MANAGEMENT DISCUSSION AND ANALYSYS REPORT

a. Industry structure and developments.

India, with its skilled manpower and flourishing end-user industries, has the right ingredients to emerge as the global hub for chemical manufacturing provided the government undertakes tax & labour reforms and facility land availability for the industry.

At brsent, India is the net importer of chemicals as the availability to feedstock is a major challenge. Add to this woe is the inverted duty structure as a result of which raw materials (inputs) are taxed at higher rate than the end product. This discourages local manufacturing.

India is highly import dependent for most of its chemical needs. However, it is placed at a point of inflection for rapid growth. India can explore many alternative feedstock options such as coal gasification, syngas, pet coke, etc. If right technologies are used, the challenge of feedstock can be solved, provided the government encourages investment in new technologies.

Finance Minister has taken a few steps towards removing anomalies in the duty structures in this year's budget. "The government is also aiming to improve business environment g. by adopting transparent policy changes and facilitating processes to solve some of the problems faced by the industry.

'Make in India' will play a pivotal role in driving some of the key initiatives to stimulate growth in the chemical industry. With GST planned to be rolled out in April 2016, the chemical industry will gain immensely. The government is committed to its 'Make in India' initiative and chemical industry can play a major role in this campaign by making India a manufacturing hub for chemicals, especially knowledge and specialty chemicals. The industry strive hard to adopt eco-friendly technologies for sustainable development and to increase its spend on research and development.

b. Opportunities and Threats.

India is a potential market for various chemicals and raw materials in view of increasing manufacturing base. For our chemicals the Indian market is growing at 4 % average. The potential threat is cheap imports from Russia and Kazakistan, in view of Foreign Exchange fluctuations.

c. Outlook

Your Company is one of the competitive manufacturing facilities in the world, therefore, there is no risk in short-term or long-term. We are always upgrading our technologies and product mix in accordance with market requirements. If the Company utilise ful capacity, I can reach Rs.1000 Cr. Swales by 2016 end.

d. Risks and concerns.

Environmental management is one of the challenges and not a risk.

f. Internal control systems and their adequacy.

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit (IA) function is defined in the Internal Audit Charter. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board.

The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are brsented to the Audit Committee of the Board.

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

g. Discussion on financial performance with respect to operational performance.

The operational performance is important for an industry on material cost surplus,co-efficiency will make all changes in financial nos. There is always areas and scope in operational performance improvement. For example, the one grade and quality sources energy utilisation and process parameter will make direct proportion to profitabilities.

During the year under review, we have increased production 24.14 % and profit increased by 67% compared to brvious year. The other areas such as operating expenses, interest, sales expenses, there will not be much scope for reduction. Therefore, entire matrix is in raw material consumption and quantity and minimisation of waste.

h. Material developments in Human Resources / Industrial Relations front, including number of people employed.

There is no increase in number of people except replacement of any resignation/retirements. During the year no strikes or lock-outs and the industrial relations are being maintained cordial. Your Company announced a loyality bonus for every year of completion of service.

i. Cautionary Statement

Statements in the Board's Report and the Management Discussion & Analysis describing the Company's objectives, expectations or forecasts may be forward-looking within the meaning of applicable securities laws and regulations. Actual results may differ materially from those exbrssed in the statement. Important factors that could influence the Company's operations include global and domestic demand and supply conditions affecting selling prices of finished goods, input availability and prices, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.