MANAGEMENT DISCUSSION AND ANALYSIS REPORT

HIGHLIGHTS:

CTR application lab set up at Dombivli Location in July, 2014 has developed new Product know as 2-n-Butyl-4-chloro-5-formyl imidazole (BCFI). BCFI is an import substitute and will save Foreign Exchange. The BCFI is an intermediate for Losartan Potassium which keeps blood vessels from narrowing, which lowers blood brssure and improves blood flow. It is also used to lower the risk of stroke in certain people with heart disease.

GLOBAL SCENARIO & DOMESTIC SCENARIO:

Chemical Industry is a knowledge based and capital intensive. The chemical industry is critical for the economic development of any country, providing products and enabling technical solutions in virtually all sectors of the economy. The chemicals whether being natural or synthetic are helpful to each and every creature for the survival. The various segments of the chemical industry (such as organic chemicals, specialty chemicals, chlor-alkali, pesticides, colorants and alcohol based chemicals) have their own unique set of challenges. The industry can grow only if these individual segments overcome their challenges and move swiftly along the growth path. The sector is highly diversified, with more than 80000 chemicals and currently accounts for 15% of India s industrial output, which makes it very crucial for the economic development of the country. "The Indian chemical industry is an integral component of the economy and has the potential to grow at 9% per annum to reach $214 billion by 2019. Key imperatives for the growth of chemical industry are to secure feedstock, right product mix and identify partnership opportunities to gain capital and technology support. India stands out as far as demography and availability of technical man-power is concerned. Chemicals industry, just like IT and pharma, stands to gain rich dividend from this. The critical success factor for the industry is its capability to provide product/application development at a favourable price-performance ratio. Innovations are acting as the driving force for the sustainable growth in the chemical industry.

The Asian region has emerged as the largest contributor to the global chemical industry, accounting for nearly half the global sales followed by Europe and USA in 2013. Going forward, growth in international chemical industry is expected to be driven by growth in the Asian region. Consequently, based on new geographic location of its customers, global production of chemicals is expected to move to Asia, with growth in specialty chemicals expected to be faster than the overall chemicals industry globally.

With the large talent pool available, the focus has been towards investment in R&D. Moreover, with increased globalization and domestic competition, Indian chemical players have to be more innovative by developing newer molecules by setting up cutting-edge R&D units. Based on inherent advantages like low cost labour and abundance of basic raw materials, Indian chemical players produce a large number of fine and specialty chemicals which have specific applications and find wide usage as food additives, pharmaceutical intermediates, toiletries, derivative products and anti-oxidants which can have multiple applications. India's competence in this knowledge intensive industry is increasing; however the tapped potential is very limited. Moreover India has a very strong outlook for the key end user industries as they are expected to grow at 12% p.a. over the period of five years. Hence, going ahead the demand of chemical products is expected to surge at 7-8 % p.a. over the next five years.

CHEMICAL INDUSTRY-STRUCTURE & DEVELOPMENT:

The Chemical Industry is critical for the economic development of any country, providing products and enabling technical solutions for virtually all sectors of the economy.

The global chemical industry is witnessing a gradual eastward shift. The industry is increasingly moving eastwards in line with the shift of its key consumer industries (e.g. automotive, electronics, etc.) to leverage greater manufacturing competitiveness of emerging Asian economies (especially India & China) and also to serve the increasing local demand. Substantial new capacities in the world are expected to come up in Asia and Europe. Operating profits in the sector have increased and many companies were able to push stronger cash flows down to the bottom line. However, the overall growth of the chemical sector was hampered by economic slowdown across US and Europe.

With rising concerns about climate change and depleting natural resources, focus on sustainability is another key trend impacting the global chemical industry. Chemical companies are increasingly working towards reducing energy intensity of their operations, minimizing effluent discharge, increasing the share of recyclable products in their portfolio and diversifying their raw material base to include bio-feedstock.

INDUSTRY STRUCTURE AND DEVELOPMENT:

Our Company is a leading manufacturer of Specialty Chemicals with diversified end-uses into Agrochemicals, Pharmaceuticals, High Performance Polymers, Paints, Pigments, Printing Inks, Rubber Chemicals, Additives, Surfactants, Dyes, Flavors & Fragrances, Home & Personal Care applications, etc. Your Company makes continuous efforts to explore and innovate new products &processes in all segments. This diversified end-user base helps the Company to derisk itself from downturn in any individual business segment and also to capitalize on the growth opportunities in each of the end-user segments.

Your Company has making substantial Investments every year for upgrading the ETP setup of the Company including setting up additional process to minimize the quantity and impurity profile of the effluents. With this effort, the Company had upgraded two of its Manufacturing Units into Zero Discharge Units and also has put in place various processes to control/limit generation of effluents and improve on the treatment of the same. As part of the Risk Management policy, the relevant parameters for all manufacturing sites are analyzed to minimize risk associated with protection of environment, safety of operations and health of people at work and monitored regularly with reference to statutory regulations and guidelines defined by the Company. The Company fulfills its legal requirements concerning emission, waste water and waste disposal. Improving work place safety continued to be top priority at all manufacturing sites.

FINANCIAL PERFORMANCE:

The financial statements are brpared in compliance with the provisions of Companies act 2013 read with the rules and regulations and other applicable laws as per the guidelines of the Ministry, and as per the generally accepted accounting practices brvalent in India. The performance of the company is discussed in detail in the financial high lights in directors' report to the members of this report.

OPPORTUNITIES & THREATS:

Opportunities:

1. Large domestic & export market, with good potential for growth.

2. Qualified and trained manpower.

3. Backward & Forward Integration of Products.

Threats:

1. Cost of funds & power in India is very high as compared to brvailing in developed countries.

2. Infrastructure facilities are not up to the mark. Network of roads & rail are not widely sbrad & quality of the same is sub standard this has result in slow moving of goods

STRENGTH OF THE COMPANY:

Your company's competitive strengths are as follows:

• Selection of new processes for the existing products and optimizing the process parameters.

• Work on continuous process improvements by adopting new techniques to achieve minimum effluent discharge, saving in power & fuel consumption etc

• Maintaining long standing customer relationship by providing timely & quality products.

• State of the art manufacturing facility to produce quality output with cost efficiency.

SPECALITY CHEMICALS:

Specialty chemical industry is a knowledge driven industry. In India it has been growing rapidly at 1.2-1.3x of GDP growth rate (12%) over the last five years and currently stands at —$21.5 Billion. Domestic demand of specialty chemicals is expected to follow an accelerated growth path. This demand is mostly driven by the strong growth outlook for end use industries. This along with increased adoption of specialty chemicals and newer usages can propel the growth further. Indian specialty chemical manufacturers have strong brsence in export market also. API and colorants (including dyes and pigments) are the key export oriented products. India exports specialty chemicals to nearby Asia-Pacific countries which don't have competitive scale of productions. India also exports to developed countries of Europe and USA where it leverages its low cost of production and quality talent pool. Compliance with global regulations and India's manufacturing competitiveness has helped the export market to grow significantly. The key specialty segments in India are agrochemicals, paints coating and construction chemicals, colorants, Active Pharmaceutical Ingredients (APIs), personal care chemicals and flavors & fragrances. The critical success factors for most of the specialty chemical segments include understanding of customer needs and product/ application development to meet the same at a favorable price performance ratio.

CAPEX AND GROWTH PLANS:

The Company is in process of expanding its operation at Mahad Location. Land and Factory building are acquired at Mahad. Structural change and the installation of new machinery are in progress. The Company's total budget in this operation is V 15 Cr. Once's the process is done this will add the capacity of existing product and also introduce New Products.

Your Company is ready to take the challenges of increased demand by continuously investing in up-gradation and expansion of its manufacturing capacities at various locations.

INTERNAL CONTROL SYSTEMS:

Company has wel defined internal financial control policies which are being reviewed from time to time. This policy gives comfort that resources are being used properly & asset & properties of company are safeguarded from misuse or leakage. The internal control is supplemented by effective internal audit being carried out by an external firm of chartered accountants. The Audit Committee of Board of Directors regularly reviews the findings of the Internal Auditors and effective steps to implement the suggestions/observations of the Auditors are taken and monitored regularly. Well defined policies; procedure ensures that financial & other transactions are being carried out with proper approval of designated authorities. ERP system is having end to end link of all the financial information & properly defined controls at all stages.

INDUSTRIAL RELATIONS:

The company maintains very cordial & healthy industrial relationship. Company undertakes various measures to get view of the employees on safety, performance improvements, employee benefit schemes etc. This ensures employees participation in the day to day operations of the company. Imparts training both internal & external to its employees which keeps them refresh with the new changes taking place & improves their efficiency

Your Company is continuously striving to create appropriate environment, opportunities and systems to facilitate identification, development, and utilization of their full potential and inculcating a sense of belongingness.

Your Company's industrial relations continued to be cordial & harmonious during the year under review.

HUMAN RESOURCES:

Your company considers human resource as most valuable asset. Company ensures that each employee is provided with respect and facilities which avoids dominating tendency which in turn avoids organizational crisis. Employees are provided with continuous opportunities for active learning and develop their skills, which are viewed as key drivers of their personal growth and career growth, thereby contributing to the success of the organization. Performance appraisal of employee is based on Key Performance Indicator (KPI) this ensures employees are rewarded as per their performance. Effective HR policies has been adopted in respect of recruitment, promotion training, this helps in attracting & retaining best human resources. Provide conducive & healthy work culture to get optimum & desired results from employees.

SAFETY, HEALTH & ENVIRONMENT:

Industrial safety is being considered as very important aspect. At each location one person is specifically designated to see that proper rules of safety are observed & no compromise is made from safety angle. Periodically industrial safety seminar is organized to train employees on safety rules. We conduct safety audit both internal & external to trace out any loop holes from safety point of view and the changes, new measures recommend is implemented on priority.. All safety equipments such as fire extinguisher, sparklers etc are always keep in proper condition. There were no major accidents during the year under review.

POLLUTION CONTROL MEASURES:

Your company is very sensitive towards environment & pollution control. R & D department of company is continuously undertaking projects to reduce the effluent discharge & implementing process with cleaner measures. We have in house ETP plant at all our major manufacturing sites. Wherever required company avails services of waste management services to dispose of its effluents and solid waste. We are also member of Common effluent treatment plant at all the locations. Wherever possible we ensure that process and products developed are free from any air or water pollutants.

Introduction of biodiesel instead of furnace oil has reduced air pollutants and working as an environmental friendly process at Rabale, Dombivli, Dhule and Baroda Unit.

Our Company is now recycling the treated effluent water thus reducing the overall water consumption.

RISKS CONCERNS AND RISK MILITATIONS:

The Company has a robust and well-structured risk management system in place. The company is responsible for and ensures Effective Risk Management including risk identification and mitigation. A team of professionals are given responsibility of each location to analyze risk and assess the potential concerns and address the same to mitigate the risks.

The Company has a systematic risk identification and mitigation framework in place, there are certain business risks, which are external and intrinsic to the company. Over these risks the company has very little control. Some of these include a general downturn in market demand conditions, escalation in raw material prices/ Risk of Forex fluctuations and changes in regulatory frameworks in India and elsewhere.

CORPORATE SOCIAL RESPONSIBILITIES:

We recognize our company as part of society and as contribution towards community development and to fulfill the Company's obligations towards the society, the Company has through its CSR committee taken several initiatives during the concluded financial year. Various programs towards corporate social responsibility are implemented during the year. Few of these initiatives are briefed here under:

i. Donation for promoting Sports programme.

ii. Donation given for executing Safety Rally.

iii. Established Digital school in Samiti.

iv. Donation given in Trust.

OUTLOOK:

For the year 2016-17, our focus will continue on sustainable growth by taking measures for increasing our market share of existing products and creating new business in untapped growth market segments in Export market. Though there is sluggish demand in certain sectors and also increased competition from global and domestic players, we expect the trend shown in 2015-16 to continue in the year 2016-17. However, we expect that in some segments the market share of existing product line will increase due to expansion of capacities.

CAUTIONARY STATEMENT:

Statements made in the report, including those stated under the caption "Management Discussion and Analysis" describing the company's plans, projections and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ materially from those either exbrssed or implied.