MANAGEMENT DISCUSSION & ANALYSIS REPORT INDUSTRY SCENARIO, STRUCTURE & DEVELOPMENTS: • STATIONERY BUSINESS Worldwide stationery industry is an absolute heterogeneous business which includes the paper industry as its primary segment. This industry has demands in schools, colleges, offices and any business irrespective of their industry natures. Most of the people might term this as a small industry but it is no more a small size business when taken the global front. The demands for these products have grown by many times in the last few years and there are some specific factors which act as the driving forces for the enhancement ofthe sector. The constant changing trends of the products and continuous innovative styles adapted by the manufacturers are keeping the industry highly competitive. North America and European countries rebrsent the most market demand for the products. Besides these markets; The Asian Pacific markets indicate largest growth potentials and are projected to grow further by many bounds in the nearing future, this region includes a group of growing economies and thus the sector is estimated to rise by a good number. Experts brdict a compound annual growth rate of about 3.4% by the end of 2015 which is noted to be a positive mark for the phases beyond. The global stationery market is forecasted to be worth $155.4 billion by the end of 2015 and the emerging markets Asia and high demand regions in parts of America and Europe are projected to be the largest contributors. Countries like India and China are projected to have an industrial increase of double digits (an estimated 10 to 15%). • E-LEARNING SEGMENT There seems to be universal agreement that the worldwide E-Learning market will show fast and significant growth in the coming years. Asia has the world's highest regional growth rate for E-Learning of 17.3%. Revenues from the sale of E Learning are expected to be double by 2016 as compared to the brvious years. The vast majority of these revenues will be generated from the sales of packaged content. Throughout India, Government-funded projects related to literacy development in rural areas are a major driver to the introduction of E-Learning. Focusing specifically on the Indian Market, the E-Learning industry in India was valued at around INR 18.41 trillion in the year 2011-12. Increasing Internet penetration, low-cost existing coverage and rising demand are expected to help this market develop strongly in the near future. According to The research and Development report by experts, 'India's E-Learning Market Outlook to F.Y. 2018 - Increasing Technology Adoption to Drive Future Growth', estimates that the market should grow at a Compound Annual Growth Rate (CAGR) of 17.4% over the period F.Y. 2013 to F.Y. 2018. In addition to technology adoption, the Indian E-Learning content market is expected to grow at a CAGR of 18.4% from FY 2014 to FY 2018. The strong Government initiatives pushing student enrolments in higher education and distance learning will keep propelling market expansion at an ever-increasing rate. DEMAND AND MARKET OPPORTUNITY OF EXERCISE BOOK MANUFACTURING: The demand for exercise books is more during the first two quarters of the financial year. Similarly, registers, writing pads etc. are essential in every office, institutions, organizations, etc. Sources like schools, colleges, offices (mainly government agencies) are prime client base for the industry. There are many sorts of stationery products; Paper stationery products include notebooks, exercise books; flip over pads and plastic cover books play a vital part in further increasing the business of these paper stationery products. Products like notebooks and other school and college usable products are most sold in the educational category. There are some products which are widely used in the official background such as the noting pads, files and folders and printing sheets. Going by the market research, paper market is gaining huge demands in the recent years and the stationery products segment has primly been positively impacted globally due to the increase in numbers of educational institutions and offices. Commercial organizations are creeping up due to the business development that is happening throughout the world. The past few years have recorded immense growth in both export and import quantity for the products resulting in profitable trends of the sector. The requirements for these stationery products especially the office stationery segment has risen due to the usage of computers. SEGMENT WISE PERFORMANCE OF THE COMPANY: • Exercise Books & Papers: Sales during the financial year ended 31st March, 2015 was Rs. 8,492.13 Lacs as against the Rs. 15,637.25 Lacs during the brvious financial year i.e. year ending as on 31st March, 2014. • E-learning: Leveraging the powers of Computers and using a blend of Internet, Mobile, and other means of Digital Communication Technologies, E-class Education System Limited our Wholly-owned Subsidiary Company is taking quality and affordable education to reach the millions of Students across the Maharashtra and even the remote areas of the State. E-class aims at educating the Majority of the Students across the state by providing various products such as Smart phone Application, Android Memory cards, Pen-drives etc. E-class offers E-Educational/ Digital products mapped to the Maharashtra State board, for 1st to 10th Standard syllabus courses on all the Subjects in Marathi, English, and Semi-English Languages. Our content have been designed and reviewed by eminent Academicians. It contains various chapter notes along with practical examples which can help to understand the concept. It also contains the question answer and Mind-map at the end of the chapter to test and enhance the knowledge. During the year under review, the Company recorded total revenue of Rs. 161.88 lacs as against Rs. 228.63 Lacs in the F.Y, 201314. Delay in the implementation of project and intense competition from the other market players mainly resulted in to decline in sales. With the increasing Government initiatives to promote the vision of Digital India, Universal digital literacy, universally accessible digital resources, the management is expecting an increase in the demand for E-learning content and positive for the future growth of the Company. BUSINESS REVIEW/STATE OF THE COMPANY'S AFFAIRS: Our Company is in the Business of School & Office stationery as well as E-learning segment. The enormous size of School and paper stationery industry of India makes it one of the most important sectors of Indian Economy. Increasing importance of education, education policy of the government, brference of consumer for branded and quality products, growing number of offices and schools, increasing income of the people, etc. are some major factors that are driving the paper stationery business to flourish. The thrust on education by the Government is the prime growth of the notebook industry. Big corporate have entered in this segment and are playing important role as well. In spite of many corporate are moving towards paperless offices, the paper market is growing. The demand of the e-learning segment is also because of improving industrial infrastructure, technologies and innovative ideas. The key drivers for E-learning market are: Increasing Government initiatives to promote the vision of Digital India, Universal digital literacy, universally accessible digital resources. The strong Government initiatives pushing student enrolments in higher education and distance learning will keep propelling market expansion at an ever-increasing rate. The rapid adoption of mobile technology is going to play a major role in the way the entire digital experience is valued and consumed. The mobile ecosystem -- devices, carriers, app markets and so on has become the fastest-growing industry ever recorded. INDUSTRY SCENARIO (OPPORTUNITIES & THREATS): Education is the second highest expenditure segment among middle class households after food and grocery, and stationery stands at sixth position. Increasing inclination towards reading & writing, rising penetration of Internet, huge base of educated middle class population with increasing discretionary incomes and improving educational systems is driving growth in sales of stationery products. Also, the Government's spend on education laying emphasis on building more schools had increased the demand for the stationery products in India. Further, the demand for the branded quality products at the quantitative prices is the biggest challenge for the organized sector creating an opportunity to research and develop quality products. With extreme brcautions, and the good quality products offered and new marketing strategies are followed, the government has also come out with various incentives for SME's. Particularly for stationary industry if we quote would be the education enhancement schemes which are giving growth to this sector. The Indian stationery market is also influenced by macro economic development, national income and lasts but not the least the ever-growing Indian population. The Indian stationery industry is highly scattered and is largely dominated by the unorganized sector and the situation is quite alarming for the organized players industry. Factors like lack of modern production facilities, unorganized nature of functioning, marginal demands, government policies and international competition are largely contributing to the slow growth of the organized stationery industry in India. Further, India is constantly challenged by the growing competition, especially from neighbouring countries such as China, Indonesia and many other countries that supply higher quality products, as compared to India. Your Company is one of the prime players in the organized sector with the established brand 'Sundaram'. Your Company has modernized plants and automatic upgraded machines to produce quality products and which also allows your Company to take advantage of the economies of scale. Your company is also providing the platform for E-Learning through its Wholly-owned Subsidiary viz. E-class Education System Limited. RISK AND CONCERN: The risk is always the part and parcel of any business activity. The Company operates in a highly competitive environment that is subject to innovation and varying level of resources available to each player in this segment of business. The common risks inter alia are: Risk to Company Assets and Property, Employees Related Risks, Foreign Currency Risks, Risks associated with Non-Compliance of Statutory enactments, Competition Risks, Operational Risks, Business risk, Technology obsolescence, Investments, Retention of talent and Expansion of facilities. Business risk, inter-alia, further includes financial risk, political risk, fidelity risk, legal risk. Immense competition is faced by the company from the international players and unorganized sectors. The Company is constantly reviewing the risk that would impact adversely. Cost of raw material and inflationary brssure also increase the cost of manufacturing, but the availability of raw material from the suppliers at the right time and at the right price has enabled the company to reduce the cost of manufacturing. For Inflationary brssures and its impact the company has taken suitable cost control steps. The Company's Human Risk is minimal as it enjoys a harmonious industrial relationship in the manufacturing units of the Company. Lack of clarity on future Government policy continues to be an area of major concern for the industry. The exact impact of this cannot be evaluated until the proposed changes are actually introduced and implemented. CAUTIONARY STATEMENT: Statement in this Management's Discussion and Analysis detailing the Company's objectives, projections, estimates, expectations or brdictions are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include global and Indian demand-supply conditions, finished goods prices, stock availability and prices, cyclical demand and pricing in the Company's principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations. |