genus paper & boards ltd share price Management discussions


  1. INDIAN ECONOMY OVERVIEW
  2. In comparison to the last few years, Indias recovery from the pandemic was relatively quick this year and the growth in the upcoming years will be supported by strong domestic demand and a rise in capital investment. Despite the global slowdown, Indias economic growth rate is stronger than in many developing economies and reflects robust domestic consumption and lesser dependence on global demand. The slowdown of economy in US and Europe have its own share of reactions in Indian Economy.

    Indias GDP growth is expected to remain strong in future and the country will remain the fastest growing major economy in the world as it fared better in dealing with the extraordinary set of challenges globally other economies had faced. The advance GDP estimates for the year 2022-23 is around 7% and GDP growth of 6.0-6.8 per cent is expected in 2023-24, depending on the trajectory of economic and political developments globally.

    The Government of Indias vast infrastructure and initiative, logistics development, and industrial corridor development will contribute significantly to raising industrial competitiveness and boosting future growth. According to the Economic Survey 2022-2023, the Capital Expenditure (Capex) of the central government has been increased by 63.4 per cent in the first eight months of FY23 and became major driver of the Indian economy in the current year. The budgeted capex for FY24 has been increased which would further boost the economic signals.

  3. THE PAPER INDUSTRY IN INDIA
  4. India is the 15th largest paper producer in the world and has emerged as the fastest growing market. The domestic market / consumption of paper is over 16 million tons per annum (TPA), with over 2 million TPA being imported. The paper industry in India looks extremely positive as the demand for growing market of paper and paper products, like, tissue paper, tea bags, filter paper, coated paper, kraft paper, duplex paper, etc. is growing up.

    As of now, India exports A4 copies, coated duplex and large quality of converted products like stationary items, calendars, books, mag- azines and other grades of papers to many south eastern countries, Eastern Europe and USA.

    The Indian Pulp & Paper Industry has agro-forestry roots and strong linkage with the farming community which is a key raw material. Pulp is the primary raw material used for manufacturing paper, and it can be obtained through processing of wood, waste paper and agri- cultural residue like bagasse and wheat straw. In early years, paper industry was majorly dependent on wood as a raw material. However, due to increasing awareness and restriction on cutting trees focus has slowly shifted to waste paper and agro residue.

    Despite the fact that the Indian Paper Industry holds its importance to the national economy, even though it stands separated. Paper sector is mainly dominated by small and medium size units, less than half a dozen mills account for almost 90% production of newsprint in the country. There is a growing need to modernize the Indian mills, improve productivity and therefore building new opportunities in Indian market.

    Based on several paper grades, the growth of Indian paper industry is attributed to factors such as increased urbanization, requirement of better-quality packaging of FMCG products and increasing preference for ready-to-eat foods.

  5. GROWTH AND OPPORTUNITIES
  6. Paper Industry in India has undergone a major transformation in the last few years. The industry has gone up to sustainability driven and became far more technologically advanced.

    Paper consumption in India is likely to witness 6 to 7 per cent annual growth and will reach 30 million tonnes by FY 2026-27, largely driven by emphasis on education and literacy coupled with growth in organized retail. The packaging paper is similarly poised for growth but the external factors such as impact of lower demand in exports packaging because of UD slowdown and Ukraine factor, the demand supply may lead for imbalance.

    The paper Industry holds immense potential for growth in India as the per capita consumption globally is one of the lowest, the Indian Paper Manufacturers Association (IPMA) said in a statement. "Around 15 per cent of the world population stays in India but consumes only 5 per cent of the total paper produced in the world," the statement said.

    The emphasis on education and literacy coupled with growth in organized retail and demand for better quality paper are the major drivers of growth.

    Moreover, there has been a continued demand for quality packaging of FMCG products, pharmaceuticals, textiles, booming e-commerce, and other segments. According to industry body IPMA, paper consumption in India is projected to grow by 6-7 per cent per annum in the next five years so as to reach 30 million tonnes by the year FY27, making it the fastest growing paper market in the world.

  7. OUTLOOK
  8. Paper Industry in India is exhibiting one of the fastest growths being witnessed anywhere in the world and is most likely to continue this growth trajectory in the upcoming years. India paper market has grown at more than 8% CAGR starting from 2022-23 to 2027-28. Total paper market is a combination of paper, paper board, industrial packaging paper and specialty paper. The paperboard & industrial pack- aging paper altogether will be anticipated to acquire more than 70% market share of overall paper market during the forecast period.

    Rising income has boosted consumer spending, with more people buying products with high-quality packaging solutions. The Indian paper industry has tapped into this opportunity by capitalizing on the growing demand for high-quality paper, paper board and packaging paper.

    The increasing demand for high-quality paper, paper board and packaging paper has encouraged paper manufacturers to introduce innovative products and expand their distribution channels. In addition, increasing consumer demand has allowed them to cater to a broader range of consumers who demand safe and secure packaging solutions.

    Management Discussion and Analysis (Contd.)

    Effective and efficient packaging solutions have become the major paramount as more consumers have turned to online shopping for their daily needs. In addition to this, packaging paper and paperboard provide an eco-friendly solution for businesses seeking to deliver their products safely and efficiently.

  9. RISKS AND CONCERNS
  10. The Company is deriving 100% of its revenue from paper and board business. Environmental issues, continuous availability of raw ma- terials & fuels and increasing interest rates are the important issues concerning the paper industry. The imbalance in raw material and fuel costs and Net selling prices are the key for strong sustainability of the products of the company.

    The paper industry is one of the highly polluting categories of industries today. The Companys both the plants comply with the zero discharge policy and is meeting all the norms as prescribed under Environment Protection Act, 1986 and other environmental laws con- sistently.

  11. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
  12. (Rs. in Lakh)

    Financial Highlights 2022-23
    Gross Sales 65,512.21
    Net Sales 65,512.21
    Other Income 3.73
    Profit before Tax (PBT) (1,398.01)
    Profit after Tax (PAT) (1372.94)
    EPS (Basic & Diluted) (in Rs.) (0.53)

    The Company posted Net sales of Rs. 65512.21 Lakh and the Net profit after tax stands at Rs. (1372.94) Lakh.

    Ratios:

    The Company has maintained a healthy capital structure as is evident from its debt to equity ratio which is as follows:

    S. No.

    Particulars March 31, 2023 March 31, 2022
    1 Debtors Turnover 10.67 7.68
    2 Inventory Turnover 6.33 7.78
    3 Interest Coverage Ratio 1.79 7.48
    4 Current Ratio 1.17 1.69
    5 Debt Equity Ratio 0.57 0.39
    6 Operating Profit Margin (%) 2.13% 2.14%
    7 Net Profit Margin (%) 2.13% 1.39%
    8 Return on Net Worth 3.01% 1.28%
  13. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
  14. Your Company has evolved a system of internal controls to ensure that the assets are safeguarded and transactions are authorized, re- corded and correctly reported. The internal control system is supplemented by management reviews and independent periodical reviews by the outside chartered accountancy firms which evaluate the functioning and quality of internal controls and provides assurance of its adequacy and effectiveness. The scope of internal audit covers a wide variety of operational methods and, as a minimum, ensures com- pliance with specified standards with regard to availability and suitability of policies and procedures, extent of adherence, reliability of management information system and authorization procedures including steps for safeguarding of assets. The Reports of internal audit are placed before Audit Committee of the Directors. Audit Committee reviews such audit findings and the adequacy of internal control systems. The Statutory Auditors and Internal Auditors of the Company also interact with the Audit Committee to share their findings and the status of corrective actions under implementation.

  15. HUMAN RESOURCES
  16. Inspite of enduring perhaps the toughest phase in the Companys history it must be mentioned that the trusted loyal work force has always stood firmly in the hour of need. The Company also looks after its human resources well and always judiciously rewarded perfor- mance.

  17. CAUTIONARY STATEMENT

Statements in this "Management Discussion and Analysis" describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand supply conditions, finished goods prices, raw material availability and prices, cyclical demand, changes in Government regulations, environmental laws, tax regimes, economic developments within India and abroad and other factors such as litigation, industrial relations and other unforeseen events.