boards ltd share price Management discussions

As per Regulation 34(2) (e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report is as follows: A. INDUSTRY STRUCTURE & DEVELOPMENTS

GLOBAL PAPER INDUSTRY:

The global economic growth was estimated at a slower 3.4% in 2022, compared to 6.3% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect). The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades. US consumer prices decreased about 6.5% in 2022, the highest in four decades. This prompted the Federal Reserve to raise its benchmark interest rate to its highest in 15 years. The result is that the world ended in 2022 concerned that the following year would be slower. The global equities, bonds, and crypto assets reported an aggregated value drawdown of US$ 26 trillion from peak, equivalent to 26% of the global gross domestic product (GDP). In 2022, there was a concurrently unique decline in bond and equity markets; 2022 was the only year when the S&P 500 and 10-year US treasuries delivered negative returns of more than 10%.

Gross FDI inflows equity, reinvested earnings and other capital declined 8.4% to $55.3 billion in April-December. The decline was even sharper in the case of FDI inflows as equity: these fell 15% to $36.75 billion between April and December 2022. Global trade expanded by 2.7% in 2022 (expected to slow to 1.7% in 2023).

The S&P GSCI TR (Global benchmark for commodity performance) fell from a peak of 4,319.55 in June 2022 to 3495.76 in December 2022. There was a decline in crude oil, natural gas, coal, lithium, lumber, cobalt, nickel and urea realisations. Brent crude oil dropped from a peak of around US$ 120 per barrel in June 2022 to US$ 80 per barrel at the end of the calendar year following the enhanced availability of low-cost Russian oil.

INDIAN PAPER INDUSTRY OVERVIEW:

The Indian paper and packaging market were pegged at US$ 10.77 Billion (H88,314 crores) in 2022 and is expected to reach US$ 15.69 Billion (H1,25,520 crores) by 2027, growing at a CAGR of 6.63%. Packaging-grade paper makes up for 55% of the major kinds of paper produced. The printing and writing paper market is expected to grow at a CAGR of 1.8% during 2022-2026. This segment is expected to witness a demand growth due to factors such as rising population, re-opening of offices, growing traction in the pharmaceutical and e-commerce industry among others.

B. OPPORTUNITIES AND THREATS ANALYSIS OF THE INDIAN PAPER INDUSTRY:

THREATS:

Inflationary pressure on raw material costs.

Increasing competition from cheaper imports creating pricing pressure. Hampering paper demand by digitalisation and digitization.

Increase in energy cost cannibalising competitiveness.

OPPORTUNITIES:

Considerable demand headroom due to lower per capita consumption. Rising demand of packaging paper/board in food and pharma sector. Greater hygiene awareness due to the pandemic. Increasing demand from downstream sectors (kraft, corrugation, duplex). Innovative product creation possibilities. Ban on single-use plastic to generate demand.

C. SEGMENT-WISE PERFORMANCE:

The Company operated in only one business segment i.e. Paper/ Paper board (including Duplex Board) at New Delhi. Moreover, at present the Company is not operative and thus and have any active business engagements.

D. OUTLOOK:

The global economy is expected to grow 2.8% in 2023, influenced by the ongoing Russia-Ukraine conflict. Concurrently, global inflation is projected to fall marginally to 7%. Despite these challenges, there are positive elements within the global economic landscape. The largest economies like China, the US, India, Japan and South Korea are not in a recession. Approximately 70% of the global economy demonstrates resilience, with no major financial distress observed in large emerging economies. Despite high inflation, the US economy demonstrated robust consumer demand in 2022. Driven by these positive factors, global inflation is likely to be still relatively high at 4.9% in 2024. Interestingly, even as the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half the global growth.

E. RISKS AND CONCERNS:

Demand risk: Preferential shift of consumers towards digitisation could hinder demand.

Regulatory risk: Non-compliance with statutory norms could attract penalties and impact the

Companys credit rating.

Resource risk: Overuse of water along with a substandard water discharge can harm resource security and respect.

Raw material risk: Scarcity in essential raw materials like wood, pulp, coal and chemicals could bring down output with profitability.

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has adequate internal control system for business processes, with regard to efficiency of operations, financial reporting and controls, compliance with applicable laws and regulations etc., clearly defined roles and responsibilities for all managerial positions have also been institutionalized. All operating parameters are monitored and controlled. Regular internal audits and checks ensure that responsibilities are executed effectively. The Audit Committee of the Board of Directors periodically reviews the adequacy and effectiveness of internal control systems and suggests improvements for strengthening these.

G. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL

PERFORMANCE:

This has been dealt with in the Directors Report.

H. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT,

INCLUDING NUMBER OF PEOPLE EMPLOYED

Since, there were no material developments in human resources / industrial relations front, including number of people employed during the year under review therefore, this provision is not applicable to the Company.

I. DETAILS OF SIGNIFICANT CHANGES (I.E., CHANGE OF 25% OR MORE AS COMPARED TO

THE IMMEDIATELY PREVIOUS FINANCIAL YEAR) IN KEY FINANCIAL RATIOS

No significant changes took place in the key financial ratios of the Company, therefore this provision is not applicable to the Company.

J. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE

IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF.

The company has been facing financial challenges from past few fiscal years, reporting losses in such financial years. Due to no good/profitable track record in the Company, therefore there were no/negative returns on the Net Worth of the Company and no change in return on net worth compared to the immediately previous financial year.

K. ACCOUNTING TREATMENT

There has been no change in the accounting policies during the period under review. However, from April 1st, 2019, the provisions relating to IND-AS shall be applicable on the Company.