Ladderup Finance Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

Non-Banking Financial Companys (NBFCs) have become important constituents of Indias financial sector and have been recording higher credit growth than scheduled commercial banks (SCBs) over the past few years. NBFCs continue to leverage their superior understanding of regional dynamics and customised products and services to expedite financial inclusion in India.

NBFCs maintained robust credit growth during 2022-23, supported by the broad-based revival in economic activity and targeted policy initiatives. The sector strengthened its financial soundness during the year through robust capital buffers, improved asset quality and consolidation of the balance sheet. A scale based regulatory framework was implemented for NBFCs during 2022-23.

BUSINESS & FINANCIAL PERFORMANCE OF THE NBFC SECTOR

After weathering countless challenges over the past three fiscal periods, exacerbated by the Covid-19 pandemic, fiscal 2023 has brought growth back into focus for NBFCs. As per the ASSOCHAM and CRISIL joint report, NBFCs are poised to witness an 13-14 % growth in AUM by the end of FY 2023. Over the past three fiscal years, NBFCs largely focused on liquidity, capital and provisioning buffer. These, combined with the consistent improvement in economic activity, has put the sector in a better position today to capitalize on growth opportunities Increase in NBFCs AUM from just Rs 3.6 lakh crore in March 2008 to almost Rs 27 lakh crore in March 2022, and expected to increase further, indicates the importance of the sector to overall credit delivery in the economy.

BUSINESS STRATEGIES & FINANCIAL PERFORMANCE OF THE COMPANY

Ladderup Finance Limited ("LFL") is a residuary NBFC, registered with RBI as an investment company. It is listed on the Bombay Stock Exchange and primarily engaged in the business of investing in securities of listed and unlisted companies, predominantly for medium to long term. The Companys investment portfolio is diversified across various sectors, such as financial retail, packaging, QSR, information technology and real estate etc. The diversified nature of the Companys investment, both strategic and financial investments, have done reasonably well and it is expected to do even better in the following years. We are confident on our long-term business strategies and our underlying investment are mostly long-term in nature and we believe that these investments shall gradually create value through realization of profit in the combination of dividends and capital gains over a period of time. The Company is for investments, during the year it has invested in several credible startups and in various Listed Companies. As the nature of the companys business is to invest, hold and exit, the profit so materialized during the year may not essentially reflect the true picture of performance. The accrued profits/loss will be recognized in the year of sale.

The details with respect to financial performance has been included in detail in financial statements of the Company and in the Boards Report.

The Company have one Subsidiary Company, one Joint Venture Company and one Associate Company, the financial performance of those Companies are as follows:

FINANCIAL PERFORMANCE OF LADDERUP WEALTH MANAGEMENT PRIVATE LIMITED (SUBSIDIARY COMPANY)

The years returns from the Indian bourses were quite low, while Nifty Midcap achieved 0.70% returns in FY 2023, Nifty 50 and Nifty Small cap suffered a loss of -1.76% and -8.65%, respectively. The start of the Russia-Ukraine war at the end of FY22 resulted in a global market correction, and markets have largely traded sideways throughout the year. The concerns of a probable recession brought on by an increase in global inflation have served as a challenge for equities. With returns of 3.9%, Ladderups predictive model for mutual funds was able to outperform the benchmarks. While the equities suffered, the rising yields drew the attention of the investors towards debt.

Ladderup Wealth Management has a niche business of advising clients on right investing across asset classes. The organization has always worked to optimize client returns while maintaining their safety, thereby safeguarding our clients from adverse market impacts. On the financial front, the Companys profit after tax stood at INR 85.65 Lacs for the FY 2022-23 as against a profit of INR 261.74 Lacs in the previous year. The Company continues to adopt the best practices while continuously evolving to improve the service delivery to clients through integrity, transparency, and competence. With growth in mind and determination continued to grow our team by hiring young & bright deliver exemplary services, we talent. Ladderup Wealth Management Private Limited also established a joint venture in Dubai International Financial Centre (DIFC) namely Ladderup Wealth International Limited, which would enable us to offer a more tailored and enhanced approach to addressing the requirements of our global clientele.

Ladderup Wealth International Limited is a Dubai International Financial Services Authority Category 4 licensed firm dealing in wealth management and financial advisory, catering to the needs of High Networth Individuals & Businesses. It was incorporated in March 2022. During the financial year 2022-23 the Company has not booked any revenue.

FINANCIAL PERFORMANCE OF WATERPROOF CORPORATION PRIVATE LIMITED (WACO), (JOINT VENTURE COMPANY)

The Company is a pioneer in the Adhesive Tapes business in India and grown year on year to become the largest manufacturer and supplier of high-quality and superior-performance Gummed Paper Tapes and allied products in the country. With presence in over 50 countries, it has a global brand in the Water Activated Gummed Paper Tapes segment. The brands WACO & TACO are synonymous with Trust Quality - Fair Practices. The company manufactures products for various industries such as the Packaging Industry, Plywood Industry, Gypsum Board Industry and has built rock-solid reputation for excellence in quality and services. Waterproof Corporation has been in business for over 75 years and is the largest gummed paper tape manufacturer in India. The technology for manufacture of gummed paper tapes has been internally developed in the Companys 35,000 square foot manufacturing facility in central Mumbai, which has an in-house laboratory and engineering design & workshop facilities. During the financial year 2022-23, it has achieved 15% growth in its revenue as compared to the previous year. The Company generated total revenue of INR 4031.06 Lacs as compared to INR 3521.44 Lacs in the previous year. The profit before tax in the financial year 2022-23 INR 617.64 Lacs as compared to INR 612.55 lacs in the previous year.

During the year, the Company acquired 100% stake in Shree Vinayak Organic Pvt. Ltd. ("SVO") including its all assets and intellectual property and SVO became wholly owned Subsidiary Company of WACO. The SVO is a leading manufacturer of special purpose solvent based and water based acrylic adhesives and emulsions. It produces roughly 18 varieties of adhesives which are primarily used in production of pre coating foam, metalized PET, PVC Stickers, medicated strips, paper labelling, BOPP, wet lamination, and prosthesis. SVO has won various awards for its consistency and quality of products.

FINANCIAL PERFORMANCE OF ANNAPURNA PET PRIVATE LIMITED, (ASSOCIATE COMPANY)

The Company has high class PET preform production plant at Umbergaon Gujrat. It manufactures and markets comprehensive range of PET PREFORMS in variety of weights, color and sizes for the most diverse applications like Packaged Water, Carbonated Soft Drinks, Edible Oils, Juices etc. by employing latest fully automatic HUSKY & ENGEL Injection molding machines with 96 and 72 cavities as well as CSD CAPS with HUSKY injection Moulding Machine. The Plant has an installed capacity of approx. 1 BILLION preform per annum (15,500 Tonnes).

It is certified by GEO-TEK ISO 9001:2015, ISO 22000:2005, ISO 14001:2015 & OHSAS 18001:2007. Key clientele of the company is amongst the blue-chip companies, with the major concentration of customers in western region followed by south and central regions and exports to African countries.

Financial Year 2022-23 was a difficult year for the Company. During the year, prices of raw material, power, packaging, logistics etc. have been increased at regular intervals and due to which the financial performance of the Company has remained subdued. On ial front the Company has earned total revenue of INR 6094.30 lacs as compared to INR 6125.98 lacs. However, during the financ the year, the Company incurred a loss of INR 410.41 Lakhs (provisional) as compared to the previous years loss of INR 151.26 Lakhs. The Shareholders of Annapurna Pet Private Limited ("Transferor Company or Annapurna") and Waterproof Corporation Private Limited ("Transferee Company or WACO") have approved the Scheme of Merger, whereby Annapurna will merge into WACO. The synergy benefit of the mergers includes reduction in common admin & employee cost, optimum use of Annapurnas factory land, tax benefit on account of set of losses among others. Further, the said merger would not impact the ownership and the Company would continue to hold 50% shares of Water Proof Corporation Pvt Ltd. The said scheme is under approval stage before the National Company Law Tribunal at Mumbai Bench.

GLOBAL OUTLOOK

Global growth is expected to slow down in 2023 and may remain subdued in the medium run. As per the IMFs World Economic Outlook (WEO) released in April 2023, global growth for 2023 at 2.8 per cent is likely to be followed by the medium-term growth plateauing at 3.0 percent. Globally, disinflation efforts are expected to take down headline inflation from 7.3 per cent to 4.7 per cent in 2023 among AEs, and from 9.8 per cent to 8.6 per cent among emerging market and developing economies (EMDEs). Overall, the prospects for the global economy continue to be shadowed by high inflation, the adverse effects of geo-economic fragmentation operating through restrictions on movements of trade, labour, capital and diffusion of technology, and potential amplification of financial sector vulnerabilities. Medium- to long-term challenges such as climate change, cyber security, crypto currencies, FinTech and tech disruptions can also potentially vitiate the outlook.

In summary, global growth continues to be uncertain due to multitude of economic and geopolitical factors. The sharp policy tightening over the last year has had some impact on the global financial sector and the ability of authorities to take swift action may be tested again.

INDIAN ECONOMY

The Indian economy exhibited robust resilience in 2022-23 amidst a global turmoil following the Russia-Ukraine war, and recorded a growth of 7.0 per cent, the highest among major economies in the world. Barring the Omicron wave scare early in the year 2022, COVID-19 was largely on the ebb for most part of the year helping in restoration of consumer and business confidence. After the Covid-19 pandemic, India was quick to get back on the pre-pandemic growth trajectory, surpassing the UK to become the fifth-largest economy in the world. According to the Monetary Policy Committee of Reserve Bank of India, the expected real GDP Growth rate of India is projected at 6.5 % in FY 2023-24. On balance, we believe that the Indian economy has weathered the external shocks reasonably well. The proof of it is that the country has emerged as the fastest growing major economy in the world.

OPPORTUNITIES AND THREAT FOR THE COMPANY

Opportunities

• The sentiment in the Indian financial market has changed considering the revival of Indian economy from covid-19 it is likely to show positive momentum over the coming years.

• Growing Corporate activities and related need for fund raising re-organisation and acquisitions

.• Size of the Indian capital market and favourable demographics like huge middle class, larger younger population with disposable income and investible surplus and risk-taking abilities of the youth.

THREATS

Despite great opportunities, there are significant factors presenting threats to our businesses viz.

• Impact on economic growth of the rising prices of oil and industrial raw materials, decelerating investment demand and high inflation;

• Increased intensity of competition from local and global players.

• Regulatory Changes.

However, your Company is well aware of the above threats and has worked steadily to strengthen its business operations by putting appropriate policies and measures in place and well positioned to counter any adverse threat successfully.

RISK MANAGEMENT AND CONCERN

The management of the Company has made policies and processes for risk identification, risk assessment and risk mitigation planning for business, strategic, operational, and financial and compliance related issues.

The Directors have formed a committee which is known as Risk Management Committee. The Board of Directors with the aid of such Risk Management committee review and monitor Business risks for your Company. Moreover, the management also periodically reviews the policies and procedures and formulates plans for control of identified risks and improvements in the systems. A risk/compliance update report is regularly placed before the Audit Committee /Board of Directors of the Company. The Directors/ Audit Committee review the risk/ compliance update reports and the course of action taken or to be taken, to mitigate and manage the risks is taken.

HUMAN RESOURCES

The Human Resources initiative focuses on structured training programs (both in-house and external) intended to equip employees at all levels, with the necessary knowledge and experience in order to demonstrate high levels of performance. The Company takes further necessary steps to use its human resources in effective manner as well as to provide good working environment as well good infrastructure to the Employees of the company. It focuses on the growth of employees in terms of monetary as well as non-monetary terms.

Our organization is committed and focused on identifying and retaining the right talent to meet the overall business strategy and objective. The broad range of activity includes viz. robust manpower planning process in line with the business objective, enhancement of employee skill-sets by identifying training and development needs, retention programs, reward and recognition, learning and development.

INTERNAL CONTROL AND THEIR ADEQUACY

The Companys internal control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulations.

The Company, being in the lending and investment industry, has put in place an adequate internal control system to safeguard all assets and ensure operational excellence. The system also meticulously records all transaction details and ensures regulatory compliance.

The Companys internal control system is commensurate with the size, nature, and operations of the Company.

DISCLOSURE OF ACCOUNTING TREATMENT

Your company follows the same accounting procedure and makes the financial statement as per the accounting standard, IND AS, as well as the other laws applicable with respect to financial statements. Your company has not changed its accounting policy.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of the applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence the Companys operations include economic and political conditions in which the Company operates, interest rate fluctuations, changes in Government / RBI regulations, Tax laws, other statutes and incidental factors. This report contains statements extracted from reports of Government Authorities