Southern Latex Ltd Management Discussions

The management and discussion analysis of our Company discusses about the Economic overview globally and in India, operating performances, business indicators and outlook from management?s viewpoint.

GLOBAL ECONOMIC OVERVIEW

The rubber industry in India is experiencing growth, driven by increased production and consumption, with a focus on sustainability and innovation. The industry is working towards sustainable practices and is addressing challenges. Yet, the slower growth was influenced by many other global and economic factors like the Russia- Ukraine war.

On the downside, price increase due to geopolitical tensions, war in Ukraine and the conflict in Gaza, raise interest rate expectations and reduce asset prices. Another medium-term risk is ocean freight delays and inflated rates due to the Red Sea crisis. On the upside, looser fiscal policy than necessary and assumed in projections could raise economic activity in the short term. Inflation could fall faster than expected allowing central banks to bring plans forward.

These has led to shortages in essential inputs for rubber production, such as natural and synthetic rubber, resulting in higher operational costs for manufacturers. Economic sanctions and trade restrictions have further complicated the export and import of rubber products. Hence, manufacturers are also increasingly seeking alternative sources.

Trends such as global warming, green energy, sustainability and digital adoption will continue to affect countries and industries. Some will be positively impacted by these changes while others will find it challenging.

INDIAN ECONOMIC OVERVIEW

Our overall outlookforthe Indian economy remains positive.

At 6.8%, India is the fastest growing large economy. This impressive performance can be attributed to factors like growing domestic demand, the government?s focus on increased capital expenditure, strong manufacturing growth, moderate inflation, a stable interest rate regime and healthy foreign exchange reserves The government remains committed to enhancing and investing in the nation?s overall infrastructure, including roads, railways, airports, ports, and power infrastructure. On the other hand, regulatory actions to tame unsecured lending will have a bearing on credit growth. A lower fiscal deficit will mean the fiscal impulse to growth will be curtailed. But the nature of spending will provide some support to the investment cycle and rural incomes. A projected average expansion of 6.7% in this period will make India the third- largest economy in the world and lift per capita income to the upper middle-income category by 2031.

THREATS, RISKS & CONCERNS

In the current scenario of increasing commodity prices, inflation and supply chain disruptions could have a negative impact on the Industry. In addition, we must acknowledge that the aforementioned factors are not the only potential disruptors. Several other developments could create a more challenging business environment like ongoing Red Sea crisis, China?s economic reopening, the geopolitical tensions and the Russia-Ukraine conflict which could also have unforeseen economic consequences.

BUSINESS OVERVIEW

A significant proportion of all Indian businesses fall under the small and medium enterprise segment. So, a broad-based, sustainable growth in the Indian economy can emerge only if the country?s SMB enterprises record a healthy growth as they attempt to improve productivity, adopt best practices and bring innovative products to market. Again Indian SMBs are undergoing rapid transformation and are looking for greater flexibility to

meet market changes. The need to grow revenues and reach their full potential in the shortest possible time span is going to increase their dependence on technology and managed by automation in production.

OPERATIONS OVERVIEW:

During the year under review, your Company had earned Rs.55.25 lakh and resulting net profit of Rs.23.50 lakh as compared with the previous year as Rs.53.90 lakh and Rs.23.51 lakh respectively.

The Company is exploring possible ways to revive the business through Strategic partnerships, collaborations and product developments. But the Company is still experiencing sluggishness in the investment and hence the Company is facing difficulties to diversify its operations. But the Company is looking for a strong future ahead and targeting the growth in the coming years.

INTERNAL CONTROL SYSTEMS:

The Company has adequate internal control systems and procedures designed to effectively control the operations. The internal control systems are designed to ensure that the financial and other records are reliable for the

preparation of financial statements and for maintaining assets. Audit Committee periodically reviews the functioning of the entire system was satisfied with the adequacy and effectiveness of the Internal Controls and Systems followed by the company.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

The Company makes efforts to ensure that employees are provided with a congenial work atmosphere. Facilities are equipped with state-of-the-art machineries, automation software and communication equipment apart from periodic recreational facilities to motivate the team. Continuously improving the quality of people through training in skill development as well as personality development. Management places great emphasis on continuously improving the work environment and ambience to nurture innovation and creativity.