western india plywoods ltd Management discussions

This report is prepared in compliance with the requirement of the Corporate Governance. It covers both performance and outlook of the company. The Management accepts its responsibility for the integrated objectivity of the financial statement.

1. Indian Economy Outlook

According to the latest India Development Update, a biannual flagship publication by the World Bank, Indias growth continues to be resilient despite signs of moderation. The report highlights that India continues to be one of the fastest-growing economies globally although significant challenges persist in the global landscape. The overall growth remains robust, with an estimated full- year growth rate of 6.9% . the real GDP grew by 7.7% year -on-year during the first three quarters of the fiscal year 2022-23.

However , there were some signs of moderation in the second half of FY 2022-23. The growth was underpinned by strong investment activity bolstered by the governments capex push and buoyant private consumption , particularly among higher -income groups. Inflation remained high , averaging around 6.7% in FY 2022-23. Nevertheless , the current -account deficit narrowed in Q3, thanks to the strong growth in service exports and easing global commodity prices.

Despite elevated headlines inflation , projections suggest it will decline to an average of 5.2% in FY 2023-24, aided by easing global commodity prices and some moderation in domestic demand. To combat inflation, the Reserve Bank of India has withdrawn accommodative measures and raised the policy interest rate. Indias financial sector also remains strong, with improvements in asset quality and robust private-sector credit growth.

S&P Global ratings recently maintained its forecast for Indias economic growth, unchanged at 6 per cent in the following year. In its quarterly economic update for the Asia-Pacific region, S&P projects a decrease in inflation rate to 5 percent in the fiscal year 2023-24, compared to 6.8 per cent in the current financial year. It also anticipates Indias gross domestic product ( GDP ) to grow by 6.9 per cent in the current financial year 2022-23 before slowing to 6 per cent in the following 2023-24 fiscal. " India leads, with average growth of 7 percent in 2024-2026", the update said.

2. Industry structure and development:

The company is in manufacture of high quality plywoods, Hardboard, Pre-compressed boards, Densified wood, Furniture and low density fibre boards. The main customers are Automobiles, Packaging industry and construction companies. The company is in operation in this field for the last few decades and has already established a name in the market. The company is manufacturing low density fibre board by using waste sludge from the currency paper mills as part of the raw materials. The low density fibre board introduced has got both domestic and international market. The company is also in the process and diversification in to new value added products.

3. Strength and Opportunities:

> The major raw material required by the company is soft wood and waste wood for Hardboard, Timber for plywood. There is scarcity of these raw materials. However as the company is in commercial operation for more than 7 decades it could establish a good system of procurement.

> Competition from other manufacturers and cheap imports can affect the profitability of the company.

> As the company is maintaining high quality for its products and the same is well accepted by the customers both in India and abroad. The company has established Research and

Development Unit, one of the best of its kind in the wood based industry. The company is also duly equipped to develop new product to meet the requirements of the market. The company believes from experience the customer loyalty will prove beneficial in meeting he challenge faced by it in the long run.

> The company has invested significantly in building its brand equity, which has led to high brand recall and has enabled entry into new product categories.

> The industry will continue to see a strong uptrend in the mid to long-term driven by macro economic and industry factors like increasing disposable incomes, increased ease of availability of finance, increasing penetration levels and growing middle class.

> The governments push for housing for all, increasing availability of electricity augur well for long term growth prospects for the sector.

4. Product wise performance ( in Lakhs)

Sl.No.	PRODUCT	2022-2023	2021-2022
1	Hardboard	5490.62	5079.02
2	Plywood and other related components	2870.47	2827.60
3	Soft board	1797.18	1461.28
4	Pre-compressed board	10.87	115.58
5	Pre-finished board	198.93	77.71
6	Furniture	278.73	154.67
7	Veneer	17.55	17.27
8	Other sales	81.39	73.87
	TOTAL	10628.02	9807.00

5. Outlook

India is one of the leading growing ecomony of the world and there is huge demand for both capital and commercial items. Since the companys products are used by the construction industry, automobile industry, increase in demand for this products entirely bring a better outlook for the company.

6. Risk and concerns

The major risk is competition from cheap variety of similar products with low quality. Similar new substitutes of the products are being developed. The availability of quality raw materials is one of the risk faced by the company. However due to the long standing in the industry the company is able to face this risk.

7. Audit and Internal control System

The company has internal control systems commensurate with the nature of its business, size and complexities. Every quarter the audit committee reviews the adequacy and effectiveness of internal control systems and monitors the implementation of improvement actions. The internal auditors of the company regularly review key processes to identify improvement opportunities and automation possibilities. During the year, key controls in operational, financial processes were tested to provide assurance regarding compliance with the existing policies and significant operating procedures etc. and no significant weaknesses or deviations were noted in operation of controls.

Further, the statutory auditors of the company also carried out audit of the Internal Financial controls over financial reporting of the company as on March 31, 2023 and issued their report which forms part of the independent auditors report.

8. Industrial relations

The industrial segment was peaceful during the year. The management wishes to acknowledge the efforts made by employees in the smooth working of the company.

9. Material development in human resources and industrial relations including no. of people employed

The manpower strength of the company as on 31.03.2023 was 253 being an ISO 9001-2015 certified company; the company conducts regular training programmes for the employees to impress on them the need for quality, productivity and transparency. These measures have helped to achieve the cost effectiveness and improve the overall operational efficiency.

10. Discussion on financial performance with respect to operational performance:

The high demand for low density fiber board has improved the turnover. The company is hopeful of encashing on its opportunity.

11. Significant changes in Financial Ratios

As per amendment made under Schedule V read with regulation 34(3) to the Listing Regulations, details of significant changes ( i.e. change of 25% or more as compared to the immediately previous financial year ) in key financial ratios and any changes in return on net worth of the company including explanations thereof are given below.

Particulars	Standalone		Changes	Reason
	2022-2023	2021-2022
Debtors Turnover Ratio	6.10	5.21	17%
Inventory Turnover Ratio	13.36	8.96	36%	Due to increase in turnover
Interest coverage	3.00	2.58	16%
Current Ratio	3.11	3.54	12%
Debt Equity Ratio	0.36	0.39	8%
Operating Profit Margin	7.87	5.16	52%	Due to increase in profit
Net Profit Margin	3.87	1.44	169%	Due to increase in profit
Return on Net worth	8.50	3.12	172%	Due to increase in profit

12. Cautionary statement:

As stated earlier statements in the management discussion and analysis report are in accordance with the companys objectives, projections, estimates and expectations and may be " forwaded looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied and changes in government regulations, tax laws and other statutes may affect the working of the company.

13. Information on non-mandatory requirements

• The company has not issued any GDR/ADR/ warrants or any convertible instruments.

• The company is not maintaining a separate office for the chairman

• Unpaid dividends up to and inclusive of 2014-15 have been deposited in the Investor Education and Protection fund as required under relevant provisions.