MANAGEMENT DISCUSSION & ANALYSIS REPORTS

Cautionary Statement

Certain statements in this section may be forward looking and be based on expectations/projections about the future. Company's actual results, performance could thus differ materially from those projected in any such forward looking statements. The Company assumes no responsibility to publicly amend, modify or revise any of such forward looking statements on the basis of subsequent developments, information or events.

Industry Structure and Development

With launch of the 'Make in India' initiative, Mr. Narendra Modi, the Prime Minister of India, aims to give global recognition to the Indian economy and also place India on the world map as a manufacturing hub. India has also set for itself an ambitious target of increasing the contribution of manufacturing output to 25 per cent of gross domestic product (GDP) by 2025, from 16 per cent currently.

Currently, the Indian Plastics Industry is sbrad over across the country, employing about 4 million people and over 2,000 exporters. It operates more than 30,000 processing units, of which 85 per cent to 90 per cent are small and medium enterprises (SMEs).

Your Company is one of the leading manufacturers of PET bottles and containers since 1984 under the brand name "PEARLPET" with dominance in both household and retail segment. We believe in providing our customers the trendy, unique storage products which is adaptable to their needs.

We are proud to have bought a new thought process to the Indian kitchen by making the first safe, transparent, unbreakable, odorless plastic jars & bottles. Our products are made of virgin plastics which are universally approved by USFDA and other regulating bodies for Food, Beverage and Water storage. All PEARLPET products are fully recyclable and also marked with a recycling code to indicate the type of material used.

The production facilities, strategically placed at four locations namely Baddi, Pant Nagar, Mahad and Jigani are in close proximity to our diversified customer base.

Economic Scenario and Outlook

Plastic Industry is one of the most versatile and widely used product in the world. Many everyday products like food containers, synthetic fibres and almost all water plastic bottles are made from PET.

The usage of plastics cut across all sections of society. Due to its moulding capacity, versatility, non corrosive and moisture resistant properties, economic viability, easy process ability and also its attractiveness and durability in all weather conditions, it has become a material of universal choice, for the lower and middle class of population, it is an essential material.

A time has come when plastics industry has the capacity to influence the progress of all other sectors. Plastic industry is regarded as 'sunrise' industry due to its increasing versatility and worldwide demand.

Indian Plastics Processing Industry is an important segment of Indian industry which is making significant contribution to the economic development and growth of various key sectors in the country. However its usage in the country is 9.7 kgs per capita which is far below as compared to 109 kgs in USA and 45 kgs in China. The lower demand growth can be attributed to the fact that the Plastics sector in India has been hit by economic slowdown, deferment of capital expenditure by the government on infrastructure, currency volatility and liquidity crunch caused by higher interest rates

Opportunities and Challenges

Thus, the Plastic goods industry in India has bright prospects and there is a great scope of growth due to universal acceptability of these goods and their production & use will grow unhindered.

Plastic industry in India symbolizes a promising industry and at the same time helps in creating new employment opportunities for the people of India, creating millions of unskilled and semi-skilled jobs and change the export profile from raw materials to value added plastics products.

The plastics processing industry is a source of great potential for global businesses. There is tremendous scope for innovative technological up gradations and thus rapid growth of the sector. There are tremendous investment opportunities in plastic industry.

But the unbrcedented growth in the use of plastics as a packing material has created a serious problem of solid waste disposal. Plastic is a non-biodegradable substance and creates problems of environmental pollution.

The industry however witnesses factors that pose a threat and restrain growth in the industry. The factors that need consideration are:

1) Recycling: The recycling of the used plastic material solves the problem of waste disposal, lessens the burden on raw materials, lightens the brssure on the biosphere and provides jobs to millions. It may be mentioned here that this process needs technological development and up gradation. It is estimated that about 60% of the plastics consumed in the Country are recycled. This rate needs to go up to 80%.

2) Inflation: the inflation rate in India was recorded at 5.01 percent in May of 2015. It is averaged at 8.51 percent from 2012 until 2015, reaching an all-time high of 11.16 percent in November of 2013 and a record low of 4.38 percent in November of 2014. Inflation rate impacts the price of plastic compounds and their usage in the industry.

3) Dumping of Products: China is seen as a threat by other developing nations for a reason that certain goods are being sold at a price far below the price brvailing in the market on account of cheap labour and significant capacities.

The various other factors viz. high interest rate, volatile currency market, tough competition from big industrial group etc. may also pose serious concern on the profitability of the Company as a whole.

Segment Wise Performance

The Company has a single reportable segment i.e. Manufacture of PET bottles and jars etc. Therefore, segment-wise reporting is not applicable.

Risk Management

As every other business, your Company also has significant exposure to different types and levels of risk. However, the Company has a well-structured risk assessment and minimization mechanism, which is periodically reviewed by the Board of Directors. With thorough market understanding, strong marketing network, diverse and flexible manufacturing and technical expertise, your Company has been able to manage and withstand risks and concerns faced by the industry. However, if any, regulatory changes affect the usage of PET, your Company will be seriously impacted.

During the year under review, there was a fire at one of the Company's unit located at Mahad due to short circuit. The Company has filed insurance claim for loss of stocks, building, furniture & fixture and machinery.

Internal Control Systems and their Adequacy

The Company has engaged the services of an independent Chartered Accountant to carry out the internal audit and ensure that recording and reporting are adequate and proper, the internal controls exist in the system and that sufficient measures are taken to update the internal control system. The system also ensures that all transactions are appropriately authorized, recorded and reported. Exercises for safeguarding assets and protection against unauthorized use are undertaken from time to time.

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Company's policies, safeguarding of its assets, the brvention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely brparation of reliable financial disclosures.

Human Resource and Industrial Relations

Industrial relation is a multidisciplinary field that studies the employment relationship. Your Company recognizes the importance of human value and ensures that proper encouragement both moral and financial is extended to employees to motivate them. Your Company has provided rent free accommodation to all its staff and workers adjacent to the factory brmises of the Company. As on March 31, 2015, 532 numbers of employees were on Company's Roll.