MANAGEMENT DISCUSSIONS AND ANALYSIS

Your Company is a public limited Company established in 1979 to manufacture Writing and Printing Paper with a capacity of 10,000 MTs per annum. The mill is located at Ahmedgarh, District Sangrur [Punjab]. In 1994, your Company purchased the paper division of M/s Zenith Limited situated at village Banah, District S.B.S. Nagar in Punjab. After certain modifications in both the paper divisions, the combined brsent capacity for manufacture of Writing and Printing Paper stands at 85,000 MTs per annum.

India ranks 15th among the paper producing countries in the world. Paper industry in India is highly fragmented. There are over 700 mills sbrad across the country, capacity ranging from 5 TPD to over 1200 TPD. Total installed capacity is estimated at 15 million tones with production of about 14 million tones. The products are broadly classified as [1] Newsprint, [2] Writing and Printing Paper, and [3] Industrial and specialty papers. Your Company produces Writing and Printing Paper. Based on usage of raw material, Paper Mills are divided into three categories namely, wood-based, agro-based and waste paper based [recycled fiber]. Your Company uses agro waste raw materials, viz. wheat straw, sarkanda as the primary raw materials.

Writing and Printing Paper accounts for about 35%, Newsprint 20% and Industrial and specialty papers 45%. The per capita consumption of paper is about 12 Kg. against the world average of 50 Kg. and Asian average of 40 Kg. With the continuous growth of economy and improvement in literacy rate and standard of living, the demand for paper and paper products is growing at an annual average rate of 5 - 6%. The demand growth in the next three years is likely to be the same in Writing and Printing Paper. However, there could be some brssure on consumption of this variety of paper due to increasing emphasis on e-governance and motivation towards "Digital India". Your company is keeping a close watch on the developments to take corrective actions, if found necessary. Raw materials availability and strict environment regulations are the major entry barriers for the industry.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has well defined internal control system. The Company takes abundant care to design, review and monitor the working of internal control system. Internal Audit in the organization is an independent appraisal activity and it measures the efficiency, adequacy and effectiveness of other controls in the organization. All significant issues are brought to the attention of the Audit Committee of the Board.

HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL

RELATIONS

The human resources development function of the Company is guided by a strong set of values and policies. Your company strives to provide the best work environment with ample opportunities to grow and explore. Your company maintains a work environment that is free from any harassment. Company enjoys excellent relationship with its personnel and considers them as an essential part of the organization.

Development and well being of people working for the Company has been a corner stone of management policy. This is reflected through very low employees' turnover at all levels including workers, staff, officers and managers. Company lays special emphasis on staff training and retraining through internal workshops and also nominating staff/officers to various training programmes. As on 31st March 2016, Company has 1340 employees consisting of 89 managers, 328 staff/officers and 923 workers.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

Your company, in collaboration with a local NGO in Ahmedgarh, has set up an Eye Hospital. Besides contributing in setting up of this hospital, financial assistance is extended on monthly basis. Eye care is provided to needy persons on subsidized rates/free of cost. Your company is also involved with various educational institutions for providing scholarship/financial assistance to deservin g students on recommendations of th e managements of such institutions.

Your company actively participates with number of NGOs for holding medical check-up camps, sports events and other social activities. Your Company provides fire fighting services, as and when need arises, in nearby areas through its own fire tender and fire fighting staff.

OUTLOOK

As mentioned in the earlier part of the report, there are certain causes of concern as far as demand for writing and printing paper is concerned. These include significant quantity of cheaper imports of material from nearby countries, increasing emphasis on e-governance and e-learning, which directly affect the consumption of cultural varieties of paper. However, increasing emphasis on education, faster growth rate in economy and increasing standards of living, shall support increase per capita paper consumption. Company expects that it shall be able to meet its products comfortably in years to come. However, a close watch is constantly kept on various developments and diversification of product range whenever found necessary will be undertaken. Company shall also look forward business opportunities, if situation so warrants. Eco-friendly technology adopted by the Company, motivated manpower and market leadership vision makes future outlook quite optimistic.

CAUTIONARY STATEMENT

This discussion contains certain forward looking statements based on current expectations, which entail various risk and uncertainties that could cause the actual results to differ materially from those reflected in them. The actual could be materially different from the ones stated in this report. Market data and product information contained in this report is gathered from published and unpublished reports and their accuracy cannot be assured.