smvd poly pack ltd share price Management discussions

Industry Structure and Development, Opportunities and Threats

Global Outlook and India

Global economy growth is expected to have slowed to 2.9% in 2023 (As per the Global Economic Prospects 2023 & IMF) amidst monetary tightening by Central Banks globally to tame inflation caused Russian invasion of Ukraine which disrupted supply chain and led to steep surge in commodity and fuel cost triggering energy crisis in Europe and hampered economic activity. High inflation, rising borrowing cost, worsening liquidity conditions and spread of covid pandemic had curtailed spending and investment and slowed the process of recovery. Slowing global demand, rising interest rates, higher food and energy prices along with sharp appreciation of US Dollar is likely to slow developing process of developing economies.

As per a press release of World Bank in 2023 it is said that the Indian economy has shown remarkable resilience and is one of the fastest growing economies of the world despite facing numerous challenges from the global environment such as the COVID-19 pandemic, the Russian- Ukraine conflict, and synchronised policy rate hikes by central banks. The GDP forecast of India in 2023/24 is estimated to be 6.3% which is 0.3 % less for its earlier

forecast.(https://www.worldbank.org/en/news/press-release/2023/04/04/indian-economy-continues-to-show-resilience- amid-global-uncertainties)

However the growth is expected to pick up in the second half of the fiscal year with revival in the manufacturing and trading activity, pick up in the investment and credit cycle and various government schemes like PM Gati Shakti, the National Logistics Policy and production linked incentive schemes are expected to support the economic growth. But still the Inflationary pressure is required to be taken care of. Overall it can be said that the Indias economic looks positive and governments proactive measures would support its growth in coming years.

Recent Trend & Future Outlook

The Indian packaging sector is projected growing at a CAGR of 12.60% during its forecast period (2023-2028 ) possibly making it one of the largest contributing sector of the Indian economy.

(https://www.mordorintelligence.com/industry-reports/packaging-industry-in - india#:~:text=India%20Packaging%20Market%20Analysis,period%20(2023%2D2028).

Indias escalating consumer market, rising population and changing lifestyles are the various factors leading to surge in demand for packaging industry specially in the end user industries.

The Woven sacks industry has also been administered a remarkable increase in the demand for FIBC Bags. The expanding industries, including food products & agriculture, pharmaceutical products, and chemicals and fertilizers, the Make in India initiative have resulted in the establishment of numerous manufacturing enterprises in India, further boosting the demand for FIBC, for effective storage, cost effective solution for bulk packaging and transportation of goods. Along with FIBC, PP, HDPE, Leno bags are also in demand on account of their use as fatigue resistance, high chemical resistance and durability thereby making it a suitable material for packaging. It is majorly utilized as a packaging material as it is waterproof and resistant to moisture, resistant to wear, tear and fatigue which makes it suitable for applications that require a high level of physical stress.

Risks and Concerns

Even though the market area where the Company is carrying on business seems to be very promising but overall it is exposed to a good number of risk factors which are incessant in nature. Like the prices of granules used as a main raw material component are derived from crude oil and are highly volatile. They tend to fluctuate with the global demand-supply, politics etc. The latest example being the Russia-Ukraine war on account of which the prices of granules remained high throughout the year. There are various stringent safety laws and regulations applicable on the manufacturing of the Company the non-adherence to which directly impacts the not only its working but also its reputation. Hence a regular check on safety and maintenance has to be done to keep it on order. This industry is mostly dependent on availability of skilled and efficient labour hence any change in their mindset tends to effect the industry as a whole.

Lastly the promising future of this industry has attracted and added a large number of competitors to the field. As a result of which one has to keep a track on them from every nook and corner.

Internal control systems and their adequacy

The Company maintains adequate internal control systems commensurate with the Companys size and business, which provide, among other things, reasonable assurance of recording the transactions of its operations in all material aspects and providing protection against misuse or loss of the Companys assets. The systems and processes are continually reviewed for their effectiveness by the company and augmented by documented policies and procedures.

Financial and Operating Performance

The operating revenue stood at Rs. 7966.20 Lakhs (Rs. 8624.13 Lakhs in FY 2021-22) and operating profits at Rs. 38.41 Lakhs (Rs. 138.61 Lakhs) respectively. The gross profit margin has decreased from 15.30% last year to 10.74% in the present year. An overview of the financial performance can be seen as follows:-

Particulars	2022-23	2021-22
Net worth (in lacs)	2331.84	2304.63
Revenue (in lacs)	7966.20	8624.13
Profit before tax (in lacs)	38.41	138.61
Net Profit (in lacs)	27.21	104.63
EBIDTA (in lacs)	567.31	694.22
Gross Block (in lacs)	3668.19	3577.75
Debtors Turnover Ratio	21.90	15.30
Inventory Turnover	39.82	31.56
Interest Coverage Ratio	1.11	1.82
Current Ratio	1.12	1.16
Debt Equity Ratio	1.41	1.40
Operating Profit Margin (%)	2.04	6.03
Net Profit Margin (%)	0.34	1.21

A brief note on the Companys Segment operations was provided as notes to Financial Statements.

Material developments in human resources & industrial relations including number of people employed

Your Company believes and considers Human Resources as a vital asset for the growth of the Company. The Company emphasises its People Development Processes and strives to upgrade skill sets to motivate the workforce to contribute towards organisational goals. The Company focuses on adequate training to empower and encourage employees. A transparent and active line of communication also exists within the organization to enable team work and promote a culture of trust and confidence.

Your Company continuously takes adequate and necessary steps to maintain a competitive, healthy and harmonious work environment and cordial industrial relations with all its customers, suppliers etc.. As on 31st March 2023, there were 153 permanent employees in the Company.

Disclosure of Accounting Treatment

In the preparation of the financial statements, the Company has followed the Accounting Standards referred to in Section 133 of the Companies Act, 2013. The significant accounting policies which are consistently applied are set out in the Notes to the Financial Statements.

Cautionary statement

This statement made in this section describes the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities, laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised by the Company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors such as cost of raw materials, tax laws, interest and power cost and economic developments and such other factors within the country which are beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information or events.