sjs enterprises share price Management discussions


Global economy the global economy was seen recovering in 2021 after the high market volatility and deep recession in 2020. However, the ongoing russia-ukraine crisis led to extensive loss of lives, triggered the biggest refugee crisis in europe, and severely set back the global recovery. After a strong rebound in 2021, the economic indicators suggest that global activity has slowed. 1global growth is projected to decline from 6.1% in

2021 to 3.6% in 2022 and 2023. At the end of 2021, inflation in several regions surged to multi-decadal highs. A key driver of inflation across the world has been the steep surge in energy, food, and commodity prices. Central banks across the world have started tightening their stances and others are expected to follow in response to domestic macroeconomic conditions, including rising inflationary pressures.

2brent crude oil prices averaged us$ 70.89 per barrel in 2021. However, crude oil prices have remained above us$ 100 per barrel following russias full-scale invasion of ukraine. Sanctions on russia and other independent corporate actions contributed to falling oil production in russia and continue to create significant market uncertainties on further oil supply disruptions. These events occurred against a backdrop of low oil inventories and persistent upward oil price pressures. 2prices are expected to taper from their record levels and average to us$ 97.24 per barrel in 2023.

Growth across advanced economies (aes) is expected to moderate to 3.3% in 2022 from 5.2% clocked in 2021. The us economic expansion has been facing headwinds from surging inflation and gradual withdrawal of fiscal and monetary policy support. The rebound that was underway in europe has suffered a setback due to the russia-ukraine conflict with inflation at unpredictable levels. Emerging markets and

Developing economies (emdes) are expected to grow at 3.8% as against 6.8% growth recorded in 2021. Developments in china continue to dominate the outlook for asia, especially for emerging asia. The risk of new covid-19 variants in china has led to mobility restrictions and localised lockdowns, which has slowed private consumption. Emerging and developing europe, including russia and ukraine will see gdp contract significantly owing to higher energy prices and the disruption of trade.

Global economic growth: actual and projections (%)

Particulars 2021 2022 (p) 2023 (e)
World output 6.1 3.6 3.6
Advanced economies 5.2 3.3 2.4
Emerging markets and developing economies (emdes) 6.8 3.8 4.4

P- projections, e-estimates

(source: imf world economic outlook april 2022, eia)

Indian economy indias underlying economic fundamentals remain strong and despite the short-term turbulences caused by the emergence of newer covid variants, supply-chain disruptions arising out of the russia-ukraine crisis, and rising inflation, the impact on the long-term outlook will be marginal. The results of growth-enhancing policies and schemes such as production-linked incentives and increased infrastructure spending will start kicking in from 2023, leading to a stronger multiplier effect on jobs and income, higher productivity, and efficiency all leading to accelerated economic growth.

As per the international monetary fund (imf), indias gross domestic product (gdp) has grown by 8.7% in fy 2021-22, and growth is expected at 8.2% in fy 2022-23. The ongoing vaccination drives, rebound in investment cycle with significant spending on infrastructure, emphasis on manufacturing and stronger digitization, and continued recovery in consumption, accentuated by gradual tapering of work-from-home along with rising rural incomes and affordability will drive significant growth in the indian economy.

However, supply-side bottlenecks persist with rising international crude oil prices and elevated commodity costs. On the monetary side, the rbi has raised the repo rate by 50 basis points to 4.90% from 4.40% earlier to tackle elevated inflation and trigger economic growth.

Industry overview

Decorative aesthetics industry overview the decorative aesthetics industry offers visually appealing products for the automotive and consumer appliances industries. Manufacturers of discretionary consumption items strive to bring value and aesthetic superiority to their offerings to enhance their market shares.

Oems have started considering product aesthetics while building a brand. Compared to other automotive parts, most aesthetic items involve lower logistics costs due to their compact nature. According to crisil, the decorative industry is estimated to grow at a cagr of 20% over fy 2021-26, even if underlying markets grow by 10-12% during the same period.

Indian decorative aesthetics industry the indian decorative aesthetics industry caters to leading auto oems, global independent tier-i automotive component makers, and consumer appliance companies. Majority of the share is, however, occupied by the 2ws. According to the crisil report, the value of the decorative aesthetics market in india was at Rs 19.9 billion in fy 2020-21.

Demand for decorative aesthetics is witnessing a shift towards premium, aesthetically superior, and technologically advanced products triggered by rising disposable incomes and aspirations, exposure to developed markets, and the advent of e-mobility. According to crisil report, the industry is projected to grow by 20% cagr to reach Rs 49.2 billion by fy 2025-26, driven by an increase in the underlying application segments and a shift towards premium aesthetic products.

Indian two-wheelers sector

during the year under review, domestic two-wheeler sales dropped 11% yoy to 13.5 million units. Demand slowdown and job losses due to the pandemic, supply chain constraints, and global semi-conductor shortages dented the industry growth. The rural markets were heavily impacted due to the second wave of the pandemic that resulted in a massive disruption in demand.

Improved macroeconomic factors coupled with the growing demand for personal mobility will contribute to a significant rebound in the 2w industry. With the recovery in economic activities and consumer demand, the industry will bounce back, and there will be opportunities for growth and entry of new players. The untapped rural market is likely to be the key growth driver for the two-wheeler industry with pronounced rural infrastructure.

Indian passenger vehicles sector

4domestic sales of passenger vehicles grew 13.2% to 3.1 million units in fiscal 2022 as against 2.7 million units in fiscal 2021. Demand from the pv sector remains strong, but supply crunch due to various global factors such as the russia-ukraine war, rising inflation, higher fuel prices, and semiconductor chip shortage pose challenges for the industry. Furthermore, acquisition costs saw a steep rise due to installing safety standards such as the necessary anti-lock braking system (abs), airbags, and other features and changes in emission standards. Moreover, the growing work-from-home trend due to the pandemic-related restrictions eliminated the need for people to go to work which along with higher ticket sizes in the pv segment also contributed to the stunted growth.

After a consecutive dip in production of passenger vehicles in fiscal 2020 and 2021, pv production increased in fiscal 2022 and is expected to further rise owing to a spurt in domestic and export demand. Also, electrification of transportation is already underway. The need is undeniably there, and it is likely to shoot up in the coming years. Demand is expected to be driven by expanded geographical footprint and enhanced product portfolios. Anticipated improvement in rural demand and stable crude oil prices will be crucial indicators to keep an eye on to drive the increase in domestic pv sales.

Indian consumer durables sector under penetration in many of indias consumer durable product categories presents a wide canvas for the industry to grow. Premiumization and the ongoing shift towards the organized sector further boost the prospects. The policy thrust on infrastructure capex across sectors and secular drivers of retail demand are also expected to drive growth.

5the Rs 1.2 trillion indian consumer electricals industry has recovered smartly after the downturn induced by covid-related disruptions for two years. Recovery was broad-based across the product categories and supported by pent-up demand initially. A strong revival in the housing market and consumer preference towards bigger and comfortable houses in a work-from-home (wfh) scenario have set the tone for a sustainable growth story. Increased disposable incomes, nuclearization of families, a wider product basket, and shorter replacement cycles have contributed to the industrys growth over the past years. Government initiatives such as improving electrification and rural/urban infrastructure, national infrastructure pipeline (nip), production-linked incentive schemes, focus on indigenous manufacturing,

3https://timesofindia.indiatimes.com/auto/news/siam-reports-stunted-growth-in-automotive-sector-but-is-it-all-bad-news/articleshow/90823758. Cms?from=mdr 4https://timesofindia.indiatimes.com/auto/news/passenger-vehicle-2w-sales-down-while-ev-demand-skyrocketed-in-f y22-fada/ articleshow/90660272.cms 5report on i ndianc onsumere lectricals:a sustainable growth story, a pril 2022 higher budgetary allocations for capital expenditure, etc. Are among the other growth drivers.

Changing demographics, rising per-capita income, evolving lifestyles and perception of products, growth of multiple sales channels, and technological advancement will increase spending on consumer appliances and contribute to market growth.

Growth drivers of indian de corative aesthetics industry

Despite the current headwinds, the indian decorative aesthetics industry is headed for high growth in the coming years. Favourable tailwinds include evolving aspirations, higher spending propensity, technological advancements, and a shift to premium and aesthetic products.

Growing demand india is the second most populous country in the world behind china. The total population stood at 1.39 bn in 2021 and is expected to cross 1.5 bn by 2030. This is expected to boost the demand for automobile and consumer durables in the country, thereby, driving the decorative aesthetics market growth in india.

Shift in consumer preferences

Rapid urbanization along with evolving consumer preferences and shift towards premium and superior aesthetic products will result in strong growth of the indian decorative aesthetics market.

Consumer durable penetration in india india lags the global average in consumer durables penetration. Household penetration of consumer durables in india remains lower than that of other developed as well as developing nations. 6only 16% of households in india own room air conditioners (racs) compared to more than 60% in china, japan, and the united states. For washing machines (wms), penetration in india is approximately 18% as against global average of less than 50%. This presents a huge opportunity to boost growth in the indian consumer durables market.

Policy support

Favourable government reforms such as increasing infrastructure investments, energy efficiency, technology-led demand, and production-linked incentive schemes will attract significant investments in the automobile and consumer appliances sector. All these factors augur well for the decorative aesthetics market.

Industry trends

Shift to premium, aesthetic products

Premiumization has been driving the demand for visually appealing and aesthetically superior products, driven by the changing aspirations, higher incomes, and availability of affordable premium products. This is reflected in the growing demand for mid and top variants of pvs and branded consumer durable products. Interestingly, aesthetics is seen emerging as important purchase consideration, and consequently, a product differentiator for the oems.

Advent of technology the decorative aesthetics market is witnessing a steady shift to technologically superior products, which will drive growth for oems and consumer appliance companies. Some of the technology-led aesthetic products comprise 3d appliques/ dials, digital speedometers in automobiles, touch-based navigation in cars (optical plastics), imd / iml parts and lens mask assembly, among others.

Demand for e-mobility electric vehicles have emerged as a growing trend in the mobility industry in response to tightening emission controls and reduced dependence on fossil-fuel-powered internal combustion engine (ice) vehicles. Ev penetration in india is expected to gain pace in the coming years, driven by impressive incentives, lower costs, particularly lithium-ion batteries, and expanding product choices. Ev models typically have better technology and aesthetics such as more connected features, larger number of screens, lens mask assembly, 3d lux badges, etc. Adoption of evs is poised to benefit aesthetic players on the back of advanced technology and designs.

Business overview sjs enterprises is amongst the leading players in the indian decorative aesthetics industry with a wide range of products across both traditional and premium segments with strong manufacturing and design capabilities, expert workforce, and trusted customer relationships. The company is an end-to-end solutions provider, wherein decorative aesthetic products are designed and delivered to the 2ws, pvs, consumer appliances, commercial vehicles, medical devices, farm equipment, and sanitary ware manufacturers.

The company serves its customers with a diverse array of products under 11 product categories. It also offers a range of aftermarket accessories for 2ws and pvs under the brand name ‘transform.

Key strengths

Extensive product portfolio the companys product portfolio includes a wide range of traditional and premium aesthetic products categories including aftermarket accessories catering to seven end segments including two-wheelers, passenger vehicles, commercial vehicles, consumer durables, farm equipment, medical devices, and sanitary ware. Each of the decorative solutions is a perfect fusion of precision and innovation designed to notch up the overall experience of customers products while doing justice to their brand legacy.

Manufacturing and supply chain capabilities sjs has a strong manufacturing footprint with two facilities in bengaluru and pune. The manufacturing infrastructure of the company enables it to produce high-precision, quality products while strengthening its competitive position. Sjs has the scale and capability to manage 6,000 skus and supplied more than 123 million parts to 175+ customer locations across

20+ countries during fiscal 2022 in an industry that few can match globally.

The bengaluru facility of the company has flexible operations, enabling it to interchange capacity and product mix and de-risk the business model. Also, the company enjoys longstanding relations with its suppliers and equipment vendors to ensure ready and uninterrupted availability of raw materials. Its products being low-weight and transport-friendly in nature enables sjs to meet the complex and timely delivery of a vast portfolio of skus to its customers while maintaining a centralised manufacturing and delivery system.

Product innovation continuous innovation and product development enable the company to stay ahead of the curve. Sjs has successfully diversified its offerings to introduce new-age, premium products such as iml/imd parts, 3d appliques, lens mask assemblies, and aluminium badges to benefit in industry trends. It has a strong in-house team of 70+ new product development (npd) personnel which has developed 4-5 new products in the past 3-4 years, accounting for 16% of the companys revenues in fy 2021-22 from less than 3% in fy 2018-19.

Long-standing customer relationships the companys ability to offer design-to-delivery aesthetic solutions has made it a preferred partner for the worlds most esteemed brands. It has forged strong relationships with all its customers which is validated by the fact that sjs has been associated with its 10 largest revenue contributors for around 15 years. It strives to further widen its customer base by adding new clients and enhancing opportunities.

Quality consciousness

Quality is of topmost priority to sjs given the visual and aesthetic nature of its products. The company has a dedicated team of over 300 people in quality assurance and control who monitor every aspect of production right from quality of raw material, manufacturing processes, and the end products. Also, the bengaluru facility meets iso class 7 dust-free clean room specifications products. The products manufactured for the automotive industry are subject to compliance with the restriction of certain hazardous substances (rohs) and international material data system (imds) guidelines. Exotechs products are certified by the national accreditation board for testing and calibration laboratories.

Robust financials the company maintains a strong and de-leveraged balance sheet with total equity of Rs 304.4 million and borrowings (current and non-current) of Rs 125.9 million. As on 31st march 2022, the companys cash and cash equivalents stood strong at Rs 1,009.2 million.

Financial performance consolidated revenue of the company stood at Rs 3,698.6 million in fiscal 2022 compared to Rs 3,201.4 million in fiscal

2021 (proforma adjusted numbers including exotech), registering a growth of 15.5%. Of the total revenue, 2ws segment accounted for a share of 41.5% (58.0% in fiscal 2021 for sjs standalone), followed by pv segment at 30.5% (16.6% in fiscal 2021 for sjs standalone) and consumer durables at 18.5% (25% in fiscal 2021 for sjs standalone). Revenue from exports doubled tofromtheshift Rs 468.1 million in fiscal 2022 as against

Rs 232.9 million in fiscal 2018.

Ebitda of the company stood at Rs 985.4 million in fiscal 2022, on a healthy margin of 26.3%. The profit after tax (pat) stood at Rs 550.1 million in fiscal 2022, on a margin of 14.7%.

Key financial ratios as per sebi listing obligations and disclosure requirements (amendment) regulations, 2018 fiscal 2022 fiscal 2022 consolidated standalone current ratio 3.27 4.11 debt equity ratio (0.24) (0.22) ebitda margin (%) 26.3% 31.5%

Net profit margin (%) 14.9% 10.4% return on n et worth 15.3% 14.5% (ronw) (%) operational highlights fy 2021-22

• became the first company in the aesthetics and decorative space to be listed on nse and bse

• secured businesses with existing customers and new marquee customers for india and malaysia markets. Forayed into north america by way of new client wins

• added marquee customers like kia india, ola electric, minda industries, mg motors, stellantis, ultraviolette automotive, amongst others

• won key business projects from continental, morris garage, honda & hyundai, etc.

• bagged prestigious order for hmsis maiden motorcycle entry in the huge 100cc bike segment

• acquired exotech plastics, which is in the business of chrome plating and painted wheel covers, thereby expanding our product portfolio

• developed products for ev segment and started supplies to ola electric and tvs iqube

• expanded product portfolio even further by addition of chrome plated parts, painted wheels covers, wheels caps, steering wheel logos and illuminated logos

• appointed sales representative in brazil, argentina, and turkey to strengthen position in latin america and european markets

Risk management

Economic risk slowdown in economic growth and geopolitical tensions may lead to new model launch delays and adversely impact the business of the company.

Mitigation: favourable government reforms, increasing investments in infrastructure development, recovery in economic activities and consumer sentiment are all expected to reinvigorate economic growth. The company makes consistent efforts to increase sales from diverse customers and geographies to mitigate risks arising from unfavourable macroeconomic events.

Pandemic risk the emergence of newer variants of the covid-19 pandemic and ensuing restrictions may disrupt supply chains and customer demand, thus impacting the business of the company.

Mitigation: the company has a comprehensive business continuity plan in place to stay afloat during the uncertain times and minimize demand slowdown.

Competition risk the company faces stiff competition from both organized as well as unorganized players. Its inability to supply innovative and high-quality products may result in the loss of market share and profitability.

Mitigation: the company leverages its robust expertise to produce differentiated products that fulfill varied customer demands to mitigate competition and maintain its market postitioning. The company has the capability to handle 6,000+ skus and ensures delivery of quality product within the required time frame, a capability which not many companies can match.

Operational risk

Manufacturing issues or delays in new product development may impact the business and revenues of the company.

Mitigation: post the easing of restrictions, the company adopted and has been stringently following all safety measures at its plants to minimize health risks for its workmen and ensure uninterrupted operations. Further, it has leveraged its diverse portfolio and longstanding customer relationships to minimize business concentration risk.

Technology risk inability of the company to keep up with the evolving technology trends may affect its business operations and, consequently, impact revenue and margins.

Mitigation: the company consistently invests in latest technologies and processes which has enabled it to create an innovative, high-quality portfolio. Further, acquisition of exotech along with its expert design team has strengthened its technology edge. The new product development (npd) team of the company also consistently strives to innovate and produce premium products in line with the evolving customer needs through early involvement with customer product design teams.

Customer risk loss of key customers due to unforeseen or adverse events may affect the companys reputation and revenue growth.

Mitigation: over the years, sjs has maintained successful relationships with its customers across the world. The vast product portfolio and superior quality and designs enable the company to cater to diverse customer requirements. The company also strives to minimize customer concentration risk by focusing on adding new customers and end markets.

Currency risk since sjs imports a major chunk of raw materials and exports final products, adverse exchange rates and volatility in currency movements may impact the margins and profitability of the company.

Mitigation: continuous monitoring of the movement in exchange rates insulates the company from adverse fluctuations. Further, during the year, the company did not enter into any hedging arrangements owing to the global economic turmoil. The company imports some raw materials and exports some of their products, which acts as a natural hedge against currency risk.

Crude risk the unprecedented increase in crude oil prices due to adverse macroeconomic events may impact the margins of the company.

Mitigation: the company looks at va/ve actions, waste reduction campaigns, alternate sourcing to minimize the impact of increase in prices of input costs and raw materials. It also approaches its customers to negotiate in order to get price increases, on a case by case basis, to minimize the impact of rising crude prices.

Talent risk unavailability of a skilled workforce or failure to retain key talent may impact the operations of the company.

Mitigation: the company has a robust hr policy aimed at attracting and retaining the best talent in the industry. Regular skill development and employee engagement programs are conducted to boost employee morale and productivity. The company has also been accredited with the ‘great place to work certificate in fiscal 2022 due to its holistic employee-centric interventions.

In addition, sjs has a unique esop policy, which was distributed to around 250+ employees in fy 2021-22, and will have a vesting period of 3-5 years to motivate employees to work harder towards a common goal and grow the company.

Outlook the decorative aesthetics industry continues to be attractive. Demand is shifting towards premium, aesthetically superior, and technologically advanced products, driven by rising disposable incomes and evolving aspirations, exposure to developed markets, and the advent of e-mobility. Automobile and consumer durable manufacturers are accordingly revisiting their product design strategy. Sjs is well-positioned to tap these growth opportunities, both in india and globally. The company expects a 25% cagr growth in revenue for the next three years on account of positive outlook for 2ws, 7pvs and consumer durables which are expected to grow at 10-12% cagr during the same period. Premiumization, new customer wins and exports will help drive higher sales growth for sjs outperforming the underlying industry growth rate.

Growth strategy

1. Organic growth - expected at ~25% cagr for fy 2023-25, maintaining best in class margins a) expanding capacity sjs intends to expand its chrome plating capacity to meet the high customer demand pipeline. The company plans to more than double its capacity to achieve revenue of ~ Rs 300 crores from chrome plating compared from the current Rs 130 crores levels. This expansion would entail a capex of ~ Rs 100 crores and would generate roce of ~20% at full capacity. The company would like to pursue exports for chrome plating post the expansion.

b) developing new products and technologies leveraging its robust capabilities, the company focuses on developing new-age products and technologies, recent introduction being illuminated logos. It continues to embed modern technologies

7source -c risil report june 2021 and develop aesthetic products in key categories of in-mould label or decoration parts (iml/imd), in-mould electronics (ime), etc. To cater to the varied needs of customers.

c) increasing global presence sjs is continuously investing to increase presence in existing geographies and enter newer markets by leveraging its strong customer relationships. The company is strengthening its sales force in the international markets of turkey, brazil, and argentina and exploring similar opportunities in other countries. Further, product portfolio expansion and greater cross-selling opportunities post acquisition of exotech will result in a wide customer base and higher exports.

d) building mega accounts with key customers strengthening relationships with existing customers by expanding the array of products and building large mega accounts is another important strategy. Simultaneously, sjs is increasing its customer base by marketing existing products to new customers and exploring more cross selling opportunities between sjs and exotech.

2. Mergers & acquisitions - evaluating opportunities and building an m&a pipeline to give an impetus to revenue growth over and above the organic growth of ~25% pursuing inorganic opportunities

during the year, sjs successfully completed the integration of exotech business, where it demonstrated credible business improvement in terms of topline growth and margin improvement. The company would like to pursue more such business accretive opportunities in the coming future as well. The intent is to either build capacity in adjacent / new aesthetic product categories, expand presence in consumer-related industries or enter new geographies and tap new markets.

3. Strengthening leadership team to execute its ambitious growth plans, the company aims to strengthen its senior leadership team by appointing new ceo to lead all the business activities and a new cfo to lead the finance function and finance integration future targets.

Human resources employees are the most important asset of the company. It strives to foster a safe and conducive environment and treat employees with utmost fairness and align their goals with that of the company. It focuses on strengthening the talent pipeline by way of continuous learning and development, employee engagement, career development, rewards & recognition programs, etc. During the year under review, the company provided safety trainings such as roll handling training and fire alarm system training, among others. The company also provided training on awareness, performance management, and six sigma. Employee engagement programs include celebrations for new years day, republic day, womens day, independence day, and other wellness sessions.

Sjs gives utmost importance to the health and safety of its workforce and adheres to all safety guidelines issued by the government. In view of the covid-19 pandemic, the company adopted flexible work guidelines, distributed medicines to employees and their families in addition to thermal screening, sanitization of facilities, and maintaining social distancing norms. On the back of all these meaningful employee-centric measures, the company was awarded ‘great place to work certification during the year. As on 31 st march 2022, the companys employee strength stood at 1,257.

Environment, health & safety (ehs) the company is committed to health, safety, and environmental concerns, while balancing a sustainable growth objective. It aims to minimize the adverse impact of its processes on the environment while ensuring the health and safety of its employees and other key stakeholders.

The company endeavors to minimize carbon footprint, reduce energy and waste generation, and conserve natural resources to mitigate environmental risks and fulfil the responsibilities of being a responsible corporate. Key initiatives include the installation of solar panels at its factories, and sewage treatment plant for waste reduction, ev charging points at the parking area premises, reduction in water wastage by reusing water in toilets and for plants, etc.

The bengaluru facility is leed gold certified (leadership in energy efficiency and environment design) by the us green building council. It has effluent water treatment units to treat wastewater and reuse in operations. The facility undertakes various initiatives towards energy efficiency and using renewable energy (solar energy generating ~2mw) to reduce carbon footprint.

Further, the company undertakes meaningful initiatives to improve the livelihoods of the communities in which it operates.

Corporate social responsibility (csr) as a responsible corporate, the company endeavours to create a positive impact in the communities in which it operates. Education, healthcare, sports, and environment protection are the key focus areas for sjs. The company intends to improve the livelihoods of the underserved masses and build an inclusive tomorrow through its meaningful and holistic interventions. During the year, the company spent

Rs 11.77 million towards csr initiatives.

Notable initiatives undertaken during the year include the construction of 5 ro plants near the factory premises; supporting building of additional classrooms for betterment of school infrastructure and education; sponsoring para-athlete mr. Mani kundan for participating in international competition and winning medals for our country; and garbage collection and waste management across 14 villages around the factory. During the covid-19 pandemic, the company also distributed medicines and equipment, essential kits, food packets, etc. To the neighbouring villages to support them.

Information technology sjs, being a design-led company, is committed to strengthening its technology initiatives to increase operational and cost efficiencies, enhance quality, and drive premiumization.

Internalc ontrol system the company has a comprehensive internal control framework in place that covers various aspects of governance, compliance, audit, control, and reporting. These internal controls are responsible for adhering to the regulatory framework, preventing frauds and errors, safeguarding assets and finances, and ensuring the reliability of financial reporting. The companys internal audit team periodically conducts an audit of internal control systems and shares the findings with the companys management, who in turn, takes corrective actions to maintain the efficacy and effectiveness of the internal controls.

Cautionary statement the management discussion and analysis contains statements describing the companys objectives, projections, estimates and expectations, which may be forward-looking in nature. These statements are made within the meaning of applicable laws and regulations and are based on informed judgments and estimates. There cannot be any guarantee of previous performance continuity, as future performance also involves risks and uncertainties. These may include but are not limited to the general market, macroeconomic, interest rates movements, competitive pressures, technological and legislative developments, and other key factors that may affect the companys business and financial performance.