Chadha Papers Ltd Management Discussions.

The paper industry in India has become more promising as the domestic demand is on the rise. Increasing population and literacy rate, growth in GDP, improvement in manufacturing sector and lifestyle of individuals are expected to account for the growth in the paper industry of India.

The focus of paper industry is now shifting towards more eco-friendly products and technology. Government of India has established rules and regulations to control the population and degradation of forest. These measures taken by the government has brought the significant changes in the paper industry of India.

1. INDUSTRY STRUCTURE AND DEVELOPMENT RELATING TO COMPANYS LINE OF BUSINESS

Your Company is engaged in the business of manufacturing of papers and related paper products such as News Print Writing Print and Kraft Paper etc. During the Financial Year, the Company was able to achieve the sales of Rs. 4,147,737,591/-. The sale of products comprises of sale of News Print Paper, Writing Printing, and Kraft Paper and includes other revenue from the sale of scrap and Paddy Husk, Local Waste Paper and Petroleum Coke.

For developing the area of business, the Company has taken various steps to increase the revenue of the Company and for the Development of the Company:-

a. The Company is trying to enter into new markets and trying to capture the new area for business.

b. Enhance growth by reaching new customers, analyzing their needs and dynamically managing the price according to the needs of Customers.

c. In-house qualified and technical team to ensure better quality products.

d. Adoption of Business models that increases the assets efficiency and long term competitiveness.

e. Increasing profitability by trying to minimize the operating Costs.

f. Adoption of new technologies and measures to manufacture the papers at a lower cost.

g. Analyzing the demands of the society and adjusting the manufacturing and supply of goods accordingly.

h. Sufficient land and other infrastructure available with the Company for future expansion and growth.

2. OPPORTUNITIES AND THREATS

OPPORTUNITIES

India is already one of the fastest growing major economies of the world and the current emphasis on education, skill development and economic reforms should provide a further boost to the Countrys growth prospects and resultant demand for Paper.

New opportunities for the Company are widely open as the company is planning to enter into new markets.

Companys has introduced the News Print and export quality writing & printing paper and management has laid out the plans and strategies to capture the markets. Improved quality of our Writing & Printing paper and acceptance of same in the printing segment places us in a strong position to take full advantage of growth opportunities.

The foregoing discussion traced that the Indian paper industry is a booming industry and is expected to grow in the years to come. The usage of paper cannot be ignored and this awareness is bound to bring about changes in the paper industry for the better.

THREATS

The gradual erosion of the market for the Kraft Paper is the biggest threat to the Company. The low sales graph of the Kraft Paper is a threat as well as alarming for the Company.

Most of the paper mills are in existence for a long time and hence present technologies fall in a wide spectrum ranging from oldest to the most modern. Due to old technologies and methods, it is difficult to meet the market demands.

The other challenge before the Paper industry is to comply with stringent Environment norms being insisted upon by the Ministry of Environment & Forest (MOEF) and the Central Pollution Control Board (CPCB).

Another threat to the Industry is increasing coal and logistic cost. These cost adds to the total expenditure of the Company and therefore it is also a big threat to the future profits and growth.

Availability of substitute products at cheap rates from the foreign markets is also another threat which the company has to deal with because there is cheap dumping from export countries.

3. SEGMENT WISE OR PRODUCT WISE PERFORMANCE

Company has basically three segments in Paper which are as follows:-

a. Kraft Paper Division

b. News Print St WP Division

c. Petrolium Coke Division

During the year, Company was able to expand its share in the market and was able to achieve the sale of News Print Paper of Rs. 1,201,471,067/-.

The sale of Kraft Paper is Rs. 1,376,717,614/-, Kraft Paper absorbent amounted to Rs. 615,133,764/- and Petrolium Coke is 60,927,444 /-.

The paper business incorporates product groups viz. Paper, Paper and Boards and Newsprint, which mainly have similar risks and returns.

4. OUTLOOK

The Company installed News Printing/Writing Paper Plant last year in order to achieve the demand for this product and further management has planned and has improvised the technologies for the News Print and WP keeping in view the demand of the product and the sales target has been set high.

5. RISKS AND CONCERNS

Company has adopted a risk management Policy, as recommended by the Board of Directors of the Company.

The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business.

The policy is categorized in following parts:-

a. ) Risk Assessment.

b. ) Risk Management.

c. ) Risk Monitoring.

d. ) Risk Minimization

The Company is prone to inherent business risks. The objective of the policy is identification, evaluation, monitoring and minimization of identifiable risks.

6. INTERNAL CONTROL SYSTEMS AND ADEQUACY

Board of Directors has adopted proper procedure and policies for ensuring the efficient conduct of business, including proper utilization of resources, safeguarding of its assets, detection of frauds and errors and timely preparation of Financial Statements and fair and true disclosure in the same.

7. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE OF THF COMPANY

The year was challenging with intense competition & our overall sales volume increased though pricing was under severe pressure during the year under review.

Total turnover of the Company for the Financial Year 2018-19 is Rs. 4,147,737,591. Company has incurred a loss of Rs. (9,459,593).

Operational Performance of the Company is satisfactory ensuring the Companys commitments of servicing its debts and enhancing the value of the Company.

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

The Company has adopted a progressive policy of development of its human resources through continuous training and motivation to achieve greater efficiencies and competencies. Progress made by the company was possible because of the efforts put in by the entire team. The total number of permanent employees as on 31st March 2019 was 602. Your Company considers people at its biggest assets and "believing in People" is the soul of human resource strategy. Company believes empowering employees through greater knowledge, opportunity and responsibility. During the year, the focus of your Company was to ensure that young talent is nurtured and mentored consistently, that rewards and recognition are commensurate with performance and that employees have the opportunity to develop and grow.

9. Significant Ratios

SNO* Ratio 2018-19
1 DEBTORS TURNOVER 10.88
2 INVENTORY TURNOVER 9.42
3 INTEREST COVERAGE RATIO 1.06
4 CURRENT RATIO 1.01
5 DEBT EQUITY RATIO 4.97
6 OPERATING PROFIT MARGIN 0.24
7 NET PROFIT MARGIN -0.28

Declaration by the Whole Time Director under Para D of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

This is to certify that the Company has laid down Code of Conduct for all the Board Members and Senior Management of the Company and the copy of the same have been uploaded on the website of the Company i.e www.chadhapaperslimited.com.

i hereby confirm that all Board Members and Senior Management Personnel have affirmed compliance with the Code of Conduct for Directors and Senior Management, as approved by the Board, for the year ended 31n March 2019.

Place: Noida For Chad ha Papers Limited
Date: 30.08.2019
Amsnbir Singh Sethi
(Whole Time Director)
DIN-01015203