MANAGEMENT DISCUSSION

AND ANALYSIS

Mr. Sahil Vachani

Managing Director & CEO

Mr. Alok Goel

Company Secretary

Mr. Arjunjit Singh

Chief Operating Officer - Max Estates Ltd.

Mr. Dinker Vashisht

General Manager – Business Development

Mr. Nitin Kansal

Chief Financial Officer

Mr. Peter McLoughlin

Chief Executive Officer – Max Learning Limited

Ms. Rachna Mohan

Senior Manager – Human Capital – Max Estates Limited

Mr. Rohit Rajput

Head – Human Capital & Business Strategy

Mr. Ashish Singla

Vice President – Investments – Max I. Limited

Ms. Prashant Sadasivan

Advisor – Human Capital & Business Strategy

3D rendering of the interiors of Max Towers on the Delhi-Noida border

3D rendering of the interiors of Max Towers on the Delhi-Noida border

Max Ventures & Industries Limited (‘MaxVIL’ or ‘the Company’) one of the three listed entities in the US$ 2.1 billion Max Group, is the holding company of Max Speciality Films, an innovation leader in the Speciality Packaging Films business. In addition to manufacturing, the Company also serves as the Group’s entrepreneurial arm to explore the ‘wider world of business’, especially taking cues from the economic and commercial reforms agenda of the present Government and the positive initiatives of the Prime Minister, including ‘Make in India’, ‘Skill India’, ‘Digital India’, among others.

With this vision, MaxVIL incorporated three new subsidiaries in FY 2017 − Max Estates Limited, the real estate arm of the Max Group with a vision to bring the Group’s values of Sevabhav, Excellence and Credibility to the Indian real estate sector, Max I. Limited, a fully-owned special purpose vehicle, which facilitates Intellectual and Financial Capital to promising and proven earlystage organisations across identified sunrise sectors and Max Learning Limited, which is focussed on the education sector.

All the three businesses are wholly-owned subsidiaries of MaxVIL, while Max Speciality Films is a 51:49 partnership with Japan-based Toppan Printing Co. Ltd.

In FY 2017, the Company reported Consolidated Revenues of ₹ 668.18 crore, and a Loss of ₹ 7.32 crore. The Company’s flagship business Max Speciality Films (MSFL) accounted for ₹ 666 crore in revenues.

Corporate Developments

The Company has made significant strides in FY 2017, in growing and/or advancing the business verticals listed above. The year was also notable because of two seminal transactions, which will have an enduring impact on the Company’s growth journey over the next few years.

The first of these was the sale of a 22.51% stake in MaxVIL to a subsidiary of New York Life Insurance Company (NYL) in January 2017. New York Life is the largest mutual life insurance company in the United States and one of the largest life insurers in the world, with more than US$ 500 billion under management. The investment marks the re-entry of New York Life in the Max Group after it sold its 26% stake in Max New York Life Insurance in FY 2012, and serves as an important stamp of approval for MaxVIL. The NYL subsidiary acquired the equity stake at an offer price of ₹ 78 per share aggregating to ₹ 121 crore on a diluted basis.

consolidated revenues   668.18 Cr.

The second transaction was the induction of Toppan Printing Co. Ltd, Japan (Toppan) as a strategic partner with a 49% stake in MSFL in February.

Established in 1900, Toppan (Market Cap of US$ 6.8 billion) will serve as a strategic partner in MSFL and share their expertise in managing a global speciality films business, as well as, leverage their global sales network. Under this partnership, Toppan, which is a large global buyer of BOPP products (MSFL’s key offering), will also serve as a customer to MSFL. As part of the partnership, Toppan invested approximately ₹ 200 crore, through a combination of primary and secondary share issuance. The transaction was completed in April 2017.

Last year, the Board of MSFL had approved an investment of ₹ 250 crore to set up its 5th BOPP line. Line 5 will help augment production capacity from 45,000 tonnes per annum to 75,000 tonnes per annum and is expected to commence commercial production in the first quarter of FY 2019.

MSFL also witnessed a significant transition in leadership this past year with the exit of Jaideep Wadhwa as the CEO in February 2017, and the recent appointment of Ramneek Jain as the new CEO in July 2017. Mr. Jain is a seasoned business leader with over 23 years of rich experience across the manufacturing organisations in India and the US, and will bring in a clear vision, strategic thinking, dedicated execution and a sense of confidence to his new role.

The Real Estate subsidiary Max Estates progressed its construction and site development activities on its project in Dehradun, Uttarakhand. The project represents ~0.15 million sq.ft. of residential and ~0.01 million sq.ft. of commercial developable space. Phase I of the project, which includes 14 Townhouses, 5 Courtyard Villas and 3 Forest Villas, is on track and targeted to be completed by FY 2018. The project has obtained all the requisite regulatory approvals and initiated sales in FY 2017, with ~20% of the inventory already sold.

Max Estates is also involved in two large commercial/office space projects in Delhi and NCR. The first one, Max Towers, is a prime commercial tower of ~0.6 million sq.ft. located within the 12.5-acre Delhi One site on the Delhi-Noida border, while the other project involves redevelopment of office space in Okhla, New Delhi utilising a potential built-up area of ~1,40,000 sq.ft. The Okhla project is likely to commence during the next quarter of FY 2018 and will be completed in 36 months.

The investment vertical, Max I. Limited made its first two investments in FY 2017 − ₹ 33.5 crore in Azure Hospitality Pvt. Ltd., which owns and operates successful F&B brands such as Mamagoto and Dhaba, and ₹ 17.55 crore for a 2% stake in FSN E-Commerce Ventures Pvt. Ltd, which owns and operates the leading online beauty destination Nykaa.com. MaxVIL has recently invested an additional ₹ 37 crore as a part of the second round of fundraising by Azure for its expansion in domestic and international markets.

Employees

As of March 31, 2017, the Company had 08 employees on its rolls.

Outlook

Over the next few years and beyond, MaxVIL’s business plans will continue to evolve and the subsidiaries will take a more concrete shape. MSFL’s focus going forward will be on nurturing the new relationship with Toppan and identifying strategic areas of synergy and successful implementation of the new BOPP line.

In addition to the successful and timely execution of its three ongoing projects in Dehradun and Delhi/NCR, Max Estates will also explore further opportunities in asset-light residential and high-end commercial real estate across North India.

Through Max I., MaxVIL would continue to explore and specifically target strategic growth sectors such as Hospitality, Food & Beverages, Healthcare, Technology-based Financial Services, Education, Real Estate and Senior Living. This focus will also be on fine-tuning the investment model as a hybrid of accelerators and venture funding, while providing both mentoring and growth capital for the investee organisations.

MaxVIL will also finalise its plans under the Education vertical in FY 2018. Max Learning is an extension of the Promoters’ longstanding association with the cause of quality education and Max’s enduring focus on the businesses of social good. With limited high-quality resources and poor infrastructure, there is a significant gap in the demand and supply of quality education in the Indian market. MaxVIL seeks to use this opportunity not only in terms of business but also in terms of making a significant positive social impact.

Relentless focus on execution of the Company’s stated strategy, while adhering to the Group’s core values of Sevabhav, Excellence and Credibility, will be the unwavering focus of MaxVIL’s management in the coming years. There is an undeniable growth potential in all of MaxVIL’s business verticals and the Company will work with resolute determination to ensure a positive outlook for all its stakeholders, including investors, customers, partners, employees and the society at large.

3D rendering of 222, Rajpur Road in Dehradun

3D rendering of 222, Rajpur Road in Dehradun