MANAGEMENT DISCUSSION AND ANALYSIS

REPORT WORLD ECONOMIC OUTLOOK:

Global growth is forecast at 3.5 percent in 2015 and 3.8 percent in 2016, with uneven prospects across the main countries and regions. Growth in emerging market economies is softening, reflecting an adjustment to diminished medium-term growth expectations and lower revenues from commodity exports, as well as country-specific factors. The outlook for advanced economies is showing signs of improvement, owing to the boost to disposable incomes from lower oil prices, continued support from accommodative monetary policy stances, and more moderate fiscal adjustment. The distribution of risks to near-term global growth has become more balanced relative to the second half of the year 2014 but is still tilted to the downside. The decline in oil prices could boost activity more than expected. Geopolitical tensions continue to pose threats and risks of disruptive shifts in asset prices remain relevant. In some advanced economies, protracted low inflation or deflation also pose risks to activity.

China and India have both experienced broad improvements in macroeconomic conditions, especially as low energy prices eased inflationary brssures and import bills. Financial markets gained in China but remained volatile in India. Forecasts for both countries have been tempered slightly for 2015. Conditions in India appear to be improving and growth through 2016 is forecast at around 6.5 percent.

INDIAN ECONOMIC CONDITIONS:

2014-15 has been a year marked by excitement and its share of challenges. The decisive political mandate accorded in the general elections set the stage for surging hopes for a rapid economic turnaround of the Indian economy. While many macro-economic indicators have improved during the course of the year, the journey to realize the growth potential of the economy is slow and challenging.

On the macro front, the biggest comfort came from the sharp drop in crude prices. For a large net importer like India, the decline in crude prices has helped in controlling the trade deficit and easing inflation. While the headline indicators point towards steady improvement, the recovery on the ground has been rather slow. Lower inflation has not resulted in significant improvement in demand conditions. The demand conditions have been quite challenging across sectors as borne out by the slow improvement in industrial production. Some of the other key underlying drives like credit growth and fixed capital formation also highlight a very sluggish environment.

The Government envisages GDP growth to accelerate to 8% in Financial Year 2016 driven by strengthening macroeconomic fundamentals and implementation of policy reforms recently announced. Reforms like e-auction of coal mines and telecom, FDI hike in insurance, speedier regulatory approvals etc will be critical growth enablers to de-bottleneck stalled projects, improve the investment outlook and ease of doing business in the country.

INDUSTRIAL TREND AND FIBC MARKET OUTLOOK:

The Indian packaging industry, growing at an annual rate of more than 15 per cent, is valued at $ 15.6 billion (INR 85,000 crore). In the next five years, the sector is expected to triple to around $ 60billion. Not only is the industry growing rapidly but it is also creating lucrative jobs for those who find a career in it.

The INR 140 billion Flexible Bulk Packaging Industry that includes woven sacks, leno bags, wrapping fabric and Flexible Intermediate Bulk Container (FIBC) is growing at over 20% with FIBC containers expected to grow three fold in the next 5 years riding an increased industrial production and a shift toward higher-value containers offering enhanced performance and supply chain efficiency. In fact, the global slowdown has been an opportunity for the Indian FIBC manufacturers as the production cuts by the companies in Europe and USA has resulted in the sourcing shifting to India adding an important factor to the growth story.

World demand for bulk packaging is projected to increase 5.0 percent annually to $59.2 billion in 2018. This will rebrsent an improvement over the 2008-2013 period, when growth in demand was particularly sluggish in the world's most developed markets, especially Japan and Western Europe. Accelerating growth in global manufacturing activity will be the primary impetus for demand gains. Although the improved performance for bulk packaging in developed markets is notable, the fastest gains will be in developing regions such as the Africa/ Mideast region, the Asia/Pacific region and Central and South America. India and Indonesia will be among the fastest growing national markets.

Flexible bulk packaging will register slightly faster growth than rigid packaging. Gains in flexible bulk packaging will be led by film wrap and FIBCs. FIBCs will register strong advances due to the advantages they offer in terms of loading and unloading products, their ability to handle greater quantities of product per container and efficiency advantages in terms of their reuse in closed-loop distribution systems.

SWOT ANALYSIS:

STRENGTHS AND OPPORTUNITIES:

Your Company enjoys the benefit of experience of over two decades in the manufacture of FIBCs. The major strengths of the company are that it has a diverse market with customers in over 30 countries. The strength of the business lies in the supply of the manufactured FIBCs that reach the end users and not the traders in both for domestic and export sales. Your Company has maintained a steady growth in spite of intense competition and slowdowns in the global markets due to its ability to adapt new technologies, product innovation, identifying and meeting the customers' expectation in terms of high quality, prompt service & performance and development of new markets through retail distribution network. The management expertise and their association with the polymer processing industry have always been an added advantage to your Company.

The planned utilization of capacity will enable us to achieve growth and increase our geographical coverage.

WEAKNESSES AND THREATS:

Fluctuating prices of raw materials/ Raw Material shortages - The main raw material used in the manufacture of FIBC is polypropylene, which is a crude derivative and subject to price fluctuations. Shortage of raw materials further aggravates stiff competition for Raw materials. Raw materials account for 60-70% of costs in FIBC manufacturing and the end result of this would be rising brssure on prices. However, with proper planning we have managed to keep these uncertainties under control.

STRATEGIES:

Your Company is still on a recovery mode after the fire accident that happened during November 2013 at Unit - II situated at Athipedu. Your company has been able to manage with the alternative options available so far and the sustained efforts by the management has improved the performance of the company after the fall and it is expected that the capacity utilization shall continue to be optimal in the current financial year. Your company expects that the insurance claim issue shall be sorted out at the earliest and the claim money will be a huge boost for managing the funds and working capital of the company.

REVIEW OF OPERATIONS:

Your Company's top line performance has increased by 15% from Rs.83 crores to Rs.96 crores and your company has managed to improve the bottom line by 40% from a loss of Rs.2 Crores in the year 2013-14 majorly due to fire accident to Rs.1 Crore this year. The Company's production capacity had gradually picked up during the course of the year and the momentum continues and it is expected that the company will recover completely in a short span of time.

FINANCIAL ANALYSIS:

The volatility of dollar price in the year 2013-14 led to forex loss for the company. The management revised the forex policy in order to align with the recent market trend. This has resulted in a positive gap in terms of the dollar price at brsent and it is expected that it will remain the same way in the near future as well. Your company has recovered the forex losses made last year and it is keeping adequate coverage of its exports and imports.

SEGMENT WISE PERFORMANCE:

Manufacturing

Your Company is primarily engaged in the business of manufacturing of polymer-based woven bags. It also deals in trading of raw materials to further enhance its performance. The performance of your company in the manufacturing division has been encouraging in the last financial year as it has been able to garner optimal productivity with limited resources. During the Financial Year your company has been able to complete the orders and satisfied the customers with just one functional manufacturing unit and also with assistance from other satellite units where the machineries and equipments from closed Unit II has been shifted. The production performance has been encouraging for the company and it is expected that your company shall be in a position to make good the losses in the next financial year.

Trading

Your company had been appointed as the Del - Credere Associate cum Consignment Stockist (DCA/ CS) of Indian Oil Corporation Limited for Tamil Nadu, Pondicherry and Kerala in the year 2009. The performance of trading division continues to be encouraging and is on an upward trend. This division continues to contribute to the profitability of the company. As a rare opportunity, IOCL has given a chance to your company to venture

into the North Indian markets starting with 3 states viz. Madhya Pradesh, Rajasthan and Chhattisgarh. Though the trading in the new regions has just begun, the management has decided to venture slowly in order to analyse the sales trend in the region.

The profit from trading has enhanced this year also to an extent of 22% as against the brvious year. The commission sales from trading earned in the current year amounts to Rs.125 Lakhs as against Rs.102 Lakhs in the brvious year. Jumbo Bag Limited continues to hold the highest sales position among all agents in South India in 2014-15 consecutively for the last two years.

For and on behalf of the Board

K.J.M. SHETTY

Chairman

DIN: 00033296

Place: Chennai

Date : 14.08.2015