Sayaji Industries Ltd Management Discussions

Your directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31, 2024.

ECONOMIC OVERVIEW

Global Economy

The International Monetary Fund (IMF), in its April 2024 World Economic Outlook, pointed to the surprising resilience of the global economy, which showed steady growth even as inflation receded. Global real gross domestic product (GDP) growth is estimated at 3.2% in CY 2023, and projected to grow at the same rate in CY 2024 and CY 2025. The IMF report attributed the slow pace of growth to several factors such as high borrowing costs, withdrawal of fiscal support, long-term effects of the COVID-19 pandemic, Russias invasion of Ukraine, weak growth in productivity and increasing geoeconomics fragmentation. Global inflation moderated from its peak in the middle of CY 2022 while economic activity continued to grow, thus averting a possible global recession.

IMF expects global headline inflation to fall further from the annual average of 6.8% in 2023 to 5.9% in 2024 and to 4.5% in 2025, with advanced economies returning to their inflation targets sooner than emerging markets and developing economies. Risks to the global outlook for 2024 seem broadly balanced. These risks arise from price spikes stemming from geopolitical tensions and regional conflicts such as those in Gaza, attacks in the Red Sea, and continued war in Ukraine, a slower than expected decline in core inflation and interest rates remaining higher than expected. On the upside are factors such as a short-term fiscal boost as many countries go to elections in 2024, faster monetary policy easing, and increase in productivity from technologies such as artificial intelligence. (Source: IMF - World Economic Outlook, April 2024). The World Banks Global Economic Prospects report of January 2024 was more conservative in its estimates, putting the global real GDP growth at 2.6% for 2023, and growth forecasts at 2.4% and 2.7% for 2024 and 2025, respectively.

Real GDP, Y-O-Y% Change

Particulars	Actual 2022	Estimate 2023	Projection 2024	Projection 2025
World Output	3.5	3.2	3.2	3.2
Advanced Economies	2.6	1.6	1.7	1.8
United States of America (US)	1.9	2.5	2.7	1.9
United Kingdom (UK)	4.3	0.1	0.5	1.5
Emerging Market & Developing Economies	4.1	4.3	4.2	4.2
Emerging and Developing Asia	4.4	5.6	5.2	4.9
India	7.0	7.8	6.8	6.5
China	3.0	5.2	4.6	4.1
Emerging and Developing Europe	1.2	3.2	3.1	2.8
Sub Saharan Africa	4.0	3.4	3.8	4.0
Middle East and Central Asia	5.3	2.0	2.8	4.2

Source: IMF World Economic Outlook, April 2024. Year is a calendar year except for India, which is presented on fiscal year basis with FY 2022-23 shown in the 2022 column.

Among the advanced economies, the US grew by 2.5% in 2023, and is projected to grow by 2.7% in 2024 and at a slower pace of 1.9% in 2025. Growth in the UK is estimated to remain largely flat in 2023, and thereafter increase by 0.5% in 2024 and 1.5% in 2025. The slower pace of growth in the UK is due to the impact of high energy prices and related inflation, which is expected to ease towards 2025. Chinas growth is projected to slow from 5.2% in 2023 to 4.6% in 2024, and 4.1% in 2025, mainly due to the waning of one-off consumption and fiscal stimulus factors post-pandemic and the continuing weakness of the real estate sector. Indias growth rate on the contrary is estimated at 7.8% in 2023 and projected to remain strong at 6.8% in 2024 and 6.5% in 2025, supported by strong domestic demand and a rising working-age population.

Source: IMF - World Economic Outlook, April 2024.

Indian Economy

India is now the worlds fifth largest economy in terms of nominal GDP and the third largest in terms of purchasing power parity (PPP). The Second Advance Estimates of National Income released by the National Statistical Office (NSO) of the Government of India in February 2024, estimates a GDP growth rate of 7.6% for FY 2023-24 as compared to a growth rate of 7.0% in FY 2022-23. Total consumption, comprising 56% of GDP, grew by 3.0% in FY 2023-24. Exports grew marginally by 1.5% while imports grew by 10.9%. As a consequence of the governments thrust on capex, which has continued to crowd in private investment, Gross Fixed Capital Formation (GFCF) at constant prices, constituting 34% of the GDP, registered a growth of 10.2% in FY 2023-24. On the supply side, agriculture grew by 0.7%, manufacturing grew by 8.5%, construction by 10.7% and services grew by 7.5% in FY 2023-24. Within services, trade, hotels, transport, communication and broadcasting related services, constituting about a third of overall services, grew by 6.5% after a strong growth of 12.5% in FY 2022-23.

(Source: NSO estimates, February 2024).

SBI Research and Moodys expects Indias GDP growth for FY 2023-24 to be 8%. Till February 2024, inflation in FY 2023-24 averaged 5.4%, in comparison to 6.8% for the corresponding period in FY 2022-23. During CY 2023, the rate of unemployment declined to 3.1% (2022: 3.6%) and the labour force participation rate expanded to 59.8% (2022: 56.1%) (Source: Govt. of India - Dept. of Economic Affairs Monthly Economic Review, February 2024). Indias foreign currency reserves stood strong at $645.6 billion as of March 31, 2024, and the Indian currency remained stable during the year.

India is one of the fastest growing large economies in the world. Its economy has been propelled by favourable demographics and a good domestic, consumer-focused economy, with a rising class of affluent Indians increasing spends on premium brands. Indias investments in building a scalable digitised public infrastructure consisting of platforms for verifying the identity of people, digital payments interface and an open e-commerce network to democratise digital commerce, has placed it in a position whereby it can funnel future growth through small and medium sized businesses and the startup ecosystem. Indias service sector hasalso been demonstrating a consistent, strong growth domestically and through service exports. The S&P Global India Services PMI Business Activity Index at 61.2 for March 2024 was one of the strongest growth rates seen in more than 13 years [Source: S&P Global India Services Purchasing Managers Index (PMI) report, March 2024]. A strong urban demand was also evident from rising passenger vehicle sales, increased house sales, higher domestic air passenger traffic, increased digital payments and improved consumer confidence.

The outlook for FY 2024-25 remains positive. The Reserve Bank of India (RBI) expects manufacturing to maintain its momentum and services to grow above the pre-pandemic trend. Agricultural activities should gain from an expected normal south-west monsoon. Private consumption is likely to gain steam with a pick-up in rural activity; discretionary spending of urban households is expected to increase (as per the RBIs consumer survey) together with improving income levels. Credit growth and private investment are also expected to rise, given optimistic business and consumer sentiments, healthy corporate and bank balance sheets leading to an upturn in the private capex cycle. Core inflation is likely to continue trending downwards, indicating a broad-based moderation in price pressures.

India is poised to benefit in terms of increased foreign direct investments (FDI) from a fragmented global landscape arising from new economic blocs and realignment of supply chains. It is already witnessing increased investments in semiconductors, automobiles, sustainable energy, mobile, telecom, etc. through the Production Linked Incentive (PLI) scheme and other attractive industrial policies, as well as Central and state government incentives.

However, the RBI has highlighted the risk of headwinds from geopolitical tensions, volatility in international financial markets, geoeconomic fragmentation, rising Red Sea disruptions and extreme weather events. Considering all these factors, the RBI has projected real GDP growth for FY 2024-25 at 7.0%.

(Source: RBI Monetary policy statement, 2024-25).

INDUSTRY OVERVIEW

Starch Industry - Global

The global corn starch market was valued at USD 58.20 billion in 2023 and the total Starch Market revenue is expected to grow at a CAGR of 5.7% from 2024 to 2030, reaching nearly USD 85.79 Billion by 2030.

The starch market has been witnessing significant growth owing to the increasing demand for starch in various industries such as food and beverages, pharmaceuticals, and textiles. In the Asia Pacific region, the starch market actively experiencing robust growth owing to the increasing population and rising disposable income. The region is witnessing a shift in consumer preferences towards natural and organic products, which is driving the demand for starch. Manufacturers in the region are focusing on expanding their production capacities to meet the growing demand. The starch market in

Asia Pacific is also benefiting from the growing food and beverage industry in countries such as China and India.

World exports most of its Starch powder to Vietnam, United States and United Arab Emirates.

The top 3 exporters of Starch powder in India with 14,302 shipments followed by Netherlands with 5,131 and Germany at the 3^rd spot with 3,219 shipments.

The growing awareness of the health benefits associated with starch consumption is driving significant changes in the food industry. Starch, known for its versatile applications in food products, is increasingly recognized for its role in providing energy, promoting digestive health, and aiding in weight management. As consumers become more health-conscious, there is a rising demand for products with natural and functional ingredients like starch. This trend has led to a surge in sales volume for starch-based products, boosting the profit margins of companies operating in this sector. Food manufacturers are now focusing on developing innovative products that cater to this demand, further driving the growth of the starch market.

Canada and the United States are the two countries in North America with the highest consumption of wheat and potato goods.

In 2021, Belarus ranked the highest in potato consumption per capita with 155 kg followed by Ukraine and Kyrgyzstan. On the other end of the scale was South Sudan with 0.130 kg, Central African Republic with 0.150 kg, and Sierra Leone with 0.310 kg.

The starch industry faces challenges owing to limited raw material availability and environmental concerns. Variations in crop yields can impact the availability of raw materials, leading to supply chain disruptions and increased production costs.

The starch market is expected to be shaped by food brands and brands, with starch being used in various food products such as breads, soups, puddings, pies, meat products, and sauces. The demand for starch is increasing due to changing consumer preferences from fresh roots to processed, value-added food products. The bakery industry is emerging in the market, with developing African countries experiencing significant penetration for baked food products. Starch manufacturers are targeting bakery and convenience food manufacturers to gain market share. Non-food applications of starch include adhesive, paper, and pharmaceuticals.

Starch Industry - India

India Corn Starch Market size is estimated to reach $4,759.8 million by 2030, growing at a CAGR of 5.2% during the forecast period 2024-2030. The Indian corn starch market has experienced significant growth, driven by its diverse applications across various industries. Corn starch, a versatile carbohydrate extracted from the endosperm of corn, is widely utilized in food and beverages, textiles, pharmaceuticals, and paper and packaging industries. In the food sector, it serves as a thickening agent, stabilizer, and ingredient in confectionery products. The growing demand for processed and convenience foods has further fueled its consumption.

In the textile industry, corn starch is used in fabric finishing and as a sizing agent, enhancing fabric strength and quality. The pharmaceutical industry leverages corn starch as a disintegrant in tablet formulation, ensuring proper dissolution and bioavailability of medications. Additionally, its role in biodegradable packaging solutions aligns with the increasing emphasis on sustainable practices.

Native Corn Starch type accounted for the largest share in 2023 and is estimated to reach $1,741.2 million by 2030. In the Indian corn starch market, native corn starch holds a dominant position, commanding the largest market share. This prominence is attributed to its extensive utilization across various industries due to its natural properties and cost-effectiveness. Native corn starch is favored in the food and beverage sector as a thickening and stabilizing agent, enhancing the texture and consistency of products. Its applications extend to the textile industry for fabric sizing and finishing, and to the paper industry as a surface coating and adhesive component. The pharmaceutical sector also relies on native corn starch as an excipient in tablet formulations. The versatility, affordability, and wide availability of native corn starch underpin its leading market share in Indias corn starch market.

Pharmaceuticals segment is analyzed to grow with the highest CAGR 6.9% in the India Corn Starch Market during the forecast period 2024-2030. Corn starch is essential in pharmaceutical formulations, acting as a disintegrant, binder, and filler in tablet production. Its role in ensuring proper tablet dissolution and bioavailability is critical for effective medication delivery. The growth is propelled by rising healthcare awareness, expanding pharmaceutical manufacturing capabilities, and increased investment in research and development. Indias drugs and pharmaceuticals industry received US$21.22 billion in FDI equity inflows from April 2000 to December 2022, accounting for nearly 3% of total FDI across all sectors. Additionally, the trend towards more natural and cost-effective excipients further boosts the demand for corn starch in the pharmaceutical industry, solidifying its rapid market expansion.

One of the major drivers of the India corn starch market is the burgeoning food and beverage industry. With an increasing urban population, rising disposable incomes, and changing consumer lifestyles, there is a heightened demand for processed and convenience foods. According to India Brand Equity Foundation, Indias food processing business is one of the worlds largest, with revenues estimated to reach $535 billion by 2025-26. Corn starch, used extensively as a thickener, stabilizer, and emulsifier, is integral in the production of sauces, soups, bakery items, and confectionery products. Its ability to enhance texture, improve shelf life, and maintain consistency makes it indispensable for food manufacturers. Moreover, the trend towards ready-to-eat meals and the expansion of the fast-food sector further amplifies its demand, positioning the food and beverage industry as a key growth catalyst for the corn starch market in India.

A major challenge facing the India corn starch market is the fluctuation in raw material prices. Corn, the primary raw material for corn starch production, is subject to price volatility due to factors such as seasonal variations, weather conditions, and geopolitical events. For instance, adverse weather can significantly reduce crop yields, driving up prices. Additionally, global market trends and demand-supply dynamics influence raw material prices. Maize, which has diverse applications beyond starch production, such as animal feed and biofuel, further intensifying competition and price instability. These fluctuations create challenges for starch manufacturers in forecasting costs, managing inventory, and setting competitive prices, ultimately impacting profitability and hindering market growth. According to Professor Jayashankar Telangana State Agricultural University, Maize Outlook December 2022 report, maize prices increased in November 2022 compared to October 2022 due to lower arrivals from the previous year. In November 2022, the average monthly loose price for Kharif Maize at the Gulabbagh benchmark market was US$ 29.6 per quintal. The price of loose maize in Devangere, Karnataka increased to US$ 26.5 per quintal from US$ 25.9 in October 2022. Such type of price fluctuations is impeding the starch market growth.

Growth Drivers

Outlook for Maize: The global corn export market is dominated by two key players: the United States and Brazil. The situation in Ukraine had significantly impacted its export capabilities due to ongoing conflict, leading to a notable decrease in the volume of corn it exports. However, export from Ukraine to India is rising doe to production of Non-GM corn.

Recently, China has emerged as a major importer of corn, driven by a surge in its demand. This increased demand is partly a response to reduced domestic maize production within China. As a result, China is procuring large quantities of corn from Brazil, which has become a primary supplier due to the challenges faced by other exporting nations.

The shift in trade dynamics is also influenced by changing patterns in global demand. Countries such as China, Canada, and various other Asian nations that were previously recipients of corn exports from China are now contributing to the growing global demand for this staple crop. This heightened demand, coupled with the reduced supply from key exporting regions, is exerting upward pressure on corn prices.

There has been a surge in demand for corn due to increased use in manufacture of ethanol after the ban on use of sugarcane juice to manufacture ethanol. This has created challenges for corn wet milling industries as it has increased price of corn during the year under review.

Increased demand for sweetener side: The demand for sweeteners has seen a notable increase, driven by the growing need for alternatives in various products such as cold drinks, medicines, and other food items. Both sugarcane and corn are viable sources for these sweeteners and flavorings.

However, a significant shift is occurring in the sugarcane industry. Increasingly, sugarcane is being redirected towards the production of ethanol, a renewable fuel. This shift is due to the rising global emphasis on sustainable energy sources and the growing market for biofuels.

As a result of this diversion of sugarcane towards ethanol production, the availability of sugarcane for sweeteners is diminished. This reduction in supply is creating an opportunity for corn to step in as a key player in the sweetener market. With sugarcanes role in producing ethanol expanding, corn is becoming a more prominent and attractive option for meeting the rising demand for sweeteners in consumer industries.

High entry barriers for the new comers in the industry: Additionally there are high entry barriers in corn processing industry due to quality standards for end-use industries such as pharma and FMCG which means trust factor and track record of a supplier is of utmost important and for the new players, given the critical end-use, the approval process of these products takes a substantially long period and established players in the industry has advantage and this also acts as entry barrier for the new comers.

Government Support: The support of Government through fixing of MSP for maize continues and increased use of maize to produce ethanol. In addition to above, with increased price of maize after Russia - Ukraine war many growers may opt for the crop this year.

COMPANY OVERVIEW

Sayaji Industries, the flagship company of the Sayaji

Group is one of the leading manufacturers of maize starch and its derivatives. Established in 1941, the Company was initially set up as a corn wet milling unit with modest corn crushing capacity of one ton/ day in Ahmedabad, primarily to serve the citys textile units. Within a span of over eight decades, the Company is amongst the largest corn refiners in India. With an annual capacity of 1000 Metric Tonnes Per Day (MTPD), the Company is among the foremost corn starch producers in the country. It is also proposed to gradually increase the maize grinding capacity in future with modernization of equipment which in turn is expected to improve the top and bottom lines of the company.

Supported by its state-of-the-art manufacturing facilities and cutting-edge R&D prowess, the Company delivers quality modified starches and other derivatives to a wide range of industries, including textiles, paper, pharmaceutical, food processing, consumer products, animal nutrition, among others. Globally, the Company has a market in more than 40 countries and is one of the big exporters in Indias starch industry. Its commendable export work has been credited with the Export House Status by the government of India. Besides, the Company has a strong distribution network in India, with branches and agents to fulfil the requirements of its extensive customer base.

Product Portfolio

Products Covered	Industries Served
Starch	Paper, food products (soups, ketchup, jellies, custard powders, mayonnaises, salad dressing), gypsum board, pharmaceutical formulations
Liquid Glucose	Used in food products like jams, jellies, chewing gums, canned fruits to prevent spoilage
Fabrilose	Textile sizing - to provide elasticity to yarn, gypsum board
Dextrose Anhydrous	Used in special food preparations and is the best sweetener for water sensitive systems such as chocolate. Also used in medical critical conditions like comas and operations
Dextrose Monohydrate	Used in quality yeast for bakery, confectionary, dairy products, carbonated beverages, formulations with vitamins and minerals
Sorbitol	For use in mints, cough syrups, tooth paste, cigarettes and baked food items to maintain freshness, softness and flexibility
By Products	For use in food products, cattle feed and poultry farming

REVIEW OF FINANCIAL & OPERATIONAL PERFORMANCE

The total income of the company is Rs. 94,386.18 lakhs as against Rs. 1,01,956.21 lakhs in the previous year which indicates a reduction of 7.42% for the reasons indicated earlier. The price of maize during the year under review remained high as compared to the previous year. Cost of some other inputs has also increased. The company could pass on only some portion of such increased cost to its customers. As a result of this the bottom-line of the company suffered as compared to previous year. Your directors inform that Sayaji Industries Limited has continued to utilize its working capital effectively as a result of which there has been less utilization of working capital limits sanctioned by the bank. The liquidity position remained adequate to service all interest and debt repayments.

The EBITDA of the company during the year under review reduced to Rs. (1057.03) lakhs as against Rs. 3351.36 lakhs in the previous year. The gross profit of the company decreased to Rs. (277.45) lakhs as against Rs. 2317.69 lakhs in the previous year. The profit before tax of the company stood at Rs. (1863.03) lakhs as against Rs. 912.85 lakhs in the previous year and profit after tax declined to Rs. (1,131.89) lakhs as against Rs. 721.65 lakhs in the previous year.

SEGMENT OVERVIEW

Maize Processing

Maize Processing segment is the main source of revenue and profitability of the company. The key numbers of the maize processing segments are as given below : ( Rs. in lakhs)

Particulars	2023-24	2022-23	Variance (%)
Maize Grinding	291672 MTs	287278 MTs	1.53
Revenue from operations	91,965.11	99219.94	(7.31)
Export Turnover	12972.80	13458.00	(3.61)
EBITDA	(1057.03)	3351.36	(131.54)
Profit Before Tax	(1863.03)	912.85	(304.09)
Profit After Tax	(1131.89)	721.65	(256.85)

There has been increase in the grinding capacity of the company due to small capital expenditure and process improvements in the plants. The bottom line remained affected due to very high price of maize and other inputs during the year under review as compared to last year which could not be passed on to the consumers fully.

Agri Seeds Segment		( Rs. in lakhs)
Particulars	2023-24	2022-23	Variance (%)
Revenue from operations	3,888.12	3443.28	12.92
Profit Before Tax	197.65	(117.89)	267.65
Profit After Tax	17.67	(76.29)	123.16

There has been increase in the turnover and during the year under review the Agri Seeds segment has attained profit of Rs. 17.67 Lakhs.

Spray Dried Food Products Segment ( Rs. in lakhs)

Particulars	2023-24	2022-23	Variance (%)
Revenue from operations	1,799.19	1403.76	28.16
Profit Before Tax	(66.57)	(244.12)	72.73

There has been a noticeable increase in overall turnover. However, its worth highlighting that within the Spray Dried Food Products segment, effective management strategies have significantly mitigated losses. Thanks to these targeted efforts, the reduction in losses has been substantial, reflecting a marked improvement in this particular segments performance.

Key Financial Ratios based on standalone financial statement

Particulars	2023-24	2022-23	Variance	Reason for variance (if 25% or more)
Debtors	18.40	21.13	-1.92	--
Turnover Inventory	12.10	18.99	-36.29	Reduction in Revenue from operations due to lower FG and revenue from Byproduct prices and increase in Inventory volume
Turnover Ratio
Interest coverage Ratio	0.79	3.24	-75.57	Increase in Borrowings owing to Capex and increased working capital and decrease in profitability due to high RM prices.
Current Ratio	0.57	0.56	0.48	--
Debt Equity Ratio	1.48	0.99	48.87	Increase in Borrowings owing to Capex and increased working capital and reduction in Equity base owing to negative bottomline.
Operating profit margin	-0.56	1.94	-128.87	Reduction in FG and Byproduct prices coupled with higher RM prices and adverse macro environment
Net Profit margin	-1.21	0.72	-268.43	Reduction in FG and Byproduct prices coupled with higher RM prices and adverse macro environment
Return on capital	-1.93	7.64	-125.23	Decrease in profitability due to high RM prices and adverse macro environment.

RISKS AND THREATS

Competition Risk

The corn starch industry has been witnessing increased capacity expansion by existing players, entry of new players and growing availability of substitute materials. Due to the abrupt increase in maize prices in the domestic market, the company is facing pricing pressure in the international Market (where the prices of maize have remained steady). This, in turn, may impact the export market share of the company.

Mitigation

Over the years, the company has cemented its reputation as a leading manufacturer and supplier of high-quality corn starch products at right prices to diverse industries. Further, its consistent focus on capacity expansion for production of high-margin products and cost optimization are likely to drive the overall profitability and sustain the market position.

Raw Material Risk

Maize, as an agricultural product, is highly vulnerable to the impacts of climate change. Extreme weather events such as droughts, floods, and heatwaves can disrupt corn production, leading to shortages in supply and increased production costs. Additionally, changing precipitation patterns and water stress can further exacerbate the challenges faced by the industry. The increased occurrence of pests and diseases associated with climate change also poses a threat to maize crops. Moreover, regulatory changes aimed at mitigating climate change effects can impact the production practices and costs within the industry. These climate-related factors may result in high production costs, under-utilization of capacities, and market volatility.

Furthermore, climate change influences the cost of power, a major input for starch manufacturing. Increased energy costs driven by renewable energy transitions or resource scarcity may further impact the margins and profitability of companies in the industry. To mitigate the impacts of climate change, implementing sustainable agricultural practices such as improving irrigation efficiency, developing drought-resistant maize varieties, and promoting integrated pest management becomes crucial. The company is also importing maize from countries producing NonGM maize to ensure availability of maize at a reduced cost.

Mitigation

The Company has established an effective maize procurement policy to ensure a continuous supply of quality corn while reducing the risks associated with climate-related production shortages. The strategic location of its storing facilities near manufacturing plants minimizes transportation emissions. The companys power generation turbine and biogas engine utilize methane gas from effluent treatment for low-cost energy production. Procuring power from the open market helps mitigate the impact of rising power costs and supports a transition to sustainable energy sources. These actions demonstrate the companys commitment to reducing its carbon footprint and promoting a sustainable future.

Environmental Risk

In addition to the risks associated with maize supply, the company also faces environmental risks such as increasing regulation and changing government policies related to sustainability and climate change. Indias Nationally Determined Contributions (NDCs) have set targets for reducing greenhouse gas emissions, increasing renewable energy use, and improving energy efficiency. Failure to comply with these regulations could result in fines, legal action, and damage to the companys reputation.

Mitigation

To mitigate these risks, Sayaji Industries Ltd. - Maize Products has implemented several initiatives aimed at reducing its environmental impact and promoting sustainability. The company has recently commissioned a new solar power plant that will generate clean energy and reduce its reliance on fossil fuels. Additionally, the company is utilizing waste heat to generate steam and utilizes the organic waste generated to convert into Bio CNG to power its manufacturing operations, further reducing its emissions and fossil fuel related energy demand.

CLIMATE RISK

As a company based in Ahmedabad, Gujarat, Sayaji Industries Ltd. is exposed to various acute physical risks that could impact its operations, including extreme weather events such as floods, droughts, storms, fires, and heavy rains. These risks could affect the companys manufacturing facilities, inventory, and supply chain, leading to disruptions in production and delivery, as well as potential damage to property and equipment.

Mitigation

To mitigate these risks, the company has implemented various measures, including regular monitoring of weather patterns and climate-related risks, as well as disaster preparedness plans. In addition, the company has invested in infrastructure and technology to enhance its resilience to extreme weather events, such as building flood protection measures and implementing fire safety protocols beyond the legal requirements.

PHYSICAL RISKS & MITIGATION OF SUCH RISKS

Sayaji Industries Ltd. also recognizes the potential impact of physical risks on its supply chain, particularly with regard to its reliance on agricultural products such as maize. The company works closely with its suppliers to encourages its suppliers to implement sustainable practices and where possible climate-resilient farming techniques to reduce the risk of crop failures and supply chain disruptions. Sayaji has further tied up with its major customers like Colgate and has initiated measures to reduce its footprint by supplying to the closest factories from supplying to several across the country.

Physical Risk Matrix and Scenario Analysis

To better understand the potential impact of physical risks on our operations, we have developed a Physical Risk Matrix, which assesses the likelihood and potential impact of various physical risks. Based on this assessment, we have identified several scenarios that could affect our operations and developed contingency plans to minimize potential disruptions. For example, in the event of a flood or heavy rainfall, we have established protocols for managing water infiltration and ensuring the safety of our employees and facilities and have emergency preparedness plans. Sayaji conducts mock drills periodically covering all possible scenarios and is well prepared to handle any such emergency

Conclusion

Sayaji Industries Ltd. recognizes the importance of addressing physical risks and is committed to implementing measures to enhance its resilience to extreme weather events and other acute physical risks. Through ongoing monitoring, contingency planning, and collaboration with suppliers, the company aims to minimize potential disruptions and ensure the continued delivery of high-quality products and services to its customers.

TRANSITION RISK

LEGAL RISKS AND MITIGATION OF SUCH RISKS

As a company operating in the corn wet milling industry in India, Sayaji Industries Ltd. - Maize Products is well aware of the importance of managing legal risks in our business operations. There are several legal risks that we face, including compliance with government regulations, intellectual property disputes, and contractual obligations.

To mitigate these risks, we have put in place comprehensive compliance programs that ensure our operations meet all relevant regulatory requirements. We have also taken steps to protect our intellectual property, such as trademarks, to safeguard our products and processes. Additionally, we maintain strong relationships with our customers and suppliers, ensuring that all contractual obligations are clearly defined and met.

Despite our best efforts, however, legal risks can be unpredictable and difficult to control. We recognize that any failure to comply with legal requirements or contractual obligations can have a significant impact on our business, reputation, and financial performance. Therefore, we remain vigilant in our approach to legal risks, continuously monitoringchanges in laws and regulations, and working with legal experts to mitigate any potential legal issues that may arise.

By prioritizing legal compliance and proactively managing legal risks, we are confident in our ability to operate effectively and responsibly.

TECHNOLOGY RISKS AND MITIGATION OF SUCH RISKS

As a leading player in the corn wet milling industry,

Sayaji Industries Ltd. - Maize Products is well aware of the importance of keeping up with the latest technologies to stay competitive. We understand that the technological landscape is constantly evolving, and we recognize the risks associated with failing to adapt to changing trends.

To mitigate these risks, we have invested in state-of-the-art technologies that allow us to improve efficiency, reduce waste, and enhance the quality of our products. For example, we use advanced processing techniques to manufacture modified starches and other derivatives like liquid glucose, dextrose monohydrate, dextrose anhydrous, and sorbitol. We have also implemented innovative solutions to reduce our environmental footprint, such as utilizing renewable energy sources as well as energy from effluents in addition to implementing water conservation measures where we have achieved our target within a couple of years.

We understand that technology risks can have a significant impact on our business, and we are committed to staying up-to-date with the latest developments in the industry to ensure that we are well-positioned to meet the evolving needs of our customers. By investing in the right technology and continuously updating our processes, we are confident in our ability to remain among leaders in the corn wet milling industry and deliver high-quality products to our customers.

MARKET RISKS AND MITIGATION OF SUCH RISKS

As a manufacturer and supplier of maize products, Sayaji Industries Ltd. is exposed to various market risks that can impact its financial performance. One of the key market risks is the growing demand from industries for sustainable sourcing and production processes. As industries are increasingly focused on environmental sustainability and social responsibility, they are seeking suppliers who can demonstrate their commitment to these values.

Sayaji Industries Ltd. recognizes this market risk and has implemented several measures to mitigate it. The company has adopted sustainable practices in its sourcing and production processes , reducing its environmental footprint and demonstrating social responsibility. The company besides evaluating suppliers on parameters like price and quality, also does an evaluation on sustainability and environment related parameters. Sayaji has also taken several initiatives within its production processes, like use of renewable power, energy from waste water and waste energy. In addition, the company has invested in advanced technology and innovative processes to reduce waste, conserve natural resources, and minimize its carbon footprint.

Overall, we believe that our commitment to sustainability is not only a responsible business practice but also a strategic advantage in todays market. We remain committed to continuously improving our sustainable practices, promoting social responsibility, and mitigating market risks associated with sustainability. By adopting sustainable practices, Sayaji Industries Ltd. is well-positioned to meet the growing demand for environmentally responsible and socially conscious suppliers. The companys commitment to sustainability and social responsibility not only mitigates market risk but also strengthens its reputation and brand value, building trust and credibility with customers and stakeholders.

RISKS RELATING TO REPUTATION OF THE COMPANY

As a supplier to renowned organizations, Sayaji Industries Ltd. - Maize Products recognizes the importance of maintaining a positive reputation in the industry. We understand that our customers and stakeholders expect us to be responsible and sustainable in our operations, and we strive to meet those expectations. To this end, we have taken significant steps to reduce our environmental footprint, such as reducing water consumption and achieving our 10-year target in just a couple of years. We have also implemented many energy efficiency measures and made changes throughout our organization to prioritize sustainability. We recognize that climate change is an increasingly pressing issue, and we stay informed of developments in this landscape to ensure that we are doing our part. We evaluate stakeholder responses and perspectives on our climate change strategy to understand their potential reputational impacts on our company.

We understand that negative publicity from stakeholders about our products, supply chain, ingredients, packaging, or employees, whether or not deserved, could adversely affect our reputation. As such, we are committed to managing any potential reputational risks and to maintaining our sustainability practices to ensure a positive impact on the environment and society.

In all of our operations, we strive to meet the highest standards of social and environmental responsibility, and we are committed to maintaining our position as a trusted supplier of high-quality maize products.

RISKS RELATING TO EMERGING REGULATIONS

As part of Sayaji Industries Maize Products commitment to monitor and comply with regulations, we continuously assess emerging regulations that may affect our operations. One such emerging regulation that we are monitoring closely is the development of a National Emissions Trading Scheme (ETS) in India. The Indian government has set ambitious targets to reduce greenhouse gas emissions as part of its Nationally Determined Contribution (NDC) under the Paris Agreement. The upcoming National ETS, which is currently under development, is expected to play a significant role in achieving these targets. As a company operating in the corn wet milling industry in India, we recognize that the implementation of this regulation may impact our operating costs over time. Our commitment to comply with all applicable laws and regulations remains steadfast. Non-compliance with applicable laws and regulations could result in civil remedies, fines, damages, injunctions, product recalls, or criminal sanctions, any of which could adversely affect our business, results of operations, cash flows, and financial condition. Therefore, emerging regulation risks related to climate change are always included in our climate-related risk assessments. We continue to stay informed about new regulations and work to mitigate any risks that may arise.

OUTLOOK

There has been a substantial increase in the price of maize due to geopolitical tensions which continued throughout the year under review. However, the threat of new covid-19 waves has reduced substantially due to large scale vaccination drive by the Government of India and the activities has returned to pre pandemic levels. Your company is also hopeful that the geopolitical situation due to Russia Ukraine war turns for better in the times to come. This coupuled with normal rains forcast during the current financial year may ease the prices of maize and other inputs in the times to come. The company is also striving to pass on the increased input costs to its customers to the extent possible to ensure that its bottom line is not much adversely affected. The company is also planning to increase its grinding capacity with modernization of its equipment to meet the expected increased demand for its products. The company is also in process to marketilise its idle land to improve liquidity.

Demand for corn starch products is set to grow with rising incomes, favourable demographics and swift industrial growth. The company offers quality products to consumers worldwide by combining customer insights with scientific and technical excellence. To remain competitive, the Company has invested in modernizing its plant and machinery and reducing the bottlenecks in the production process. The company has aggressively focused on strengthening its cost competitiveness and raising production of higher-margin value-added products to enhance profitability. The company is hopeful that normal monsoon in the maize growing areas like Karnataka, Maharashtra, Telangana, MP, etc. in this monsoon season coupled with culmination of the aforesaid factors will offer sustainable growth opportunities to the company. The government may reconsider its decision and allow production of ethanol from sugarcane juice.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has an adequate internal control framework commensurate with the size, nature and complexity of its business operations. The internal control systems are formulated as part of the principles of good governance and ensure proper recording and reporting of transactions, safeguarding of assets and protection against losses from any unauthorized use or disposition and misappropriation of funds.

The internal auditors ensures, checks and reviews the internal controls and proactively recommends measures for strengthening them. The internal controls are supplemented by documented policies and procedures, which provide reasonable assurance about the reliability of financial and operational information, fraud control, compliance with applicable statutes and internal policies. The Audit Committee of the Board periodically reviews the internal audit reports to ensure the effectiveness of the internal controls. The management as well as the statutory auditors of the Company review the internal audit findings and undertake relevant action.

HUMAN RESOURCES

Sayaji Industries Ltd. - Maize Products believes in top-down approach when it comes to sustainability and environmental responsibility. The Managing Director and Board of Directors are responsible for setting the tone and providing direction to ensure the companys commitment to sustainability is reflected in its policies and practices. The Company Secretary reports directly to the Managing Director and is responsible for ensuring compliance with all regulations including environmental regulations and implementing sustainability initiatives and monitoring the environmental impact of the companys operations. In addition, the company has an independent Environmental Manager, who is exclusively responsible for managing the function and reports to the Directors.

The company has also established an Internal Environmental Health and Safety (EHS) Committee, comprising of senior management representatives, along with worker initiatives which oversees the implementation of the companys sustainability, environmental as well as energy policies and procedures. In addition, the company has an Energy Management Committee, which is responsible for monitoring the companys energy usage and identifying areas for improvement. The committee is headed by the Electrical and Mechanical Heads of the plants in addition to representatives from various departments. Human resource function by creating adequate roles plays critical role in the company meeting its compliance regulations in addition to the emerging risks.

At Sayaji Industries Ltd. - Maize Products, sustainability and environmental responsibility are integral to the companys business operations and are deeply ingrained in its organizational structure. The company recognizes that it has a responsibility towards the environment and is committed to implementing best practices to minimize its environmental impact.

Environmental Impact

At SIL, we are dedicated to minimizing our environmental impact and promoting sustainable practices across our operations. Our commitment to environmental stewardship is evident through our continuous efforts to reduce greenhouse gas emissions, conserve water, and promote sustainable practices. Below, we outline our interactions with the environment.

Energy Efficiency

In alignment with our commitment to the Nationally Determined Contributions (NDC) targets for GHG emissions reduction, we are dedicated to enhancing the energy efficiency of our operations through the use of renewable energy. To address the environmental risks associated with our production processes, we have installed a solar power plant that generates clean energy. Furthermore, we view waste as a valuable resource. The company has also signed letter of intent with Repowering India (OPC) Private Limited to produce 6.6 M.W. of solar power which is expected to generate clean energy by the end of current financial year. By using biogas generated from ETP as fuel in gas turbine, we significantly reduce our reliance on fossil fuels, thereby promoting sustainable practices and contributing to our overall environmental stewardship.

Climate Change:

We adopt a structured approach to manage climate-related risksand advance our sustainability goals. We focus on immediate resilience andadaptation by monitoring weather patterns, tracking regulatory changes, andconducting continuous risk assessments. Our proactive planning includes implementing energy efficiency measures, optimizing resources, reducingemissions, and engaging in industry collaborations. We invest in research and development, consult with stakeholders, and align with evolving climate trendsand best practices. Additionally, we take a comprehensive, long-term view, evaluating the impacts of climate change on our operations. We explore sustainable innovations and alternative technologiesto anticipate and adapt to potential disruptions.

Water Stewardship

Our organization takes a proactive stance in identifying and assessing potential water-related risks, particularly those associated with water shortages and their impact on business operations. We use a comprehensive approach that includes monitoring water usage, forecasting future risks, and implementing effective conservation strategies. We adopted a water-related target in 2021 to enhance water use efficiency, aiming for a 10% reduction in water consumption per ton of product by 2032 which we have already achieved.

Our success is attributed to a series of targeted initiatives designed to optimize water usage across our operations. Key to this achievement is our focus on improving the steam-to-coal ratio and also implementing measures to combat steam theft, such as reducing excess air in coal and optimizing ID fan operations.

Waste Management

Effective waste management is a critical component of our companys operations. We are dedicated to reducing waste generation, maximizing recycling, and ensuring the responsible disposal of all waste materials. Our comprehensive approach to waste management minimizes our environmental impact, drives operational efficiency, and supports a circular economy.

Our commitment to Extended Producer Responsibility (EPR) underscores our dedication to sustainable practices and waste minimization. EPR is an integral part of our business strategy, ensuring that we take full responsibility for the products we manufacture, from production through to end-of-life management. By embracing EPR, we are committed to designing environmentally friendly products, implementing efficient take-back programs, and collaborating with recycling partners to foster a sustainable and circular economy.

Social Impact

We believe that our success is intrinsically linked to the well-being of our employees, communities, and stakeholders. Our commitment to social responsibility is at the core of our values and operations, driving us to create a positive and lasting impact on society. We are dedicated to fostering inclusive growth, promoting education and health, supporting local communities, and ensuring fair and ethical business practices.

Employee Health, Safety and Well-being

We prioritize the health and safety of our employees by maintaining rigorous safety standards and protocols across all our operations. Regular training programs and safety audits ensure a safe and secure workplace. We support our employees well-being by promoting work-life balance through flexible work arrangements.

Community Engagement

We actively engage with local communities by supporting educational initiatives that empower individuals and promote lifelong learning. We also support healthcare initiatives that improve access to medical services and promote public health in the communities we serve.

Diversity and Inclusion

We are committed to fostering a diverse and inclusive workplace where all employees feel valued and respected. Our company focuses on recruitment, retention, and development of talent from various backgrounds. We also uphold fair labor practices and ensure equal opportunity for all employees.

Ethical Business Practices

We adhere to the highest ethical standards in all our business practices. Our code of conduct outlines our commitment to integrity, transparency, and accountability.

Our Sustainable Governance

Our governance structure is designed to ensure effective oversight and integration of Environmental and Social impacts into our business practices. We are committed to upholding the highest standards of governance to support our ESG objectives and drive sustainable growth over the long term.

Our Board of Directors plays a critical role in overseeing our ESG journey and ensuring that all policies align with our commitment to environmental and social responsibility. The Board is well-versed in their roles and responsibilities, and we have established a robust system for reviewing and approving all company policies.

By maintaining strong oversight, promoting transparency, and engaging with stakeholders, we are dedicated to advancing positive environmental and social outcomes while adhering to the highest governance standards.

Mr. Priyam B. Mehta

Chairman & Managing Director

(DIN-00030933)

Place: Ahmedabad

Date: 9th August, 2024