Orient Press Ltd Management Discussions.

1. Introduction-Global Economy:

The Company is involved in manufacturing activities comprising printing of capital market stationery, commercial printing such as text books, annual reports etc., security printing like MICR cheques, dividend warrants, shares and debenture certificates, railway tickets and coupons, computer stationery, telephone cards (scratch cards), smart cards, recharge coupons and note books etc. The Company is also engaged in packaging activities which include flexible packaging material of multi-layer laminates, paper board mono cartons, liner carton, display cartons, rigid boxes and outer corrugated boxes etc.

The Company has earned Profit before- tax ofRs. 94.16 Lakhs as compared to Rs. 572.27 Lakhs in the previous year.

The decrease in profit is attributed to increase in fixed and finance cost of the Company.

2. Review of Operations

The Gross Turnover of the Company was lower at Rs. 22,393.93 Lakhs for the year as against Rs. 22,611.91 Lakhs in the previous year, registering an decrease of 0.96%.

The Gross Turnover of different divisions of the Company was as under:

Division Current Year Previous Year
Printing Division 72.06 88.20
Flexible Packaging Division 120.77 105.98
Paper Board Carton Division 31.11 31.94

3. Segment Wise Performance

The Business of Company falls under three Segments viz.

(a) Printing (b) Flexible Packaging ( c) Paper Board Packaging

(a) Printing Division

The Gross turnover of Printing Division of the Company has decreased by 18.30% compared to the previous year. In the current year turnover of this division should improve.

(b) Flexible Packaging Division: The Gross turnover of Flexible Packaging Division of the Company has increased by 13.96% compared to the previous year. In the current year turnover of this division should improve further.

(c) Paper Board Carton Division: The Gross turnover of the Paper Board Carton Division of the Company has decreased by 2.60% compared to previous year. The division was operated below of its production capacity due to severe competition from the unorganized sector and un-remunerative selling price. In the current year turnover of this division should improve. The Company is keenly interested in inducting new technology aimed at upgrading its existing facilities to remain as one of the leading players in the printing and packaging industry. The Companys main thrust now is in paper and paper board related printing and packaging business to safeguard its business interest against any government legislation to curb plastic related packaging on the grounds of environmental pollution. The Company is committed to promote eco-friendly packaging for which it has installed automatic Board to Kraft fluting Lamination Machines. All these machineries and equipments will help the Company to enhance film its business opportunity in value added printing and packaging sector and in export market.

4. Future Prospects / Outlook

The present scenario of the printing industry is fragmented . and is dominated by a few big players. The printing and cost packaging industry has lately improved after receiving initial shock of financial crisis in the year 2008-09. There is strong belief that this business improvement will sustain in the future too. The printing and packaging industry is a service provider and it is co-related with the GDP growth of the country as well as the growth of countrys educational of sector. Since the GDP growth of the country is pegged at 7%, it provides a lot of encouragement for growth of printing and packaging industry. In the present business scenario and with robust GDP growth, the Company is expecting 10% to 15% growth in its business, at least, for next three years. Besides, Indias printing and packaging industry has upgraded to international standard in the last five years and thus provides a lot of export business opportunities for the sector. India is gradually establishing itself as a business sourcing hub for developed countries in printing and packaging materials. Initially, it was China and now India is competing with that country in this sector.

Today, the printing and packaging industry export growth is significant is constantly upgrading its technology to cater to this market and we expect that in three years our 20% to 25% earnings will be from the export sector which today stands at 14.92%. Your company is upgrading its technology to cater to this market. Your Company has also received the "Export House" status from the Govt. of India for its consistent export performance.

5. Industry Structure

Though the printing and packaging industry is one of the biggest employers in the country, the nature of the industry is not organized and it has not been termed as an "Unorganized Industry" by the Government of India. The number of players in our industry is close to 1,30,000 units ranging widely from the highly organized sector to a very small proprietary units. Due to this diversified of the industry, growth and profitability are affected by unhealthy competition.

The packaging industry enjoys continuous growth in demand year after year, necessitating large investments for technology up-gradation and automation of manual operations. However fragmented nature of the industry, consequent unhealthy competition put pressures on margins, increasing payback periods for investments. As demand from the larger customers is consistently increasing, it is expected the organized segment will secure larger market share and better margins.

6. Opportunities and Threats

(a) Opportunities

Scenario for future opportunities is bright. In the case of printing segment, the enactment of RIGHT TOEDUCATION, by the Parliament, much larger and increasing allocation of budgetary resources by the Central and State Governments, demand for text books and note books is robust. With government change at center, activities in financial sector increased and in turn this should help to revive market.

Government is determined to introduce new legislation to curb food adulteration and enforce higher standards of safe and hygienic packaging. This will result in greater opportunities for the entire packaging industry. Your Company is geared up to meet this challenge and is planning to expand its production capacity in the packaging field to capitalize on this new business opportunity.

(b) Threats

Uncertainty regarding new policies or rules to be enforced for use of plastics in packaging and their impact on the pattern of demand for various types of packaging. The prices of raw materials are becoming unstable, and it may result in increase in the cost of production, thereby compelling the Company to re-align the prices in order tomanage the risk.

7. Risks and Concern

Adverse or sudden changes in policies of environmental protection affecting use of plastics in packaging, international market conditions for petrochemicals affecting raw material prices and unstable demand scenario affecting export volumes and realizations are risk factors which can impact growth and profitability of the industry and your Company.

8. Internal Control Systems and their adequacy

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined in the Internal Audit Manual. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Chairman & Managing Director of the Company. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

9. Material Developments in Human Resources /Industrial Relations Front

Directly/indirectly your Company is providing employment to more than 500 persons at various levels at its factories and the Corporate Office. Its industrial relations continue to remain cordial.