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 31, 2019.

Sangal Papers Limited (hereinafter called "The Company") incorporated in the year 1980 and having registered office at Uttar Pradesh. The company is engaging in manufacturing of News Print paper and other various verity colour 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 culturals 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 across approximately 750 paper mills. 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. However, demand in emerging markets has partially offset the decline by driving increased demand for paper used in packaging materials. 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 industry accounts for approximately 4% of the worlds production of paper.

During the financial year 2018-2019 the paper and paper product industry in India growing was satisfactory, the Sangal Papers Limited ("The Company") has a growth of 18.87% (approx) in turnover (total income) and 135.86% in profit after tax (PAT) (*details based on 2018-2019 and 2017-2018 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 newsprint paper and the newsprint sector in the 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.

Our company is manufacturing paper on demand of the customer, our production and market size is negligible in paper industry. We are manufacturing of newsprint and writing printing paper, the prices of newsprint paper decided by international market, large manufacturer and publishers of Newsprint (Buyer) on quarterly basic on the availability of indigenous as well as imported newsprint paper in the market.

In the reference of pricing of writing printing paper and other various verity 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, 2019 of Rs. 14,938.36 (Rupees in Lakhs) increased with 23.33%. 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 associated 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.

The 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 and other various countries.

In the significant customers, our company is paper manufacturing and selling the paper to all over 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, 2019, the total income of the company (including other income) of Rs. 14398.36/- ( in Lakh, approx) (current year) and of Rs. 12,112.86/-(? in Lakh, approx) (previous year) increased about 23.33% (approx) and total expenses of the respected year of Rs. 14,205.76/- ( in Lakh, approx) (current year) and of Rs. 11,749.61/-(? in Lakh, approx) (previous year) expenses increased about 20.90% (approx). Profit after Tax (PAT) of the company for the relevant period of Rs. 613.645/- ( in Lakh, approx) (current year) and of Rs. 260.17/-(? in Lakh, approx) (previous year), profit after tax increased about 135.86% (approx). The management of the company is expressing growth in the overall performance of the company during the financial year and performance is satisfactory during the concern period.

(D) Outlook and other Concerns:

This section lists future based statement, it depends on the present and future market and paper industry situations and also involvement of risk and uncertainties.

For the Indian paper industry, strong economic growth has been accompanied by equally robust demand for paper. The demand drivers and growth triggers have come from a combination of factors such as rising income levels, growing per capita expenditure, rapid urbanization and a larger proportion of earning population which is expected to lead consumption and there is enormous potential for the paper industry in the country.

CARE Ratings expects that the overall paper demand growing at a CAGR of 6.6% is likely to touch 18.5 million tonnes in 2018-19.

The individual segments are expected to grow as follows:

Printing and writing segment demand is expected to grow at a CAGR of 4.2% and reach 5.3 million tonnes in FY19. The demand is expected to grow on account of an anticipated pick-up from the education sector with improving literacy rates and growing enrolment as well as increasing number of schools and colleges.

Additionally, the Chinese Government has banned the import of several varieties of waste paper, which is the primary raw material for finished paper. Consequently, the production of finished paper is expected to be hampered in China. This in turn is expected to lead to some relief in raw material prices and improve realizations.

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 increased in the revenue and profit of the company in future. The company will 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, 2019, Revaluation Reserve as on 31st March, 2018 of Rs. 48.56 (Rupees in Lakhs) and on 31st March, 2019 of Rs. 48.56 (Rupees in Lakhs).

2. Retained Earnings

As per standalone balance sheet for the financial year ended 31st March, 2019, the retained earnings as on 31st March, 2018 of Rs. 2,343.44 (Rupees in Lakhs) and on 31st March, 2019 of Rs. 2,960.87 (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, 2018 of Rs. 12,050.03 (Rupees in Lakhs) and as on 31st March, 2019 of Rs. 14,823.40 (Rupees in Lakhs), revenue of the company increased with 23.02% 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, 2018 of Rs. 62.83 (Rupees in Lakhs) and as on 31st March, 2019 of Rs. 114.96 (Rupees in Lakhs), other income of the company increased with 82.97% 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, 2018 to March, 2019.

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, 2018 of Rs. 363.25 (Rupees in Lakhs) and as on 31st March, 2019 of Rs. 732.60 (Rupees in Lakhs), Profit before Tax increased with 101.67%.

2. Profit After Tax

As per standalone balance sheet of the company that Profit after Tax of the company for the financial year ended 31st March 2018, of Rs. 260.17 (Rupees in Lakhs) and as on 31st March 2019, of Rs. 613.64 (Rupees in Lakhs), Profit before Tax increased with 135.86%.

3. Earning Per Equity Share

As per standalone balance sheet of the company for the financial year ended 31st March, 2018, of Rs. 19.90 (Basic and Diluted) and as on 31st March 2019 of Rs. 46.95 (Basic and Diluted). The Earning Per Share (EPS) of the company increased with 135.81%.

The financial performance of the company during the year is satisfactory, which was mainly due to moderate price levels of raw materials and other materials things throughout the year and better realizations for the companys products.

(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, our company enjoyed cordial relationship with workers and employees at all levels.


Employees of the company are essential assets of the company. Our company believes for welfare and development of the company. As at 31st March, 2019, the company employed 280 employees.


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 31st March, 2019 280 employee on pay roll of the company, during the financial year ended 2019, 98 new employee joined and 22 employee left the company.


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.


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, 2019 the company has 280 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 2018-2019 changes in financials and operating position of the company.

Financial Ratio:

Sr. no. Ratio Definition UOM 18-19 17-18 % change
1. Debtor Turnover Net credit Sale/Average Account Receivable Days 6.72 6.02 11.63%
2. Inventory Turnover Sale/Inventory Days 9.42 8.58 9.79%
3. Interest Coverage Ratio EBIT/Finance Cost Times 5.38 3.35 60.60%
4. Current Ratio Current Assets/ Current Liabilities Times 1.52 1.35 12.59%
5. Debt equity Ratio Debt/Equity Times 0.25 0.25 0%
6. Operation Profit Margin EBIT/Sale % 0.06 0.04 50%
7. Net Profit Margin Net Profit/Total Revenue % 0.04 0.02 100%

The Company reported an increase of 23.02% growth in its sales due to increased better demand in domestic and export sales. The Company reported 11.63% increment in Debtor Turnover Ratio during the financial year 2018-2019. The Company reported 9.79% increment in Inventory Turnover Ratio during the financial year 2018-2019. The Company reported 60.60% increment in Interest Coverage Ratio during the financial year 2018-2019 due to profit before tax increased with 101.67% and profit after tax increase with 135.86(other than OCI). The Company reported 12.59% increment in Current Ratio during the financial year 2018-2019. There is no increment or decrement in Debt Equity Ratio during the financial year 2018-2019. The Company reported 50% increment in Operation Profit Margin during the financial year 2018-2019 due to profit before tax increased with 101.67% and profit after tax increase with 135.86(other than OCI) and sale increased with 23.02% during the year. The Company reported 100% increment in Net Profit Margin during the financial year 2018-2019 due to profit before tax increased with 101.67% and profit after tax increase with 135.86(other than OCI) and total revenue increased with 23.02%.

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.

For and on behalf of the Board of Directors,

Sd/- Sd/-
Date: 30/05/2019 Amit Sangal Himanshu Sangal
Place: Meerut Whole Time Director/CFO Managing Director
DIN- 00091486 DIN - 00091324