S. V. J. Enterprises Ltd Management Discussions

Outlook:

The global economy is expected to grow 2.96% in 2024, influenced by the ongoing Russia-Ukraine conflict. Concurrently, global inflation is projected to fall marginally to 7%. Despite these challenges, there are positive elements within the global economic landscape.

Indian Economy:

Overview: Even as the global conflict remained geographically distant from India, ripples comprised increased oil import bills, inflation which is gradually coming down. Indias economic growth is estimated at 7.2% in 2023-24. India overtook UK to become the fifth-largest global economy. India surpassed China to become the worlds most populous nation.

Growth of the Indian economy quarter by quarter, 2023-24

(Source: Budget 2023-24; Economy Projections, RBI projections)

INDUSTRY STRUCTURE AND DEVELOPMENT

The global paper and packaging board market size was estimated at US$ 195 billion in 2022 and is forecasted to reach US$ 232.8 Billion by 2028, growing at 3% CAGR.

In volume terms, the global paper and paper board packaging market is expected to have contracted by about 0.5% in 2022 compared to a growth of 4.5% in 2021. The printing and writing paper segment is expected to have declined by 2% in 2022 compared to a growth of 3% in 2021.

A number of developed and emerging economies are adopting paper-based products as an alternative to plastic. Food manufacturing organisations are using food-grade paper packaging products to preserve nutrient content and food quality. Other factors, such as product innovation to improve product functionality and produce visually appealing variants is further expected to drive paper-based packaging growth.

INDIAN PAPER INDUSTRY OVERVIEW

The Indian paper and paperboard packaging market was pegged at US$ 10.77 Billion (Rs. 88,314 crores) in 2022 and is expected to reach US$ 15.69 Billion (Rs. 1,25,520 crores) by 2027, growing at a CAGR of 6.63%. Packaging-grade paper makes up for 55% of the major kinds of paper produced.

The printing and writing paper market is expected to grow at a CAGR of 1.8% during 2022-2026. This segment is expected to witness a demand growth due to factors such as rising population, re-opening of offices, growing traction in the pharmaceutical and e-commerce industry among others. The Indian government has launched several initiatives to promote the growth of the Paper industry, including the Make in India campaign. These initiatives a re expected to boost d omestic production, create employment opportunities and drive innovation and technological development in the sector.

SWOT ANALYSIS OF THE INDIAN PAPER AND PACKAGING INDUSTRY

DEMAND DRIVERS:

Growing literacy: In 2021, Indias literacy rate was pegged at 77.7%, catalyzing the demand for writing and printing paper as well as packaging paper owing to product offtake.

Re-opening of offices: Companies are gradually opening their offices full-time and expanding into newer cities, fostering a d emand for corporate activity and paper consumption.

Population growth: In the year 2024, India is set to overtake China as the worlds most populous country, creating a wide market base.

Demographic shift: In 2024, the average age of an Indian was 28.7 years. More than half of Indias population is under 25 years of age. The consumer market is largely driven by the millennial (15-34 years) population, who are either students or young professionals.

Growing middle class income: India is expected to form 23% of the global middle class, leading to an increase in households earning between US$ 10,000 and US$ 50,000 per year till 2028, widening their wallet share for discretionary spending.

Urbanization: By 2030, India will have more than 70 cities compared to only 55 cities in the USA, fostering demand for sectors such as health, education, retail, e-commerce among others.

E-commerce growth: Indian e-commerce market is expected to reach 350 billion by 2050, on account of greater internet penetration, rising incomes and growing population.

MITIGATION STRATEGIES:

The company is focused on building a robust training framework to cater to the development needs of employees across leadership levels. a. Also, the Company keeps itself abreast and updated on the contemporary developments in the technology landscape through participation in key technology forums and conferences. b. The company tried to revamp framework to ensure that it meets the continuity and recovery requirements for employees, assets and business in the event of a disruption.

c. The company has defined a process for Identification of Critical to Success capabilities for each key position, objective assessment to identify current capability metrics for the potential successors, a structured development journey of identified successors.

d. The company has implemented a robust compliance assurance system and mechanism to monitor various compliances.

OPERATIONAL PERFORMANCE

The Companies growth considering the past years performance has increase. The Company is striving hard for increasing profits from year to year. The total revenue from the operations for the year ended March 31, 2024 amounted to Rs. 5.80 Crores as against the Revenue of Rs. 5.63 Crores incurred in a previous financial year for year ended March2023.

RISKS AND CONCERNS:

The Company recognizes that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and effective manner. In this regard, the Company has adopted Risk Management Mechanism which involves the Process of systematically identifying all possible risk events which have a potential impact on the business.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Internal Control Integrated Framework (the 2013 framework) is intended to increase transparency and accountability in an organisations process of designing and implementing a system of internal control. The framework requires a company to identify and analyse risks and manage appropriate responses. It has well-defined delegation of power with authority limits for approving revenue as well as expenditure, Segregation of responsibility, Independent control over the execution of activities, processes for formulating and reviewing annual and long term business plans. It has continued its efforts to align all its processes and controls with global best practices.

HUMAN RESOURCES

Employees are your companys most valuable resource. Your Company continues to create a favourable environment at work place. The company also recognizes the importance of training and consequently deputes its work force to various work-related courses/seminars including important areas like issues like Technical skills.

CAUTIONARY STATEMENT

Statements in the Management Discussion & Analysis Report describing the Companys expectations, opinion, and predictions may please be considered as “forward looking statements” only. Actual results could differ from those expressed or implied. Companys operations should be viewed in light of changes in market conditions, prices of raw materials, economic developments in the country and such other factors.