Gautam Exim Ltd Management Discussions

REPORT

Global Economic overview

The Global Waste Paper Recycling Market Analysis Report is a comprehensive report with in-depth qualitative and quantitative research evaluating the current scenario and providing future Waste Paper Recycling Market potential for different product segments with their market penetration in various applications and end-uses, over the next few years.

The pulp and paper industry is one of the largest industries in the world. Paper and paper board are used in a wide range of writing & printing and packaging applications in end-user industries such as consumer goods, hygiene, food and industrial packaging.

The global pulp and paper market is projected to grow at a compound annual growth rate (CAGR) of 1.0% from 2024 to 2032, reaching a value of USD 391.39 billion by 2032. In 2023, the market was valued at USD 357.21 billion, with Asia Pacific accounting for 50.16% of the market share. The Worlds largest paper producing country is China followed by United States and Japan. These top three paper producing countries account for over 50% of the worlds total paper production. North America holds the largest market share of the paper and pulp market due to its growing requirement in the packaging and consumer goods industry. India embraces 15th rank among paper manufacturing countries in the world. It is expected that both India and China will become key players in the industry as Asia is responsible for the bulk of the market in global output and consumption of paper and paper boards.

The Indian Paper industry is expected to see increased demand coming from manufacturing sector, requirement of better quality packaging of FMCG products marketed through organised retail and the demand for the upstream market of paper products, such as copier paper, cup stock paper board, base paper for making straws & paper bags and other single use paper (SUP) products are expected to drive the paper & paper products market in India in coming years.

Business background, Structure and Developments

Incorporated in 2005, The company is engaged in importing of waste paper, pulp and specialty chemicals, provides import trading, import aggregation and import facilitation services of industrial raw material, stores, spares etc to paper mills, chemical units and other manufacturing units. Import of these goods is majorly done from USA, UK Europe, Middle East and Australia.

The Company is promoted by Mr. Balasubramanian Raman and Mrs. Nagalaxmi Balasubramanian since Incorporation. Balasubramanian Raman is a certified Management Consultant and is a member of Institute of Management Consultants of India. He heads Marketing and Finance Department of the Company. Mrs. Nagalaxmi Balasubramanian holds a Bachelor of Science and Bachelor of Education Degrees from Bangalore University and looks after the administration department of the Company.

Gautam Exim Ltd. (Formerly known as Gautam Enterprises) had been in this line of activity for over 27 years since 1997. Company is managed by professionally qualified promoter director & CFO Mr. R. Balasubramanian. Company enjoys extremely good credentials with all its suppliers abroad, its customers in India and its Bankers.

Opportunity and Threats

Having consolidated its business in imports and import trading of waste paper the principal raw material to paper industry, company has tied up with paper mills to whom imported waste paper suppliers are made by the company, for distributorship and export of finished paper namely Kraft paper, writing & printing paper and news print.

The domestic as well as export demand for finished grades of paper has been good and company expects a sizable turnover in finished paper segments in the coming years due to increase in education center, growing literacy rates thereby substantially contributing to improvement of bottom line.

Threats

Paper Industry in general in India is subject to cyclical variation in demand & supply. Presently the industry enjoys good demand with the opening up of export market in the Middle East. Prices of imported waste paper are subject to fluctuation due to exchange rates, international freight rates and consequent international prices for waste paper.

Segment-wise or products-wise performance

During the year, your Company has earned revenue from trading business of Rs. 16762.79/- Lakhs. Further, the Company has made Net Profit after Tax of Rs. 14.94/- Lakhs from trading business.

Outlook on Risk and concerns

Your Company is exposed to a number of risks such as economic, regulatory, taxation and environmental risks. Further, following can be some of the risks and concerns; the Company needs to keep in mind:

- the top 5 customers constitute more than Approx 70% and contribute Approx 90% of our revenue from operations for the last couple of years.

- Adverse fluctuations in the price and availability of recyclable paper fiber and pulp could increase input costs which affect the operations of the Company and thereby affect the profitability of the Company.

- We do the business with our customers on purchase order basis and do have long-term contracts with most of them.

- We require high working capital for our smooth day to day operations of business and any discontinuance or our inability to acquire adequate working capital timely and on favorable terms at a future date may have an adverse effect on our operations, profitability and growth prospects.

- Some of the risks that may arise in its normal course of its business and impact its ability for future developments include inter-alia, credit risk, liquidity risk, counterparty risk, regulatory risk, commodity inflation risk, currency fluctuation risk and market risk. Your Company has chosen business strategy of focusing on certain key products and geographical segments are also exposed to the overall economic and market conditions. Accordingly, your Company has established a framework and process to monitor the exposures to implement appropriate measures in a timely and effective manner.

Internal Control System and their adequacy

The Company has adequate internal control systems including suitable monitoring procedures commensurate with its size and the nature of the business. The Internal Auditors and Companys Internal Audit Department conduct regular audits to ensure adequacy of internal control system, adherence to management instruction and compliance with laws and regulations of the country as well as to suggest improvements. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit committee of the Board.

Discussion on financial performance with respect to operational performance

The performance of the company during last year, the net profit of the company after taxation has decreased to Rs. 20.98/- Lakhs as compared to Rs. 51.05/- Lakhs in the previous year (Net Profit decreased by appx. 60%), while the turnover of the company has decreased to Rs. 16762.79/- Lakhs as compared to Rs. 27955.34/- Lakhs in the previous year (Turnover decreased by 40%). Management of the company is striving hard by making more sincere efforts for better growth and prospects of the company in the future and to yield better returns for the members of the company.

Human Resources

One of the key pillars of the Companys business is its people. The Company considers human resources as one of the vital and important factors for sustained growth, business success and creating value for Stakeholders. Company has maintained cordial and harmonious relations with all Employees.

The total numbers of Employees were 9 as on 31st March, 2024.

Cautionary Statement

Certain statements made in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, predictions and expectations may be forward looking statements, within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Significant factors that make differences to Companys operations include competition, change in Government policies and regulations, tax regimes and economic development within India. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statement, on the basis of any subsequent development, information or events or otherwise.

By order of the Board of Directors

Managing Director

DIN: 00410443