MANAGEMENT DISCUSSION AND ANALYSIS

Operationally, the business continued its strong performance during the financial year ended March 31, 2015 reflecting a growth of 59% and production reaching record levels at 36% and your Company envisages to utilize its production capacity at consistent levels in continuation. Exports grew at alarming record by 43.90% mainly tapping niche markets on the global front.

Industry Scenario

The Chemical industry overall seems to be fairly favorable environment for players focusing on broadening customer base in the near future. The chemical industry comprises of large players as well as small players from unorganized sector resulting stiff competition compelling your Company to focus its margins thereon. Overall the fall in the crude prices and economy downtrend of few Asian countries has resulted stagnant exports due to unviability. At the global front and domestic segment the Management continued its endeavor in increasing its customer base. The strategic efforts of the Management have been successful in consistent and repeated order intake for your Company.

Outlook

Inconsistent pricing of Raw material and the fluctuating exchange rates have become the main challenges in the near future. In order to overcome these challenges, your Company envisages to achieve the same by strategic sourcing of raw materials and enhanced sales distribution network.

Your Company expects to continue its strategy of seeking niche markets, broad customer base overseas and domestically yielding better margins with enhanced volume growth. The global metal industry, to which your Company's Trading Division caters to, has been experiencing a reasonable growth rates over the last few quarters in terms of capacity addition wherein the existing demand there from is expected to be fairly resilient. The new R&D setup is endeavoring in addition of new products and has been successful in testing the outcome. Your Company is also in the process of modifying its idle capacity to cater to the new product expansion.

Segment-wise Performance

The increased demand for minerals in the overseas market pegged the growth of the Trading Division at 40%. The profits before interest and tax improved, as your Company had focused only on customers yielding better margins.

Your Company's overall profit after tax for FY 2014-15 was Rs. 1451 Lacs against Rs. 482 Lacs in FY 2013-14.

Your Company's Chemicals division has shown sustained increased capacity utilization throughout the year because strategic decisions were taken by the Management to improve the efficiency of the manufacturing facilities despite existence of challenging market conditions.

Opportunities, Threats, Risks and Concerns:

The optimization of capacity of the Chemical Division expects to cater significantly to broaden its Customer base overseas by increased volumes and ascertained margins. The major threat and risk to reckon with is the highly volatile pricing of raw materials, import as well as domestic. Also the commodity orientation for your Company, part of the highly volatile Chemical Industry faces certain threats and risks.

Financial Performance

Financial performance achieved by your Company during the year under review, are shown above under the head

Internal Control Systems and Adequacy

Your Company has in place adequate internal financial controls with reference to financial statements. During the year under review, such controls were tested and no reportable material weaknesses in the design or operation were observed.

Material Developments in Human Resource / Industrial Relation front, including number of people employed

a. The number of employees for the year under review was 80.

b. There were no material developments as regards human resources / industrial relations front during the period under review.

Credit Rating

Your Company's financial discipline and prudence is reflected in the strong credit ratings ascribed by rating agency ICRA. Your Company has been assigned first time long-term rating of BBB- and short-term rating of A3. The outlook assigned on the long-term rating is stable.