MANAGEMENT DISCUSSION AND ANALYSIS

A. INDUSTRY STRUCTURE AND DEVELOPMENTS:

Your Company operates in a business segment-Prepared Foods which comprises-Consumer business and Tasty Bite Food Service (TFS). During the year, Consumer Business grew 25% YOY, while TFS grew 15% in the same period.

Tasty Bite is in a Natural, Convenient and Specialty foods business. The marketing and distribution of these products is through Preferred Brands International Inc, (PBI), the Parent company, in the US, Canada, UK and Japan and Preferred Brands Australia Pty Ltd (PBA) in Australia and New Zealand. Tasty Bite continued to be the #1 brand in terms of market share for shelf stable Indian foods, and the fastest growing brand for Asian Noodles and Organic Ready to eat rice in North American mainstream markets. Overall distribution grew by 15% system wide.

Tasty Bite operates at the intersection of three major trends, natural, convenient and ethnic or specialty foods. The natural foods industry is today a $110 billion industry in the U.S. and is expected to grow ~14% annually from 2013 to 2018. Presently, 18% of consumers contribute 50% of sales in this segment leaving room for significant growth. Nearly 17% of all U.S. grocery food sales are either natural or organic and this number is growing rapidly. Sales of gluten-free products have increased from $5.4 billion to $8.4 billion in the past two years. Your Company's products are all-natural with a clean label, vegetarian, non-GMO and many products are gluten-free. Our range of RTE rices and grains are organic and all products are manufactured using sustainable manufacturing practices.

The convenience foods industry is over $24 billion and is expected to grow 10% between 2013-2018. Convenience has been a major long-term trend in the U.S. with consumers now seeking convenience of authentic, tasty and better for you convenient meal solutions. Tasty Bite has been developing products and process technologies that provide convenient meals without compromising taste or nutrition.

The ethnic Indian and Asian food market is experiencing the highest percentage of growth of any segment and is expected to reach a size of ~$4.0 billion in the U.S. by 2018. This segment has grown 27% between 2008 and 2013 and is currently at a size of $3.5 billion. These cuisines popularized by the increasing number of restaurants are becoming more popular amongst the millennial consumers who are more eager to try new foods and diversify eating habits. Market studies show that 36% of consumers in the U.S. have had Asian/Indian food at their homes in the past 3 months. Your Company is well positioned to benefit from this trend with its established range of Indian entrees and its growing range of Asian noodles and RTE rices and grains.

Tasty Bite's domestic food service business operates in an attractive backdrop of a foodservice market in India. This industry is mainly driven by an increase in the average spending on eating out by middle class households. Food service operators are experimenting with value for money products to incentivize consumers to eat away from home. Various Quick-Service restaurant chains are entering and expanding their footprint in this fast growing market. Your Company strives to be the partner of choice to all leading QSR and HORECA (hotels, restaurants and caterers) players. It develops innovative food products that suit Indian palates and address vegetarian brferences.

Products manufactured and sold in India require approval by the food regulator FSSAI. The Company is licensed and all its products are fully in compliance with relevant food laws and good manufacturing practices. The Company has applied for product approval for its proprietary products and is awaiting approval for many of them. As FSSAI is besieged with several thousand applications the process of approvals have been delayed. This in turn has the potential of delaying new market launches. The Company is actively in engagement with FSSAI in answering all queries and expects all its products to be cleared in due course of time.

TFS has an increased share of business with most customers, and has had some important customer acquisitions on the strength of strong customer service and product and process innovations at TBRC.

Margins during the financial year remained robust and were not heavily impacted because of muted inflation in raw materials - vegetables, pulses, edible oils, dairy etc. Tasty Bite's Supply Chain team pursued a finely tuned purchase strategy for key ingredients mitigating risks whenever there were shortages in the market. The team ensured that advance purchase contracts were honored.

Gross Margins also improved on account of operational efficiencies in manufacturing.

Sustainability remains a key focus area of the Company. The Company has implemented 'Rain Water Harvesting' technique to increase ground water level. Company uses simple techniques such as crop rotation, use of naturalfertilizers and pest control methods and green composting in its farm. Chemical fertilizers are not used anywhere in the farm. Several measures are underway for improving the quality of air, soil and water in the company eco-system. Specific initiatives have also been undertaken for constant monitoring and conservation of water and power.

B. REVENUES:

Exports to the US market grew by 24.9% on account of increased penetration across all retail markets. New product launches, notably organic rice and Asian range of products also positively impacted sales. Higher exports resulted in better export linked incentives to the company.

Food Service Business in India comprising of 'Formed Frozen Products'(FFP) and 'Sauces' continued to witness growth crossing Rs. 58 crores in FY15, a growth of over 15%. This is in the backdrop of a declining 'Same Store Sales Growth'(SSSG) witnessed across the QSR industry in India through the entire year.The ability to rapidly create a library of new innovative food solutions for the industry helped us acquire additional marquee customers. The company is confident of sustaining momentum in the business and is looking forward to continued strong performance in domestic as well as exports markets.

C. MARGIN ANALYSIS:

During the year, your Company saw healthy expansion in margins. Profit before tax grew from 4.3% last year to 9.3% this year.

Few favourable factors helped your Company keep materials costs under control. While prices of some vegetables and dairy products remained relatively stable during the year the Company also took early steps on advance purchase contracts for several volatile commodities to mitigate risk of impending commodity inflation.

The year also saw significant improvement in productivity as a result of investment made in new production facilities. The state-of-the-art production facilities are now able to generate consistently better productivity. Key production indices improved, positively impacting operating margins.

Economy of scale and better control over fixed costs helped further improve our margins.

D. STRENGTHS, OPPORTUNITIES, CHALLENGES:

Strengths :

1. Experienced and successful entrebrneurs leading the Company.

2. Tasty Bite is the dominant brand in key international markets for the 'Indian brpared meals' category.

3. Tasty Bite is the fastest growing brand of organic rice and noodles in key markets.

4. Tasty Bite is in the centre of 3 mega trends - consumer brference for all natural foods, specialty foods and convenient foods.

5. Strong supply chain - from farm to fork. Secure availability of supplies of all important ingredients.

6. Experienced R&D team and Consumer led Product Development.

7. State of art, versatile and scalable manufacturing capabilities. Opportunities :

1. Having succeeded in North American and Australian markets, there is a strong platform to scale up the businesses in other parts of the globe.

2. Alliance with Kagome will create opportunities to explore new markets and product segments. New technologies and R&D capabilities from Kagome will provide strength to existing capabilities. Challenges :

1. Several raw materials are commodities prone to rapid price fluctuations, and inconsistent availability of materials through the year.

2. Export business is exposed to foreign exchange risk.

3. With a dominant share of the Indian category there is always a threat from new entrants that can potentially reduce our market share.

4. Delays in getting product approvals by the Indian food regulator, FSSAI, for the domestic market have the potential to delay new product launches and impact the near term growth of the food service business.

E. OUTLOOK :

Going forward, revenue growth will be driven by a combination of increasing width of distribution in key markets as well as increasing velocity in existing distribution. Width of distribution will be through acquisition of new supermarket distribution, new product and new category launches in existing markets. Velocity, which is increasing the frequency of product usage by our consumers, will happen as a result of constant engagement with them through various promotional events, digital media as well as live product demo's across a large number of stores through the year.

In the Indian market, your Company will continue to add on its existing base of customers and products focused on the food service industry. The company will continue to focus on forging strong customer partnerships with leading players in the QSR industry and will initiate entry into the large HORECA sector to grow the market.

F. SEGMENT WISE OR PRODUCT WISE PERFORMANCE/ NATURE OF BUSINESS :

The Company operates in one segment: Prepared Foods consisting of ready to serve products and intermediate food products such as brpared meals, frozen finger foods and sauces. There is no change in nature of business of the Company.

CAUTIONARY STATEMENT

Statements in Management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations may be "forward looking statements" within the meaning of applicable securities law and regulations. Actual results may differ materially from those exbrssed or implied. Important factors that could make a difference to results include economic conditions affecting demand/ supply, price conditions in domestic and overseas markets in which the Company operates, competitive brssures in these markets, changes in government regulations, tax laws and other statutes and incidental factors.