Jasch Industries Ltd Management Discussions

MANAGEMENT DISCUSSION & ANALYSIS REPORT

(PURSUANT TO REGULATION 34(2) OF THE LISTING REGULATIONS)

DISCLAIMER / CAUTIONARY STATEMENT

Statement in this Report, which describe the companys plans, projections, estimates, expectations or predictions, are based on certain assumptions and expectations of future events which may or may not happen at all or as expected. Therefore, actual results could di er materially from those expressed/ implied and the company cannot guarantee that these will be realized. Important factor that could make a di erence to the companys operations includeraw material availability and prices, cyclical demand and pricing in the companys principal markets, change in the government regulations, tax regime, politico-economic conditions within India and the countries in which the company conducts business and other incidental factors. The law does not require the Company or the Directors to update or otherwise revise any statements reflecting circumstances arising after the date hereof or to reflect the occurrence of underlying events, even if the underlying assumptions do not come to fruition.

PRODUCT INTRODUCTION

Jasch industries Ltd manufactures PU/PVC Coated Fabrics (also known as synthetic Leather or Arti cial Leather) and Polyurethane Resin. The current major business segment and their product applications are as follows:

Business Segment 01: - PU Coated Fabrics & Allied Products: Business Segment 02: - PVC Coated Fabrics & Allied Products:

PU/PVC Coated fabrics and PU resin are mostly used in footwear industry (as raw material for shoe upper, shoe-line, shoe-insole, chappal, sandal straps, etc), in garment industry (as lining material) and in automobiles (as seat covers). These are also used in furniture upholstery material, ladies and gents purses, bags, luggage and also in the manufacture of sports goods & accessories. PU coated fabrics are light-weight and high-value addition products as compared to PVC coated fabrics. Different raw materials are used for these segments.

BUSINESS DISTRIBUTION

Business distribution of these segments is as under:

(Value is in Rs. lakh)

	2024-2025		2023-2024
Business Distribution	Value	Percentage	Value	Percentage
PU Coated Fabrics & Allied Products.	10265.33	55.59	10168.44	59.01
PVC Coated Fabrics & Allied Products	8200.55	44.41	7062.87	40.99
Total	18466.08	100	17231.31	100

INDUSTRY STRUCTURE AND DEVELOPMENT

Synthetic Leather Industry in India is mostly in small and medium scale sector and somewhat concentrated in Northern India and Western India. It has not been able to achieve its full potential due to tough competition from imported material from China, wherethere are very large units enjoying bene ts of economies of scale and availability of local raw material and labour at very competitive price.

Your company has been able to withstand competition, both domestic and from abroad, as it is also an integrated player with in-house manufacturing facility for PU Resin, which is the main raw material for PU coated Fabrics. Besides captive consumption of PU resin, the Company also sells surplus PU Resin to outside parties for adhesive & coating applications. Further, the company is continuously upgrading its technology and modernizing plant & machinery to maintain competitive edge in the market.

The Company is in the process of setting up its Unit-2 in village Bhigan, Distt. Sonipat (Haryana), land for which has been acquired and plant and machinery has been imported.

OPPORTUNITIES AND THREATS

Development of new types of high quality PU resins and coated fabric, particularly breathable ones, presents fresh opportunities in automotive sector and some other sectors, because there is less competition in these elds. Obsolescence of technology of coated fabrics poses a threat but through in-house R&D and foreign technical expertise, the company is continuously upgrading its technology. Most of Synthetic Leather Units in India manufacture only PVC Leather and Jasch Industries Limited is the only signi cant manufacturer of PU Synthetic Leather. There are also fresh opportunities in the automative sector.

FINANCIAL RATIOS

As required under Regulation 34(3) of Listing Regulations read with para B.1 of Schedule V thereof, changes in financial ratios in the nancial year 2024-25, as compared with those of the immediately preceding nancial year are given in Note 37(14) to Standalone Financial Statements and the same may kindly be read as a part of this Report.

SEGMENT WISE PERFORMANCE

During the year under Report, the segment wise performance of the company had been as follows: (Unless speci cally stated otherwise, the gures are Rs. lakh) A. PU COATED FABRICS & Allied Products.

	2024-25	2023-24
Production (lakh meter)	22.56	21.11
Segment Revenue	8200.55	7062.86
Segment pro ts/(loss) before interest and other common un-allocable expenditure	470.96	577.17
Segment assets	5138.29	4134.97
B. PVC COATED FABRICS & Allied Products.
	2024-25	2023-24
Production (lakh meter)	71.39	67.91
Segment Revenue	10265.53	10168.44
Segment pro ts/(loss) before interest and other common un-allocable expenditure	663.11	735.73
Segment assets	5815.04	4421.53

OUTLOOK

The Company is continuously upgrading its technology and modernizing plant & machinery to maintain competitive edge in the market. The Company has entered into a royalty-based technical licensing knowhow agreement with a foreign Company for production of PU resins and PU Tapes for fastener and seam tape application. Royalty is based on revenue generated from these products. In PVC segment, the Company has engaged experienced professionals as consultants to advise the Company on making better quality products with lower breakdown and rejection. However, the constantly erratic prices of petroleum based raw materials and the mandate of law to use only piped natural gas as fuel (which is nearly three-times costlier than the conventional fuel) in the factories located in the National Capital Region, have significantly eroded Companys profits. Inspite of the on-going tariff war and hostilities at the border, the management hopes that it will be able to do better in the financial year 2025-26.

RISKS AND CONCERNS

Risk is an integral part of any business and Jasch Industries Ltd is no exception. A brief evaluation of business risk, as perceived by the management, is as under:

1. Business Risk

A. User Industry concentration

PVC /PU Synthetic Leather is used across a wide spectrum of industries. The companys products are mostly used in footwear industry. Therefore, the fortunes of the company are invariably inter linked with those of footwear Industry. Any downward trend in footwear Industry may result in signi cant impact on the company. With vigorous e orts, the Company has been able to diversify usage of its products in other industries such as automobile & general purpose upholstery, sports goods and garment industries to the extent of 40%.

B. Commodity Risk

About 65% raw materials (comprising of Dioctyl Phthalate, Dimethylformamide, PVC resin, man-made fabrics, pigments, etc) used by the Company are petroleum-based products. Any increase in the international crude-oil price may adversely a ect the prices of petroleum-based raw materials, thereby increasing the cost of production. Therefore when, say after three months, the e ect of increase in crude oil price is visible on the petroleum-based raw materials, all the sellers of synthetic leather/PU resin in the market, try to increase prices to pass on this burden to the customers and the Company also follows suit. The Company does not enter into any long term contracts either with suppliers of raw materials or with the buyer of nished goods. Therefore, the only commodity risk the Company assumes in this segment, relates to less than 15 days orders in hand, which is not material.

C. Competition Risk

Your Company faces significant competition from a number of entities, some of which are large and have substantially greater resources than us including longer operating histories, better brand recognition, greater financial resources, more advanced technology, better research and development capabilities, greater market penetration, larger distribution networks, etc. We also face competition from cheaper imports and smaller entities who may compete effectively against us in a particular region based on price, size and established regional trust with the local customers. If we do not compete in these areas effectively, this could lead to a decrease in our market share, experience downward pressure on prices and an increase in our marketing and other expenses.

D. Litigation risk

Inspite of best efforts to remain within the framework of law, there is a risk that your Company, its Directors, Promoters and Officers may inadvertently get involved in legal and regulatory proceedings. Any adverse decision in such proceedings may have a material adverse effect on our business, financial condition, cash flows and results of operations.

E. Cybercrime Risk

The cyber threat landscape is vast and continuously evolving. Cybercriminals are discovering new approaches to take advantage of vulnerabilities as technology evolves. Inspite of using complex passwords and time-based OTPs, installing latest anti-virus/anti-malware/security patch, etc, the cyber criminals may still be one step ahead.

E. Customer & Geographical concentration

Excessive exposure to a few large clients has the potential to adversely a ect the sales and pro tability in view of failure/shift of clients to other manufactures. Fortunately, the companys customers are fairly spread out across the country and further e orts are underway to enlarge presence in eastern and southern markets in India.

F. Technological Obsolescence

Right from the beginning, the company has been engaged in its own research & development activity with a view to improve upon/ modify the process and product to suit Indian tropical conditions and usage practices. Over the years, the company has been able to develop many new processes/applications. A few years ago, the company had entered into technical collaboration agreement with Duksung Company Ltd., Korea. This collaboration had been quite successful in updating technology and development of new products and saving in cost of inputs.

2. Financial Risk

(A) Currency Fluctuation Risk

The currency risk emerges from the downward uctuation in foreign currency. The Companys foreign exchange spending by way of import of raw materials and consumables is given in a separate paragraph dedicated to Foreign Exchange Earnings and Outgo. The companys foreign currency transactions are on current account basis and there are no deferred liabilities in terms of foreign exchange except amount due in respect of raw material imported on deferred payment basis after 31st March 2025 and to be paid later.

(B) Interest and Leverage Risk

Increase in bank interest rate impacts the pro tability of the company because this increase cannot always be passed on to customer. The management tries to contain interest cost by e cient management of inventory and working capital resources.

(C) Force Majeure & Act of God

Unforeseen natural or man-made calamities may have a signi cant nancial bearing on the operation of the Company.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY Internal Control Systems

In order to safeguard the assets and their usage, maintenance of proper accounting record and provision of reliable data for taking business decisions, the management has put in place various internal control system. Broadly, these systems are entity level controls, nancial controls andoperational controls. The internal controls provided by this system are authority and organization matrix, standard operating procedures, risk management practices, compliance framework within the organization, ethics and fraud risk management, management information system, self assessment of control point, business continuity and disaster recovery planning, budgeting system, etc.

Adequacy and Key elements of the Internal Control Systems

The Audit Committee of the company, all of whose members are Independent Directors, has reviewed the aforesaid internal control systems and found the same to be adequate and commensurate with the nature, size, complexity and the business processes followed by the Company.

The Company has appointed a firm of Chartered Accountants as internal auditors to ensure compliance and e ectiveness of the internal control systems prevalent in the company. The Audit Committee reviews the Internal Audit Reports. Additionally, the Audit Committee approves all the audit plans and reports for any issues raised by the internal and statutory auditors. Regular reports on the business development, future plans and projections are given to the Board of Directors. Internal Audit Reports are regularly circulated for the perusal of the senior management for appropriate action as required.

Normal foreseeable risks of the Companys assets are adequately covered by comprehensive insurance and are supplement by periodic risk assessments, inspections and safety conducted by the Company.

DISCUSSION ON FINANCIAL AND OPERATIONAL PERFORMANCE: Please refer to first paragraph of Directors Report.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT & NUMBER OF PEOPLE EMPLOYED

The Company treats its human resources as one of its most important assets. The Company continuously invests in attraction, retention and development of talent on an ongoing basis. The welfare activities of the Company speci cally dedicated to its employees include free emergency medical care, subsidized group health insurance, subsidized canteen facilities and need-based soft loans. To enrich the skills of employees, the Company conducts focused training programs. The Company did not have any labor problem during the year under report. Relations with worker and sta were cordial. There were no material developments in human resources/industrial relations front. There were 167 people on rolls of the Company as on 31-03-2025.

Place: Sonipat	For & on Behalf of Board
Date: 20th May 2025	Jai Kishan Garg
	Chairman