supreme industries ltd share price Management discussions


1. OVERVIEW

The year began on a positive note as the adverse effect of Covid pandemic was effectively controlled with unprecedented vaccination drive and valuable guidance from Central and State Governments.

In India, RBI with its effective monetary measures, managed to contain inflationary pressures much better than the Central banks in most other countries. Agricultural crops were robust. Large investments were initiated in infrastructure by Central and State Governments. Forecast about monsoon was good, giving hope to boost agricultural production in the year.

Demand for housing was also quite robust. Due to weak world economic forecast the commodity prices were on downward path, which augured well for boosting growth in economy of the country.

Fiscal deficits of the Governments were also contained.

Cumulative effect of these developments enabled the Company to achieve 29% volume growth in the year, thus recovering quite a bit of the business lost in preceding two years. The Companys major raw material usage is PVC, which witnessed a fall in prices of more than 40% in first half of the year under review, which resulted in substantial inventory loss to the Company.

However, the said steep fall in PVC prices brought with it an opportunity as the products became more affordable. This coupled with increased market reach, continuous introduction of new products and expansion of capacities, enabled the Company to cross half a million tons of sale of Plastic products during the year. The Company now aims to reach sales volume of one million ton in next 5 to 6 years time.

The Company sold 5,06,501 tons of products in the year which has reversed de-growth in volume witnessed in preceding two years.

During the year, Barring Cross Laminated Film and Protective Packaging business, all other businesses have shown improved demand prospects. Company has initiated several steps in both these product portfolio and is intensifying their reach in global markets. The Company expects much better business prospects in both these products during the current year.

The Company envisages good growth in business opportunities going forward and expects to achieve overall 15% volume growth in the year 2023-24.

2. PRODUCT GROUPS

The product groups of The Company have been recast as follows:

Group Products
Plastics Piping System uPVC Pipes, Injection Moulded PVC fittings and handmade fittings, Polypropylene Random Co-polymer pipe system, HDPE Pipe Systems, CPVC Pipes Systems, Inspection Chambers, manholes, Toilets Bath fittings, Roto moulded Tanks and Fittings and Solvents, Industrial Piping System, DWC, PEX Pe Pipe System and Fire Sprinkler System
Consumer products Furniture
Industrial Products Industrial Components, Material handling System and Pallets - Roto moulded crates, pallets and garbage bins and Composite LPG Cylinders.
Packaging Products Flexible packaging film products, Protective Packaging Products, Cross Laminated Film products

The net turnover (including other income) of the Company for the year under review was R 9282.94 Crores (including R 71.84 Crores by way of trading in other related products) as against R 7840.51 Crores (including R 105.89 Crores by way of trading in other related products) during the previous year.

During the year under review the Company has sold 5,06,501 tons of Plastic products as against 3,93,908 tons of Plastic products in the corresponding period of previous year, reflecting growth of 29% in product turnover by volume.

The Company exported goods worth US $ 29.27 million as against US $ 29.11 million during the corresponding period of the previous year.

Profit before interest, depreciation and exceptional items and taxes during the period under review have been at R 1281.84 Crores as against R 1309.89 Crores during the previous year.

3. COMPANY STRENGTH AND GROWTH DRIVERS

3.1 Manufacturing Sites

During the year under review, The Company has added three new greenfield sites which went into commercial production one after the other. Company is now operating from 28 manufacturing sites across 12 States and Union Territories. Pan India geographical spread of manufacturing facilities provides excellent support in servicing the customers efficiently and economically. The Company has plans to add more Green Field Projects and work for 29th state of the art facility at Malanpur (Madhya Pradesh) to manufacture Industrial and Ball Valves. The same is being taken in hand and is likely to be in operation during second half of the current year.

3.2 Distribution Network

The Company is successfully spreading its reach in various parts of the country where it is being less represented. Each of the business division of the Company is working out extensive plan and strategy to reach such area by appointing new channel partners, increasing retailers and influencers connect and also creating awareness and promotional campaigns. The Companys active Channels Partners strength increased to 4577 Nos as on 31st March 2023 as compared to 4053 Nos as on 31st March 2022.

Company has also been participating in various national and international exhibitions, and remains focused on spreading its wings to international markets. Presently Companys products are being exported to 54 countries and efforts are being made to reach more countries and new customers.

The Company continues to open more Depots & fabrication facilities to provide value added services in a cost efficient manner to its customers. The Company has total 40 Depots and Fabrication facilities for its various product groups.

3.3 Growth Drivers

The Company has increased its spending for brand awareness to R 97 crores from R 63 Crores spent in previous year to strengthen its brand. Company is judiciously spending on various media platforms including national and regional TV advertisement, OTT platforms during popular events and popular trade magazines.

Company is taking numerous initiatives on digital activities for promoting its brand and creating product awareness. Company has launched its new website incorporating latest features & giving out valuable insights about Supreme Corporate brand, its philosophy, its strengths and detailed product offering of all business verticals. Considering the market dynamics of its various product verticals and to promote search activity for corporate brand, Company plans to increase its spending further for Google Search activity.

Company has distinct social media presence on various major platforms like Facebook, LinkedIn, YouTube, Instagram etc. Company has good follower base on all these platforms which is helping in increasing visibility, customer connect / interaction and enquiries. Company has also launched dedicated product information sharing mobile apps for Pipe and furniture divisions.

The Companys focus on strengthening its bond with influencers like plumbers, architects etc. is giving fruitful results. It not only makes the visibility of new and innovative products of the Company being introduced but also make them educated and skilled for proper application techniques etc. Role of knowledge centers is proving very fruitful. They are providing knowledge about new products/applications and are able to create awareness among architects, contractors, farmers, plumbers and channel partners and thousands of business associates who are getting benefitted.

Company is also effectively dealing with the menace of counterfeit products created by certain unscrupulous players in a large way particularly in the Pipe Segment and Cross Laminated film segments. Company is determined to deal with such malpractices in best possible manner by engaging teams of professionals to take suitable measures to overcome this continuous and recurring problem.

3.4. Renewable Energy & Sustainability

Company is committed towards the Sustaiability development & Climate change and has taken focused approach to reduce the Carbon foot print & Water conservation.

Companys unshakeable belief that its business possesses immense capability to make a transformational contribution as a corporate to make sustainability a core component of its business strategy. The Company formed a vertical - Energy and Environment for climate change, energy efficiency and renewable energy programme to augment its vision towards Sustainable Development.

Company has taken various concrete steps to move forward in Sustainable Development by establishing the roof top solar power at different locations across India by making substantial investment to Increase Green energy quantum. Pursing a proactive strategy of DE carbonization, Company is increasing its renewable energy footprints, thus enhancing the green infrastructure across India. It has Increased its Solar Capacity from 17.38 MWp (FY 21-22) to 28.05 MWp (22-23).

To ensure the positive environmental footprint, Company has adopted a low-carbon growth strategy which focuses on enhanced use of renewable energy resources as well as the reduction of specific energy consumption. In line with this strategy, companys nine manufacturing facilities are already EnMS certified and others are working in that direction.

The Company has achieved increased Re contribution from

31.2 Million kwh which constitutes 12.37% (FY 21-22) to 44.46 Million kwh which is 14.08% of overall energy consumption. (FY-22-23). Also avoided emissions increased from 26,109 Tco2e (21-22) to 35,992 Tco2e (22-23).

Sustainability Road Map - Green energy "Lakshay"

Company is vigorously pursuing its green energy goals and have planned following:

• Long Term PPA of 25 Years for 3.5 Mw for Noida & Kanpur plant

• Long term Group Captive Hybrid PPA of 20 Million KWH PA for units located at Tamilnadu and MP

• Long Term Open Access Hybrid PPA Units of 2.9 Million Kwh PA for unit located at Gujrat.

• To increase RE Energy share to 25% by 2024-25.

• Planned additional 14 Mwp Solar Installation by 2025 and commit required capital investment.

It is heartening to share with you all that three facilities of the Company viz; Lalru, Jalgaon and Kanpur won CII23rd National award for excellence in Energy management. Company was also the winner of Econour Sustainability

Award 2022 for the Best practices in sustainability and Gold Care India Sustainability Award 2022 in Plastic Sector for outstanding achievement in Sustainability Management.

4. OPERATIONAL PERFORMANCE

4.1 PLASTICS PIPING SYSTEMS (N)

The Company remained focussed on its business of Plastic Pipe System business and continue to grow aggressively. Company is a leader in the segment and has the largest portfolio of products. Company continues to expand its product portfolio with newer SKUs & systems for various applications as required by the market it caters to.

During the year under review the Company achieved volume growth of about 37% in Plastic Piping System made from different plastic materials. Overall the Company sold 3,75,046 Tons of Pipe System compared to 2,74,295 Tons in the preceding year. However due to steep reduction in PVC resin prices, revenue growth was at about 20% over previous year.

PVC is the predominant raw material in the Companys Plastic Pipe business. During the year 22-23 the prices of PVC were again literally in roller coaster mode for second year in succession. The prices of PVC were in downward trend from 1st April22 till third week of November22. Overall prices of PVC went down by R 67/- per kg during that period. This has resulted in large inventory loss. Thereafter from 1st December22 prices of PVC started increasing till up to January23 and the rise was close to R 15/- per kg. From 14th March23 onwards the increasing trend in prices of PVC was arrested. Prices are now close to stable at lower level leading to boost in consumption in the Country. The Country experienced growth of around 32% in PVC resin consumption as the previous two years growth was negative.

The Government at the Centre and States have taken several initiatives, like focus on Jal Jeevan Mission, Swatch Bharat Abhiyan, Sanitation, affordable housing, smart cities and many more, which all are boosting demand for plastic piping products.The initiatives are much more pronounced in the past year. The same trend continues from the beginning of this year also.

Real Estate Regulation Act (RERA) is now well established and giving boost to organised housing construction. Many large players have announced ambitious plans in this sector to grow geometrically with launch of their projects at multiple locations. Company has also introduced low cost products for affordable housing segment meeting all functional requirements. The Company expects good business from this segment on a sustainable basis.

The Company incurred a Capex of R 398 crores in this division during the year under review in its various plants to build higher capacities and increased range and commissioning of three Greenfield projects. All three Greenfield plants have gone into production during the year one after the another.

The Company has started manufacturing at one more plant at South zone at Perundurai, District Erode, at Tamil Nadu in addition to its existing plant at Jadcherla in Telangana making its presence stronger in southern India. Erode plant is at a strategic location to service Tamil Nadu, Kerala and part of South Karnataka, cost effectively The company has taken in hand to double the capacity of PVC Pipes and also start manufacturing DWC Pipes and Blow Moulded Water Tanks manufacturing at Erode during this year.

The plant at Kharagpur is fully operational. The increased capacity of HDPE and DWC Pipes at Kharagpur plant is in place. Further capacity expansion of Moulded Fittings is planned and will be implemented during the year 2023-24.

The production of Double Wall Corrugated HDPE Pipes continues from Gadegaon and Kharagpur plants with necessary BIS Certification. The Company has also launched suitable DWC Pipe for Cable Ducting application to cater to this application. The Company is in process to educate various user departments about the benefits of putting in place a good quality DWC Pipes with latest technology and using virgin certified raw materials in terms of performance and longer life. The Company is also promoting successfully the DWC Pipe requirement of private Building societies through Channel Partners mainly on merit of quality of DWC Pipes supplied by the Company. The Company now also plans to start the DWC Pipes manufacturing in the current year at Kanpur plant for North market and at Erode plant for South market.

The Company now has seven plants producing HDPE Pipes in West, East, South and North Zones to cater to these markets cost efficiently. The Company plans to start manufacturing HDPE pipe at Kanpur plant in the current year. The Business of HDPE Pipes System had 68% volume growth during the year under review.

The Company now manufactures Water tanks in all the four geographies of the country viz., North, South, East and West to service these markets cost effectively. This business grew by 46.8% in volume during the year under review over the preceding year. Companys Premium range of Water Tanks "Weather Shield" with added features such as superior thermal insulation etc., from three locations has received good market response. To cater to economy range of Water Tanks market the Company has started the manufacturing of Blow Moulded Water Tanks at Kharagpur and also plans to start manufacturing of Blow Moulded Water Tanks at Erode. Overall, now the Company is producing Tanks at eight different locations which will enable it to service customers more economically.

The total product portfolio in Plastic Pipe System has reached 10,073 nos., thus adding 965 products to the range of various Plastic Piping System, over the preceding previous year. The Company has plans of introducing further new items during the year as per existing system along with the addition of new system as required in the country.

The Company manufactures the cPVC Pipes at four of its manufacturing locations and cPVC Fittings at two of its manufacturing locations with all necessary BIS certification. The Company now has multiple sources to get increased volume of cPVC resins.. The cPVC system sales during the year under review grew by 24% in volume over preceding year.

The Company has started manufacturing Braided and Plain Hoses at Guwahati, Gadegaon, Erode and Cuttack Plants. These hoses are principally made to cater Technical Hose requirement like Fertilizer spraying hoses and Gas hoses. Over a period, several varieties of hoses are planned to meet high performance hose requirement in the Country.

The Company has come with e-lite brand of Pex pipe Systems. The pipes are made from state of art Swiss technology. These are composite pipe i.e. PEX/AL/PEX which withstand high temperature and pressure. The Company is also making Pex mono layer pipes.

The Company has developed metal fittings suitable for the market for this application. The fittings are offered in Two varieties i.e. compression and crimping type. The Company is developing plastic based fittings which can withstand high temperature. The same may be launched during the later part of this year. High rise building and premium villas will require these type of system which is presently catered only from imports.

Your Company has produced PE/AL/PE pipe for house service connections from existing PEX/AL/PEX line. These type of pipes are now part of house connection design approved for "Nal se Jal" scheme. The Companys product line has procured BIS certification.

The compression type fittings for these pipes are also developed to offer complete system of Pe/AL/Pe Pipes applications.

The Company has successfully launched Electrofusion Olefins fittings and compression molded fitting with a portfolio of 179 Nos. The Company plans to increase the range substantially and add another 140 new products during the current year. With Electrofusion Olefin fittings, Company has entered into Industrial piping system, which offers new business opportunities.

The company is now adding range of PPR pipe system for industrial applications.

Your Company has launched Cable shield conduit system. The conduits are made at Gadegaon, Cuttack. Kanpur and Erode factory. Malanpur plant will be added in the current year. The fittings for the systems are made at Kharagpur.

Company has taken in hand to offer Gas Piping System from its Gadegaon Plant. Government has plans to multiply supply of Gas through pipe system in the country. Company expects to launch the same in second half of the current year, along with the required DVGW approved Electrofusion fittings.

The Company has plans to introduce PP Silent pipe system during the year from its Gadegaon plant which will have improved sound damping capability. There is large growth in demand for Silent pipes system due to high rise buildings being constructed across the Country with an advanced drainage system. The System has good export potential also.

The Company has started manufacturing variety of Specialized Valves such as Butterfly Valves, Swing Check Valves, Ball type non-return Valve etc.. These Valves have been designed for different applications and are made of specialized materials to ensure reliability & longer life and also to meet best of global standards. The Company has received positive response from the market. The Company intends to increase the range of Valves for Industrial usage in the current year.

The AQUAKRAFT Bath Fittings (including newly launched Chrome Plated range) introduced by the Company is now well established. There were 44 new items introduced during the year. The portfolio in Bath Fittings has reached to 194 items. The Company plans to further complement the range during 2023-24 by introducing many new products in Bath fittings including some of the premium products. The enhanced manufacturing facility at the newly built unit to make Bath Fittings at Puducherry is fully operational. The

Bath Fittings sales during the year under review grew by 48% over the previous year. The Company intends to double its manufacturing capacity by value from R 10 crs. per month to R 20 Crs. per month at its existing site at Puducherry.

The Company now has 36 Product Systems in the division and plans to add another 4 new systems in the division viz. PP Low Noise system, Polyethylene Gas Piping System, PE/ AL/PE Pipe system and PPR & PPR Composite Industrial Pipes and Fittings System during the current year

The Companys business to Export market during the year had a growth of about 6% in US $ terms. The Company is continuously trying to increase its export business of Piping Systems in several markets.

The Divisions Value-Added Products sale was 44% compared to 42% in the previous year. The Company has added 193 new Channel Partner during the year 2022-23 and is now servicing through 1443 Channel partners. The Company continues to expand its reach by appointing new Distributors in areas where there is a gap in servicing. The Company has also started directly servicing retailers in selected markets for certain specific products of this division.

The Company has set up multiple Knowledge Centres across the country to train Plumbers and interact with Farmers, Architects and Plumbing consultants in respective zones. Currently, they are functioning at Gadegaon, Kochi, Malanpur and Kharagpur. Company expects to start such centres at Jadcherla and Erode during this year.

With the help of specialists, the Company has embarked upon a new activity with nomenclature as "Plumbing Workshop" which is a full day session with Plumbers, to improve their skill in installation of Plastic Pipe System. The Company shares latest Plumbing techniques along with applications of new products introduced by the Company in the recent past in its range to the Plumber fraternity. The markets have well appreciated it and there is pressure on Company to increase the Plumbing Workshop numbers substantially. The company conducted 262 Plumbing Workshops during the year 2022-23 and trained 12362 plumbers. The Company plans to conduct large numbers of Plumbing Workshops during the year 2023-24. There are now more than 1,55,000 Plumbers associated with the Company.

FlameGuard cPVC pipe system made by the Company is considered as a safe material for the use in fire sprinkler system in many parts of the country. Unlike plumbing system, a fire sprinkler system requires multiple approvals. Much awaited revision in Indian standard IS-15105 has been completed and revised standard has been published. Now CPVC has been considered as a superior material than metal system for use in Automatic sprinkler fire system. As system is approved in Indian standard more customers have started exploring this system as an alternate material to traditional metal system.

Maharashtra, Karnataka and Gujarat have already started the use of CPVC Fire Sprinkler system. The Company is proud to share that its FlameGuard system is installed in modern coaches of all "Vande Bharat Express" trains. Due to cost differential the system has limited success in some part of the country where MS pipe is still considered as material for installation in sprinkler system instead of GI pipe. The cost of the MS pipe is approximately 20-25% less compared to GI pipe system.

Product installation training for this system is a mandatory requirement before the actual installation starts to avoid hiccups. The Company provides the technical support and also offers value engineering to reduce the cost without compromising the quality of the installation. The company has registered a growth of 67% in FlameGuard system over previous year. The Company expects substantial business growth in this segment in coming years.

Your Company has taken plans in hand to put its 29th manufacturing state of the art plant at Malanpur. That plant will be dedicated to manufacture varieties of Industrial valves and Ball valves. The same is expected to go in production in second half of this year, with an installed capacity of One and half million Nos per month.

With all the systems launched successfully and with the addition of three manufacturing sites which have gone into production, expansion of the capacity planned with one additional manufacturing site, during the year, the Company expects 20% volume growth this year.

With all the Capex planned in place, total installed capacities of Plastic Piping division shall reach to about 7,50,000 MT per annum by 31st March, 2024 as against existing installed capacities of 6,00,000 MT per annum as on 31st March, 2023.

4.2 CONSUMER PRODUCTS

4.2.1 FURNITURE

The Companys furniture business grew by 11% in value terms against estimated growth of 3% for plastic furniture industry during 2022-23 over previous year. The Company could grow more than the industry due to intensive marketing effort, consistent business policies, increase in coverage of uncovered markets and strong brand position as a premium brand.

The overall growth in plastic furniture has been low due to improvement in life style and living standards of consumers who prefer to buy wooden and other material furniture. However, the Company has grown due to its wide range of innovative products and strong brand presence in premium segment. The Company enjoys the position of being a market leader in Premium Plastic Furniture Category. The Company has been a pioneer in upgrading the perception of plastic furniture by introducing highly innovative premium range. The Company keeps a regular tab on the evolving preferences of customers and continues to offer stylish & innovative plastic furniture in line with the latest trends.

In line with the latest trends, the Company introduced a knock down DIY chair model Vecto which is a first of its kind for Indian market. Its stylish contours, shape and ease to assemble will usher in a new revolution in the industry.

The year started with the highest rates seen of PP which had a cascading effect of substantial increase in furniture prices adversely affecting the demand and operating margin. However, the Company took various measures to keep costs under control and pursued consistent marketing efforts in all major markets which helped in overall growth for the Company and maintain the operating margin.

The Companys focus on creating large retail display showroom for plastic furniture was extremely successful. During the year, the Company started 99 such showrooms across India and plan to add another 97 such showrooms in current year, in order to improve display of Companys furniture range at various retail outlets. The Company conducted display contests which were extremely successful in motivating the retailers to display our unique products prominently. This helped in increasing the sales from their retail outlets.

The Company started focusing on various market segments such as Government business and received good response. The Company started participation in Government business through GEM directly as well as through various channel partners which helped in overall business growth.

The year 2023-24 has started on a positive note with stable PP prices at lower end which will spur the growth in demand. The Company has planned for adding many new furniture models during 2023-24 to ensure it grows ahead of industry growth. The Company continues to focus on improving its sales of value added items, blow moulded tables and cabinets which will help in long term growth for the division and improve its operating margin. The sales of cabinets grew well during the year and the Company expects this segment to be the growth driver for future business.

The Company manufactures furniture at 7 different locations across India in order to service its customers efficiently. These units are located at Derabassi (Punjab) Gadegaon (Maharashtra), Jadcherla (Telangana), Pondicherry (UT), Durgapur (West Bengal), Kharagpur (West Bengal), Guwahati (Assam).

The Company manufactures furniture made with all three different technologies i.e. Injection Moulding, Blow Moulding & Roto Moulding. The Company has been manufacturing Injection Moulded Furniture for 33 years and Blow Moulded Furniture for almost 7 years. The Company started manufacturing Roto Moulded Furniture in 2021 but could not establish its product range due to various factors. The Company has now taken necessary measures to establish smooth manufacture of Roto Moulded Furniture and plan to grow in this segment.

During the year, the Companys sales of Blow Moulded Tables grew well and helped in overall growth of furniture divisions business. The Company received a bulk order for supply of Blow Moulded Tables against a state education project which helped in increasing its volume business during the year. The Company plans to further increase its product range and has already committed for Two new models which are expected to be launched by beginning of second quarter. The Company hopes that the acceptance of the product category and its awareness will result in consistent growth.

The Company introduced Twelve New models during the year of various furniture items comprising of chairs, tables, cupboards & baby furniture. Some of the new models have been well received and hope to give good growth in the coming year. The Company has already committed investment for various new models planned for 23-24 and expect to launch in phased manner all through the year. These new models will help substantially in overall growth and market penetration in the coming year.

The Company is committed to make available its furniture across India and is aggressively working towards increasing its retail penetration. The Company currently has 14961 retailers selling its furniture who are serviced through our network of 1440 channel partners. The Company plans to add 1250 retail outlets during the year. The Company has received good response of its intensified marketing efforts in some of its weak markets which has helped in increasing its presence in those markets.

The Company started its online store www.supremefurniture. co.in to showcase its complete range and offer the convenience to its end customers for ordering some of the premium furniture models from the comforts of their home. The Company expects the store to help in increasing the awareness of its complete product range among its customers and increase the sales at retail level for the complete range manufactured by Company. The Companys furniture range is also available on various e commerce portals such as Amazon & Flipkart through a few dedicated channel partners as well as various resellers.

The Companys export business declined drastically due to steep increase in sea freights. The sea freights have now come down to affordable level and the Company expects growth in its export business during 2023-24.

4.3. INDUSTRIAL PRODUCTS

4.3.1 INDUSTRIAL COMPONENTS

FY23 was the first full year significantly free of Pandemic effect after two critical years, FY21 and FY22 under health emergency shadow. Previous year, the first quarter of FY22 was affected due to Pandemic second wave and a mild third wave during last quarter; however, there was reasonable bullish trend throughout year due to pent up demand across economy, achieving YOY revenue growth of 24% over FY21, for the division. The same trend continued during FY23 also. Some of the customers of the Company continued facing problem of shortages of Electronic and Imported parts affecting their production during initial part of the year. However, availability of these parts has eased out to a considerable extent during FY23 and it is hoped that the worst is over on this front now. Challenges like volatile commodity prices, availability of Logistics/ships, depreciation of Rupee etc affected customers heavily putting them under pressure of uneven production and huge manufacturing costs thereby stretching its suppliers to reduce prices or give discounts. Although these challenges are expected to be there during FY24 also, the turn-around in the economy would take care of such challenges.

In Automotive sector, Passenger Vehicle segment did exceptionally well and Commercial Vehicle segment also was on bullish trend. This has significantly given boost to the revenue of the Company. However, Two Wheeler segment continued to remain under demand pressure. In Appliances sector, Air Conditioners showed a healthy growth while overall demand in Washer Segment remained subdued. However, your Company engaged very closely with OEMs to rationalize the product mix share, which is expected to work favorably in the years to come. Other segments of Appliances like Refrigerators, Coolers, Water Purifiers etc. where Company has its presence are in steady growth mode.

The Division, started the year with a theme Establishing Transformational Strategies . Under this theme, several initiatives were taken to put the Division on a respectable growth path of CAGR of 15%-18% with adequate returns on investment. Some of the initiatives taken are Organizing business based on Geographically Regional SBUs, Manufacturing complete products for customers in Appliances sector, Asset light Structure, Focus on acquiring Value Add business by improving Engineering Capability,

Acquiring business to fill the specific Capacity-Gaps arising due to seasonality, Offering our customers RM Re-Engineering solutions for VA/VE, Focused Automation, Developing business in the sectors where Company has no presence, Digital Manufacturing solutions, Human Capital Development for Multitasking, Lean Manufacturing initiatives, Adding new customers having high growth potential in future etc. While some of the initiatives were already taken during the year, some are in progress. The initiatives taken have already started yielding positive results and Company will accelerate these further in the coming years. The Company acquired a prestigious order from ECIL for manufacturing EVM and VVPAT related parts and subassemblies. All these factors resulted in to Revenue growth of nearly 30% YOY over the preceding year. With this, the Company achieved the Revenue Growth at CAGR of well over 20% over the last 3 years for this Business Division.

Companys Strategy to develop well-diversified Sector Portfolio resulted into getting orders from a Telecom sector Company. Couple of other sectors where Company is not having presence will be addressed to get orders during the current year and the efforts to diversify will be accelerated.

On Operational front, the Company accelerated its efforts to improve Productivity, Quality, Energy Conservation, Focused Cost reduction Projects, Talent development Initiatives etc. These initiatives, to a significant extent, are ensuring to keep the costs in check in the scenario of soaring inflation. It is also helping the Company to retain its margins and still pass on certain cost benefits to its valued customers.

Looking at the positive demand scenario in various sectors of Appliances, Automotive and few other Sectors, Company is investing judiciously for Capacity balancing and expansions. The geo-political uncertainties, high Inflation affecting purchasing power of the people, impending recession in Western Economies etc. are some the factors which may play spoil sport to some extent. However, Company feels that business scenario will remain bullish in medium to long term due to business friendly policies by the Government, including PLI Schemes launched for various sectors like, Automotive, Consumer Appliances, Electronics, and Telecom etc. New machines being planned are with the latest technologies, Energy efficient and Robust, designed for Excellence, Quality and Repeatability. Company is also planning to gradually keep investing in Automation to improve productivity.

Company continues to enjoy overall Excellent Rating from its customers year after year. The Company is considered as one of the most Reliable Supplier in its area of expertise by the Customers. Division is continuously striving to excel in all Operational Parameters and the habit is being inculcated among all its employees. It helps Company to remain cost efficient in this fiercely competitive Supply Chain to OEM customers. With no Pricing Power in hand and built in vagaries of OE Business, Company is doing reasonably well in this Business Division.

4.3.2 MATERIAL HANDLING PRODUCTS

The year 2022-23 began with a brighter outlook, shedding off gloom and negativity of COVID period even when Russia and Ukraine conflict was continuing. Coupled with inflation and supply chain woes, somewhat subdued the sentiments prevailed around the world. The effects of high inflation and economic stagnation were more pronounced in technology companies but other sector also treaded cautiously. The

Indian economic context was somehow less affected and your Companys material handling products division stood grounds with an impressive double-digit growth both in volume and value terms.

The Automobile, whitegoods, Engineering, FMCG companies enjoying relatively better domestic demands over previous two years led your division to put a growth of 6% in volume and 13% in value terms in Industrial Injection moulded Crates and Bins which cater primarily to these industries. Company is confident of this growth momentum for the coming year also as we are regularly strengthening our customer reach and introducing suitable new products in this segment of Business.

Companys regular pitch, to reach new users of Inj. moulded Pallets, educating them about the features and benefits of the same, providing value enhancing solutions for safe, effective economic material storage and transit has given positive and encouraging results registering a volume growth of 16% and revenue growth of 28%. Company is constantly gauzing the changing pattern in storage and warehousing as all major companies are employing efficient Automated storage and Retrieval system in storage warehouses. Company has introduced new pallets fitting these Automated warehousing applications and is confident of even better result in current year.

The Roto moulded pallets however have taken a beating mostly owing to fluctuating Raw material prices. Quality of Companys Roto pallets is well appreciated by our patrons and Company is confident of good results in this segment over the years.

The one-time use pallets, which are mainly required for exports of the goods, have been consistently doing well, Company is regularly engaging with its customers and keen on introducing newer cost effective and efficient one-time use pallets for diverse use. Company plans to introduce two new models in this category during the current year.

The consumption of dairy products is increasing in country with sizable jump in production too. The dairy specific crates of Company have registered a growth of around 11% in volume and 16% in value terms. Division is enhancing its reach with in the frame work of quality and envisage better results during the year.

With inflation increasing during the year putting retail and E-commerce companies to tread cautiously. The major players patronizing our retail and E-commerce specific crates restricted their volume purchases to very urgent needs only and scaling up of operations and distribution centers opening was minimal during the year which resulted in huge drop in volume and value terms in this segment across the specific product lines.

Your Company introduced new dustbin models, which received encouraging response by customers especially at northern and eastern part of the country. The Company has been able to register an impressive growth of 19% in volume and 25% in revenue. Company is planning to gear up marketing efforts to triple the business volumes of dustbins during the current year.

The cyclic purchases of soft drink and beverages majors in country paid dividend to your Company this year. Company enjoys a healthy business relationship with most big players in this sector and seeing good business opportunities. Keeping in mind the changes in beverages Industry Company shall introduce new crate models, which are expected to roll out around June-July this year.

During the year under review, inflationary pressure were more pronounced in fruit and vegetables, food items, fish and meat products, leading to subdued activities in these sectors. The results were also apparent in flat growth of Companys F & V and fisheries specific crates. Company has a strong presence and distribution network along the eastern and southern costal belts for its fisheries crates business but is relatively weak along the western coastal areas. Efforts are being made to establish a workable distribution channel network in western coasts. Company is hopeful of finding suitable channel partners in these areas in current year.

The Company is constantly striving to provide unmatched product quality, timely service and value proposition to all its customers which ultimately helps in adding new and retaining regular customers. The division has been successful in adding new customers and enlarging the customer base which shall continue in current year as well.

4.3.3. COMPOSITE LPG CYLINDER

The year under review was the most successful year for Composite Cylinder division with plant running at 90% of its capacity and fulfilled its supply commitments. The Company managed to supply full demand of M/s. Indian Oil Corporation Limited (IOCL) during the year as well as continued exports to its valued customers. Against the original Letter of intent of supply of 735186 cylinders to IOCL, balance quantity now remaining is 263486 cylinders. Company expects further orders from IOCL during the year. Discussion with other OMCs are also continuing as they are exploring to introduce composite Cylinders in their portfolio. Further discussions are also taking place with private bottlers and expected to yield positive results.

Expansion of existing capacity has been successfully completed and increased capacity of 1 million cylinders per annum is now in place. Company is expanding its geographical reach and adding new customers. Division had added more countries and customers for supply of products during the year under review and received encouraging response. This would help to optimally utilise the increased capacity.

IOCL has started promoting Composite cylinders on social media platforms and has also permitted the Company to use its promotional material among its market network of associates through social media platform which would help the division to promote Composite Cylinders and make the people aware of its various advantages.

The Company is participating in various national and international exhibitions showcasing its capability to produce world class Composite cylinders. Company is also exploring opportunities to develop other composite vessels. Overall prospects for the division looks encouraging.

4.4. PACKAGING PRODUCTS

4.4.1 Performance Films Division (PFD)

The Performance Films Division has recorded 6% growth in Volume and about 23% growth in Value.

The Total sale achieved was 10069 MT as against 9514 MT in the last year.

On the positive front, changes in Product mix and focus on Direct sales to Brands and value added Products resulted in growth. Major contributors were High Barrier EVOH/Nylon films to Flexible Packaging Industry which was supported by increasing demand from food industry focusing on increased shelf life and recyclability. Oil & Dairy industry reflecting growth of 6% in Volume. Sales to Nepal reduced due to Additional Duty on Export to that country. Persistent efforts in New Industrial /Food application helped the company in creating value added products to its portfolio. Sales of Bag/ Pouch has increased. Division has registered Trade mark for Total 7 Products.

Exports have shown similar volume as last year. 2753 MT against 2806 MT in the preceding year. The Companys product has received Positive response from Middle East, Africa and some European countries. Further Exploring opportunities in USA to export. Company will also participate in exhibitions in foreign countries.

The Company remains optimistic about the business prospects for this division in the current year. The customer base will not only be sustained but will grow due to Companys quality commitment and service.

The Company expects to achieve volume and value growth in this business in the current year due to increase in customer base in India and abroad.

4.4.2 PROTECTIVE PACKAGING DIVISION Over all Business Growth

Turnover was 11% higher in value terms and 5% higher in volume terms in FY 2022-23. Margins were impacted adversely due to steep reduction in raw material prices.

PROTEC (Packaging)

PROTEC vertical grew by 4% in value terms during the year under review over previous year. Fabrication business grew by 11% in value. A total of 14 new distributors were added during the year.

CIVIL

CIVIL business grew by 18% in value with a volume growth of 21% over the previous year.

INSULATION

INSULATION business grew by 38% in value over the previous year.

Increase in additional XLPE capacity at Hosur unit will help in further growth of this vertical in 2023-24.

Consumer Products : Retail Business Vertical

Consumer Product Division has achieved sale R 15 Crs for FY2022-23 as against R 11 Crs for FY2021-22 achieving a growth of 40%. This vertical added 41 new Distributors, and 599 new retailers. Companys total Retailer strength now stands at 6107.

EXPORTS

The division achieved an export sale of R 29 Crs with a modest growth of 9%. The Company is expanding its reach in more markets. This should result in further growth of exports and the division is geared up to meet the increasing demand.

The Company has enhanced its focus on new markets including Europe. Business has started in countries like Germany & Denmark. There is a renewed focus on other gulf countries like Saudi Arabia, Kuwait, and Bahrain etc. Business has already started in Saudi Arabia.

The Company has received DCL accreditation UAE ) for its INSU range of products which will help in getting its products specified for new projects. To expedite this process, the Company has appointed Eros Group, a large trading entity, for building materials in Dubai as its authorized distributor for UAE market. They would be selling our products under Companys brand.

MANUFACTURING ACTIVITIES Power & Fuel:

The Company has achieved significant saving on account of green power, both solar & wind energy during FY 2022-23

New Product Development : INNOVATION : TECHNOLOGY New Product Development:

The Company has developed a new variant of Capcell (Single Stage EVA Foam) product for (Photovoltaic Cell ) Packagining, input material specification matched as per USA customer requirement. The Companys product has been approved & first supplies shall be done in April/May 23. The Company expects a substantial business from this customer.

Two new products have been developed for German customer for printing machine application. This is a special product having very high bounce back and low compression set value.

The Company has developed an acoustic EPE foam ( inhouse technology ) for its new vertical in Acoustics under the brand name of RESIMER.

The Company has added a new product for floor protection under the brand name of SUPREME FLOOR GUARD.

Technology / Innovation -

Unique in-house technology and hardware were developed to produce EVA based Cricket bat and ball.

A new press 2mtr x 2 mtr has been installed at Hosur plant to substantially increase productivity of certain products, to reduce manufacturing cost for those grades

The production capacity of the new XLPE plant at Hosur installed with modified hardware and heating control mechanism, has increased by 300 kg/day from 2100 kgs/ day, and fuel consumption has reduced up to 10%.

Heat sealing and cutting press designed in-house by our Engineering Division team installed at Urse Unit II to produce Acoustic products for one of our customers in the automobile industry.

Certifications

DCL certification received for our INSU range of products (for UAE markets)

Registration with CPCB (Central Pollution Control Board) done under plastic waste management guidelines by ministry of Environment, Forest and Climate change (Government of India)

4.4.3 CROSS LAMINATED FILM

The Business of Cross Laminated Film & Products had a de-growth of 5.24% in volume terms during the year under review.

The sale of made up fabricated products has increased from 334 MT in previous year to 654 MT during the year under review. The family of fabricated products is growing with many new products being perfected and introduced. These products are garnering lot of interest from end customers. The company is expanding its user base by selling these products directly to ultimate consumers. The company expects to add many such direct customers during the coming year. The company also plans to sell these products through online marketing places. Capacity of fabricated product is being increased regularly by installing new fabrication equipment keeping it in tune with the growing demand as well as new product development. The thrust is on automation of the various processes of fabrication. Apart from perfection and enhanced productivity, it will reduce cost & dependency on manual activities. Company plans to sell made up product volume of 1500 MT during current year.

The Company has successfully introduced Gazzetted bags during the year which has opened up new business opportunities in the bag segment.

Exports grew by 11.70% over the previous year despite challenging Global conditions posed by Russia Ukraine war. At present company has presence in 32 countries across the globe. The aim is to bring in more countries into its fold in the coming year. Over the years the company has developed many fabricated products for new applications in the export market & will continue to do so in the coming years also. The company expects to achieve substantial growth in exports in the coming year.

The long wait for Cross Plastic Film Project is finally over. The company has placed orders for equipments to manufacture Cross Plastic Film. The Company may commence commercial production with a capacity of 2500 tons per year in Jan/March 2024 quarter.

5. FINANCE

1. A brief on borrowing levels and finance cost is given below -:

1.1 Summary

Particulars Measure F.Y. 2022-23 F.Y. 2021-22
Net borrowing level at the end of the year R in crores Surplus of 737.68 Surplus of 517.71
Average Monthly Borrowings R in crores Surplus of 525.21 Surplus of 308.52
Interest & finance charges R in crores 8.02 5.15
Financial cost as a % of Turnover 0.09% 0.07%
Interest Cover No. of Times 150 241
Total Net Debt : Equity Ratio NIL NIL

The above parameters reflect continued strong financial position of the Company with comfortable Net Worth, Nil debt, Excellent key financial ratios, Adequate liquidity in hand & generation of healthy cash reserves year on year.

1.2 During the year under review the Company remained debt free. The Companys Capex and its working capital requirements have been entirely funded through internal accruals. The excess cash accruals during the year have been judiciously deployed from time to time in safe and secure Investment avenues with the objective of generating optimal returns, while maintaining the assurance of liquidity at short notice. Due to overall increase in interest rates, the Returns on surplus investments have sharply improved over the previous year.

2. Working Capital Borrowing

2.1 During the year under review, the Company was privileged to be associated with 9 reputed (Private and Foreign) banks in its Multiple Banking Arrangement (MBA), to meet its working capital requirements at optimum cost. The banks have sanctioned on fully unsecured basis, aggregate working capital facilities of R 1,570.90 crores (fund / non fund based facilities) which have been utilised optimally during the year. The Companys established track record, strong market position in each segment it operates, healthy profitability, robust financial ratios, absence of any long-term debt and availability of surplus liquidity, have enabled the Bankers to extend favourable terms to the Company. The Company is thankful to all its bankers for the confidence reposed by them on the Company & its Management for providing continuous support all the while.

2.2 The Company continues to enjoy favourable terms with its vendors / customers for effectively managing its working capital requirements at optimum cost. The Company continue to focus on timely collections & also planning procurement optimally to mitigate fluctuations in raw materials prices and for minimising the logistic costs.

2.3 The Company intends to use its surplus cash to continue to grow organically, while being open to explore the opportunities to grow inorganically through rightful acquisitions.

2.4. Working capital utilisation

During the year under review, the raw material prices continued to slide down steeply right from the beginning of the year. The prices of different polymers, particularly for PP LDPE and PVC resin went down between R 41 per kg to R 66 per kg since the beginning of the year till November 2022 representing a steep reduction between 28% to 46%. Severest fall among them was in PVC Resin, which is the main item of Raw material for the Company. After a moderate recovery between December 2022 to February 2023, prices again moved downwards till the end of March 2023. Similar trend was also witnessed in other items of Raw Materials. This has resulted in the Company incurring significant inventory loss during the major part of the year. Despite the overall low prices of polymers during the year, the Companys working capital requirements remained only moderately lower, owing to overall higher inventory levels.

2.5 During the year under review, the Rupee also remained extremely volatile with a depreciating bias against US Dollar, mainly due to on-going geopolitical tensions and the hawkish policy of FED, in increasing the US interest rates throughout the year. The Rupee witnessed depreciation of more than 10% during the course of the year. However due to its prudent and consistent hedging policy the Company has largely mitigated the risk arising out of Foreign Currency fluctuations and optimised its hedging costs.

3. Dealers Financing

The Dealers Finance Scheme (DFS) provided by the bank to its Channel Partners is getting very popular among them. Year after year more & more Channel partners are joining the DFS, in view of affordable rates of interest, unsecured nature of the facilities & other related services / privileges offered by the bank. Seasonal / peak business requirements are also being serviced by the bank, by providing temporary incremental limits. The credit limits of the Channel Partners are also being increased/enhanced considering their business growth in tandem with the growth of the Company. These

Normal/Additional/enhanced working capital requirements have become helpful to them in meeting the full potential in their businesses.

4. CRISIL Rating

As per the latest review conducted in the last quarter, (a) the Rating for the Companys Short term bank facilities were reaffirmed at "CRISIL A1+" rating by CRISIL (which is the highest rating for the Short term instruments) and (b) Rating for Long Term Bank facilities were maintained at "CRISIL AA+ Stable". The ratings continue to reflect the Companys strong business risk profile, healthy market position across segments, and robust financial risk profile. CRISIL Ratings expects Supreme to continue to register robust revenue growth, mainly driven by healthy volumes from end-user demand across agriculture and real estate sectors along with improved operating margins leading to strong annual cash generation. Financial risk profile is also robust, supported by strong capital structure with high net worth, healthy cash position and strong debt protection metrics.

5. Capital Expenditure

During the year under review the Company has incurred capital expenditure (capex) of R 541 crores entirely funded from internal accruals. Company plans to spend about R 750 Crores towards capex during F.Y.2023-24 including carry forward commitment of previous year of R 149 Crores. Details of the various capital expenditure plans have been elaborated by each business division in earlier part of Management Discussion and Analysis (MDA). Company will continue to fund all its Capex requirements from internal accruals.

6. In the short to medium term the Company expects strong revenue growth, better operating margins, healthy liquidity surpluses, prudent funding of its capital expenditure through achievement of operational efficiency, increasing contribution of value added products & continued focus on efficient working capital management.

The Companys focus shall remain in, i) adopting various cost austerity measures (ii) close monitoring of its working capital & (iii) better treasury management by investing in high rated & secured investments resulting in safe & quality returns.

7. Changes in Key Financial Ratios:

Pursuant to the provisions of Regulation 34(3) of SEBI (LODR) Regulation, 2015 r/w. Schedule V, Part B(1), details of changes in Key Financial Ratios are given as hereunder :

Sr. No. Ratio Year Ended
31.3.2023 31.3.2022
1 Debtors Turnover Ratio Times 19.20 18.14
2 Inventory Turnover Times 4.99 5.30
3 Interest Coverage Ratio Times 149.62 241.20
4 Current Ratio Times 2.53 2.47
5 Debt Equity Ratio Times NIL NIL
6 Operating Profit Margin % 12.93% 15.84%
7 Net Profit Margin % 8.23% 10.36%
8 Return on Net Worth % 21.14% 25.95%
9 Return on average capital employed % 27.47% 33.55%

6 INTERNAL CONTROL SYSTEM

The company has adequate, proper and well placed Internal Financial Control System, which ensures that all the assets are safeguarded and all the transactions are authorized, recorded and reported correctly in a timely manner.

The Internal Finance Control System comprises due compliances with companys policies and Standard Operating Procedures (SOPs) and audit and compliance by different Internal Auditors independently. Internal Auditors comprising of professional firms of Chartered Accountants have been entrusted to conduct regular internal audits and report to the Management, the lapses, if any. Both Internal Auditors and Statutory Auditors independently evaluate the adequacy of Internal Control System. Based on the Audit observations and suggestions, follow-up, remedial measures are being taken including review and increase in the scope of coverage, if necessary.

Independence of the Audit and Compliances is ensured by direct reporting of Internal Auditors to the Audit Committee of the Board. The Audit Committee of Directors in its periodical meetings, review the adequacy of Internal Financial Control System and procedures and suggest areas of improvement.

To ensure effective Internal Financial Control, the company has laid down the following measures.

(i) All operations are executed through Standard Operating Procedures (SOPs) in all functional activities for which key manuals have been put in place. The manuals are updated and validated as and when required.

(ii) Approval of majority of transactions is ensured through a pre-approved Delegation of Authority (DOA) and the key processes are under schedule integration with SAP system. DOA is reviewed periodically by the management and compliance of DOA is regularly checked and monitored by the auditors.

(iii) System based reports and automated accounting for various areas in financial statements have contributed to better accuracy and reducing scope of errors.

(iv) The company has a comprehensive risk management framework which is evaluated by the Audit Committee & Risk Committee periodically.

(v) Functional heads are responsible to ensure regulatory compliances and also with the policies and procedures laid down by Management. and

(vi) The Company has devised Risk Assessment and Control Matrix for all key processes involved in financial reporting and are being tested for design and operating effectiveness.

7. KEY RISKS & MITIGATION STRATEGY

The companys business is subject to risks and uncertainties that could have both short term and long term implications on the company. The company is exposed to different risks arising from economic, regulatory, environmental, competitive scenario and others.

To mitigate these risks and ensure consistent business growth and success, the company continuously scans the external and internal environment, to identify risks, track them and devise effective remedies to mitigate them. The company also continues to take measures, to further strengthen its risk management mechanism and remains stay ahead to mitigate the probable adverse impact. Risk Management Committee set up by the Board is responsible for ensuring the effectiveness of companys risk management framework. The risks are identified based on their likelihood and severity of impact and accordingly mitigation measures and monitoring process is designed.

Macro-Economic Risks

The global geopolitical development, such as the Russia-Ukraine war has posed new challenges like high inflation, supply chain bottlenecks and lower growth. The direct risks posed by the pandemic have however substantially reduced. Though the cases of infections due to new omicron variant of corona virus are on a decreasing trend still one has to remain vigilant and take adequate precautions in the endemic period of Covid. The lingering uncertainty due to monetary policy tightening, high commodity prices, inflation - (both the wholesale and retail) continue to rise in India and globally and hawkish policy of the US government shall impact all regions including India. Any adverse impact of the above in the Indian economy may lead to slower growth and weak demand of the products in industrial sectors and consequently affects the performance of the company.

Mitigation Strategy

The Indian economy has proven to be remarkably resilient in the face of the deteriorating global situation due to the strong macroeconomic fundamentals that place it well ahead of other emerging market economies. Plastic consumption per capita which is very low in the country is expected to grow higher than GDP growth.

The company is having diversified product portfolio and has setup 28 manufacturing facilities across the country. Company is continuously expanding its product portfolio and geographical spread by putting new manufacturing facilities across the country. Companys strategic plan and initiatives for the medium term are aligned to the goal to diversify revenue mix across product divisions and geographical locations in India.

The Company remains conservative with strong financial capital structure, healthy cash reserves, prudent capex investment policies and well managed uses of working capital.

Process & Technology Risk

With the rising competitive intensity, the Company needs to drive more automation, efficiency and innovations led by updating of technology. Inability to evolve its product line and modernize may lead to its product becoming obsolete and /or uneconomical and may see market erosion.

Mitigation Strategy

The company is (i) Continuously adding many unique and innovative products to cater to the various application requirements of the consumer, (ii) Seeking technical assistance or making technology tie up with renowned players in the globe, so as to offer technologically advance and superior products, (iii) Creating in house capability of designing and development and (iv) remains focused on continuous cost optimization without compromising quality and service parameters.

Risk of availability/ procurement of key raw materials

Principal raw materials for companys products is various plastic polymers, which are primarily derivatives of crude oil. Company sources its raw material requirements from domestic/ overseas suppliers. Volatility in crude oil prices, currency fluctuations of Rupee vis-a-vis prominent world currencies, coupled with demand/supply mismatch in the world market, affect the effective price and availability of polymers for the company. Inability of the company to obtain critical raw materials at competitive prices, could impact its operational continuity and profitability.

Mitigation Strategy

The company effectively manages its raw material requirements as well as price volatility though (i) Widening its sourcing base (ii) Appropriate contracts & commitments for key raw materials to ensure smooth supply, (iii) Monitoring external environment and evaluating alternate availability for uninterrupted supplies. (iv) Developing local alternatives and (v) Well planned procurement and inventory strategy.

Talent Management - Human Resources Risk

The company recognizes human capital as its key assets. Developing, retaining and recruiting key talent is key to achieve Companys growth plans and aspirations. Institutionalizing a framework as an ongoing process to identify succession gaps, loss of expertise and retained knowledge of the organization, continuity of critical roles, loss of time and efforts to recruit and train the employees are critical areas. Any gap in these efforts could impact the performance of the Company.

Mitigation Strategy

Defining and implementing structured interventions has been initiated as an approach to minimize such risks that could impact the performance of the Company. Company has on boarded senior managerial personnel as Chief Human Resource Officer to oversee and take required effective steps.

The company is taking various steps to mitigate the risk in the Talent management space. A structured talent management process was put in place for select job levels / roles with a 2 pronged approach of identifying critical roles & assessing potential talent to develop the leadership pipeline as per the succession planning framework. Critical roles and job levels were identified and development interventions were designed on the basis of 3 vital inputs viz. training need analysis, competency framework and the future skills needs and behaviours linked to the business strategy and role. External benchmarking on learning and partnerships were factored in for content design & delivery. All the programs have been designed keeping in mind the 60:40 principle wherein 60% of learning would be to bridge the current gaps and 40% of learning to develop skills linked to future needs. The learning approach implemented will be practise with focus on application of learnings in work and life. Development road maps to build & strengthen the leadership pipeline have been initiated through a 70: 20:10 principle and a blended approach consisting of interventions with a mix of classroom sessions, Peer Cohort coaching, individual coaching, action learning projects and digital contents for self-learning.

A shift in the learning approach was implemented by moving from a time defined module based approach to longitudinal learning journeys focusing on both role & functional skill building. In addition, each learning intervention have been designed to ensure a continuous engagement in terms of Pre-work & post work, check-Ins and webinars

Foreign Exchange Risk

The company operates internationally and portion of the business is transacted in several currencies and consequently the company is exposed to foreign exchange risk through purchases from overseas supplies and sales & services overseas in foreign currencies. Exports are significantly lower in comparison to its imports. The foreign exchange transactions exposure could hinder the sourcing of raw materials and it could adversely affect companys financial performance.

Mitigation Strategy

Bulk of the Companys foreign exchange risk (arising out of import of Raw materials) is very short-term (less than 3 months) in nature at any given point of time. The company has adopted prudent and consistent hedging policy guided by the Board, by entering into simple forward contracts, at optimized hedging costs for mitigating the said risk. Company is able to partially balance the exposure risk by way of export of goods. Further company is not exposed to any long term/ short term foreign currency loans, thereby minimizing exchange fluctuation risk.

Cyber Security Risk

We live in a world that is connected and inter connected. This world of ours is now dealing with and generating huge quantities of data every day. Securing this data, maintaining data integrity and assuring data privacy is important to keep our modern society functioning. Cybersecurity is a concern for everyone today, from organisations to individuals. Organizations focus on physical and information security, due to regulatory requirements, the value of data in the current times and the risks of a security compromise.

Digital attacks on systems, networks and programs, aimed at accessing, changing, or destroying sensitive information; extorting money from organizations; or interrupting normal business processes are cyber-attacks. The company also faces risk of leakage/ misuse of confidential information resulting in financial losses and disruption to business operations due to failure of IT infrastructure and inability to ramp up security measures and protect data.

Mitigation Strategy

Cyber security aims at making the internet safer and reliable for everyone. Cyber security consists of technologies, processes and controls, designed to protect systems, networks, programs, devices and data from cyber-attacks. Effective cyber security reduces the risk of cyber-attacks and protects against the unauthorised exploitation of systems, networks and technologies. A successful cybersecurity approach has multiple layers of protection spread across the computers, networks, programs, or data that one intends to keep safe. It involves people, processes and technology working in tandem to deal with both attempted and successful cyber-attacks.

The Company has its well-defined policy to protect the infrastructure and secure its information. The policy clearly stands to safeguard all information in the interest of the Company. The Company has a robust security mechanism designed to defend and protect its infrastructure from external threats or vulnerabilities. All applications, critical end points and servers have their backup scheduled automatically at regular intervals on to The Company Appliance. Companys Network is secured with "Enterprise Edition Next Generation Firewall" installed at its primary/production data centre as well as secondary/DR data centres. The Company uses robust endpoint protection EDR system and users access to data or appliance or Infrastructure, is controlled as per Industry Best Practices. Central Database has high availability; Disaster recovery is in place for ERP infrastructure with regular DR drills. Keeping in mind the ever expanding cyber threat landscape,

Company has implemented a robust and real-time monitoring solution. This includes state of the art technology, a multivendor environment from top Technology and Security partners. Projects on AI ML based Security Operations Centre (SoC) are in progress while Network Operations Centre (NoC) is already functional. Email ATP (Advanced Threat Protection) solution has been implemented for better email security. External Audit from CERT-IN Certified Audit Firm has also been conducted thereby ensuring Companys systems are protected from external threats. Company is continuously looking at newer ways of securing its data, network and all related infrastructure.

Risk of competition with Counterfeit/ spurious products

Counterfeit and spurious products are global problems of enormous scale, impacting almost majority of sectors, causing significant losses and disruption in business particularly for leaders in the industry. They also lead to loss of sales and consumer confidence in the brand. In few segments of the company, the prevalence of spurious/ counterfeit products, are on rising scale. Induction of counterfeit products by some unscrupulous players in a large way, in few segments of the company, causes disruptions to the growth of the companys products.

Mitigation Strategy

The Company continues to create awareness and is educating the users not to be cheated by lookalike products which also compromise on the quality to a great extent. Company is also getting its proprietary designs, trade-marks etc. patented to the extent feasible and is in a process to create distinctive identifiable marks on packages for ease of trade and consumers to distinguish from counterfeit/look alike products. Company is also working aggressively in co-ordination with legal advisors and local authorities across States to identify and target such spurious and counterfeit products manufacturers to desist from such activities.

Environment & Climate Change Risk

Climate change is the biggest business challenge in coming years in view of the unprecedented scale of the extreme weather event such as heat waves, floods, cyclone and considerable increase in mother earths temperature continuously due to exploitation of natural resources.

Due to change in the regulatory requirements, owing to climate change there is likely hood of business disruptions, adverse impacts on operations and consumer demand.

Mitigation Strategy

In line with ESG approach and strategy, the Company has identified key areas in respect of emission & energy and water conservation. Company has taken various initiative to improve in energy efficiency, increase usage of renewable energy, Reduction of Green House Gas emission, zero waste & efficient use of water sources.

Installation of roof top solar power at different locations PAN India to increase green energy usage, conservation of water at several plants through Rainwater Harvesting, installation of Piezometer and Ultrasonic flow meter for water monitoring quantities are areas of continuous focus.

Gas substitution from LPG to CNG to reduce carbon emission and usage of lead free stabilizer in many piping products are other initiatives to support the environment.

Geographical presence of the company through its manufacturing plant spread across the country also results in reduced transportation and thereby reduction of emission of carbon and other hazardous gases in the environment.

Risk of ban on usage of Plastic Products

Several States across India are banning Single Use Plastic and the onus of collecting and disposing plastic waste generated by their usage has been put on Manufacturing Companies.

Mitigation Strategy

Plastic is wonder material of twenty first century and is being used for substituting various conventional material which are drain on natural resources. However, due to haphazardly littering habits, Plastic has got a bad name. Resultantly Central & State governments are banning/ restricting Single Use Plastic products and putting various regulatory measures to control and monitor the uses of plastic in general.

The Company is not manufacturing any Single Use Plastic products as such which are banned by the governments. However, some of the films used in packaging applications may fall in regulatory compliances.

As per plastics waste management guidelines, the Company is required to register with Central Pollution Control Board (CPCB) as a producer, brand owner & importer.

The Company has uploaded all the necessary documents on the portal & EPR targets assigned by CPCB have been fulfilled for the year under review as a producer. Company is complying with all the statutory requirements as recommended by CPCB.

Reputational Risk

A threat to the positive perception of stakeholders/ general public about the company, its products, services or Management may cause adverse consequences like Loss of customers, Loss of talent, Loss of revenue, Bad will on behalf of public, Additional scrutiny on behalf of Government and/or regulatory agencies and loss of brand value etc.

Mitigation Strategy

The company is (i) Actively addressing product complaints and ensuring product delivery as promised. (ii) Strengthening corporate governance norms, adherence to the code of conduct, for one and all, the employees. (iii) Sign off for all product/ warranty promised to customers. (iv) Identifying other relevant reputational attributes through brainstorming with various stakeholders and (v) Standardisation of policies and procedures to reduce/eliminate the likelihood of any such event.

Fire, Safety & Health Risk

The Company has a wide spread operational presence of its manufacturing units across the country. The manufacturing process in these units for plastic products does require usage of certain inflammable material which are prone to risk of fire and safety hazard.

More over since companys manufacturing process requires uses of polymers, additives and chemicals, employees are also required to manage the plant & machinery and material handling equipments all of which has exposure and risk on safety and health aspects. Further disposal of hazardous waste also poses certain challenges which need to be managed in a meticulous manner.

Mitigation Strategy

As a part of risk mitigation strategy, the Company has formulated a robust framework to ensure seamless operations of its manufacturing Units across the country. Checks and balances through an ongoing review and audit process has been put in place to identify and act proactively on any gaps / omissions. Various initiatives and actionable have been undertaken & implemented as stated below:

i. Company has installed fire hydrant system at all its manufacturing locations along with other apparatus like sprinkler system where required, extinguishers filled with chemical foam etc.

ii. First aid training given to safety personal, engaging professional risk assessing advisors to conduct periodic audit, review & suggest improvement measures.

iii. Safety Committees are formed at each location who conducts regular fire safety drills and train the employees for emergency evacuation plan etc.

iv. Appropriate illumination at shop floor, earmarked storage areas with safety measures, installation of safety guards & switches, open passages for people and material movements, fencing of high risk zones etc. has been implemented across all Units.

v. Company has implemented occupational health and safety management system at all its locations providing personal protective equipment, installation of CCTV camera to enhance security and surveillance, well defined & well at Safety & Health related SOP It conducts regular Safety Audits and training programmes.

vi. Company is also taking appropriate insurance coverage to mitigate any financial impact due to any adverse impact of any of above risks.

vii. The company is following a robust waste management procedure in line with latest requirement of pollution control board & ISO system. Hazardous waste is being disposed of through authorized vendors.

viii. The company is having agreement with authorized agencies at all locations for recycling, reusing or safe disposal of hazardous plastic waste.

8. HUMAN RESOURCES

The Company as per its Human Resource strategy focuses on inclusive, collaborative and growth oriented culture built over the years. Companys workforce has grown from strength to strength over the last five decades. From its early days, Company remained an equal opportunity employer and has embedded these values in its employee life cycle management from hiring, retaining to retirement. The Company complies with all applicable fair employment practices and equal opportunity laws in every state where it operates. Company strictly prohibits discrimination against any employee or applicant based on language, race, color, religion, sex, origin, ethnicity, age, disability, marital status, sexual orientation, gender identity, or any other category protected by law.

The Company provides a work environment that fosters collaboration, lateral thinking and innovative ideation for employees to create value. Company firmly believes that people are its greatest assets and it is always endeavours to ensure their development and growth. Companys strategy supports promoting diversity in its workforce while ensuring each employee feels empowered at work. It has robust human resource framework and processes which support the smooth functioning of workforce and wellbeing of all the employees.

Linkage between personal goals and organizational goals is considered a vital aspect for the shared growth of employees and the organization. Annual appraisals are made to ensure such an alignment. Companys reward strategy is strongly driven by performance linked pay approach to drive a culture of meritocracy.

Company is committed to equip its employees with the required skills and know-how to be future ready. Its training programs are based on inputs from the training needs identified linked to a cadre based approach which enables targeted training to the role across job levels. The learning interventions are designed on various job skills along with the desired competencies broadly

classifying into skill upgradation, leadership development and compliance.

Making employees feel safe and secure is an important aspect of ensuring employee satisfaction and productivity. As part of "Employee Wellness" strategy, Company provides Group Medical Insurance and Group Personal Accident Insurance. Company also provides Annual Health Check-up.

At Supreme we strongly believe in the fundamental of human rights. Company remains fully committed to uphold the highest standards on human rights protection by adopting a proactive approach. Company strictly prohibit child labour, forced labour and discrimination of any kind based on gender, caste, creed, religion, disability, marital status, pregnancy, culture, etc. Company periodically conducts training and awareness programme for employees to sensitize them on matters linked to protection of human rights. This enables the Company to uphold its values on the protection of human rights in letter and spirit.

Industrial relations at all the units and locations are cordial.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities, laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that would influence the Companys operations include cost of raw materials, tax laws, power cost and economic developments and such other factors within the country and the international economic and financial developments.