Proventus Agrocom Ltd Management Discussions

Global Economy

In the year 2022, the global economy saw a growth rate of 3.4%, which was a bit slower compared to the significant rebound of 6.2% witnessed in the previous year following the impact of the COVID-19 pandemic. Remarkably, this growth rate matched the average rate of growth observed in the years prior to the pandemic (from 2015 to 2019), which was 3.4%. This achievement occurred despite facing challenges such as the Russia-Ukraine conflict and the aggressive measures taken by central banks to raise interest rates.

The wealthier nations, categorized as advanced economies (AEs), experienced a growth rate of 2.7% in 2022. This was notably higher than the average growth rate of 2.1% that had been recorded in the five years leading up to the pandemic. The driving force behind this growth was the impressive expansion of both the United States and the Euro area, which achieved growth rates of 2.1% and 3.5% respectively. However, these countries were grappling with the issue of high inflation. In the United States, prices rose by 8% compared to the previous year, reaching levels not seen since the 1980s. Similarly, the Euro area experienced inflation of 8.4%, marking a significant inflationary trend. To tackle this, central banks in developed countries like the US and Europe made the strategic move of increasing interest rates substantially - by 450 basis points and 250 basis points respectively.

Conversely, the growth of emerging market and developing economies (EMDEs) was at 4% for the year 2022. Although this was slightly lower than the pre-pandemic average growth rate of 4.4%, this difference was due to Chinas economy encountering slowdowns caused by frequent lockdowns. Chinas growth rate dipped to 3%, a significant decrease from the pre-pandemic average of 6.7%. This could be attributed to Chinas continuous efforts to manage the ongoing COVID-19 situation and the challenges faced by their housing market.

Looking forward to the financial year 2023, crude oil prices remained relatively high, averaging around $93 per barrel. These prices stayed above the $100 per barrel mark during the first half of the year due to the ongoing conflict between Russia and Ukraine. However, the situation changed in the second half of the year as Chinas demand for oil decreased and strategic petroleum reserves were released by OECD countries.

Anticipating the future, global growth is projected to slow down to 2.8% in the year 2023. This slowdown is primarily a consequence of the delayed effects stemming from the coordinated efforts of central banks around the world to raise interest rates. The growth of advanced economies is expected to decrease to 1.3%, with the United States and the Euro area projected to grow at rates of 1.6% and 0.8% respectively. A major concern for these advanced economies is the potential impact of the rapid series of interest rate hikes over the past year, coupled with potential risks arising from credit shortages in regional banks in the United States.

On the other hand, emerging markets are anticipated to maintain a growth rate close to the pre-pandemic average, hovering around 3.9% in the year 2023. This projection is supported by strong performances expected in both India and China. Chinas growth is predicted to rebound to 5.2% in 2023, bouncing back from the 3% growth seen in the previous year. This anticipated rebound is attributed to Chinas plans to reopen its economy after a three-year period and the continued support received from its monetary policies. Similarly, India is also expected to be a prominent performer among the fastest-growing economies, as indicated by the projections of the International Monetary Fund (IMF).

The Indian Economy

In the face of diminishing global demand and the implementation of tighter monetary policies to manage inflation, India is poised to secure its position as the second-fastest growing economy within the G20 for the fiscal year 2022-23. Impressively, the Indian economy showcased significant progress towards a complete recovery in FY22, surpassing several other nations. It is strategically positioning itself to regain the growth trajectory observed prior to the pandemic, a trend anticipated to materialize in FY23.

An astounding surge in economic expansion during the initial quarter of FY 2022-23 propelled India beyond the United Kingdom, elevating it to the rank of the worlds fifth-largest economy. This remarkable ascent followed a resilient response to successive waves of the COVID-19 pandemic.

India deftly confronted the challenge of inflation, a concern further amplified by turmoil in Europe. Through a combination of governmental initiatives and measures undertaken by the Reserve Bank of India (RBI), alongside the relief of global commodity prices, the nation succeeded in curtailing retail inflation, effectively aligning it below the upper tolerance target set by the RBI. Despite persistent concerns about the depreciating Rupee, it has demonstrated relatively stronger performance compared to several other currencies. Another challenge arises from the potential reduction of export incentives, linked to the contraction of global market dimensions spurred by a deceleration in worldwide trade and economic growth.

Despite these hurdles, international agencies continue to project India as the most rapidly advancing major economy, foreseeing a growth rate of 6.5-7.0 percent for FY23. This optimistic growth projection stems, in part, from the resilient character of the Indian economy. This resilience is evident in the seamless shift of private consumption as the primary growth driver, effectively taking over from export stimuli. The revival of private consumption has simultaneously revitalized production activities, thereby boosting capacity utilization across various sectors.

This revival in consumption is attributed to the extensive coverage achieved through vaccination efforts. A resurgence in public mobility has led to increased spending on services requiring interpersonal contact, including dining establishments, lodging facilities, shopping complexes, cinemas, and various other venues.

INDUSTRY OVERVIEW Indian Packaged F&B industry:

Market Size and Growth: The Indian packaged F&B industry is one of the largest and fastest-growing sectors of the Indian economy. The industry encompasses a wide range of products, including processed foods, beverages, snacks, dairy products, ready-to-eat meals, and more. Rising incomes, changing lifestyles, urbanization, and increased consumer awareness have been driving the demand for packaged F&B products.

Consumer Trends: The industry has been witnessing shifts in consumer preferences and behaviors. Health and wellness concerns, convenience, and premiumization have become important factors influencing purchasing decisions. There is a growing demand for healthier and natural products, organic and gluten-free options, and products with reduced sugar and additives.

Innovation and Product Diversification: Companies in the packaged F&B industry are continually innovating and diversifying their product offerings to cater to evolving consumer demands. This includes introducing new flavors, formats, and packaging designs.

E-Commerce and Digitalization: The rise of

e-commerce and digital platforms has transformed the way consumers purchase packaged F&B products. Online grocery shopping and food delivery services have gained significant traction, especially in urban areas.

India has more than 800 successful direct-to-consumer (D2C) brands3, many of which have played a crucial role in educating consumers about health and wellness. These companies have helped alter daily habits and encourage wellness as a routine rather than a one-time occurrence.

In recent years, Indian consumers have consumed vast amounts of content on the internet, including through social media platforms. D2C companies have been at the forefront of educating consumers through these channels, providing valuable information and insights on health and wellness.

Government Initiatives and Regulations: The Indian government has introduced various initiatives to promote food safety, hygiene, and quality standards. The Food Safety and Standards Authority of India (FSSAI) regulates and monitors the safety and quality of packaged F&B products.

Supply Chain and Logistics: Efficient supply chain and distribution networks are crucial for the packaged F&B industry. Cold chain infrastructure is particularly important for preserving the quality of perishable products.

Competitive Landscape: The industry is highly competitive, with both domestic and international players vying for market share. Major Indian conglomerates and multinational corporations have a significant presence in the market.

Key Insights into the Indian Snack Industry

The Indian snack food market boasts an estimated valuation of US$ 6.6 billion, and its upward trajectory is characterized by a Compound Annual Growth Rate (CAGR) of 6.3%.

Between 2022 and a projected 2027, the industry is set to experience growth percentages of 20.2%, 11.6%, and 10.4%.

Agriculture and allied sectors contribute significantly to the nations Gross Value Added (GVA), occupying a share of 64% in the total economy.

The snack industry plays a substantial role in employment, contributing to 71% of the total workforce.

Indias exports are fueled by this sector, representing an impressive 85% share.

Notably, a striking 64% of consumers express a preference for consuming multiple small meals throughout the day rather than a few larger ones.

Globally, a significant portion of consumers, amounting to 71%, indulge in snacking at least twice daily.

Consumer purchasing decisions regarding Ready-to-Eat (RTE) snacks are markedly influenced by brand recognition, packaging quality, and nutritional value.

These insights collectively underscore the thriving nature of the Indian snack industry, where consumer habits, cultural practices, and market dynamics converge to foster robust growth and innovation.

Changing Consumer Patterns in Snacking

Consumers are increasingly favoring snacks as substitutes for traditional meals, a trend evident across all three conventional meal periods. The shift towards snacking has led to a significant surge in the frequency of snack consumption during standard meal times.

This evolving preference for snacks over main meals has resulted in a noteworthy uptick in the number of individuals who have "skipped at least one main meal." In 2021, this figure reached 40% of consumers, marking a distinct increase from the 30% reported in 2013. Its worth highlighting that breakfast emerges as the most commonly skipped meal.

Additionally, over 55% of respondents reveal that their households regularly assemble meals from snacks, at a frequency of at least once a week. This culinary practice is particularly driven by members of Generation Z (aged 16 to 24) and slightly older millennials (aged 25 to 34), with a particular emphasis on women within these age groups, contributing to the overall growth in snacking habits.

BUSINESS OVERVIEW: Proventus Agrocom Limited Proventus Agrocom Limited is an all-encompassing health food brand that offers a wide array of dried fruits, nuts, seeds, berries, and nutritious snack options across the entire value chain. Our strategic approach revolves around diversification across various product categories while establishing a firm presence along the entire value chain, positioning ourselves as a convenient "one-stop shop" for our diverse consumer base.

At Proventus, we are guided by a mission to excel in crafting health-conscious food items, generating revenue streams through a seamless integration spanning from sourcing to distribution. Our core aim is to construct a unified business model that encompasses the entire journey from agricultural origin to end-user households. A central pillar of our approach involves harnessing the dynamics of supply and demand through the establishment of a robust sourcing and distribution network.

In the Indian market, a significant void exists in the realm of "healthy snacking," particularly within the domain of dried fruits, nuts, seeds, and berries. Recent years have witnessed a marked shift in consumer preferences, transitioning from unbranded or unpackaged goods to branded products, even reaching Tier 2 urban centers and local grocery stores. As discerning consumers increasingly gravitate towards premium, reliable brands that offer imaginative products ranging from natural to delightfully flavored healthful snacks, ProV positions itself as a stalwart contender. With a diverse collection of wholesome snacks within the dried fruits, nuts, seeds, and berries category, ProV aspires to etch a lasting impression as the go-to choice for nut or dried fruit purchases. With widespread distribution and ready accessibility across India, ProV aims to become the leading brand that instantly comes to mind whenever the craving for nourishing snacks arises.

Offering a Selection of Premium Dried Fruit Snacks from Across the Globe

• Extensive Global Access: Our well-established connections grant us access to the finest dried fruits from around the world.

• Efficient Back-End Channels: Supported by highly efficient back-end channels and distribution networks.

• Health-Conscious Variety: We offer a health-conscious snack brand featuring a diverse range of flavors.

• Catering to the Lifestyle-Aware: Focused on meeting the demands of the growing lifestyle-aware consumer base.

• Agricultural Expertise: We bring collective experience of over a century in agricultural supply chain management.

• Steady Revenue: We maintain an average monthly brand revenue of approximately 17.5 Crores in the Fiscal Year 2023.

Proven Value: Diverse Nationwide Presence

• Established Across States: Proventus is established in over 20 states, with a strong concentration in southern regions.

• Expansive Catalog: Boasting a catalog of more than 100 product variants across 6 sub-brands.

• Global Collaborations: Collaborating with over 40 international suppliers, sourcing from 5 or more countries globally.

• Accessible Across India: Widely available across India through traditional retail, e-commerce, and general stores.

Proven Value: Guiding Principles

• Quality and Price: Offering the right quality at the right prices.

• Partnership: Nurturing long-term partnerships.

• Integrity: Upholding integrity and trust as cornerstones.

OUTLOOK: Changing Perceptions of Quality and Price in the Indian Consumer Landscape

The paradigm that Indians are hesitant to invest in superior quality ingredients for their food and consumables is being swiftly debunked. This transformation in perception is particularly pronounced amid growing health consciousness. As health becomes a core consideration for Indians, there is an increasing willingness to allocate resources to food and beverages made from premium ingredients that are perceived as nourishing and health-beneficial. This shift is underscored by a notable increase in the willingness to pay a premium of up to 80% for products deemed healthier. This shift reflects a departure from previous norms, indicating a rising appetite for healthful and nutritionally advantageous edibles. Furthermore, this change is substantiated by a separate study revealing that Indian consumers rank among the worlds most health-aware segments. Remarkably, 40% of respondents express their willingness to invest more for food products that offer enhanced health benefits and superior nutritional value. This percentage notably surpasses the global average of 29% among international consumers. This trend signals an increasing demand for food and beverage choices that eschew artificial constituents, preservatives, and other harmful additives.

Aligned with these shifting preferences, the health-focused Food and Beverage (F&B) sector in India is gaining significant ground, projected to become a USD 30 billion industry by 2026, showcasing a remarkable 20% Compound Annual Growth Rate (CAGR). This impressive ascent is fueled by the growing awareness of the manifold benefits of organic food, combined with rising disposable incomes and evolving consumer preferences.

PERFORMANCE REVIEW

Total Revenue: Proventus Agrocom Limited (ProV)

We are delighted to report a robust performance for the year ended March 2023. Proventus Agrocom Limited has posted a consolidated Profit After Tax (PAT) of INR 367.18 lakhs, marking a remarkable year-overyear growth of 3.2 times.

ProV Brand Growth: Healthy Profitability and Growing Consumer Reach

In this fiscal year, our ProV brand has showcased remarkable growth, reflecting its journey as the preferred choice for health-conscious snacking. The ProV brand revenue sales reached INR 21,200 lakhs, showcasing a phenomenal year-over-year growth of 2.75 times. This surge in revenue underlines our commitment to providing consumers with quality, healthful snacks.

EPS and Future Outlook

Our Earnings Per Share (EPS) stands at INR 14.14, reflecting our strong financial performance and commitment to value creation for our shareholders.

As we look to the future, Proventus remains dedicated to its mission of offering wholesome, health-conscious food products to consumers across India. Our strategic collaborations, innovative product offerings, and expansive distribution network position us for sustained growth and continued success.

Conclusion

In conclusion, the global economy continues to navigate a distinctive array of challenges, from the impact of the COVID-19 pandemic to geopolitical conflicts and disruptions in supply chains. Despite these hurdles, the Indian economy stands strong, showcasing significant progress and growth potential. Within the Indian packaged F&B industry, opportunities abound, driven by changing consumer trends, innovation, and digitalization.

Proventus Agrocom Limited, as a leading player in the health food sector, exemplifies the potential for growth and innovation. With a diversified product portfolio, robust distribution network, and commitment to quality and sustainability, ProV is poised to thrive in the evolving landscape of health-conscious snacking.

As we move forward, its imperative to remain vigilant in risk management, embrace changing consumer patterns, and leverage emerging opportunities to ensure a prosperous and sustainable future for businesses, economies, and individuals alike.

SWOT Analysis Strengths

1. Diverse Product Range: We offer a wide variety of products, including over 100 different items that cater to different consumer segments.

2. Flexible Packaging: Our products come in various package sizes to suit consumer preferences, from luxury options to convenient and affordablechoices.

3. Quality and Diversity: We stand out with our commitment to high-quality and diverse snacks, avoiding reliance on a single ingredient.

4. Effective Distribution: Our products are distributed through a strong network of retailers, modern trade outlets, and our successful e-commerce platform.

5. Retail Partnerships: Collaborations with major retail chains boost our market presence and accessibility.

6. Global Sourcing: With a global network of suppliers, we ensure a steady supply of raw materials, reducing vulnerability to price fluctuations.

7. Innovative Approach: Our "ProV Fusion" mix and bio-fuel briquettes from raw material by-products showcase creative resource utilization.

8. Experienced Leadership: Promoters and management bring decades of industry experience, guiding our growth and strategic initiatives.

Weaknesses

1. Infrastructure Gap: Lack of modern facilities and equipment in India weakens industry operations.

2. Seasonal Raw Materials: Dependency on seasonal raw materials affects continuous production.

3. High Taxation: Government taxes raise production costs.

4. Inventory Costs: High inventory carrying costs limit capital investment.

5. Labor Expenses: The expense of retaining employees is significant.

Opportunities

1. Changing Consumer Preferences: Increased demand for hygienically packaged foods due to the pandemic offers growth potential.

2. Hygiene Emphasis: Consumers prioritize hygiene, leading to investments in advanced food packaging equipment.

3. Eco-Friendly Trend: Demand for eco-friendly packaging creates opportunities for biodegradable solutions.

Threats

1. Supply Chain Disruptions: Fluctuating raw material prices and supply chain disruptions pose challenges.

2. Regulatory Compliance: Meeting regulatory standards adds complexity.

3. Consumer Concerns: Customer worries about additives and preservatives impact choices.

4. Environmental Awareness: Public demand for eco-friendly practices and packaging affects reputation.

5. Financial Strain: Investing in technology and sustainability may strain finances.

Strategies

1. Seize Hygiene Demand: Tap into the demand for hygienically packaged products.

2. Embrace Eco-Friendly: Adopt eco-friendly packaging to align with environmental trends.

3. Efficient Technology: Strategically use technology while considering financial implications.

Conclusion

We are fully committed to innovation and investment, aiming to become the top choice for healthy nut snacks across various price ranges. Our recent launch, ProV Minis, priced at 30/- INR, reflects this commitment. Its designed for easy access at local Kirana ladder displays and POS (Point of Sale) locations, offering wholesome snacking at an affordable price. Our focus remains on strengthening the ProV brand, educating consumers about healthy choices, and enhancing brand awareness. This involves strategic advertising through diverse mediums, including social media, digital ads, and embedded promotions, adapting to evolving consumer media habits.

Our dedication to fortifying the ProV brand remains resolute, as we endeavour to enlighten consumers about health-conscious dietary options and augment brand awareness, all while upholding our core ethos of health and well-being. Our strategy involves investing in effective advertising mediums while expanding our marketing footprint to align with evolving shifts in consumer media consumption habits, encompassing platforms such as social media, digital advertising, and embedded promotions.

Innovation remains a cornerstone of our forward journey. We are dedicated to pushing boundaries and introducing novel products that resonate with evolving consumer preferences. Through a combination of insightful market research, collaboration with industry experts, and leveraging our in-house R&D capabilities, we will continue to unveil offerings that cater to the changing demands of health-conscious consumers. This commitment to innovation not only underscores our adaptability but also reinforces our reputation as a trailblazer in the healthy snacking landscape.

Expanding our direct sourcing initiatives stands as another pivotal aspect of our future endeavours. By broadening the scope of products, we directly source, including dry fruits, nuts, seeds, and berries, we aim to solidify our supply chain and enhance the traceability and authenticity of our offerings. This strategic move aligns seamlessly with the growing consumer preference for transparency and ethical sourcing practices, positioning us as a trustworthy brand that values both consumer well-being and responsible sourcing.

As we step into the future, these pillars—automated manufacturing, innovation, consumer experience and an extended basket of direct sourcing—will be the driving forces behind our continued growth and success. With these strategic imperatives in place, we are poised to not only meet the evolving needs of our customers but also lead the industry by setting new standards of excellence and sustainability.

Business Updates

In the fiscal year FY23, we embarked on an exciting and transformative journey by forging a strategic collaboration that holds the potential to redefine our brand and elevate it to unparalleled heights. This groundbreaking partnership brings together the culinary brilliance of the renowned Chef Sanjeev Kapoor and the seasoned expertise of FMCG specialist KS Narayanan. The convergence of their skills and insights is set to propel the ProV brand into new realms of success and recognition.

Our collaboration with Chef Sanjeev Kapoor and KS Narayanan is not merely a business move; its a harmonious blend of culinary mastery and industry acumen. Chef Sanjeev Kapoors reputation as a culinary icon, coupled with KS Narayanans extensive experience in the FMCG sector, forms the foundation of this strategic alliance. Their combined expertise promises to infuse fresh perspectives, innovation, and unmatched quality into our brands offerings.

One of the core aspirations of this collaboration is to create a seamless synergy of flavors and innovation. The partnership envisions the development of unique and tantalizing culinary creations that cater to diverse palates. These creations will embody the essence of Chef Sanjeev Kapoors culinary artistry while aligning with KS Narayanans deep understanding of consumer preferences and market trends.

This dynamic collaboration has manifested in various impactful ways. One of the most prominent showcases is our captivating endorsements. Chef Sanjeev Kapoors endorsement of the ProV brand adds a layer of authenticity and trust, assuring consumers of the exceptional quality and taste of our products. His association resonates with food enthusiasts and reinforces our commitment to delivering top-notch culinary experiences.

Furthermore, our advertisements have taken on a new dimension with this collaboration. They are dynamic, engaging, and resonate with consumers on a personal level. By leveraging Chef Sanjeev Kapoors charm and expertise, along with KS Narayanans industry insights, our advertisements communicate not only the flavor but also the passion and thoughtfulness behind our products.

Vibrant promotional campaigns have also been a cornerstone of our collaboration. These campaigns are designed to connect with consumers at various touchpoints and create a memorable experience. Whether its through interactive social media engagement, tantalizing recipe showcases, or innovative contests, our promotional activities are a testament to the innovative spirit that this collaboration embodies.

As we move forward, the vision of this collaboration remains clear—to push the boundaries of culinary innovation, deliver exceptional quality, and connect with consumers on a deeper level. The infusion of Chef Sanjeev Kapoors culinary finesse and KS Narayanans industry wisdom into the ProV brand has set us on a trajectory of growth, recognition, and unmatched culinary delight. Through this partnership, we are not just offering products; we are offering an experience that transcends taste and resonates with the heart of every consumer.

Risk Factors

• Inadequate or interrupted supply and price fluctuation of our raw materials and packaging materials could adversely affect our business, results of operations, cash flows, profitability and financial condition.

• Any significant interruption in continuing operations of our production or cold storage facilities could have a material adverse effect on our business, results of operations, cash flows and financial condition.

• We face intense competition which may lead to a reduction in our market share and may cause us to increase our expenditure on marketing and promotion as well as cause us to offer discounts, which may result in an adverse effect on our business and a decline in our profitability.

• Our Company requires significant amount of working capital for a continuing growth. Increase in business activities may be reflected by an absolute increase in the gap between our trade receivables and trade payables, requiring us to arrange for increased working capital limits. Our inability to meet our working capital requirements may adversely affect our results of operations.

Current ratios (for Proventus Agrocom Ltd. - standalone only)

Particulars	FY 2022-23	FY 2021-22	Change	Reason
(i) Debtors Turnover	14.63	22.39	-34.66%	Decrease in ration due to sales decreased and debtors increased.
(ii) Inventory Turnover	13.47	13.69	-1.61%	NA
(iii) Interest Coverage Ratio	2.85	1.45	96.55%	Increase in net profit after tax anddecrease in finance cost as compare to previous year.
(iv) Current Ratio	3.81	2.86	24.93%	NA
(v) Debt Equity Ratio	0.2	0.46	-56.52%	Decrease in Borrowings and increasing in shareholders equity fund as compare to previous year.
(vi) Operating Profit Margin (%)	0.12	0.09	24.13%	NA
(vii) Net Profit Margin (%)	0.007	0.003	150.73%	Profit level increased as compare to previous year, or sector-specific equivalent ratios, as applicable.
(viii) Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof	0.04	0.02	95.30%	Increase in return on net worth due to increase in profit of the company compare to previous year.

Risk Management and Internal Control Framework

Risk entails the likelihood or potential of adverse occurrences, encompassing damages, liabilities, losses, or other unfavorable events stemming from external or internal vulnerabilities. Such events can be preemptively mitigated through a systematic approach. Risk management encompasses the process of identifying, evaluating, and prioritizing risks, followed by the efficient allocation of resources to minimize, monitor, and regulate the probability and/or impact of unfavorable outcomes or to optimize the exploitation of opportunities.

The Company has established comprehensive Risk Assessment and Minimization Procedures geared towards the recognition, evaluation, and reduction of business risks. Regular reviews of these procedures are conducted to ensure their alignment with existing potential threats to the Companys operations.

Robust Internal Control Mechanisms

The Company has implemented robust internal control systems commensurate with its business scope and scale. These internal controls are reinforced through regular internal audits performed by the Companys Internal Auditors. The findings from these audits are subject to review by both the Management and the Audit Committee of the Board of Directors. Additionally, the effectiveness of the internal control systems is subject to scrutiny by the Companys Statutory Auditors.

Human Resources

The Company considers its human resources to be the key thrust area. Our employees are one of our most important assets and are critical to us maintaining our competitive position. The Company has always stood by its commitment of harnessing and developing its human resources. The training and development of

human resources is an ongoing process. The HR department endeavors to create a work environment that ensures employees continued wellbeing and each individual personal potential is fully aligned with Companys growth strategy. The Company had 124 employees as on 31st March, 2023.

Our employee policies aim to recruit a talented and qualified work force, facilitate their integration and encourage development of their skills in order to facilitate the growth of our operations. We endeavour to develop and train our employees in order to facilitate the growth of our operations. Our employee induction procedures are focused on taking regular feedback and facilitating interaction between new employees and senior management.

Cautionary Statement

The statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable laws or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting global and domestic demand-supply, finished goods prices, power and raw materials costs and availability, power wheeling charges and restrictions, changes in Government regulations, tax regimes, economic developments within India and other factors such as litigation and industrial relations. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.