Sangal Papers Ltd Management Discussions.

Pursuant to the Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015. Your Directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31st, 2021.

Sangal Papers Limited (hereinafter called The Company") incorporated in the year 1980 and having registered office in the state of Uttar Pradesh. The company is engaging in manufacturing of News Print paper and other various variety color papers. We manufacture the paper on demand of the customers. The management discussed the various aspects and come out this summary:

A) INDUSTRY STRUCTURE AND DEVELOPMENT:

Paper is the cultural barometer of the nation. We need paper every day for widening the frontier of our knowledge. The new millennium is going to be the millennium of the knowledge. Pulp and paper constitute one of the most important segments of Indias industrial economy and is treated as a basic sector. As per IPMAs (Indian Paper Mills Association) estimates, this industry contributes approximately provides employment to more than 5 lakh people and indirectly 1.5 million people. The Broad characteristics of the industry are that it is capital, raw material, energy and water intensive and highly fragmented (small units account for 60% of the industry size). Globally over 400 million tonnes of paper and paper products are consumed. The worlds three largest paper producing countries are China, the United States, and Japan (these three countries account for approximately half of the worlds total paper production), while India accounts for a small but growing share of the global market. The global paper and pulp mills industry has contracted slightly over the past five years, primarily due to the shift to digital media and paperless communication across most developed economies. The Indian Paper & Paperboard industry is one of the oldest organized manufacturing industries in India and the first paper mill was started in 1812 in Serampore, West Bengal. The Indian paper industry accounts for approximately 4% of the worlds production of paper.

During the financial year 2020-2021 the paper and paper product industry in india seen a significant decline in demand in export market as well as in domestic market due to Covid 19 pandemic as compared to last fiscal year. The Sangal Papers Limited ("The Company") has reported a decline of 15% (approx) in turnover (total Income) and profit after tax (PAT) plunges by 64% (*details based on 20202021 and 2019-2020 financials of the company) during the financial year. Paper pervades all sectors of our activity from book to bullets and from morning newspaper to nuclear technology. Indian paper industry is highly fragmented with varying sizes ranging from 10 tpd to 1500 tpd. In global context, India is one of the fastest growing markets for paper and paper consumption in the country is estimated to touch 23.50 million tons by 2024-25. Our company also engaged in manufacturing of news print paper and the newsprint sector in India is governed by the Newsprint Control Order (NCO), 2004. At present there are more than 120 mills registered under the Schedule of the NCO.

B) Opportunities and Threats:

The Companys products have been enjoying consistently good brand image and loyalty from the consumers for the past several years and the company is concerning on the increasing in sale of the paper product in India and abroad but due to Covid pandemic globally has seen a drastic decline in demand of the paper globally which is quite challenging to almost every sector of the economy.

Your company is manufacturing paper on demand of the Customer, our production and market size is negligible in paper industry. We are manufacturing of News print and writing printing paper, the prices of News print paper decided by international market, large manufacturer and publishers of Newsprint (Buyer) on quarterly basis on the availability of indigenous as well as imported news print paper in the market.

In the reference of pricing of writing printing paper and other various variety of paper, our company is very small company by size and value. We are following price decided by the customer and the market forces. We are only price takers and not setters. The price of paper is determined/decided by taking into various factors like quantity, quality etc.

Current year sale (total revenue from operations) of product involve domestic sale and abroad sale of our product during the year ending 31st March, 2021 of Rs. 10591.66 (Rupees in Lakh) decreased with 15% approx. The company is also trying to using to full capacity of production for better and economical use of the resources. Raw material use by the company is one of the best quality of its category, the availability of raw material for production is depend on the availability in the market and as well as price consideration. The Company is also considering on the using of best technologies in the production for economical uses of the production capacity.

The Company is facing many issues with raw material and other substance, to overcome the problem associate with production as shortage of raw material, labor etc. and other considerable other things.

C) Segment:

As per Ind AS 108 required to information in business report about reporting segment and related disclosures about product and services, geographic areas and major customers. Based on the management approach as defined in IND AS 108, the Chief Operation Decision Maker (CODM) evaluated the companys performance and allocates resources based on an analysis of single segment and geographic segment. Accordingly, the information has been presented both along business segment and geographic segment.

Sangal Papers Limited engaged in single segment of business, paper manufacturing is our primary business activity.

In geographic segment, the company is selling its paper in India and exporting to Sri Lanka, Singapore, Nepal, Iran, United Arab Emirates and other various countries.

In the significant customers, our company is paper manufacturing and selling the paper to pan India and export to many countries.

As per IND AS and as the standalone balance sheet of the company for the financial year ended 31st March, 2021, the total income of the company (including other income) of Rs. 10638.39/- (Rs. in Lakh, approx) (current year) and of Rs. 12651.79/- (Rs. in Lakh, approx) (previous year) decreased about 16 % (approx) and total expenses of the respected year of Rs. 10561.90/- (Rs. in Lakh, approx) (current year) and of Rs. 12461.40/-(Rs. in Lakh, approx) (previous year) expenses decreased about 15% (approx). Profit after Tax (PAT) of the company for the relevant period of Rs. 65.30/- (Rs. in Lakh, approx) (current year) and of Rs. 180.27/-(Rs. in Lakh, approx) (previous year), profit after tax decreased about 64% (approx). Despite of challenges due to Covidl9 which affects (decline) the global demand significantly. The Company is able to satisfy in terms of servicing its debt and interest obligations during the relevant financial period without any delay or default. The management of the company is optimistic and expects the business to get back to its normal rhythm by next year.

D) Outlook and other concerns:

This Section lists future based statement, it depend on the present and future Market and paper industry situations and also involvement of risk and uncertainties.

Due to outbreak of CoVID-19 pandemic situation since March 2020, both inward and outward supply chains of the paper industry have been totally disrupted, and are yet to fully recover. There has also been a severe demand compression due to the lockdown of commercial establishments and downstream printers, publishers, converters, stationery services among others.

For the Indian paper industry, this year see a de-growth as compared to last fiscal ended March 31, 2020 with poor sales volumes in the first quarter and the ongoing second quarter, where the situation has not improved much. However the business may take at least couple of more quarters in fair assessment, things may get back to normalcy by next year.

CARE Ratings witness a significant decline in import during FY 2020-2021 and slightly increase in export due to outbound shipments of the segment paper of all kinds (except newsprint).

The growth will be largely driven by printing & writing and packaging & paper board segment. The Indian paper industry can be broadly classified into three segments:

1. Printing & writing (P&W): Printing and writing segment caters to office stationary, textbooks, copier papers, notebooks etc. This segment forms ~31% of domestic paper industry. Governments thrust on education through steps like Right to Education, Sarva Shiksha Abhiyan, rise in service sector are key factors contributing to the growth of this segment.

2. Packaging & paper board: Packaging paper & board segment caters to tertiary and flexible packaging purposes in industries such as FMCG, food, pharma, textiles etc. This segment forms ~47% of the domestic paper industry. This is currently fastest growing segment owing to factors such as rising urbanization, increasing penetration of organized retail, higher growth in FMCG, pharmaceutical.

3. Newsprint: Newsprint serves the newspaper & magazines industry. This segment forms ~18% of Indian paper industry. This segment is under stress due to lower growth rates and import threat.

Our actual results could differ materially from those anticipated in these statements a result of certain factors. The company will try or make efforts to increase in the revenue and profit of the company in future. The company will also try to enter in new geographical area for capturing more market and increased in the percentage of participate in the national and international market. A large portion of the revenue is dependent on the top clients of the company and the loss of any one of major client cloud significantly impact of the business. We may be the subject of litigation which, if adversely determine could harm our business and operating result.

E) Internal Financial Control and their adequacy:

The Company identifies a risk based internal audit scope and assesses the inherent risk in the processes and activities of the department within the company and ensures that appropriate risk management limits, internal control mechanisms and mitigation strategies are in place. The Internal Auditors, via, their internal audit reports, make suggestion for better application of policies and rules relating to the deficiencies/non-compliance of various audit areas and give suggestions/recommendations and control directives like periodic reconciliation, proper authorizations/approvals, processing controls, segregations of duties, maker-checker approach, etc. so as to mitigate the deficiencies and make the process, procedure, systems and functions more robust, accountable, reliable and compliant. The suggestions made by the Internal Auditors and the compliances thereof are placed before the Audit Committee. The Audit Committee of the company, the details of which have been provided in the Corporate Governance Report. The Committee reviews audit reports submitted by the Internal Auditors. Internal Financial Controls Suggestions for improvement are considered and the Committee follows up on the implementation of corrective actions. The Committee also meets the Statutory Auditors to ascertain, inter alia, their views on the adequacy of internal control systems in the company.

F) Financial Performance:

Funds (Equity):

AS per present capital structure of the company i.e. we have authorized capital is Rs. 7,00,00,000/- divided into 70,00,000 equity share of Rs. 10/- each. The issued, subscribed and paid-up capital is Rs. 1,30,72,600/- divided into 13,07,260 equity share of Rs. 10/- each.

Other Funds (Other equity):

1. Revaluation Reserve

As per standalone balance sheet for the financial year ended 31st March, 2021: Revaluation Reserve as on 31st March, 2020 of Rs. 48.56 (Rupees in Lakhs) and on 31st March, 2020 of Rs. 48.56 (Rupees in Lakhs).

2. Retained Earnings

As per standalone balance sheet for the financial year ended 31st March, 2021: The retained earnings as on 31st March, 2020 of Rs. 3,138.04 (Rupees in Lakhs) and on 31st March, 2021 of Rs. 3236.13 (Rupees in Lakhs).

Revenue of Operations:

1. Sale of Product

As per standalone balance sheet of the company that total revenue from operation during the relevant period as on 31st March, 2020 of Rs. 12568.74 (Rupees in Lakhs) and as on 31st March, 2021 of Rs. 10591.65 (Rupees in Lakhs), revenue of the company decreased with 15.21 % in the relevant period.

2. Other Income

As per standalone balance sheet of the company that total other income of the company as on 31st March, 2020 of Rs. 83.05 (Rupees in Lakhs) and as on 31st March, 2021 of Rs. 46.73 (Rupees in Lakhs), other income of the company decreased with 44 % approx, in the relevant period.

Earning/Profit of the Company:

As per standalone balance sheet of the company that total profit earn by the Company during the period April, 2020 to March, 2021.

1. Profit before Tax (PBT)

As per standalone balance sheet of the company that Profit before Tax of the company for the financial year ended 31st March, 2020 of Rs. 190.39 (Rupees in Lakhs) and as on 31sl March, 2021 of Rs. 76.49 (Rupees in Lakhs), Profit Before Tax decreased with 60% approx..

2. Profit after Tax (PAT)

As per standalone balance sheet of the company that Profit after Tax of the company for the financial year ended 31st March 2020, of Rs. 180.27 (Rupees in Lakhs) and as on 31st March 2021, of Rs. 65.30 (Rupees in Lakhs), Profit after Tax decreased with 64% approx..

3. Earning per equity share

As per standalone balance sheet of the company for the financial year ended 31st March, 2020, of Rs. 13.78 (Basic and Diluted) and as on 31st March 2021 of Rs. 5.0 (Basic and Diluted). The Earning Per Share (EPS) of the company decreased with 64%.

The financial performance of the company during the year is satisfactory. Amid, decline in export, pressure on profit margin and outbreak of Covidl9 pandemic.

G) Human Resources Relationship:

As per human resources relationship policy of the company recognizes the importance of human value and ensures that proper encouragement both moral and financial is extended to employees to motivate them and as well as we protects the right of the employee/workers and provide a comfortable environment to the employee/workers. The company is a paper manufacturing industry, we are maintaining a culture and custom for our employee to attract and retain the best talent. During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

HUMAN RESOURCES

Employees of the company are essential assets of the company. Our company believes for welfare and development of the company. As at 31st march, 2021, the company employed 266 employees.

RECRUITMENT

Our company has recruitment policy and procedure. All the recruitment and vacancy filled by the company under this policy and procedure. The selection process based on candidates qualification, experience and interview after that eligible candidate elected for the company. As on 31s* March, 2021 266 employee on pay roll of the company, during the financial year ended 2021, 19 new employee joined and 25 employee left the company.

TRAINING AND DEVELOPMENT

Our companys continuous education program emphasize enhancing the relevance and effectiveness of learning. Under review, The Company is providing relevant training for skills and personality development to every employee (employee of 3rd or 4th level) of the company in every month and training providing to senior level employee (employee 2nd level) periodically or as per requirement and directors and top managements training conducting at least one time in a year.

COMPENSATION

We always to try to provide best competitive salaries and benefits to our employees as per our industries. We have also a variable compensation policy as per individual employee performance.

As per pay roll policy of the company as on March 31, 2021 the company has 266 employees/workers on pay roll at its Power and Paper unit. The company has provided many facilities to the staff & workers of the company for welfare. The company enjoyed excellent relationship with workers and staff during the last year.

H) Details of significant changes:

During the financial year 2020-2021 changes in financials and operating position of the company. Financial Ratio:

Sr.no. Ratio Definition UOM 20-21 19-20 % change
1. Debtor Turnover Net credit Sale/Average Account Receivable Times 4.49 5.53 (18.81%)
2. Inventory Turnover Sale/ Inventory Times 7.93 9.32 (14.91%)
3. Interest Coverage ratio EBIT/Finance Cost Times 1.48 1.97 (24.87%)
4. Current Ratio Current Assets/ Current Liabilities Times 1.51 1.52 (0.65%)
5. Debt equity Ratio Debt/Equity % 54 61 (7%)
6. Operation Profit Margin EBIT/Sale % 2.21 3.08 (28.25%)
7. Net Profit Margin Net profit/Total Revenue % 0.93 1.41 (34.04%)

The Company reported a decline of 15% approx, in its sales due to adverse market condition both in domestic and export market. The Company reported a decline of 17.71% in Debtor Turnover Ratio during the financial year 2020-2021 as compared to FY 2019-2020. The Company reported a decline of 14.91% in Inventory Turnover Ratio during the financial year 2020-2021. The Company reported a decline of 24.87% in Interest Coverage Ratio during the financial year 2020-21 due to profit before tax decreased sharply with 60% and profit after tax decreases with 64% (other than OCI). The Company reported marginal change in Current Ratio during the financial year 2020-2021. There is an decrease of 7% in Debt Equity Ratio during the financial year 2020-2021. The Company reported a decline of 40% in Operating Profit Margin during the financial year 2020-21 due to decline in both - profit before tax with 60% and profit after tax with 64% (other than OCI) and sale decreased with 15% approx, during the year. The Company reported a decline of 45% in Net Profit Margin (includes other comprehensive income) during the financial year 2020 - 2021 due to decline in profit before tax with 60% and profit after tax decrease with 64 % (other than OCI) and total revenue decreased with 15% approx.

I) Announcement:

The statements in the "Management Discussion and Analysis Report" section describes the Companys objectives, projections, estimates, expectations and predictions, which may be "forward looking statements" within the meaning of the applicable laws and regulations. The annual results can differ materially from those expressed or implied, depending upon the economic and climatic conditions. Government policies and other incidental factors.

CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS (Pursuant to Regulation 34(3) and Schedule V Para C clause (10)(i) of the SUM (Listing Obligations and Disclosure Requirements) Regulations, 2015)

I have examined the relevant registers, records, forms, returns and disclosures received from the Directors of Sangal Papers Limited having CIN: L21015UP1980PLC005138 and having registered office at "Vill. Bhainsa, 22km stone, Meerut-Mawana Road, Mawana, Meerut, UP"(hereinafter referred to as ‘the Company), produced before me by the Company for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Schedule V Para-C Sub clause 10(i) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In my opinion and to the best of my information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in) as considered necessary and explanations furnished to me by tire Company & its officers, I hereby certify that none of the Directors on the Board of the Company as stated below for the Financial Year ending on 31st March, 2021 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs, or any such other Statutory Authority.

Sr. No. Name of Director DIN Date of appointment in Company
1. HIMANSHU SANGAL 00091324 25/11/1980
2. AMIT SANGAL 00091486 27/09/1996
3. TANMAY SANGAL 01297057 30/11/2003
4. VINA YAK SANGAL 06833351 01/03/2014
5. PRF.M SETHI 07146425 16/03/2015
6, GEETA GUPTA 00095939 16/03/2015

Ensuring the eligibility for the appointment/continuity of every Director on the Board is the responsibility of the management of the Company. Our responsibility is to express an opinion on these based on our verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.