MANAGEMENT DISCUSSION AND ANALYSIS

a) Industry structure and developments :

According to reports Global Agrochemical Market was estimated at USD 214.2 billion in 2015 and was expected to grow at CGAR of 3.2% to USD 250.5 billion by 2020. The Crop Protection Chemical Market was estimated at USD 52 billion in 2015 and expected to grow at CGAR of 6.2% to USD 82 billion by 2020.

The company manufactures technical grade agrochemical active constituents used as insecticides, fungicides and weedicides which belong to the Crop Protection Chemical segment of the Agrochemical market. China continues to dominate the international markets in supply of voluminous products being advantageously placed with the domestic availability of intermediates.

b) Opportunities and Threats :

Many agrochemical active ingredients are coming out of application patent in next five years. This brsents a good opportunity for R&D driven companies which have the ability to develop and commercialize the molecules in short time. With excellent R&D team, this brsents a big opportunity to BCIL to enhance its brsence in domestic and global market.

China continues to lead the off-patent and generic product market with timely and well planned development. They brsent a big entry barrier to the Indian companies in global market with competitive pricing. However by aligning with strategic partners to market the products in the regulated markets, Indian companies can cut down the threat of Chinese competition.

c) Financial performance vis-a-vis operational performance :

The turnover of the company decreased from Rs. 21783 Lakhs to Rs. 14913 Lakhs. Crude oil price has crashed from a high of USD 130 per barrel to USD 39 per barrel in recent times. Since most of the crop protection chemicals are crude oil derivatives, the value of these chemical has also dropped by 25 to 30%. The underperformance of export and domestic markets also resulted in lower revenues for the company.

d) Outlook :

The domestic and export market are showing sign of recovery. Domestic market is expected to be good on account of good rains. However, the margins are expected to be on the lower side. Domestic and export market are expected to be growth drivers for the company. The company is also actively pursuing export opportunities.

e) Risks and Concerns :

The steep decrease in the prices of crop protection chemicals and its intermediates is a matter of concern for the Industry. Indian companies which specifically import intermediates from China are exposed to a greater extent and are at a risk of losing margins. Continuous market updates and reliable sourcing partners can help mitigate this risk.

f) Internal Control System and their adequacy :

The company has proper and adequate systems of internal controls which ensure that all the assets are safeguarded and that all transactions are authorized recorded and reported correctly. The company maintains adequate and effective control system and suitable monitoring procedures with regard to the purchase of raw materials, stores, plant & machinery, equipment and other assets as well as sale of goods. The finance and commercial functions have been structured to provide adequate support and controls for the business of the company.

g) Industrial Relations and Human Resource Development :

The company has cordial and harmonious industrial relations. Opportunities for individual growth, creativity and dedicated participation is organizational development are being provided.

Cautionary Statement

Statements in this report on Management Discussion and Analysis describing the company's objectives, projections, estimates, expectations or brdictions may be "forward looking statements" within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and expectation of future events. Actual results could however differ from those exbrssed or implied. Many important factors including global and domestic demand-supply conditions, prices, raw materials costs and availability, change in government regulations, tax laws and other statutes, force majeure may affect the actual result which could be different from what the director's envisage in terms of future performance and outlook.