Genus Paper & Boards Ltd Management Discussions.


In line with the global economy, India witnessed major economic disruptions in FY 2020-21, as the outbreak of COVID-19 Perversely impacted human health and safety of the countrys inhabitants. This prompted the government to undertake one of the worlds tightest lockdowns, bringing manufacturing and trade activities to a screeching halt. Prolonged lockdown exacerbated existing vulnerabilities of the country including the weakened financial sector, private investments, liquidity constraints and consumption demand. An accommodative monetary policy from the Reserve Bank of India (RBI) and fiscal policy interventions by the central government, coupled with the gradual reopening of the economic activities from June 2020, have led to a sequential recovery in economic output. Indias economy contracted during the first half of FY 2020-21, before returning to positive territory in third quarter of FY 2020-21 with a growth of 0.4 per cent. GDP had seen revival, albeit marginally, as economic activities resumed after a long and arduous lockdown and overall sentiment improved with the rollout of vaccination drive.

The Indian economy passed through one of the volatile periods in living memory in 2020-21.At the start of 2020, India was among five largest global economies; its economic growth rate was the fastest among major economies (save China); its market size at 1.38 billion was the second largest in the world; its rural population of the under-consumed was the largest in the world.The Indian economy de-grew 23.9% in the first quarter of 2020-21, the sharpest de-growth experienced by the country since the index was prepared.

The pandemic affected both demand and supply, at least in the short-term. As lockdowns eased across the world economic activity gradually started to recover. The contraction in GDP seen in many countries, including India, was because of reduced economic activity and restricted mobility, due to COVID-19 as people curtailed discretionary spending and focused on essentials and precautionary savings due to the level of uncertainty.

The November RBI Consumer Confidence Survey showed that while consumer sentiment was higher by November, compared to July and September 2020.The pandemic affected both demand and supply, at least in the short-term. Exports and imports both declined as a result of reduced consumer and industrial demand, according to NCAER. According to the Economic Survey 20202021, the government adopted a four-pillar strategy of containment, fiscal, financial, and long-term structural reforms and the country remained a preferred investment destination in financial year 2020-21.


There were a number of positive features of the Indian economy during the year under review.

A slowdown in economic growth and inflation weakened the countrys currency rate nearly 2.83% in 2020 from INR 71.28 to INR 73.30 to a US dollar before recovering towards the close of the financial year. Despite the gloomy economic scenario, foreign direct investments (FDI) in India increased 13% to USD 57 billion in 2020.India jumped 14 places to 63 in the 2020 World Banks Ease of Doing Business ranking and was the only country in the emerging market basket that received positive FPIs of $23.6 billion in 2020; the country ranked eighth among the worlds top stock markets with a market capitalization of $2.5 trillion in 2020.The per capita income was estimated to have declined by 5% from INR 1.35 lacs in 2019-20 to INR 1.27 lacs in 2020-21, which was considered moderate in view of the extensive demand destruction in the first two quarters of 2020-21.


The prime reasons for the rise in Kraft paper prices are shortage of wastepaper in the international market (primarily the USA and Europe) which is affecting waste paper imports by India in addition to already lower supply of waste paper in the domestic market due to Covid-19 disruptions. The pandemic has also affected the usage of paper globally which is thus resulting in shortage of wastepaper creation in the international market. It is important to note that of the total paper produced in India, paper manufactured from wastepaper/recycled fiber as raw material is estimated at 58% followed by 25% and 17% from wood/bamboo and agro residue (bagasse/wheat straw), respectively. (Source: CARE Ratings Ltd)

Moreover, scarcity of containers which are used for imports is also adding to the higher costs of kraft paper manufacturers. All these factors are thus causing the prices of corrugated boxes to rise as well. Apart from this, higher exports of kraft paper from India to China amid shortage of its raw materials for domestic manufacturers are also resulting in higher prices of corrugated boxes in India. China has imposed ban on imports of waste paper since 1 January 2021 which is encouraging China to import kraft paper directly instead of waste paper.

The increase in prices of corrugated boxes however have come at a time when all the user industries may not be fully ready for such price hikes given the current situation which remains affected by the disturbances caused by Covid-19 pandemic. Such a situation may have an impact on the profitability of paper & paper products industry.


Paper Industry is a core industry that plays a vital role in the economic growth of our country. The industry is expected to grow in the range of 12-15% in the coming year due to increased economic activities. Infrastructure spending and rural growth being the focus areas of this budget — all industries like FMCG, pharma, health and hygiene are expected to grow significantly. Subsequently, more than 75% of the paper industry producing packaging paper and board is also expected to witness a high growth opportunity. Consumer awareness concerning eco-friendliness, sustainability, replacement of plastic, rise of e-commerce and growth in retail are again big boosters for the demand of packaging paper and paper board. Indian paper mills are investing and would be required to invest more in the capacity building and technology upgradation of their facilities to address the demand growth.”

The Indian paper market can be classified on the basis of raw material and application. On the basis of raw materials used, the market can be categorized into waste and recycled paper, wood and agro residue, of which the waste and recycle paper segment, is expected to grow faster owing to growing concerns about felling trees to produce pulp. On the basis of application, the market can be classified into writing and printing paper, paper board and Kraft paper for packaging and newsprint. Of this, the biggest share is accounted for by the paper board and Kraft paper packaging segment, which is expected to grow on the back of rising growth in the e-commerce sector. The growing use of paper in food packaging is also expected to strengthen off take. Writing and printing paper accounts for the second biggest share of the sector on the back of growing policy-induced literacy.


Kraft paper is a paper or paperboard that has a more high strength and high tear resistance. It is largely used in the packaging industry and is made from wood pulp or recycling materials and adding chemicals to increase its fibers strength, thickness, and durability while maintaining the light weighted property. The growing environmental concerns to use recyclable and degradable packages have led to a rise in the demand for Kraft papers. Kraft papers have a rising trend of manufacturing it through natural recycling which has though lesser strength than virgin natural craft paper, but it is more eco-friendly and still has enough strength to fill void applications. The growing packaging industry and paper industry is largely driving the growth of the global kraft paper market.

The Kraft paper market is projected to grow from USD 15.6 billion in 2019 to USD 18.7 billion by 2025, recording a CAGR of 3.0% during the forecast period. The rise in demand for Kraft paper in various end-use industries, such as food & beverages, building & construction, cosmetics & personal care automotive, and consumer durables, is a key factor that is projected to drive the growth of the Kraft paper market across the globe. In addition, factors such as rapid urbanization across regions and the recyclability feature of Kraft paper are projected to contribute to the growth of the Kraft paper market during the forecast period.

In terms of value and volume, the corrugated boxes segment is projected to lead the Kraft paper market from 2019 to 2025.

Based on packaging form, the corrugated segment is projected to dominate the Kraft paper market, in terms of value and volume, from 2019 to 2025. Corrugated boxes not only offer protection to shipped goods from damages but also offer easy handling features. The reusable and recyclable nature of corrugated boxes reduces packaging waste. This has resulted in an increased demand for corrugated boxes in various industries such as food & beverages, building & construction, clothing, freight forwarding, logistics, cosmetics & personal care, and pharmaceuticals.


The Company is deriving 99.66% of its revenue from paper business and 0.33% from other business. Environmental issues, continuous availability of raw materials & fuels and increasing interest rates are the important issues concerning the paper industry. The paper industry is one of the highly polluting categories of industries today. The Company is meeting all the norms as prescribed under Environment Protection Act, 1986 and other environmental laws consistently.


(Rs. in Lakh)

Financial Highlights 2020-21
Gross Sales 28571.77
Net Sales 28571.77
Other Income 94.89
Profit before Tax (PBT) 1013.77
Profit after Tax (PAT) 768.79
EPS (Basic & Diluted) (in Rs.) 0.30

The Company posted Net sales of Rs. 28571.77 Lakh and the Net profit after tax stands at Rs. 768.79 Lakh.


The Company has maintained a healthy capital structure as is evident from its debt to equity ratio. Irrespective of Covid-19, the Company has improved its Sales, Net Profit Ratio and Return on Net Worth as compared to last year.

S. No. Particulars March 31, 2021 March 31, 2020
1 Debtors Turnover 4.79 4.84
2 Inventory Turnover 6.34 6.88
3 Interest Coverage Ratio 7.91 6.26
4 Current Ratio 1.93 1.43
5 Debt Equity Ratio 0.11 0.15
6 Operating Profit Margin (%) 3.22% 3.38%
7 Net Profit Margin (%) 3.55% 3.38%
8 Return on Net Worth 2.77% 2.39%


Your Company has evolved a system of internal controls to ensure that the assets are safeguarded and transactions are authorized, recorded 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 compliance 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, Internal Auditors and the Cost Auditors of the Company also interact with the Audit Committee to share their findings and the status of corrective actions under implementation.


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 performance.


Statements in this "Managements Discussions 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.

As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)0) of the Act, we are also responsible for expressing our opinion on whether the company has adequate Internal Financial Controls with reference to Financial Statements in place and the operating effectiveness of such controls.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of managements use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Companys ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Company to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Materiality is the magnitude of misstatements in the Financial Statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the Financial Statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the Financial Statements.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements for the financial year ended March 31,2021 and are therefore the key audit matters. We describe these matters in our auditors report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditors Report) Order, 2016 ("the Order”) issued by the Central Government in terms of Section 143(11) of the Act, and on the basis of such checks of the books and records of the Company as we considered appropriate and according to the information and explanations given to us, we give in "Annexure 1” a statement on the matters specified in paragraphs 3 and 4 of the said Order.

2. As required by Section 143(3) of the Act, we report that:

a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books;

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement and statement of changes in equity dealt with by this Report are in agreement with the books of account.

d) In our opinion, the aforesaid financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.

e) On the basis of the written representations received from the directors as on 31st March, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2021 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls with reference to Financial Statements of the Company and the operating effectiveness of such controls, refer to our separate report in Annexure 2 to this report.

g) With respect to the other matter to be included in the Auditors Report in accordance with the requirements of section 197(16) of the Act, as amended:

In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of the Act, and

h) With respect to the other matters to be included in the Auditors Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financial position in its Financial Statements. Refer Note No. 32 to the Financial Statements;

ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.

For D Khanna & Associates
Chartered Accountants
[Deepak Khanna]
M. No. 092140
UDIN: 21092140AAAADO7871
Date: June 28, 2021
Place: Jaipur