MANAGEMENT DISCUSSION & ANALYSIS REPORT ECONOMIC SCENARIO

Indian markets have witnessed a buoyant trend that indicates better profit growth prospects for 2015. This seems to be the start of a golden era, not just for the markets, but also th^ Indian economy. Many factors have fallen into place for Indian markets and the economy. India is the only major country that is projected to see a pickup in growth momentum. The government's initial estimates for Fiscal Year 2014 (ending 31 March 2015) show that economic growth accelerated to 7.4%. Growth in the gross domestic product is expected to accelerate to 7.8% in FY 2015 on improved performance in both industry and services as policy addresses structural bottlenecks and external demand improves. Growth is expected to edge up further to 8.2% in FY 2016, helped by a supportive monetary policy in 2015, as inflation continues to trend lower and by a pickup in capital expenditure.

INDUSTRY OUTLOOK FERTILIZERS

The fortune of fertilizer industry is highly dependent on factors such as population growth, government policy and regulation including incentives and subsidies to lower the cost of fertilizers to the farmers. The fertilizer consumption in India has generally exceeded the domestic production in both nitrogenous and phosphatic fertilizers, except for a few years. Government policy on pricing and prioritizing allocation of natural gas to Urea may severely affect production and sale of fertilizers. Free Trade Agreement with other nations may result in lowering of the existing duty structure, thus encouraging cheaper imports which in turn can affect sale of domestic manufacturers. Government has liberalized import of chemicals to meet the ever increasing consumption level of chemicals in almost all sectors of the economy. International manufacturers, apart from cheaper energy sources, are having huge production capacities thus benefitting from the economies of scale, making available their products at cheaper rate compared to domestic manufacturers.

POLYMER

Despite the slowdown in the economy, the polymer industry in India is believed to be finally on track. With an increase in demand the polymer consumption is expected to double by 2020, to about 20 million metric tons. The key players of the market believe that the growth drivers of the sector are finally in place and with the insatiable manufacturing industry, supportive government policies and a freshly surging economy, the best is yet to come for this niche.

OPPORTUNITIES FERTILIZER

There is a lot of development going on to meet the demand of fertilizers in the country through indigenous production, self-reliance in design engineering and execution of fertilizer projects is very crucial. There are consultancies which organize themselves to undertake execution of fertilizer projects starting from concept/designing to commissioning of fertilizer plants in India and abroad. The fertilizer plant operators are now in the position to absorb and assimilate the latest technological developments, incorporating environmental friendly process technologies, and are in a position to operate and maintain the plants at their optimum levels without any foreign assistance and on international standards in terms of capacity utilization, specific energy consumption & pollution standards.

POLYMER

The polymer industry in India has bright prospects stored for it in the time to come. As mentioned earlier, the polymer products have universal acceptability and their production and use will grow unhindered. An insatiable manufacturing industry, a surging economy, and supportive government policies have already made India a polymers superpower, but the best is yet to come. Production levels are soaring in order to keep up with India's ravenous demand. India's government has played a key role in boosting the significance of polymers, in terms of both consumer demand and in the production industry.

RISKS & CONCERNS FERTILIZER

The growth trajectory of the Indian fertilizer industry has camouflaged the impending challenges with which it is faced. Growth and development of agriculture in India derives a significant stimulus from the fertilizer industry. Agricultural milieu in India could be jeopardized by the uncertainties in the fertilizer industry. The government is faced with the piquant situation, which demands a balance between the needs of the farmers and the fertilizer manufacturers. The challenges before the Indian fertilizer industry relate to the incertitude in the supply of fertilizers. There has been a surge in the demand for fertilizers in the past few years.

POLYMER

While much of the polymer products are still imported, there is now considerable investment taking place in polymer processing to support manufacturing investments, driving growth in polymer demand. The report claims those that understand and participate in this market now will reap the benefit of future growth but there are challenges, including lack of sufficient local polymer production; exchange rate fluctuations of local currencies against the dollar and power supply in the sub-continent is erratic and unreliable. Exchange rate fluctuations of local currencies against the dollar make it harder to compete against cheaper Chinese imports of finished goods and the power supply can dramatically reduce effective utilization.

INTERNAL CONTROL

The Companies Internal control/supervisory system is established to ensure that board and management are able to achieve their business objectives in a prudent manner, safeguarding the interest of Companies shareholders and other stakeholders whilst minimizing the key risk such as fraud, misleading financial statements, breach of legal and contractual obligation, unauthorized business activity.

HUMAN RESOURCES

Your Company follows a strategy of attracting and retaining the best talent and keep employees engaged, motivated and innovative. The Company continues to have cordial relations with its employees and provide personnel development opportunities for all round exposure to them.

FINANCIAL & OPERATIONAL PERFORMANCE

Financial and Operational performance forms part of the Annual Report and is brsented elsewhere in the report.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis Report and in Board's Report describing the Company's objectives, expectations or brdictions may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those exbrssed or implied. Important factors that could influence the Company's operations include competition, government policies and regulations.