MANAGEMENT DISCUSSIONS & ANALYSIS REPORT

INDUSTRY STRUCTURE & DEVELOPMENT:

Stovec is a part of SPGPrints Group, The Netherlands and is a Market leader in India for Rotary Screens and Printing Machines. Stovec essentially operates in three verticals viz. Textile Printing, Graphics Printing and Sugar Filtration.

The large part of Stovec’s product portfolio caters to textile industry. Textile Industry has a prominent place in the Indian manufacturing sector. Employing around 35 million people, textiles industry stands as a major foreign currency revenue generator, generating around 16% of export revenues for the country and holds 14% share of industrial production. Thus, growth and all round development of this industry has a direct bearing on the improvement of the India’s economy.

Indian Graphic Industry and more specifically Label Printing Industry is developing strongly and is growing consistently. The industry has rapidly evolved and is global in its outlook and delivery. Entry of International Brands will play a key role in increasing the demand driven by a need for high quality label printing.

Stovec is also growing its Sugar Screen business, which is highly dependent upon the Sugar Crop performance and resultant demand from the Sugar Industry. Growing population, high demand from food and beverages industry are the key drivers of this Industry. Sugarcane prices, impact of cyclicality and sugar pricing issues are some of the major challenges faced by Sugar Industry.

COMPANY PERFORMANCE:

Standalone:

Your Company has demonstrated excellent performance during the year and has achieved revenue from operations of Rs. 1567.02 Million (Previous year Rs. 949.09 Million); a growth of about 65 % in comparison to brvious year, contributed by growth in sales of all product lines driven by increased market brsence. The Company has achieved Profit before Tax of Rs. 310.66 Million (Previous year Rs. 165.15 Million), a growth of about 88% in comparison to brvious year.

The Company achieved revenue from Exports of Rs. 92.19 Million during the financial year 2015.

Consolidated:

The Company has achieved consolidated revenue from operations of Rs. 1621.98 Million and Profit before Tax of Rs. 331.79 Million during the financial year 2015.

OPERATIONS PERFORMANCE

The Company has its manufacturing facility in Ahmedabad. With the strength of 162 permanent employees, Stovec Industries Limited drives its operations facility with best-in- class manufacturing practices. Operations excellence tools such as Six Sigma, have been progressively used to drive the operational efficiency.

PARTICIPATION IN TRADE SHOWS & EXHIBITIONS:

The Company participated and made its brsence felt in various trade shows and exhibitions such as Label Expo, Brussels; ITMA, Milan, Italy; Shanghai Tex, China and STAI (Sugar Technologists Association of India) Exhibition held in Goa

The Company will continue to participate in trade shows & exhibitions to enhance its brsence and visibility in the market.

OUTLOOK & OPPORTUNITIES:

The International Monetary Fund (IMF) in its World Economic Outlook forecast India’s economic growth at about 7.5 percent during 2016. Resilient domestic demand and a limited reliance on the external sector has fueled a pickup in growth for India in fiscal year 2015. In contrast to other major developing countries, growth in India remained robust, buoyed by strong investor sentiment and the positive effect on real incomes of the recent fall in oil prices.

From the Global front, the growth is expected to remain at about 3.4 % in 2016. The pickup in global activity is projected to be more gradual, especially in emerging market and developing economies.

Overall, financial conditions within advanced economies remain very accommodative.

The Government of India had notified the amended Textile Upgradation Fund Scheme (TUFS) which may give a boost to employment generation and exports in the textile sector. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players into the Indian market. The organized apparel segment is expected to grow at a Compound Annual Growth Rate (CAGR) of more than 13 per cent over a period of 10 years. The Government of India is expected to soon announce a new National Textile Policy, which aims at creating 35 million new jobs by way of increased investments by foreign companies, which in turn may increase the business prospects for industries related to textiles. The future of Indian Textile Industry which is a key business industry for your Company looks promising.

RISKS AND CONCERNS:

Economic challenges being faced by the world including India, may slow down the growth rate forecast which might adversely affect Business in general as well as your Company’s business. The volatility in cotton and nickel may impact the Company’s performance. The fluctuations in exchange rate, liquidity issues and rising power and labour cost continues to be a key challenge for the industry. The overall economic climate and in particular the health of textile processing industry which remains confronted by environment related issues, may have impact on the Company’s business plans. The Company continues to take suitable steps to minimize these risks and their impact on Company’s overall performance.

INTERNAL CONTROL SYSTEM:

Adequate internal control procedures and systems are in place.

HUMAN RESOURCE MANAGEMENT:

The Company has focused on creating per formance based culture within the organization and emphasize on employees training and development. The Company intends to attract, retain and develop talent through good HR practices.

The Company had 162 permanent employees on the rolls of the Company as on December 31, 2015.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis describing the projections, estimates, expectations may be “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 includes, among others, economic conditions affecting demand/ supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.