MANAGEMENT DISCUSSION & ANALYSIS ECONOMIC OVERVIEW The Indian economy grew at 7.3 per cent in 201415 due to improvement in the performance of both services as well as manufacturing sectors. The manufacturing sector recorded a growth rate of 8.4 per cent during the last quarter of last fiscal, up from 4.4 per cent a year ago. The services sector too witnessed marked improved during the quarter. The fourth quarter GDP growth rate at 7.5 per cent was better than China's 7.4 per cent, making India the fastest growing economy in the world, for the full fiscal it was a tad lower than the Chinese growth rate. In order to boost the Indian Economic further and with the aim of sustained infrastructure investment in the manufacturing sector, the Prime Minister announced "Make In India" campaign. Make in India initiative is an honest attempt to revive the fortunes of Industry / Manufacturing sector. Revival of Industry sector is key to revival of Indian economy. It is not an easy task. Government should target to increase contribution of Industry / manufacturing from existing 16% to 35% in next 5 years. Make in India will help to achieve this goal but it comes with its own set of challenges. Manufacturing is capital and resources intensive sector which will require conducive environment for business. Labour issues will be major hurdle which the govt is trying to handle through labour reforms. Besides this, a major push is required to upgrade infrastructure of country. REVIEW OF OPERATION: During the year under review, your Company has achieved a net revenue from operations of f 18,317 lacs, thereby registering a de-growth of 3.68% as compared to the revenue from operation of f 19,016 lacs of the brvious year. The Company registered an operating profit of f 1,822 lacs against f 1743 lacs in the brvious year, an increase of 4.5% over the brvious year. The operating profit grew by 4.5% despite the decrease in revenue by 3.68% due to better realization from its Customers. The Operating profit % to sales is 9.9% against 9.2% in the brvious years. The Company has earned a Net profit after tax of f 761 lacs, thereby registering an increase of 5.8% as compared to the Net Profit after tax of f 719 lacs of the brvious year. The Earning per share increased from f 9.22 per share to f 9.76 per shares. FUTURE OUTLOOK, OPPORTUNITIES AND THREATS: The Indian chemical industry is at the threshold of rapid growth with the Government of India providing an atmosphere of support and encouragement. India's vibrant chemical and petrochemical industry plays a significant role in the economic development of our country. In terms of volume, the Indian chemical industry is the 6th largest in the world and the 3rd largest in Asia, with the size worth $108.4 billion. Strong domestic demand, driven by increasing purchasing power parity in the country, is one of the main pillars of Indian manufacturing sector, and India is expected to maintain the healthy growth in the years to come. India's geographic location provides easy access to the world markets; and low cost advantage, availability of talent pool and skilled manpower make India the destination of choice. India offers strong opportunity for manufacturing of petrochemicals in future with its plan to increase the share of manufacturing in GDP from 16% to 25% by 2022. The increasing demographic dividend, urbanization, growing income levels all support a strong case of increase in both demand and supply of petrochemicals in India. Plastics are the major product that account for bulk of the Indian petrochemical industry. RISKS AND CONCERNS: Raw materials are difficult to procure and expensive due to the lack of adequate facilities at ports and railways. Many manufacturing plants need to be upgraded and made more environmentally friendly. India is overall deficit in plastics and a lot of these materials are imported to cater the unmet domestic demand. The major import source countries are Saudi Arabia, Qatar, UAE, Korea, USA, Singapore, Thailand, Germany, Spain and Malaysia. The dependability of import major raw material is cause of concern. Any adverse movement of the currency may affect our profitability. Although the Company have policy to pass any upward or downward movement of raw material price to the custom with a maximum leg of one quarter. The real decline in oil prices happened towards the second half of last year and if it compare year-on-year, 2015-16 vs 2014-15, oil prices are going to be about 27-28 per cent lower. So the positive impact is going to be felt in 2015-16. Our Company like any other Company is exposed to several risk which can be internal risk as well as external risk. The Company's risk management practices ensure that the Company accepts risk within defined parameters for which it is adequately compensated and thereby managing the risk portfolio of the Company. The objective of Risk Management program is to create awareness about various risks associated with the business of the Company. The process involves risk identification, risk measurement, risk prioritization, risk monitoring, risk escalation and risk mitigation. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: Your Company has adequate internal controls for its business process across departments to ensure efficient operations. Compliance with internal policies, applicable laws and regulations, safe keeping of assets and resources, and accurate reporting of financial transactions. The Company also has internal audit system which is conducted by an independent chartered accountant so as to cover various operations on continuous basis. Summarized Internal Audit Observations/Reports are reviewed by the Audit Committee on a quarterly basis. HUMAN RESOURCES/INDUSTRIAL RELATIONS: The Company recognizes that Human Resources are the greatest assets. The Company actively strives to train and motivate all employees to participate in Total Quality Management activities, cost reduction and improving productivities.. Human resource development happens through structured approaches for employee engagement, resourcing, performance and compensation management, competency based development, career and succession planning and organisation building Your Company continues to maintain its good record on industrial relations without any interruption in work. HEALTH SAFETY AND ENVIRONMENT: The importance of Environment, Health and Safety (EHS) in running an competent and winning business is vital. The Company has policy framework on EHS for protecting the safety, health and welfare of its employees and workers. The Company is devoted to carry out its operations with due regards to the environment and providing a safe and healthy workplace for employees. The collective attempt of the employees at all levels is directed towards supporting and continuously improving standards of environment, occupational health and safety in a bid to attain and exceed defined benchmarks. CAUTIONARY STATEMENT: Statement in the management Discussion and Analysis describing the Company's objectives, projections, estimates, expectations or brdictions may be forward looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those exbrssed or implied. |