Gautam Exim Ltd Management Discussions.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Global Economic overview

The conflicts economic consequences will cause a considerable slowdown in global economy in 2022, as well as an increase in inflation. Fuel and food prices have risen significantly, disproportionately affecting vulnerable populations in low-income countries. The global economy is expected to decelerate from 6.1% in 2021 to 3.6% in 2022 and 2023.

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 are projected to grow from $351.51 billion in 2021 to $370.12 billion in 2028 at a CAGR of 0.74%. 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.

Domestic Overview

In a dynamic international environment fraught with high uncertainty and elevated perceptions of risk, it is ultimately the strength and resilience of the macro-economic fundamentals that will determine our ability to manage external shocks. As per Asian Development Bank (ADB), Indias economy will grow 7.5% in fiscal year (FY) 2022 and 8% in FY 2023, supported by increased public investment in infrastructure and a pickup in private investment. Indias nominal GDP is expected to rise from $ 2.7 trillion in 2021 to $ 8.4 trillion by 2030.

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.

Paper consumption in India is approximately 22.05 MT and expected to reach 23.5 MT by 2025, of which carton boards and container boards (corrugated boards) constitute the largest share of 55%, followed by writing and printing paper by 25%, specialty paper 10% and newsprint by 10%. Paper industry in India is expected to derive an annual average growth rate of 8-9% over the next 5 years led by a robust growth in packaging grade. Within consumer packaging segment it is expected to clock 9.5% CAGR in the same period driven by increased volumes in end-user segments such as household appliances, FMCG products, ready-made garments, pharmaceuticals and e-commerce. Further, the ban on single-use plastics is expected to fuel the demand for paper based alternatives.

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 Balasubramanian Raman and Nagalaxmi Balasubramanian since Incorporaion. 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 Banglore 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 24 years since 1997. Company is managed by professionally qualified promoter director & CEO Mr. R. Balasubramanian. Company enjoys extremely good credentials with all its suppliers abroad, its customers in India and its Bankers.

Opportunity and Threats

• Opportunities

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 centre, 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. 37764.64/- Lakhs. Further, the Company has made Net Profit after Tax of Rs. 100.07/- 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 constitutes 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 country witnessed lockdown being implemented in the second forth night of March, 2020. Our Company has taken all safety precautions as per guidelines from the Government. During the period the Net Income of your Company for the year 2021-22 was increased to Rs. 37952.98/- Lakhs as against Rs. 25046.81/- Lakhs of the previous year. Accordingly, the Company has made a Net Profit after Tax of Rs. 100.07/- Lakhs in the current year as against Rs 65.87/- Lakhs of the previous year.

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 10 as on 31st March, 2022.

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

BALASUBRAMANIAN RAMAN

Managing Director

DIN: 00410443