Sophia Traexpo Ltd Management Discussions.

Industry Structure & Development:

The Indian paper industry accounts for a 4% share of the total global paper output with an estimated turnover of Rs 60,000 crore. India emerged as the fastest growing market. Over the last few years, the per capita paper consumption in India has grown from 11 kilograms in FY2014-15 to 13 kilograms in FY 2017-18, an appreciable increase catalyzed by a growth in income, literacy and aspiration levels. The Indian paper industry provides employment to over 400,000 and 1.5 million people directly and indirectly, respectively. The sector is mostly fragmented in nature with over 750 paper mills jostling for market share with only 50 mills possessing a capacity greater than 50,000 tonnes per annum. Approximately 72% of the total installed capacity in India is concentrated in Andhra Pradesh, Gujarat, Odisha, Karnataka, Maharashtra and West Bengal. India produces diverse varieties of paper - from printing and writing grades to packaging boards to coated and specialty papers. Printing and writing paper demand was estimated at about 4.6 million tonnes, growing at about 5% per annum. Packaging board is in high demand with an average annual growth rate of 13-15% from growing end-use industries including pharmacy, food, garments, and consumer goods. Containerboard is the most fragmented category, with the top 10 producers representing only 35% of total capacity. Tissue accounts for less than 1% of the total paper production in India compared to about 8.2% globally. The Indian paper industry bears the brunt of high wood and imported pulp prices, due to land use policies and restrictions on corporate farming.

Weakness and Threats:

1. Increasing coal cost

2. Numerous Regional Trade scheme (RTs)/Free Trade Agreement (FTAs) without adequate safeguard to the domestic industries.

3. Increasing competition from electronic media and digitalization (for newsprint).

4. Fragment nature of industry having small and unorganized industry players.

5. Capital-intensive industry.

Risk and Concerns:

Your Company identified various risks and implemented its Mitigation Plans. Risk Policy and monitored frame works has been approved by the Audit Committee and the Board of Directors of the Company. Risk reporting and monitoring is being conducted regularly at all the operation levels and reporting directly to the Audit Committee and the Board

Discussion on Financial Performance with respect to Operational Performance:

Internal Control:

The Company has proper and adequate internal control systems to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly. The internal control system provides for well documented policies, guidelines, authorizations approvals and procedures. The observations arising out of audit are subject to periodic review, compliance and monitoring. The significant observations, made in internal audit reports, along with the status of action thereon are reviewed by the Audit Committee of the Board of Directors on a regular basis for future appropriate action, if deemed necessary.

Performance Review

Discussion on Financial Performance with respect to Operational Performance:

1. Total Income: During the year under review Sophia Traexpo Limited has achieved a gross total income of Rs. 71,26,903/-

2. Share Capital:

The paid up share capital as on 31st March, 2018 is 5,10,00,000/- divided into 51,00,000 fully paid-up equity shares of Rs.10/- each

3. Net Profit:

The Companys operating Profit is Rs. 95326.54 during the year.

4. Earnings Per Share (EPS):

The Earning per Share for the Financial Year 2017-18 is 0.04

Your directors are putting continuous efforts to increase the performance of the Company and are hopeful that the performance in coming year will overcome from the present situation.

Human resource:

Your company recognizes that the human resources are the most crucial factor for achieving sustained growth over the years. The management considers its highly motivated and passion driven work force as its partner in the growth of the company.

For and on behalf of the Board
For SOPHIA TRAEXPO LIMITED
Date: 05th September, 2018
Place: Hyderabad. Sd/-
YERRAPRAGADA MALLIKARJUNA RAO
Whole Time Director
(DIN: 00905266)