MANAGEMENT DISCUSSION AND ANALYSIS

As part of the Director's Report or as an addition thereto, a Management Discussion and Analysis Report forming part of the Annual Report to the Shareholders includes discussion on the following matters within the limits set by the company's Competitive position:

SOCIO ECONOMIC ENVIRONMENT AND INDUSTRY STRUCTURE & MATERIAL DEVELOPMENTS

The global economy remained sluggish in a challenging environment during the year under review. Greater volatility and uncertainty marred growth prospects, with the sudden and rapid decline in oil prices impacting economic conditions worldwide. The disturbing political situation in many countries has affected the international trade between countries.

The government continued its trend to increase taxation on tobacco and tobacco products in its Union budget produced in July, 2014 and later in February 2015. In 2014 the duty on most affordable 64mm cigarettes was disproportionately increased by 72% versus 17% for other key segment while in 2015 Excise duty on cigarettes is being increased by 25 per cent for cigarettes of length not exceeding 65 mm and by 15 per cent for cigarettes of other lengths. This impacts your Company significantly more than competition. Most of the states of the Country also revised upward their tax rates. This twin effect of taxation policy in India causing hike in prices of cigarettes and reducing margin and profitability. This also impacted cigarettes manufacturing companies' production capacity and they are bound to lower down the same due to decline in consumption level.

Considering the brsent situation of the industry it can be said that the year ahead will be very challenging for the Company. But amidst the rising taxation policy, regulatory brssures, stringent packaging condition and illicit trading of cigarettes, your company is optimistic to sustain its position in the industry with the help of its portfolio, technologies and goodwill.

STRENGTHS & OPPORTUNITIES

India is the third largest producer and Amounts for 5.8% of the international trade and ranks 5th after Brazil, U.S.A. Turkey and Zimbabwe, reflecting the tremendous success that Indian tobacco companies achieved. As of December 2014, the exports showed that India has so far exported 18,003 tonnes of tobacco in the period of 2014-15. The data for the period 2014-15 suggests that India has exported around US$ 64.38 million worth of tobacco till December 2014.

While India's share in the world's area under tobacco crop has risen from 9% to 11% in the last three decades, its share in production inched up from 8% to 9% in the tobacco industry.

Tobacco, in India, makes a significant contribution to the national economy by earning about US$ 900 million of foreign exchange, besides accruing US$ 3.4 billion to the central exchequer by way of excise levies on manufactured tobacco. Tobacco is an important commercial crop that provides employment to nearly 41 million people, who are engaged in the various process of tobacco cultivation, curing, grading, manufacturing and marketing.

This shows that India has significant opportunity for cigarette industry to extend and consolidate its position in intentional market due to some recent trend like withdrawal/reduction of agricultural subsidy and escalating costing in the traditional cigarette exporting countries.

Your company has re launched some of its brands like National Gold Flake and Regent Flake in new designs under the 64 mm and 69 mm segment across various places in India. The smaller cigarettes are subject to lower excise duty and are therefore priced at an affordable price range. The lower price helps these cigarettes to remain competitive in price- sensitive cigarette consumers market.

THREATS

The continuous restriction and control on tobacco cultivation by Government Agencies led to increase in the cost of prime raw material i.e. raw tobacco. Stringent Packing condition and proposed harsh graphic health warnings imposed by the Indian government posing a big threat to the Company and lowering down its competitiveness in the market. Under WHO

FCTC guidelines, only point of sale (POS) remain the only way to reach customers. Manufacturers continue to pay tobacco specialist retailers a brmium to display their brands, which is the only mode of communication. Further campaigning by various government forums and non-government organizations against the use and consumption of tobacco and shifting of consumers to some other forms of tobacco is also a big threat to the industry. The passing of various bans on smoking is also supplementing these threats. ^0*

SEGMENT WISE / PRODUCT WISE PERFORMANCE

Your Company considers "Manufacturing of Cigarette and Smoking Mixture" as the primary business segment. Therefore segment wise / product wise performance reporting is not applicable to your company.

RISKS AND CONCERNS

Continuous increase in input cost, excise duty by the central government and the VAT by most of the states have affected the prices of cigarettes in India and creating tough situation for the cigarette manufacturer and resisting growth of the volume. It also helping illicit trade to grow which consist of domestic non duty paid, counterfeit and contraband cigarettes. This non duty paid and imported lower priced cigarettes creating unfair competition and is a great threat to the Indian Cigarette industry.

Moreover, in the current market situation there is a stiff competition from big players with regard to marketing of new brands.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

ntc maintain its commitment to always improve its system designed for internal controls and ensure its effectiveness at the same time. The system which comprised of policy, procedure and internal audit processes. It safeguarding its assets, ensuring transactions are in accordance with the policies, and are duly authorised to identify possible risk areas and to brvent possibilities of frauds or other irregularities.

The company have skilled and qualified audit committee which met 5 times during the year to review the adequacy and effectiveness of internal control system of the Company and reports placed by by a firm of chartered accountants appointed as the internal auditor who has conducted audit to review the existing financial and operating controls. Your company is also ISO 9001:2008 certified for its internal audit function.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT

At ntc, we follow a culture that provides a platform for continuous learning and development to meet the challenges posed by ever-changing market realities. Employees are your Company's most valuable assets and the Management recognizes them as the prime machinery of the organization. They are always given the first priority and are provided with all the basic requirements and safety measures for good health and well-being. The Management, in order to create enduring value, has fostered a culture of feeling of being togetherness and attachment amongst ntc employees through participative management practices, open interaction and mutual respect.

Your Company's human resource management systems and processes aim to enhance organizational capability and vitality to seize emerging market opportunities. The strategy of the organization and its ongoing emphasis on developing and nurturing distributed leadership has ensured that each of your Company's business is managed by a team of competent, passionate and inspiring leaders.

Your Company's belief in the mutuality of interests of key stakeholders binds all employees to a shared vision and purpose. The Company continued to maintain healthy industrial relations and did not report any sort of strike or lockout that would have impacted Company's operations.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the industrial expectations are "forward looking statements" within the meaning of applicable securities law and regulations. Actual results could differ materially from those exbrssed or implied, important factors that could make difference to the Company's operations include raw material availability and prices, cyclical demand and pricing in the Company's principal markets, changes in the government regulations, tax regimes, economic developments in India and other incidental factors.

For and on behalf of the Board

Nilotpal Deb

Managing Director

Place: Kolkata

Date: 30.05.2015