MANAGEMENT DISCUSSION AND ANALYSIS REPORT OVERVIEW

Government of India is pursuing policies of economic reforms. Indian Economy is one of the fastest economy in the world. GDP growth in the range of 7.5 % - 7.6% p.a. Indian Economy will be lead by major investments in agriculture, housing & infrastructure. Growth in all these sectors will create business opportunities for  plastic industry in the coming years.

INDUSTRY STRUCTURE AND DEVELOPMENT

Plastic processing is the pillar of the economy in most of the advanced economies. The per capita consumption of the world is 28 kgs whereas India's is 11 kgs, China is 38 kgs, Brazil is 32 kgs, while USA, Germany, UK, Italy, Spain, Australia, Japan, Korea and Taiwan is over 100 kgs. It can be seen that India's per capita consumption is one of the lowest in Asia, implying that India has a big potential to grow. The overall Plastics Industry poised for quantum jump in volume as its multipurpose uses in Agriculture, Construction and Infrastructure developments. Government focus on Digital India will flip telecom business in terms of PLB Ducts requirements for telecom operators.

Looking to the growth potentials in overall plastic Industry, company has planned expansions in phases to meet growing demand in the coming years.

COMPANY VERTICALS & PRODUCTS

The Company is operating under Plastic segment in four verticals namely Agriculture, Building products, Micro irrigation and Infrastructure. The products details of each vertical areas under:

VERTICAL PRODUCTS

Agriculture RPVC Pipe & Fittings, Casing pipe, PE coils, Sprinkler systems, Submersible Pipe , Suction, Garden Pipe.

Building products SWR & Drainage Pipe and Fittings, CPVC and Plumb Pipe and Fittings, Garden Pipe.

Micro irrigation Micro Irrigation lateral (Inline and Online) , Sprinkler systems ,RPVC Pipe and Fittings.

Infrastructure RPVC Ring Fit Pipe ( Elastromeric) and Fittings, HDPE and MDPE (PE) Pipes and Fittings, PLB Telecom Duct, Micro Duct

OPERATIONAL PERFORMANCE

Company has processed 49010 M.T Plastic as against 37812 M.T in the brvious year, reflecting growth of 29.61%.The Net turnover of the company for the year under review was Rs.462.56 croresas against 362.31crores in the brvious year reflecting growth 27.67%. Profit before Interest and Debrciation & taxes during the financial year under review have gone up by Rs. 18.25 crores from Rs. 20.69 crores to Rs. 39.21 crores.Net Profit after debrciation and tax was Rs. 11.69 crore in the year as against Rs. 2.69 crores in the brvious year showing quantum jump. Performance in the year under review was possible due to stability in raw material prices and inventory management.

FINANCE

The total finance cost of the company was Rs. 15.85 crores (3.43% to sales) as against Rs. 12.58 crores (3.47% to sales). The interest out go in fund base working capital and term loan was Rs. 5.29 crores and Non fund LC/ BG discounting was Rs. 7.66 crores . Total commission and charges was Rs. 2.89 crores. The corresponding discounted bills payable have been classified as creditors.

Effective average rate of interest on fund base working capital & term loan was 12.49% and non fund base limit was 11.04%. Bank limits varies from month to month as perbusiness volume in peak/liense as on.

Company has undertaken Water tank, RPVC Pipes & Fittings, CPVC and Infrastructure up gradation expansion projects involving capital outlay of Rs. 14.00 crores in Phase I to be financed byTerm loan of Rs. 10.00 crore and balance by internal accruals, Company has availed term loan Rs. 8.50 crores during the year. Company has repaid term loan of Rs. 7.93 crores during the year.

SUBSIDARY COMPANY

Kriti Auto & Engineering Plastics Private Limited, wholly owned subsidiary of the company, achieved gross turnover of Rs. 1943.59  Lacs (Previous Year Rs. 1999.19 Lacs) incurred a net loss of Rs 98.79 Lacs (Previous Year Rs. 66.79 Lacs) during the year.

Its fortune is linked with automobile industry which is passing through difficult phase. All efforts are being made to cut the losses.

OPPORTUNITY

Following factors will be opportunities for the Polymer Industry growth:

-India’s projected polymer demand estimated to be 24 MMT by 2022/23

-Expected the per capita consumption of 20 kgs of plastics by the year 2020.

-Productivity growth to help India sustain>8%growth

-Government focuses on Infrastructure, Sanitation, Irrigation and Drinking water facilities projects.

-Digital India/Smart cities projects /Swactch Bharat Abhiyan

-Upcoming affordable housing projects in rural / urban areas

-Continuous expanding end use of Plastic products in agriculture, industry & housing.

RISK AND CONCERNS

+ The industry is highly raw material intensive, with the raw material cost more than 70% of the total cost.

+ The industry relies heavily on imports with associated forex fluctuation risk

+ Supply of Inferior Quality products by un-organized sectors leading to unhealthy competition.

+ Environmental concern and recycling plastic products.

BUSINESS TRATEGY

Company is on SAP which enables seamless integration of operations and effective analytics help decision making.

In Identified focus markets, company offers need base products with aggressive pitch to strengthen its foot hold in market share.

The company continues to expand its reach by appointing distributors in the areas where there is a gap.

New products with Brand supports are being offered through strong Marketing Network of dealers. Company regularly conduct Plumbers Meets and Dealers & Distributors Meets and organizes interactions for exchange of knowledge and information. Need base CAPEX plans for expansions are being pursued by the company in phases with latest equipments and infrastructure. Proper manpower training and developing human recourses is regular practice to keep ahead in competition.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company follows standard operating procedures (SOP) at Individuals as well as department level. These are periodically reviewed for effective internal controls.

Regular internal audits, monthly compliances are being monitored with plans verses actual achievements. Correction for identified short comings and learning are being taken aggressively for improvements. Periodical Peer reviews are done by internal as well as external experts.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

Human Resources is considered as key to the future growth strategy of the company and looked upon to focus its efforts to further align human resources policies, processes and initiative to meet its business needs. In order to focus on keeping employees abreast of technological and technical developments, the company provides opportunity for training and learning.

The Directors of your Company deeply apbrciate the spirit and commitment of its dedicated team of 507 employees as on 31.03.2016.

CAUTIONARY STATEMENT

Estimates and expectations stated in this Management Discussion and Analysis Report may be "forward-looking statements" within the meaning of applicable securities, laws and regulations. Actual results could differ materially from those exbrssed or implied. Important factors that could make a difference to your Company's operations include economic conditions affecting demand/supply and price conditions in the domestic and international markets, changes in the Government regulations, tax laws, and other statutes and incidental factors.