MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The management of Victory Paper and Boards (India) limited is pleased to brsent its analysis report covering performance and outlook. The report contains expectations of the company's business based on current environment. Many unforeseen and uncontrollable external factors could alter these expectations.

BUSINESS ORGANIZATION:

The company is dealing only in paper manufacture and sales. The Company is having a plant with an installed capacity of 7500 TPA at Elappully in Palakkad district of Kerala.

I. Industry Outlook

The demand for paper is shrinking with economic recession. Paper industry is under recession in line with the overall industrial situation in the country. However we expect brighter years ahead for the industry as a whole.

a) Paper policy

The company shall concentrate on launching value added products to increase turnover and profitability. According to the experts, as against the paper industry's growth rate of 6 to 7 %, the market for products in the high-end segment is growing at 19 %.The domestic demand for paper products is now showing a gradual healthy trend across segments. However a significant growth is expected in the high-end segment

b) Opportunities and threats

Though the pulp and waste paper prices have gone up, the domestic market is not able to sell their products at reasonable prices. Frequent power failures cause loss of production due to shut down and restarting of the plant. However the company is hopeful of achieving the targets with better realization from the high-end segment.

II. Operational and Financial Performance

Paper Sales Volume

There was no sale of paper during the vear 2011-12 and 2010-11. Trading Activity:

During the year the Company was involved in trading activitie s to the tune of Rs.64602 (Previous year Rs.9095772)

III. Material Development in Human Resources/Industrial Relations front including number of people employed.

The company was in lock out during the year 2011-12 due to labor strike.

IV. Internal Control System

The Company ensures existence of adequate internal control through documented Policies & Procedures to be followed by the executives at various levels in the organization.