Saffron Industries Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Managements discussion and analysis of the financial condition and results of operations include forward-looking statements based on certain assumptions and expectations of future events. The Company cannot assure that these assumptions and expectations are accurate. Although the Management has considered future risks as part of the discussions, future uncertainties are not limited to Management perceptions.

Outlook

The Indian pulp and paper industry is experiencing substantial growth, with an average increase of approximately 8%, which is on par with the countrys GDP. This growth rate surpasses that of China and numerous other Asian countries, except for Vietnam. Such promising development highlights the increasing capacity and demand within the Indian market.

The kraft paper market is currently experiencing an oversupply situation, which has been further compounded by a decrease in demand. The initial projections for increased demand did not account for the easing of e-commerce growth following the peak of Covid-19. As a result, the market has experienced a slowdown. The recent surge in Covid-19 cases has significantly impacted Chinas demand, leading to a major downturn. However, it is important to note that while growth may be slower than anticipated, it is still on the horizon.

Paper Industry in India

The Indian paper sector is showing promising signs of long-term growth. Despite currently holding just a 5% share in global production, there is a significant gap in per capita paper consumption, indicating ample room for expansion. Industry experts project that the sector will generate INR 70,000 Crores in revenue and contribute INR 5,000 Crores to the government coffers. These figures highlight the substantial economic impact this sector can have on the country.

Moreover, the Indian paper industry plays a critical role in employment generation. Currently, it directly employs around 500,000 individuals and indirectly supports another 1.5 million jobs. As one of the leading employers in India, this industry continues to contribute significantly to job creation and economic development. The growth of this sector is closely tied to Indias increasing GDP. As the economy continues its upward trajectory and consumer demand rises further, there will be an even greater need for paper products across various sectors such as packaging, printing, education, and more. In conclusion, with its positive trajectory driven by rising GDP and increasing demand for paper products domestically and globally along with its significant contribution to employment opportunities and government revenue generation; it is evident that the Indian paper industry holds great potential for continued growth and success in the future.

Industrial Structure & Developments

Indias paper market has witnessed impressive growth over the past few years, with a compound annual growth rate (CAGR) of 10% in value between fiscal years 2011-12 to 2016-17. This upward trend is projected to continue, as the market is expected to reach more than INR 85,000 Crores by the end of fiscal year 2024-25.To remain competitive on a global scale, i smoother movement of raw materials and finished products.

Furthermore, a revision of forest policies will ensure sustainable and crucial for the paper industry sourcing practices and support environmental conservation efforts. One challenge that the Indian paper mills face is their mix of outdated technology alongside modern ones. This fragmentation within the industry poses problems such as inefficiencies in production processes and varying quality standards. To overcome these challenges and streamline operations, investment in upgrading technology infrastructure should be prioritized. Collaborative efforts between industry stakeholders are also essential for knowledge sharing and best practices adoption. Sharing expertise between older mills with traditional methods and newer mills equipped with advanced technology can lead to improved efficiency across the board. By addressing these issues head-on and embracing innovation while maintaining sustainable practices, Indian paper mills can position themselves competitively within the global market landscape.

Opportunities and Threat

Growth in the Indian economy and demand creates unprecedented opportunities for the company to invest significantly in each of its core businesses.

In keeping with the philosophy of a continuous consumer-centric approach which is the hallmark of any organization, several developmental activities have been planned for the next fiscal year.

Risk Management & Concerns

Risks in the cost of raw materials, environmental liabilities, tax laws, labour relations, litigation and significant changes in the Global political and economical environment exert tremendous influence on the performance of the company. The Company has laid down procedures to inform Board Members about the risk assessment and minimization procedures.

Human Resource Development and Industrial Relations

The Company believes that the employees are the backbone of the Company. A congenial and safe work atmosphere, appropriate recognition and rewards, constant communication, focus on meeting customer needs and change management through training are the hallmarks of the development of human resources of the company. Every employee is aware of the challenges posed by the current economic environment.

Employee morale has remained high even during difficult times. The employees have co-opted fully with the management in implementing changes as required by the market. And it is providing an opportunity for all the employees to utilize their full potential and grow in the Organization. There was no strike or labour unrest during the last financial year.

There are 30 employees in the company as on 31^st March, 2023.

Internal Control System and Their Adequacy

Every successful company needs to have certain controls in place for functioning effectively. Saffron Industries Limited as well has sufficient internal controls in accordance with the nature and magnanimity of its business.

These have been designed to ensure that:

> Assets of the Company are acquired in an economical manner and safeguards are in place for their upkeep and to ensure their protection against any damage or destruction.

> Controls relating to the financial and operational aspects of the business remain in place and are working satisfactorily to detect exceptions and raise alerts.

> The Company enforces stringent compliance with all applicable laws and internal policies.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvements to strengthen the same. The Board of Directors has framed a policy which ensures the orderly and efficient conduct of its business, safeguarding of its assets, to provide greater assurance regarding the prevention and detection of frauds and accuracy and completeness of the accounting records of the company.

Further, your company has adequate internal financial controls with reference to its financial statements.

Key financial ratios

> Debtors turnover - Nil

> Inventory turnover

Inventory turnover increased to 174.83 from 219.66 due to increase in turnover and decrease in stock in the current year

> Interest coverage ratio

There was no finance cost in the period under review.

> Current ratio

Current ratio increased to 3.14 from 1.15 due to decrease in current assets.

> Debt equity ratio - Nil

> Operating profit margin (%)

There was operating loss during the financial year under review.

> Net profit margin(%)

There was loss in the period under review.

> Return on net-worth - Nil

Cautionary statement

Certain Statements in the "Management Discussion and Analysis" describing the Companys objectives, expectations or predictions may be "forward-looking statements" within the meaning of applicable laws or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied due to various risks & uncertainties. Important factors that could make a difference to the Companys operations include changes in Govt. regulations, tax regimes, economic developments and other factors such as litigation. The company does not undertake to update these statements.

Place: Nagpur	For and on behalf of the Board
Date: 07/09/2023
	Sd/-
	Vinod Maheshwari
	Chairman