Kushal Ltd Management Discussions.


(a) Indian Economy

The Indian economy continued to be one of the fastest growing large economies expected to register a growth of ~7% for the year under review. The principal developments during the year under review comprised stabilization of GST, sustained increase in per capita income, decline in inflation, steadying interest rates, and good growth in GDP for the first 3 quarters. However, consumer sentiment started weakening from the 4th quarter on account of a large non-banking financial company announcing its inability to address liabilities. This affected credit expansion, financial markets and consumer sentiment, which resulted in a slower than expected GDP growth in the 4th quarter.

The reduction in interest rates by the Reserve Bank of India is aimed at boosting the economy. IMD has also forecasted a near-normal monsoon. One can therefore look forward to a revival in Indias growth momentum riding on continued investment in education sector and infrastructure building.

Assuming no major global and domestic political shocks, India is expected to grow at 7.1% in FY19-20.

Industry structure and developments:

The Indian paper industry accounts for about 3.7% of the worlds production of paper. The estimated turnover of the industry is INR 60,000 crores (USD 8.5 billion approximately) and its contribution to the exchequer is around INR 4,500 crores. The industry provides employment to more than 0.5 million people directly and 1.5 million people indirectly. Paper Industry in India is moving up with a strong demand push and in expansion mode to meet the projected demand of 20 million tonnes by 2020.

Thus paper industry in India is on the growth trajectory and is expected to touch 8.5% GDP in the coming years. Therefore, the growth of industry will exceed the present rate of 6.5%. Inspite of the sustained growth witnessed by the industry, the per capita paper consumption in India stands at a little over 13 kg which is well below the global average of 57 kg.

The demand drivers include 1) rising income levels,

2) growing per capita expenditure, 3) a likely pick-up from the education sector, 4) requirement of better quality packaging of FMCG products marketed through organised retail, and 5) increasing preference for ready-to-eat foods. On the other hand, challenges include 1) access to quality and cost competitive raw material whose prices have started increasing recently, 2) competition from imports and 3) technology obsolescence.

(b) Opportunities and Threats

The company has now adequate infrastructure facilities such as huge spare land and uninterrupted supply of water and power which is critical for the paper industry by acquiring M/s Rainbow Papers Limited under Insolvency and Bankruptcy Code,

2016 and amalgamating four sister concern companies. The company has the flexibility to manufacture various grades of paper, which gives the company, a distinct quality edge. With the current Global scenario, Export potential has opened up significantly and your company has been scaling up its marketing network to tap this potential. The company continues to face challenges on account of increasing competition. Devaluation of rupee leading to increase in cost of imports. Your company is committed to meet these challenges by improving productivity and innovating processes to achieve reduction in production cost. The capital investment being made for increasing production capacities would also help your company in maintaining its cost leadership.

(c) Segment–wise performance :

As on 31st March, 2019, the company had Three Wholly Owned Subsidiaries operating from Singapore,

Ajman and Malaysia. The Segment wise performance of the Company along with its subsidiaries is as follows:



Ajman, U.A.E.


Segment revenue
a) Segment revenue from sales to external customers and 36121.59 7597.62 46243.18
0.00 0.00 0.00
b) Segment revenue from transactions with other segments;
Segment result 2059.44 3732.30 63.54
Total carrying amount of segment assets 188410.72 27747.99 1939.79
Total amount of segment liabilities 59792.44 103.51 597.38
Total cost incurred during the period to acquire segment assets that are expected to be used during more than one period (tangible and intangible fixed assets) NIL NIL NIL
Total amount of expense included in the segment result for depreciation and amortisation in respect of segment assets for the period NIL NIL NIL
Total amount of significant non-cash expenses, other than depreciation and amortisation in respect of segment assets that were included in segment expense and, therefore, deducted in measuring segment result. NIL NIL NIL

(d) Outlook:

The Indian economy is slated to grow at a healthy 7.3% in the fiscal year 2018-19. As per a report by

World Bank, the slow but steady improvement in size of the Indian economy is likely to continue in

2019-20. Your Company will continue to move on its path of sustained growth through differentiated product offerings and providing great service to its customers.

(e) Risk and concerns:

Risk is associated with every kind of business. There are risks and concerns such as less-favoured environmental policies, market risks, increasing input cost, competition from imports, foreign exchange fluctuations etc. State government degraded forest land should be made available to the Industry for raising plantations. Import duty on waste paper should be reduced, duty free imports of new and second hand machinery, equipment should be allowed for technology up gradation. Your company regularly identifies the risks and undertakes appropriate measures to mitigate risk through risk identification and management.

(f) Internal control systems and their adequacy: The company views internal control as a tool for improving operational performance and ensuring reliability of reporting mechanism. The company is equipped with adequate internal control systems for its business operations which determine the efficiency of its operational strengths in financial reporting and ensure compliance with applicable laws and regulations. The company continuously monitors the effectiveness of the internal controls with an objective to provide to the audit committee and the board of directors, an independent, objective and reasonable assurance on the adequacy and effectiveness of the organizations risk management, control and governance processes. The company also assesses opportunities for improvement in business processes, systems and controls to add value to the organization and follows up on the implementation of corrective actions and improvements in business processes after review by the audit committee and the senior management. The internal control systems are supplemented by extensive audits conducted by the internal auditors. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorized use or losses, executing transactions with proper authorization and ensuring compliance of corporate policies.

(g) Discussion on financial performance with respect to operational performance.

Financial Performance of the Company and group companies is not satisfactory, however Company is continuously focusing to diversify its business to maximize portability which result into maximize shareholders wealth.

Financial Overview

The analysis of the consolidated financial statements for the year is as follows:


Total Income for the year ended March 31, 2019 was 89962.39 Lakhs as compared to 233793.05 in the previous year.

Employee Benefit Expenses

The employee benefit expenses increased from 246.46 Lakhs in FY 2017-18 to 933.38 Lakhs in

FY 2018-19

Depreciation & Amortisation Expenses

Depreciation charge for the year increased to 746.53

Lakhs as compared to 57.83 in the previous year.

Exceptional Items

There were no exceptional items for the year

Other Expenses

Other Expenses include Insurance premium, Audit Fees, Electricity fees, Municipal expenses, rent and other administrative expenses which stood at 9865.71 Lakhs in FY 2018-19 as compared to 912.57 Lakhs in FY 2017-18

(b). Balance sheet

Shareholders funds increased from 33647.43 Lakhs in FY 2017-18 to 160605.18 Lakhs in FY 2018-19.

There is Change in Equity Share Capital pursuant to scheme of Amalgamation of Kushal Wealth Creators Private Limited, Kushal Infrastructure Private Limited, Ashapura Paper Mills Private Limited and Riddhi Siddhi Recyclers Private Limited with Kushal Limited.

Non-Current Liabilities

The balance under this head increased from 2009.26 Lakhs in FY 2017-18 to 25668.68 Lakhs in FY 2018-19.

Current Liabilities

The balance under this head declined from 54773.31 Lakhs in FY 2017-18 to 31824.65 Lakhs in FY 2018-19.

Fixed Assets

Fixed assets increased to 150608.11 Lakhs in FY 2018-19 as compared to 1417.33 Lakhs in FY


Current Assets

The Balance under this head declined from 85242.64 Lakhs in FY 2017-18 to 54254.84 Lakhs in FY 2018-19.

(h) Other Material Disclosures

The promoters and registered office of the Company had been searched by Income Tax Department on 5th February, 2019. The IT Department investigated accounting records to identify the extent of financial irregularities. Pursuant to this investigation conducted by the officers of Income Tax Department, various documents relating to period affected were seized.

CGST office pursuant to investigation, visited the registered office of the company on April 01, 2019. Pursuant to part of investigation, Chairman and Managing Director of the Company Mr. Sandeep Agrawal was detained on 1st April, 2019 under section 132 of CGST Act alleging the wrong GST input credit. Mr. Sandeep Agrawal was released on bail on June 01, 2019 due to non-filling of charge sheet by the officers of CGST Department. Both the proceedings are pending for disposal.

As per Resolution Plan approved by Honble NCLT,

Ahmedabad Bench, the company has to pay 350 Crores in cash component. The Company also requires huge amount of fund for overhauling of machineries of Rainbow papers Limited, capital expenditure and additional working capital. Therefore, the company is exploring various avenues presently. If it is not tied up, that will have adverse impact on the operations/performance of the Company.

(i) Material developments in Human Resources / Industrial Relations front, including number of people employed.

Employees are vital and valuable assets for any organization. They have always been part of success stories experienced by the organizations. The company recognizes people as the primary source of its competitiveness and continues to focus on people development by leveraging technology and developing a continuously learning human resource base to unleash their potential and fulfil their aspirations. It believes in creating a favourable work environment which can lead to innovative ideas. The company has an optimum process of recruitment and awarding its human resource which leads to attraction and retention of productive individuals in the organization. The Company believes in offering full opportunity for growth to employees demonstrating positive attitude and initiative to accept challenge and responsibility. The total number of employees in the company stands at 38 as at March 31, 2019.

(j) Cautionary Statement

Statements in this Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. The Companys actual results, achievement might differ materially from those projected in any such forward looking statement.

For and on Behalf of the Board

Sandeep Agrawal
(Chairman and Managing Director)
(DIN: 00239648)
Place: Ahmedabad
Date: September 02, 2019