Suumaya Corp. Management Discussions


GLOBAL ECONOMIC REVIEW

The current state of the global economy is marked by a significant level of uncertainty resulting from various factors. Instability in the financial sector and persistently high inflation rates contribute to this uncertainty. Additionally, the ongoing repercussions of Russias invasion of Ukraine and the prolonged effects of the COVID-19 pandemic further add to the overall unpredictability.

According to the baseline forecast, global growth is expected to decline from 3.4 percent in 2022 to 2.8 percent in 2023, ultimately reaching a 3.0 percent growth rate in 2024. Advanced economies are likely to experience a more pronounced slowdown in growth, with their growth rate dropping from 2.7 percent in 2022 to 1.3 percent in 2023. In an alternative scenario where the financial sector experiences further stress, global growth could decline to approximately 2.5 percent in 2023, with advanced economies witnessing growth rates below 1 percent.

While global headline inflation is projected to decrease from 8.7 percent in 2022 to 7.0 percent in 2023 due to lower commodity prices, underlying (core) inflation is expected to decline at a slower pace. It is unlikely that inflation will return to target levels before 2025 in most cases.

The natural rate of interest holds significant importance in monetary and fiscal policy as it serves as a benchmark for assessing the effectiveness of monetary policy and determining the sustainability of public debt. The COVID-19 pandemic has led to a surge in public debt-to-GDP ratios worldwide, and it is anticipated that these elevated levels will persist.

The concept of geoeconomic fragmentation, characterized by disruptions in supply chains and escalating geopolitical tensions, has become a central focus in policy discussions. The risks, potential benefits, and costs associated with this fragmentation are currently being carefully examined.

In summary, the global economy is currently navigating uncertainties arising from turmoil in the financial sector, high inflation, the ongoing repercussions of the Russia-Ukraine conflict, and the prolonged effects of the COVID-19 pandemic. The baseline forecast indicates a slowdown in growth, particularly in advanced economies. Public debt remains a concern, and efforts are underway to explore strategies for reducing debt-to-GDP ratios. Geoeconomic fragmentation is being thoroughly studied to understand its implications for foreign direct investment (FDI) and its impact on the global economy.

Source: https://www.imf.org/en/ Publications/WEO/Issues/2023/04/11/ world-economic-outlook-april- 2023?cid=ca-com-compd-pubs belt

INDIAN ECONOMIC REVIEW

Indias economy demonstrated strong growth in the fourth quarter of the fiscal year 2022-23, expanding by 6.1 percent, resulting in an annual growth rate of 7.2 percent. This growth rate surpassed the 4.5 percent expansion witnessed in the previous quarter of October-December 2022-23.

The official forecast for Indias economy in the fiscal year 2023-2024 is an expansion of 7 percent. However, the Finance Ministry has identified downside risks to this forecast. These risks include oil production cuts by OPEC, challenges in the financial sector of developed markets affecting cash flows, and the potential impact of deficient monsoon rains due to El Nino on farm output and prices.

According to the International Monetary Fund (IMF), Indias economy is displaying resilience and is expected to contribute to a growth rate of 4.6 percent in Asia for the current financial year, an increase from 3.8 percent the previous year. India, along with China, is recognized as a key driver of growth in the Asia-Pacific region, with both countries projected to account for approximately half of global growth in 2023, while the remaining 20 percent comes from the rest of the region. Despite the implementation of monetary tightening measures, domestic demand in Asia remains strong, although there is a declining trend in external demand for technology products and other exports.

The Economic Survey report 2022-23 highlights several factors that could positively influence Indias growth outlook. It suggests that the ongoing surge in Covid-19 infections in China may have limited health and economic repercussions for the rest of the world, leading to the normalization of supply chains. Additionally, inflationary pressures resulting from Chinas economic reopening are expected to be temporary and not have a significant or lasting impact. Furthermore, if major Advanced Economies (AEs) experience a recessionary trend, it could result in a pause in monetary tightening measures and a return of capital flows to India. This, combined with a stable domestic inflation rate below 6 percent, has the potential to enhance investor confidence and stimulate private sector investment.

The Indian agriculture economy is expected to grow at a rate of 3.5% in 2022-

23, according to the Economic Survey 2022-23. This growth is driven by several factors, including increased investment in agriculture as the government has increased its investment in agriculture in recent years, and this is expected to continue in the coming years. This investment will be used to improve irrigation facilities, develop new crop varieties, and provide training to farmers. Further, the agricultural sector has been making steady progress in terms of productivity, and this is expected to continue in the coming years. This progress is being driven by a number of factors, including the use of improved agricultural practices, the adoption of new technologies, and the availability of better inputs. Lastly, the demand for agricultural products is expected to grow in the coming years, due to the increasing population and rising incomes. This growth in demand will provide a boost to the agricultural sector.

As per the third advance estimate for 202223 the total foodgrain production in India is estimated to be 330.53 million tonnes in 2022-23, which is a record high. This is an increase of 7.5% from the previous year. The total pulses production in India is estimated to be 27.5 million tonnes in 2022-23, that of oilseeds is 40.99 million tonnes, cotton is 34.35 million tonnes and sugarcane is 494.23 million tonnes.

In summary, the Economic Survey report 2022-23 identifies various factors that could positively influence Indias growth prospects. These include the limited impact of Chinas Covid-19 surge on global health and economies, temporary inflationary effects from Chinas economic reopening, a potential pause in monetary tightening by major AEs, and increased capital flows to India. These factors, along with stable domestic inflation and improved investor sentiment, could provide a boost to private sector investment and further drive Indias economic growth.

Source:

https://pib.gov.in/

PressReleaseIframePage.

aspx?PRID=1927272

https://www.livemint.com/news/india/

imf-predicts-resilient-economic-growth-

for-india-in-2023-driven-by-china-

and-india-contributing-70-of-global-

growth-11683049759653.html

https://www.forbesindia.com/article/

explainers/gdp-india/85337/1

https://economictimes.indiatimes.com/

news/economy/indicators/expect-

indias-gdp-growing-over-7-pc-in-

2023-24-cea-anantha-nageswaran/

videoshow/100895649.cms

https://pib.gov.in/PressReleasePage.

aspx?PRID=1894932

GLOBAL SUPPLY CHAIN REVIEW

In todays interconnected world economy, with numerous businesses operating across different regions and countries, smooth economic coordination is essential for the successful functioning of the global economy. Supply chain management plays a critical role in establishing a robust logistical network between companies and their suppliers, enabling the efficient manufacturing, production, and distribution of goods to customers. The supply chain network, as a complex and dynamic system involving organizations, resources, information, and people, facilitates the intricate web of supply and demand among various economic agents. The significance of supply chain management has further intensified with the expansion of international trade.

The global market for supply chain management has experienced remarkable growth, reaching approximately $28.9 billion in value in 2022. It is projected to achieve a revenue of around $45.2 billion by the end of 2027, with a compound annual growth rate (CAGR) of 9.4% from 2022 to 2027. This growth is primarily driven by the escalating demand for enhanced visibility and transparency in supply chain data and processes, as well as the rapid expansion of the retail and e-commerce sectors. Additionally, ongoing technological advancements in supply chain management are reshaping the industry, and the integration of Artificial Intelligence (AI) with SCM products presents lucrative opportunities for vendors operating in this space.

Source: https://www.marketsandmarkets.com/Market-Reports/supply-chain-management-market-190997554.html

INDIAN SUPPLY CHAIN INDUSTRY REVIEW

Indias investment in its supply chain infrastructure is experiencing an upward trend. Factors such as the implementation of the Goods and Services Tax (GST), the relaxation of Foreign Direct Investment (FDI) Regulations, and increased government expenditure have played a significant role in stimulating growth in the sector.

Driven by the ambition to establish itself as a prominent global manufacturing hub, the Indian governments focus on the "Make in India" initiative has further accelerated the need for comprehensive supply chain reforms across the country. This has resulted in the introduction of various schemes and investment incentives at both the federal and state levels to encourage and facilitate investments in the supply chain sector.

A wide range of technology, such as GPS, RFID, Artificial Intelligence, and Internet of Things and automation have made it possible to monitor and improve operations in realtime, while the growth of e-commerce has created new demands for faster and more flexible delivery methods with last mile delivery.

Moreover, e-commerce and online grocery shopping with contactless deliveries and cashless payments are redefining consumer-facing business. Retailers are facing more pressure than ever before to provide a seamless and personalized experience for their customers, as well as provide value in ways that go beyond traditional retail models. With the rise of drones, retailers can now offer lightweight goods delivery, making it easier for them to reduce fulfilment costs and capital expenditures associated with physical stores.

Opportunities in the supply chain sector

National Logistics Policy: A strategic framework aimed at optimizing logistics efficiency and promoting seamless integration across various modes of transportation for enhanced economic growth and competitiveness.

PM Gati Shakti: It will integrate infrastructure initiatives from multiple Ministries and State Governments, such as Bharatmala, Sagarmala, inland waterways, dry/land ports, UDAN, etc. It will encompass diverse economic zones like textile clusters, pharmaceutical clusters, defence corridors, electronic parks, industrial corridors, fishing clusters, and agri zones, with the aim of enhancing connectivity and bolstering the competitiveness of Indian businesses.

Sustainable Supply Chain: With

increasing awareness of sustainability and environmental concerns, companies are looking to optimize their supply chains to reduce waste, minimize carbon footprint, and promote ethical sourcing. Offering sustainable supply chain solutions, including green logistics, reverse logistics, and waste management, presents an emerging opportunity.

E-commerce Logistics: With the

rapid growth of e-commerce in India, there is a significant demand for efficient and reliable logistics and supply chain solutions. Companies specializing in last-mile delivery, warehousing, order fulfillment, and reverse logistics can explore opportunities in this sector.

Threats

Infrastructure Bottlenecks: Indias infrastructure, including roads, ports, and railways, still faces challenges in terms of capacity, efficiency, and connectivity. Inadequate infrastructure can lead to delays, increased transportation costs, and supply chain disruptions.

Complex Regulatory Environment: India has a complex regulatory environment with multiple layers of bureaucracy and varying state-level regulations. Navigating through these regulatory hurdles, obtaining licenses, permits, and dealing with compliance issues can be time-consuming and challenging.

Inefficient Logistics and

Transportation: The logistics and

transportation sector in India can be fragmented and inefficient, leading to delays, higher costs, and poor service quality. Inconsistent road conditions, congested ports, and limited multimodal connectivity can impact supply chain efficiency.

High Dependence on Road

Transportation: The majority of goods in India are transported via road, leading to heavy congestion, traffic delays, and increased risk of accidents. Reliance on road transportation increases vulnerability to disruptions caused by strikes, natural disasters, or fuel price fluctuations.

Inventory Management Challenges:

Effective inventory management is crucial in supply chain, but it can be challenging in India. Factors such as demand variability, inadequate forecasting, and inefficient warehouse management can lead to excess inventory, stockouts, and increased costs.

SUUMAYA CORPORATION LIMITEDS SUPPLY CHAIN ENGINEERING

In India, the expenditure associated with logistics stands at approximately 12%-13% of the GDP, a considerably higher figure in comparison to BRICS nations as well as the United States and Germany, where it stands at 11%, 9.5%, and 8% respectively. The government has already devised a comprehensive plan encompassing various measures to reduce this percentage to 8% by 2030, with the aim of enhancing operational effectiveness for businesses.

Based on business analysis and demand and supply forecasts, company procures raw materials in bulk from importers and local suppliers. The procedure in the procurement of raw materials, is the identification of buyers of these raw material products, providing logistics and warehousing services to deliver products to the customers at their doorsteps, providing financial assistance and also finding sellers for their products.

The Company believes in long term trustworthy, satisfactory and sustainable relationships with customers by providing them end to end solutions to make their business grow.

SECTOR-WISE OVERVIEW

INDIAN AGRICULTURAL SECTOR OVERVIEW

India is one of the major players in the agriculture sector worldwide and it is the primary source of livelihood for ~55% of Indias population. India has the largest area planted to wheat, rice, and cotton, and is the largest producer of milk, pulses, and spices in the world. It is the second-largest producer of fruit, vegetables, tea, farmed fish, cotton, sugarcane, wheat, rice, cotton, and sugar. Agriculture sector in India holds the record for second-largest agricultural land in the world generating employment for about half of the countrys population.

Thus, farmers become an integral part of the sector to provide us with means of sustenance.

Consumer spending in India will return to growth in 2021 post the pandemic-led contraction, expanding by as much as 6.6%. The Indian food processing industry accounts for 32% of the countrys total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth.

In terms of exports, the sector has seen good growth in the past year. In FY22, exports of marine products stood at US$ 7.77 billion, exports of rice (Basmati and Non-Basmati) stood at US$ 6.98 billion, buffalo meat exports stood at US$ 3.30 billion, sugar exports stood at US$ 4.60 billion, tea exports stood at US$ 750.93 million, coffee exports stood at US$ 1,020.80 million.

The sector has also recorded a sharp increase in investments with a cumulative FDI inflow of US$ 2,600.70 million between April 2000-June 2022. Indias agricultural and processed food products exports stood at US$ 9,598 million in FY23 (April- July 2022), up by 30% YoY.

Source: https://www.ibef.org/industry/

agriculture-india

PRODUCT OVERVIEW

During the year under review, the Company was engaged in supply chain engineering of polymers, non-ferrous metals, medical textiles, agro and textile yarns. The Company provides comprehensive solutions, supplying customers with raw materials, fabrics, yarns and polymers for onward use in manufacturing operations. This timely service helps customers liberate their precious managerial bandwidth for other business-strengthening functions.

Products

Industries associated

Polymers

PVC, HDPE, LDPE, LLDPE, PP, Mettalocene

Agriculture, Automobile, Real estate, Packaging.

Textiles (Medical textile and yarns)

Medical, Apparels etc

Manganese ores

Iron, steel, agriculture, aluminium alloys

BUSINESS STRATEGY

Our vision for the year 2023-24 revolves around "Creating Value with Intelligence".

Along with polymers, fabrics, the companys aim for the future is to build a sustainable business by diversifying risks over a wide range of products. These include dairy goods of various types, agricultural commodities and produce, medicinal and aromatic plants, Tur, Chana, Rice, Wheat, Bajra, Turmeric, Maize, Guar, and Mentha. Furthermore, we intend to engage in various trading modes, such as sourcing partners, general trade, exchange-based trading, and trading in processed Tur/Chana Dal, to ensure flexibility and maximise market prospects.

GENERAL TRADING

Our success and growth in the trading of raw materials like polymers grains and other agricultural commodities, respectively, have been greatly influenced by our commercial relationships with some of the major agro business players. We plan to expand our product options and market reach through experience, networks, and resources, which we have access. We believe that our partnerships & strategies will position us as a trustworthy and competitive player in the agricultural trade industry, in addition to helping our firm to develop.

COLLABORATION WITH FPOS

To enhance our distribution network and effectively reach end consumers, we plan to strategically form alliances and partnerships with multiple Farmer Producer Organizations (FPOs). These collaborations will allow us to tap into their expertise and local networks, enabling us to establish efficient last-mile supply chains. By working together with FPOs, we can ensure timely and seamless delivery of our products to the target market, thereby enhancing customer satisfaction and optimizing our overall distribution operations.

A distinctive aspect of our business model of directly sourcing of produce from farmers, will also ensure that Indian farmers receive a just and equitable portion of the profits within the supply chain. By establishing robust market linkages, we aim to empower farmers and enhance their socio-economic standing.

FINANCIAL PERFORMANCE VIS-A-VIS OPERATIONAL PERFORMANCE

FINANCIAL REVIEW

Revenues: Revenue from operations during the year stood at Rs.40.78 /- crore, as compared to Rs. 3364.01/- crore in FY 202122.

Interest and finance costs: Net interest and finance costs decrease by 97.17 % during the year.

Profit after tax: The Company registered a loss of Rs. 37.19 crores compared to Rs. 0.29 crores profit in FY 2021-22

OPERATIONAL REVIEW

Key Ratios:

Particulars FY 2022-23 FY 2021-22 Reason
Debt- equity ratio 0.08 1.73 Due to restrucuring and revised business model in current FY.
Inventory turnover (Days) 170.17 7.73 Changes in business model in the Company, Inventory completely sold off during the year.
Interest coverage ratio 0.00 7.02 Due to restructuring, changes in business model interest convering ratio reduced.
Current ratio 0.11 1.19 Reduction in short term Loans (Assets).
Debt- equity ratio 0.08 0.39 Reduction of debt by effective handeling of working capital
Operating margin ratio (%) (100.53) 0.67 Due to significant reduction in revenue and increased in expenses, operating ratio declined.
Net profit margin (%) (96.92) 0.01 Due to significant reduction in revenue and increased in expenses, operating ratio declined.

RISKS AND RISK MITIGATION

The Risk factors have been determined based on their materiality. The following factors have been considered for determining the materiality.

1. Some risks may not be material individually but may be material when considered collectively.

2. Some risks may have material impact qualitatively instead of quantitatively.

3. Some risks may not be material at present but may have a material impact in the future.

The Company faces the following Risks and Concerns Economic Risk:

Any business is in a way or other, dependent on the prevailing global economic conditions. Inflation, changes in tax, trade, fiscal and monetary policies, scarcity of credit etc. However, we do not expect to be significantly affected by this risk.

Mitigation:

Economic risk can be mitigated by proper planning and staying updated with the global and economic scenarios.

Finance risk:

Inability to fund the expansion of the business in a cost-effective manner could affect growth. Competition risk: Growing competition could affect profitability.

Mitigation:

The Company plans to raise funds for working capital by way of owned and working capital finding and utilise the same to the optimum.

Competition risk:

Growing competition could affect profitability.

Mitigation:

The Company offered a unique and sustainable business-strengthening proposition to its customers, which could be measured in terms of bps contributed to the overall EBITDA margin, validating the reasons for sustained engagement. In view of this, the company strengthened its recall around A partner that is good for our business.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The internal control and risk management system is structured and applied in accordance with the principles and criteria established in the corporate governance code of the organisation. It is an integral part of the general organisational structure of the Company and the Group and involves a range of personnel who act in a coordinated manner while executing their respective responsibilities. The Board of Directors offers its guidance and strategic supervision to the Executive Directors and management, monitoring and support committees. The control and risk committee and the head of the audit department work under the supervision of the Board-appointed Statutory Auditors.

HUMAN RESOURCE

Human resources are a valuable assets and the company seek to attract and retain the best talent available. Systematic training, development, continuance of productivity and employee satisfaction are some of the highlights of human resource development activities during the year. Employee relations continued to be cordial. The company strives to develop the most superior workforce so that it can accomplish along with the individual employees, their work goals & services to its customers & stakeholder. Our fundamental belief in immense power of the human potential and team work. A transformational force that stimulates enterprise accelerates our constant pursuit of excellence and empowers our people to release their full potential. The company also believes human resources as the supporting pillars for the organizations success. Your director acknowledges and thanks employees for their continued contribution.