MANAGEMENT Discussion and Analysis

POISED FOR THE FUTURE:

Hitech with a view to consolidate the businesses, resources and benefits of the design and development facility as well as to simplify the group structure and avail synergies, has merged the rigid packaging business of its subsidiary Clear Mipak Packaging Solution Limited into the existing business of Hitech Plast Limited with effect from April 1, 2014, in accordance with the order received from the Hon'ble Bombay High Court. In view of the above the Company has reported Financial Statements after considering merger of its subsidiary and no separate financial statements for consolidated results are attached.

Hitech has been in the rigid packaging business for over two decades now providing packaging solutions to Paint & Coating Industries as well as other industries viz Personal Care, Food, Agrochemicals, Lubricants, Health Care and FMCG.

The Company's credentials and unmatched design and development expertise help it to enjoy a brferred partnership status with most of its corporate clients. Hitech has over 600 large customers who award significant repeat orders to the Company on a regular basis. The Company has a manufacturing footprint in west, north and southern region. There are about 800 direct employees and over 1200 indirect employees engaged in Hitech.

OVERVIEW OF INDIAN ECONOMY:

The global economy grew at 3.4% remaining unchanged over the brvious year. 2014-15 has been a year of major political change and resultant hopes for a rapid economic turnaround of the Indian economy. Few of the macro-economic indicators have improved during the course of the year, however, the economy growth has remained slow. 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. This has helped the packaging industry as the prices of Polymer, the basic raw material have remained subdued.

Owing to rapid growth and changing customer needs, the industry is undergoing a significant transformation. At one level, global packaging companies are setting base in India. There is large scale investment in introducing high capacity moulds and machines to deliver greater efficiencies. Globally, the increasing awareness of environment is impacting the plastic packaging industry. This has led to Hitech initiating research on bio-based plastics and biodegradable plastics as alternative raw materials.

The Company's mainstay of product development and R&D has been new design, coupled with eco-friendly and sustainable products. The Company is also brparing to rationalise its manufacturing facility by consolidation of facilities thereby reducing overheads. The key objectives included identification of attractive customer segments, acquiring higher share of business from target customer segments, and developing a best-in-class delivery model. The strategic review has been initiated and the key elements of the business growth strategy have been identified. These include internal reorganisation to better serve the customer and focusing on profitable market segments. It has also IT enabled business processes across all the plants with the objective of driving productivity and consistency in its deliverables.

BUSINESS SEGMENTS:

In accordance with the nature of markets addressed, business drivers and competitive positioning, the lines of business catered to by Hitech and the strategy of the company therein is as under.

PAINT INDUSTRY:

The Company's products mainly cater to the packaging requirements of the decorative segment which constitutes 70 to 75 % of paint industry in India. The overall weak demand environment in the economy witnessed lower demand in the decorative paints in the domestic market. This together with unseasonal rains & less rains in different parts of the country have worsened the situation of the paint industry resulting in growth lower than expected. However, reduction in key raw material prices, specifically in the second half of the year, largely due to significant drop in crude prices have restricted the impact on profitability.

Whereas the brsent scenario has witnessed lower growth, the Company expects that to be temporary and the sector will soon be in double digit trajectory due to likely growth in Infrastructure & other industries.

FMCG:

The FMCG sector has grown at an annual average of about 11 per cent over the last decade and is expected to grow at CAGR of above 14 per cent in next few years.Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the consumer market. The Government of India's policies and regulatory frameworks such as relaxation of license rules and approval of 51 per cent foreign direct investment (FDI) in multi-brand and 100 per cent in single-brand retail are some of the major growth drivers for the consumer market.

The Company is geared up to keep pace with the growing market in this segment.

PERSONAL AND HEALTH CARE INDUSTRY:

During 2008-20, the market is expected to record a CAGR of 17 per cent. The total industry size is expected to touch USD160 billion by 2017. As per the Ministry of Health, development of 50 technologies has been targeted in the financial year 2015-16, for the treatment of disease like Cancer and TB.

The response from Customers in this sector is quite positive and the Company is also trying to develop a few alternate resins to penetrate deeper into this sector.

HOME CARE :

Growing brference for healthier lifestyle has led to increased demand for homecare products. Increasing medical care costs is leading to more number of people opting for products and solutions which can reduce their medical bills and keep them safe. Growing adoption of these solutions in developing countries like India, Brazil and China has further augmented the growth of packaging solutions for homecare products.

Manufacturers are trying to differentiate their offerings by opting for specific packaging solutions which conveys useful information while keeping the products safe. The packaging market for this segment is set to witness high growth for the forecast period.

The Company is leveraging its existing partnership with one of the largest rigid packaging consumers in this business by engaging more with them for their newer products and thereby also get due share in their organic growth.

AGRO CHEMICAL:

India is the fourth largest producer of agrochemicals globally, after the United States, Japan and China. The agrochemicals industry is a significant industry for the Indian economy. However, India's agrochemicals consumption is one of the lowest in the world with per hectare consumption of just 0.58 Kg compared to US (4.5 Kg/ha) and Japan (11 Kg/ha). Indian population is increasing and the per capita size of land decreasing, the use of pesticides in India has to improve further leading to higher demand for this sector.

The Company is trying to enter into the untapped market in Northern states by adding capacity at the Rohtak plant which would give us an advantage of being nearer to the customers to increase market share.

INDUSTRY STRUCTURE AND DEVELOPMENTS MANUFACTURING:

Your Company has been continuously investing in expanding its manufacturing footprint to serve customer demand. In its second year of operations, the Khandala plant in Maharashtra significantly ramped up production. During the year, your Company invested Rs. 5.45 crores in Fixed assets of which Rs. 2.4 crores was in Khandala plant.

The Company continues to have the same strategy for expansion of capacities depending upon demand especially in northern states.

OPPORTUNITIES, RISKS AND THREATS:

The merger of Clear Mipak Packaging Solutions business into Hitech would help the organisation in consolidation of resources thereby able to offer customers more choice and various alternative solutions in terms of product range and processes. Also, the Research and Development facility has extended design and development of innovative products to serve its range of customers in various business segments.

As a part of the strategy to consolidate the operations in line with our core business, the Company has discontinued its tea packaging business, at Aurangabad in January 2015. Furthermore, we have shifted and merged the Dadra plant of the Company with the plant situated at Naroli (D&NH) as a part of our consolidation initiative. This will help improving operational efficiency.

Your Company being a B2B service provider, is highly dependent on its customers, industrial outlook and sales. Our revenue and price realisation fluctuates with the increase or decrease in our major raw material Polymer prices which in turn is influenced by crude prices. Other main cost component of our business is power & fuel cost which is highly dependent on monsoons. Monsoon failure leads to power cuts that increases use of alternative fuel like diesel which will result in higher cost.

HUMAN RESOURCES & INDUSTRIAL RELATIONS:

One of the principal anchors of your Company's ability to cope with challenging business environment is its strong culture of customer centricity, innovation and people focus. Your Company has embarked on several initiatives to strengthen its Employee Relations. Innovation in thoughts, processes and products is driven in the culture of an organization through the core values. Every 30 - 45 days, an innovation meeting is conducted where the Design & Development team, Sales & Marketing Team and Operations Head participate. This meeting is led by the Key Business Advisor. At operation level, 10% of the KRA are aligned to innovation and environment that fosters continuous and incremental improvement. Due importance is given to enhance employees' well-being and effectiveness by conducting meditation, innovative problem-solving sessions, brain storming sessions, etc. in sync with the core value of your Company 'Happiness Within'.

ENVIRONMENT, HEALTH & SAFETY(EHS):

Your Company's EHS policy is to consider compliance to statutory EHS requirements as the minimum performance standard and is committed to go beyond and adopt stricter standards wherever appropriate. Your Company's major manufacturing facilities at Silvassa have the ISO 9001:2008.

The factories and corporate office have run awareness campaigns to sensitize and educate employees on judicious use of paper and to avoid its wastage. Your Company also gives priority and attention to the health and safety of its employees and trains all the employees to work as per brscribed procedures designed to meet all EHS requirements of the Company.

INFORMATION TECHNOLOGY:

Digital technology is a major disruptor for businesses everywhere and has the potential to alter the way businesses are being run. Your Company continues to leverage right digital technology to help create and refine business models.

RESEARCH & DEVELOPMENT:

Your Company has a Technology centre at Pune which carries out product designing, process innovation and improvements. The centre has been providing solutions for unique packaging design which enhances the quality and also reduces the cost of packaging, thereby adding value for the customer. This centre has got accreditation from the Department of Science and Technology, Government of India (DSIR).

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has in place a robust internal control mechanism based on an integrated Cloud based ERP system, which is commensurate with the nature of its business as well as the size and complexity of its operations. There are internal auditors appointed by the Audit committee. A summary of Internal Audit Report is periodically submitted by the Internal Auditors to the Audit Committee of the Board, which discusses and reviews the findings with the Internal Auditors as well as with the senior management, including the heads of various operations and functions.

FINANCIAL PERFORMANCE:

Financial results and performance for the year are elaborated in the Directors' Report.

FORWARD LOOKING STATEMENTS:

This report contains forward looking statements, which may be identified by their use of words like 'plans', 'expects', 'will', 'anticipates', 'believes', 'intends', 'projects', 'estimates', or other words of similar meaning. All statements that address expectations or projections about the future, including but not limited to statements about the Company's strategy for growth, product development, market position, expenditures and financial results, are forward looking statements. Forward looking statements are based on certain assumptions and expectations of future events.

The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company's actual results, performance or achievements 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 forward looking statements, on the basis of any subsequent developments, information or events.