MANAGEMENT DISCUSSION AND ANALYSES

1. Economic Environment & Rice Industry:

The Indian economy grew at 7.3 per cent during 2014-15 as economic activity expanded at a faster pace in the March quarter, led largely by services and manufacturing sectors. The economy was relieved from the Sub 5 per cent growth, persistent inflation, elevated fiscal deficit and oscillating value of the rupee. The industrial sector shrugged off stagnation and grew for the second consecutive years this fiscal. The output of electricity, gas, water supply and other utility services rose by 7.9 per cent as against 4.8 per cent a year ago. The construction activity too registered an increase of 4.8 per cent, up from 2.5 per cent a year ago. Financial, real estate and professional services also showed an improvement by registering a growth of 11.5 per cent as against 7.9 per cent in brvious fiscal. However, crude oil, natural gas and refinery products continued the slump, damaging the overall mining story. It is absolutely clear that the economy is in a recovery mode". Pinning hopes on dividends from 'Make in India' campaign and a conducive business environment, indicates that Indian Economy is moving. The fiscal year ended with total exports of USD 310 billion, lower than USD 340 billion target. Imports on the other hand, contracted by a modest 0.59 percent during the year leaving a trade deficit of USD 137 billion, slightly higher than the brvious year figure of USD 135 billion. Food grain production in 2014-15 was estimated at 251.12 million tonnes, almost six mt less than the brvious estimate in February and 5.25 per cent less than the production in 2013-14.

India's southwest monsoon in 2014 was almost 12 per cent less than normal, putting almost 30 per cent of the country's landmass under the specter of below normal rain. Then, a burst of unseasonal rain from late February in most parts washed away the rabi harvest and damaged standing crops in almost 18 million hectares resulting declined overall food-grain production in the country. Moreover, the global environment is still not conducive for trade as big markets like the EU are not doing well. Besides the global economic scenario, the exporters are also concerned about delay in the announcement of the country's new Foreign Trade Policy (FTP). Special Economic Zones (SEZs), which contribute about 23 percent of the country's total exports, too are facing problems and the developers are demanding to roll back minimum alternative tax and dividend distribution tax to revive investors sentiment for these zones.

Rupee closed the FY 2014-15 at Rs. 62.65 per USD as against brvious fiscal close at Rs. 59.97 per USD.

A moderate recovery is likely to shape up in Indian Economy in 2015-16 with progressive implementation of some of the reforms announced since 2012. These includes FDI in multi brand retail, Amendment in Banking Regulation, Food Security Act, Insurance Reforms, Make in India Campaign etc.

2. Output Global Rice industry

Today, agriculture is the backbone of India's economy, providing direct employment to about 66% of working people in the country especially to rural households whose principal means of livelihood is agriculture. Agriculture, along with fisheries and forestry, is one of the largest contributors to the GDP. It forms the basis of many brmier industries of India, including the textile, jute and sugar industries. Agricultural export constitutes 10 per cent of the country's exports and is the fourth-largest exported principal commodity.

India is the second largest rice producing country of the world

Throughout history as per the Archeological evidence rice has been one of man's most important foods for more than 5000 years . Today, this unique grain helps sustain two- thirds of the world's population.

The major rice growing area in India are West Bengal, Uttar Pradesh, Madhya Pradesh, Orissa, Bihar, Andhra Pradesh, Assam, Tamil Nadu, Punjab, Maharashtra, Kannataka, Haryana, Gujarat, Kerala, Jammu- Kashmir, Tripura, Meghalaya, Manipur, Rajasthan, Nagaland, Arunanchal Pradesh, Himachal Pradesh, Mirozam, Goa, Pondicherry, Sikkim, A & N Island and D & N Haveli.

Through a combination of increasing the area under cultivation and increasing cropping intensity today India is self reliant in Rice. Adoption of modern Varieties, rice production exceeded every year from its brvious year since 1988 . India is the leading exporter of the Basmati Rice to the global market. The country has exported approxed 37,02,260.12 MT of Basmati Rice to the world during the year 2014-2015

In India alone , basmati rice ,non basmati rice export during 2014-15 is around 10.81 million tons of rice. Over 80% of basmati rice grown in India is produced for export . The increase in demand of rice in India is expected to be followed by world as rice is being used increasingly in other products such as beer ,liquor etc heavily consumed in USA, Europe etc. However as compare to last year India's basmati rice exports have declined this year due to Iran's ban on rice imports since November 2014. Actually Iran accounts for one-third of Basmati rice exports from India. Recently, Iran introduced new norms for import, which required local registration and issue of certificates, pertaining local registration and safety standards Due to this ban India's overall Basmati exports were down 10 per cent in terms of volume over the year-ago period at 1.8 million tonnes (mt). However, lower domestic production has kept prices high. Thus, despite a drop in volume, the realisation from exports during April-October 2014 was flat at Rs 15,789 crore, against Rs 15,543 crore approximately in the year-ago period. At the same time, the exports of non-Basmati rice remained flat between in terms of both volume and realisation at 4.5 mt and Rs 11,569 crore, approximately.

Opportunities & Threats:

Opportunities

1 The Company has developed a Novel and innovative process which involves recycling of most of the hot water used for soaking of paddy during parboiling of rice , thereby generating little waste water and still having a high quality product .

2 The Promotion of flagship brand Maharani is on the Top agenda of the company in the time to come .Company has introduced very attractive and novel packagings of Maharani Brand. The Company plans to go for aggressive advertising in print and electronic media and brand equity is likely to be future strength and business stimulators of the company .

3 The Company has explored new International markets and it is continued pursuit of Management to find new markets world around and also winning the confidence of the existing customers.

4 The company is also concentrating on new domestic centers through brand promotion, advertising and offering lucrative packaging of quality product at competitive prices.

5 The company's novel and innovative products viz ; Bhatti Sella, Pesticide Residue free rice and quick cooking rice and Rice for Diabetic People having moderate G.I Sale is picking up in various directions of the World markets particularly the Maharani Rice suitable for Diabetic people. This rice has added qualities like taste, aroma, easy cooking and longer brservation period.

6 The Executive director of the Company Sh. Vijay Setia who was President Rice Exporters Association of India has been engaged by an International Company namely M/s Gerson Lehrman Group as a consultant in the field of Food Technology for having so in depth knowledge of the subject that he is being paid for that worldwide .This is a major achievement which can be highly instrumental to the growth of the company in the time to come .

Threats

Under performance of world economy specially USA and UK, global recession and uneven monsoon, High Inflation rate, new norms for import in Iran which required local registration and issue of certificates, pertaining local registration and safety standards, rising gold imports, lower growth in Agricultural sector, lower share of agricultural sector in the real GDP frequent change in govt.policy, Govt.'s ban on Non basmati, rice were the threats which may debrss the prices and the demand for rice. This risk can be mitigated largely due to the concept that Food Industry has lesser elasticity of demand as compared to the other products. Further the business wisdom and technological aspirations inherent in the management team can be quiet helpful to overcome such difficulties.

As the company is mainly dependent upon Agriculture which totally depends upon the quality of rains in India, the poor and untimely rainfall can adversally affect the costing of the Company and consequent price realisation. But the Company has developed its procurement market throughout India and if in any region the rainfall is lesser the Company can buy its raw material from the another region.

Risks and Concerns

The unbrcedented nature of Rice Industry and volatile prices are areas of concern for which the company 's focus to make cost of production internationally competitive and reduces interest cost by more & more utilising its own resources and cutting other cost through technological up gradation and computerization of company's operations.

The protectionist measures or non tariff barriers by other countries may hit or reduce the exports. However the company's focus is also on the domestic market.

INTERNAL CONTROL SYSTEMS, RISK MANAGEMENT AND THEIR ADEQUACY:

The company continued to lay emphasis on strengthening and improving internal supervision and control. The Company has a proper and adequate system of Internal controls to provide reachable assurance that all assets are safeguarded and protected against loss from unauthorized use or disposition, and that transaction are authorized, recorded and reported correctly. The internal control system provides for well-documented policies, guidelines authorization and approval procedures. Management information system (MIS) is the backbone of yours company's control mechanism. Well-conceived annual planning and effective budgetary control ensures adequate control on all the expenditures of the company.

An extensive programme of Internal Audit by the internal audit department and periodic review by the Management further supplement the Company's internal control systems. In the line with the International trend, planning and conduct of internal audit is oriented towards review of control in the management of risks and opportunity in the Company's activity.

The Internal Controls and Risk Management systems are duly checked for their adequacy by carrying out regular and exhaustive internal audits. Internal Auditor carry out the internal audit of the Company's various divisions. The Internal Auditors report significant audit observations, periodically at regular intervals to the Audit Committee that comprises of three independent Directors. The Committee met regularity during the financial year and reviewed internal audit plan, audit observation and followed up implementation of corrective actions and covers all significant areas of Company's operations. The Audit committee also met the company's Statutory Auditors to ascertain their views on the adequacy of Internal Control System in the Company.

FINANCIAL PERFORMANCE:

During the year the sales of the company increased at a handsome rate despite

adverse factors i.e. cut throat competition in the market. This was the result of the efforts put in by management viz attractive packaging, branding & standardization of quality of rice, creating of new markets overseas, The handsome profit can be attributed to the innovative Ideas of management to produce better quality product and focusing to new International markets which led to better realization of Prices. During the year the Sales of the Company increased at a handsome rate . The Sales of the Company touched Rs. lacs in 2014-15 50802.91 from Rs 41607.03 lacs in 2013-14. The Profit of the company reached at the level of Rs.2954.27 lacs in 2014-15 from Rs. 2715.26 lacs in 2013-.14. The EPS of the company is Rs. 20.98 for the year 2014-15

INDUSTRIAL RELATIONS & HUMAN RESOURCE MANAGEMENT:

Like any high performance organization, your company firmly believes that success of the company comes from good Human Resources. Employees are considered as important assets and key to its success. HRD always strives for sourcing and developing high caliber employees, providing them relevant training for enhancement of their competence and facilitating their assessment process through an effective performance Management System (PMS).

Training and development initiatives aim at bridging the gap between existing skills and desired skills of the employees in line with organisational needs. Extensive training inputs aim at building up competence amid commitment to employees through understanding and utilizing new technology, hands on job training, inter functional knowledge, furtherance of safety awareness and training in behavioral area etc.

During the year company has incurred 9.24 lacs on the training of its employees and Rs. 17.14 lacs on staff welfare & other provisions for the benefit of employees.

Employee relation continued to be satisfactory. The number of persons directly and indirectly employed by company was about 250 as on 31st March 2015.

The company continued with the existing welfare schemes for the benefits of its employees. The Provident Fund, Bonus, Promotion, Gratuity and other fringe benefits were bestowed upon all the confirm employees of the company to motivate them for attaining the ultimate goals of the company. In addition to these benefits Group Insurance, Medical Insurance and Retrenchment Compensation were also assured for the employees of the company.

In addition to these ultimate benefits, employees are also provided with better working environment, first aid medical facilities, conveyance facility and computerised environment.

CAUTIONARY STATEMENT:

Statement in this report on Management's Discussion and analysis describing the company's objectives, projections, estimates, expectations or brdictions may be "forward looking statements" are based on certain assumptions and expectations of future events. Actual results could differ materially from those exbrssed or implied important factors that could make a difference to the Company's operations include economic conditions affecting global and domestic demand supply, finished goods prices in the domestic and overseas markets in which the Company operates, raw material cost and availability, changes in Government regulations, tax regimes, economic developments within India and other factors such as litigation and Industrial relations. 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.