Management Discussion and Analysis

Performance Review

The Company delivered a strong financial and operating performance during the year. Chemicals business' performance improved led by better margins and volumes. Sugar business witnessed better margins with higher sugar recovery and firming up of sugar prices during the second half of the year. Fenesta business' earnings improved on robust growth in sales volumes during the year. Performance of the Agri-input businesses faced challenges on account of deficient monsoons impacting demand and margins of our Hybrid seeds, Agro Chemicals and bulk Fertilizer offerings.

1. Net Revenues increased by 4% to Rs.5,841 Crores

• Shriram Farm Solutions: FY 16 revenues increased by 27% YoY to Rs.1,798 Crores. The rise in business' revenue was driven by higher sales volumes of bulk fertilizers during the year.

• Fertilizer: Revenue increased by 10% YoY to Rs 798 Crores primarily due to higher realizations, a result of the rise in gas prices, which is a pass through.

• Sugar: Revenue during FY 16 declined by 11% YoY to Rs.924 Crores due to lower volumes and a 11% fall in average realizations vis-a-vis last year.

• Bioseed: Revenue during the year declined 15%, to Rs 485 Crores vs. Rs.570 Crores last year on lower sales volumes, as challenging Agri scenario in India and international markets impacted off-take of Hybrid seed offerings.

2. Profit before debrciation, interest and tax increased to Rs 544 Crores in FY 16, up 21% over brvious year.

• Chloro-Vinyl: PBDIT improved by 9% YoY to Rs.392 Crores on higher realizations in the Chlor Alkali business and overall decline in input costs.

• Sugar: Sugar business' PBDIT improved to Rs 113 Crores vs. -ve Rs 31 Crores last year due to lower costs led by better recoveries, better prices in Q4 leading to lower inventory losses vis-a-vis last year and sugarcane subsidy for the brvious season received during the year.

Growth in Company's earnings driven by the above businesses was moderated by the lower performance of Agri-input businesses:

• Bioseed and Shriram Farm solutions: PBDIT in FY 16 stood lower as El-nino impact led to adverse agro-climatic conditions resulting in lower sales volumes and margins leading to lower earnings during the year.

• Fertilizer (Urea): PBDIT in FY 16 declined primarily due to the tightening in the energy efficiency norms under the New Urea Policy.

3. Finance Costs - Finance costs during FY 16 declined by 23% to Rs.86 Crores.

4. Net Profit increased to Rs.297 Crores, up 41% YoY

5. Net Debt stood at Rs 1,057 Crores as on March 31, 2016 vs. Rs 688 Crores as on March 31, 2015. The Company's balance sheet remains strong with a capital gearing ratio of 0.5 as on March 31, 2016.

6. The Board of directors have recommended a total dividend of 160% for FY 16 as compared to 110% in brvious year

7. Credit rating of company's Long term debt was upgraded to [ICRA]AA- from [ICRA]A+ in Q4 FY 16. Rating for Short term debt was affirmed at [ICRA]A1+

Business - Wise Performance Review and Outlook

Chloro - Vinyl Businesses

DCM Shriram's Chloro-Vinyl business is highly integrated supported by 143 MW coal based power facilities (part of 283 MW power capacity in the Company). This business has multiple revenue streams with Chlor-Alkali (Caustic Soda and Chlorine), PVC resins, Calcium carbide and Power. These multiple revenue streams enable the company to maximize earnings per unit of power produced and lend stability to Chloro-Vinyl operations.

• Chloro-Vinyl segment's revenue stood at Rs.1,222 Crores as compared with Rs.1,242 Crores in FY 15; This decline in revenues during the year was due to lower PVC volumes and realizations. Higher realizations and volumes in Chlor Alkali business limited the decline in revenues during the year.

• The Chloro-Vinyl business' earnings benefited from higher Chlor-Alkali revenue and lower cost of key input materials such as salt, limestone and carbon material. However, higher power cost at the Kota facility driven by various duties and levies on Coal and power generation by central and state government, moderated the earnings growth during the period.

• Increase in Chloro-Vinyl's capital employed was on account of the undergoing capital expansion at the Bharuch plant

Chlor-Alkali

Chlor-Alkali (Chemicals) industry has Caustic Soda and Chlorine as the two Co-Products that are produced in the ratio of 1:0.88. Caustic soda is used in Alumina, Paper, Textiles, Detergents, Pharmaceutical industries etc. whereas Chlorine is used in polymers, Dyes and inks, Crop care chemicals, HCL, water treatment etc. The prices of key product Caustic soda are influenced by international prices as well as domestic demand supply factoRs.The growth of this business is highly correlated to the growth of GDP in the country.

The company operates manufacturing facilities at Kota (Rajasthan) and Bharuch (Gujarat) with an aggregate capacity of 780 TPD, which places it among top three players in the domestic Chlor-Alkali Industry. Power is the key component of cost, hence to be able to influence cost of production, both of our manufacturing facilities have full access to 100% captive power based on Coal. While the Kota unit is based on domestic Coal, the Bharuch plant imports its Coal requirements.

Business Performance

Operations at both, Kota and Bharuch facilities continued to deliver optimally driven by higher production with improving cost efficiencies. Chlor Alkali revenue increased by 7% YoY in FY 16, mainly on account of the 5% increase in realizations during the year. Realizations remained stable during April-Dec 2015 and improved significantly in the fourth quarter. PBDIT stood higher by 33% YoY in FY 16 due to higher realizations and overall lower cost of key input materials. Cost of power, however stood higher at the Kota plant due to duties and levies on coal and power generation.

Industry Overview and Outlook

The Chlor-Alkali industry in India has 35 operating units with a combined installed capacity of 3.5 million TPA of Caustic Soda. The top three players comprise about 45% of the total installed capacity. The domestic demand for Caustic Soda and Chlorine in 2015-16 is estimated at about 3.4 million TPA and 2.7 million TPA respectively. The growth in demand for Caustic soda and Chlorine is linked to GDP growth.

Our Strategy

The Company had embarked upon a major expansion drive to take the total capacity of the Company from 780 TPD to about 1,285 TPD. In addition to this, the company has also undertaken a technology up gradation project at both Kota and Bharuch plants that will lead to substantial improvement in energy efficiencies. The total capital expenditure on these projects is Rs.607 crore. These projects are progressing as per schedule and will be fully operational in phases by September / October 2016. The Company continues to lay strong emphasis on further improving cost structures at both its manufacturing units as well as exploring opportunities in downstream products.

Plastics

The business is involved in the manufacturing of PVC Resins and Calcium Carbide. The Plastics business is an integral part of the Chloro-Vinyl manufacturing facility at Kota with integration in terms of Captive Power, Chlorine and Calcium Carbide. The Company manufactures PVC Resin through the Calcium Carbide route as against the Ethylene route which is being followed by most of the companies worldwide except in China. The Calcium Carbide manufactured by the company is partly sold and partly used for the manufacture of PVC Resins. Almost 50% of the country's demand is met by imports, hence the prices are sensitive to international prices of product as well as crude oil.

PVC Resin is a widely used raw material owing to its safe, healthy, convenient and aesthetical advantage for applications in urban infrastructure, Electronic products, Consumer products, Irrigation etc. It is a thermoplastic with 57% chlorine and 43% carbon, making it excellent fire resistant material. More than 70% of PVC resins are used for producing PVC pipes in India. Traditionally PVC Pipes were mainly used for agriculture. However, PVC pipes are fast replacing steel pipes for plumbing applications as well.

The other key driver for PVC Resin is the rise in micro-irrigation. This sector is expected to account for a sizeable percentage of the demand for PVC resins. Other application with large potential is PVC films for packaging. With the trend for buying packaged goods increasing even in rural India, the demand for PVC films is also expected to rise.

Business Performance

Plastic business' revenue declined to Rs 493 Crores from Rs 559 Crores in FY 15 due to lower PVC volumes and realizations during the year.

Business' earnings were impacted by lower volumes; fall in realizations and higher power costs. The business undertook several initiatives during the year towards cost reduction such as use of cheaper carbon mix, reduction in power consumption and better maintenance practices. These initiatives along with lower input costs of raw materials such as carbon material and limestone partly mitigated the adverse impact of lower PVC realizations and volumes as well as higher power costs on business' earnings.

Industry Overview & Outlook

India's PVC resin industry's capacity currently stands at around 1.4 million Metric Ton per annum (MTPA). As against this, domestic demand has been growing steadily and has reached ~2.7 MTPA in FY 16, up 10% over last year. The gap in demand and supply is being met by the import of PVC resin in India. The continued focus of the Govt. on building infrastructure as envisaged in the 12th Five Year Plan - development of smart cities, rural housing and Agri-asset creation, rapid urbanization and other initiatives like investments in rural sanitation is expected to fuel growth of the PVC industry in India over the next few yeaRs.

For Calcium Carbide, continuous increase in usage of desulphurization (DS) Compound in the Steel Industry remains the key growth driver. Increased focus of Government on infrastructure sector will result in growth in steel industry and is likely to have a positive impact on the growth in demand for Calcium Carbide in India.

Our Strategy

The company's strategy is to maximize product volumes while ensuring higher net back per unit of Power from the sale of PVC Resin and Calcium Carbide. Company is focused on optimizing its cost structure through learnings from global best practices. This enables competitive cost structure and to support business' earnings.

Sugar

DCM Shriram is a major player in the domestic sugar industry based out of the State of Uttar Pradesh. The company operates four sugar units located in central U.P at Ajbapur (10,500 TCD), Rupapur (6,500 TCD), Hariawan (8,000 TCD) and Loni (8,000 TCD) with a total crushing capacity of 33,000 TCD. These four units have a total power cogeneration capacity of 94.5 MW of which 51.5 MW of power can be exported.

• Cane crush during SS 2015-16 stood lower at 282 lac Qtls, vs. 299 lac Qtls in the brvious season. This was on account of lower sugarcane yield in the region.

• During the SS 2015-16, sugar recovery was up by 1.2 percentage points as compared to last season. Recovery improvement was a result of favourable agro climatic conditions & intensified efforts towards improving cane quantity and quality. The business is focused on further improving cane quantity and quality in sugar season 2016-17.

• Revenues at Rs.924 Crores were down by 11% on account of lower volumes and a 11% YoY decline in average realizations during the year.

• PBDIT stood at Rs.113 Crores vs. -ve PBDIT of 31 Crores in FY 15. Steady improvement in realizations in Q4 FY 16, higher recoveries, lower inventory write downs, and cash cane subsidy for SS 2014-15 received from the UP State Govt. in FY 16 led to earnings improvement during the year.

• Increase in capital employed during the year was on account of increase in closing stock quantity as well as valuation at the end of FY 16 vs. last year.

Industry Overview and Outlook

The Indian Sugar Industry is the second largest producer after Brazil and the largest consumer of sugar in the world. In domestic context, sugar is the second largest agro-based industry supporting over 50 million farmers along with indirect employment to rural population. It is estimated that about 7.5% of the rural population in India is involved with the sugar industry.

Indian Sugar Industry is highly fragmented with private sector, Government undertakings, Co-operatives, and unorganized playeRs.Unorganized players are mainly involved in production of Gur and Khandsari, the less refined form of sugar. The crushing period varies from region to region beginning in October/ November and goes on till April/ May in all states except in southern states like Tamil Nadu, Andhra Pradesh where it continues till July/ August.

Globally, sugar prices are trading at almost 3 years high levels, which is a big respite for the entire industry. For the last 5 years high levels of inventory in the market led to lower sugar prices that adversely affected the financial viability of the sugar companies. The recovery in sugar prices is in anticipation of expected global deficit of 4-5 million Ton in 2015-16 season, a result of lower production in India, Thailand, north east Brazil and European Union. 2016-17 sugar season is also expected to be sugar deficit season and cane production in Brazil and its diversion for sugar or ethanol production will be key factors impacting  overall deficit in 2016-17.

Domestically sugar season 2015-16 witnessed huge volatility wherein sugar prices revived to around Rs 3,400/Qtl levels after touching 5 year low of ~ 2200/ Qtl. This has been possible with the Central Govt's exports push policy that enabled exports of about 1.5 million Ton of sugar in Sugar Season 2015-16 and decline in sugar production to just over 25 million Ton from 28.3 million Ton in last season. The majority of the decline in India production was driven by ~20% fall in production to 8.4 million MT in Maharashtra due to draught during the year.

Last year, both Central Govt. as well as State Govt. took several initiatives to support the domestic sugar industry. Some of the key measures undertaken were:

• Announcement of production linked subsidy of Rs.4.5/Qtl directly to cane farmers and stipulating minimum export quota for each sugar mill.

• Waive off of excise duty on ethanol for supply of Ethanol produced out of current year's molasses under Ethanol Blending Program. Increase in Ethanol Blending target to 10% from the 5% target earlier

• Rational Policy by the UP State Govt. - For Sugar Season 2015-16, the UP State Govt. retained the cane price at last season's price of Rs.280/Qtl. It also announced a cane subsidy of Rs.35/Qtl of which Rs.11.7/Qtl was in the form of remission of taxes / commission and the balance Rs.23.3/Qtl was linked to the average realization and recovery of sugar and its by products during the season.

We expect the State as well as Central government will continue these rational policies which are in the long term interest of the Industry and the farmer.

Our Strategy

The business continues its focus on improving productivity and quality of Sugarcane benefitting both farmers in terms of higher yields and mills in terms of better recoveries. This measure is being supported by dedicated cane development efforts focused at empowering and equipping our farmers with latest technologies and improved agronomy practices.

The business has embarked upon an up gradation and expansion project at Ajbapur unit for cogeneration power. The capex project is progressing as per plan and is expected to complete before start of Sugar Season 2016-17. The Company will continue to explore opportunities to add value in this business through better utilisation of by-products

Shriram Farm Solutions

Shriram Farm Solutions business strives to provide complete solutions to the farmer ranging from products as well as agronomy. The product portfolio includes Value added inputs such as Seeds (GM, Hybrid and OP), Crop Care Chemicals (Insecticide, Fungicide and Herbicide), Soluble Fertilizers, Micro-Nutrients etc and Bulk Fertilizers like DAP, MOP and SSP. The Company not only provides a wide range of quality inputs, but also customized solutions which include providing customized inputs and creating a package of practices which helps farmers in enhancing their productivity and profitability levels. The business is supported by a strong extension program called the SKVP (Shriram Krishi Vikas Program). This program, apart from being an Agronomy services platform providing latest technology and practices to the farmers and the Channel, also focuses on meeting its social responsibilities. The company lays strong emphasis on strengthening its customer interface which will help in capturing the evolving trends in Agriculture and leverage technology to enhance performance of the Business, the Channel and the Farmer. The business is supported by a strong distribution network sbrad across 17 states, reaching out to ~ 1.0 million farmers and ~ 35,000 retaileRs.The Company sells these Agri-Inputs under brand 'Shriram' which is known for quality and has a strong brand image within the farming community.

• Revenues in FY 16 increased to Rs. 1,798 Crores, up from Rs.1,417 Crores last year. This was on account of higher sales volumes of bulk fertilizers during the year amounting to Rs. 1,210 Crores in FY 16 Vs Rs.791 Crores last year. Revenue of the 'Value Added' inputs vertical stood 6% down YoY at Rs.589 Crores as a second consecutive year of drought in India adversely impacted off take of Seeds and Agrochemicals during the year.

• PBDIT for FY 16 was down by 17% YoY to Rs.73 Crores primarily due to lower margins in the bulk fertiliser vertical as well as Value added inputs vertical during the year.

• Higher subsidy outstanding as well as extended working capital cycle contributed to the rise in capital employed during the year.

Industry Overview and Outlook

2015-16 turned out to be another challenging year for the domestic Agri-inputs sector as distressed farmer economics, deficient South West monsoons and delayed start to the 2015 Rabi season adversely impacted off take of Agri-inputs in India. In 2015, the southwest monsoons stood 14% deficient vis-a-vis the long term period average. In 2014 as well there was a deficit of 12% in the Southwest monsoons. Kharif 2015 witnessed change in sowing patterns

as well reflected by the shift towards crops such as pulses and oil seeds. Late harvesting of Kharif crops and low reservoir levels led to delayed sowing in the Rabi 2015-16 season, which also impacted the sales volumes of Agri-inputs during the year.

As per Indian Meteorological Department, 2016 Southwest monsoons are expected to be above average on expected easing out of the El-Nino phenomenon. This is expected to lift sentiment and provide fillip to the demand for fertilizers and other Agri-inputs such as crop care chemicals, seeds and micro-nutrients. However, weak farmer economics can weigh down to a certain extent on the positive impact of anticipated normal monsoons this year. Over the medium term, the Agri-inputs sector in India is poised to witness strong growth given the macro factors such as population growth, rising per capita income that are leading to rapid rise in growing demand for food.

Our Strategy

The business has decided to rationalise its bulk fertilizer business as low and inconsistent margins in the business along with high subsidy outstanding lead to volatile earnings.

To ensure sustainable growth over the medium term, the business is strengthening its product portfolio, entering into new geographies, leveraging latest technology, strengthening the extension and market development program and is beefing up its supply chain network.

We believe, that these steps will enable the business to achieve healthy growth in the medium term especially in the 'Value Added' inputs segment.

Bioseed

Bioseed business provides high quality hybrid seeds to help farmers improve their profitability and productivity. Bioseed has end to end integration with brsence across Research, Production, Processing and Marketing. Business' product portfolio consists of both Field and Vegetable crops. In the Field crops, the business is brsent in Bt Cotton, Corn, Paddy, Bajra and Jowar. In the Vegetable crops, it is brsent in Tomato, Chillies, Okra, Brinjal, Gourds among otheRs. In terms of Geographical brsence, apart from being brsent in India (in both Field and Vegetable Crops), the company is also brsent in Corn in Philippines and Vietnam and has started commercial activities in Indonesia.

We believe that we have a strong business model led by advanced research facilities. The business continues to invest about 8% of revenues into research for developing new hybrids. This has led to a healthy product pipeline. The product development is not only focused on providing high yielding hybrids, but also meeting other challenges, such as pest resistance, disease tolerance, salinity and drought tolerance. The Company has got into various research alliances to further strengthen its capabilities. We are also focused on Agri-extension activities that involve working very closely with the farming community. Bioseed has developed a strong brand image among farmers with quality and reliability as its hallmark.

Business performance

The Revenue, PBDIT and Capital employed for this business for FY 16 are as follows:

Bioseed Revenues in FY 16 stood at Rs 485 Crores vs. Rs 570 Crores last year. This decline in revenue was driven by the adverse agro-climatic conditions in India and overseas for two successive years impacting sales volumes. The Indian operations witnessed a decline in revenue to Rs.432 Crores from Rs.479 Crores last year, the international operations witnessed decline from Rs.91 Crores last year to Rs.53 Crores in FY 16. The year witnessed decline in sowing of cotton seed in India by ~8% that impacted offtake of our hybrid cotton seeds, especially in the Northern market. Lower volumes impacted the earnings as well as margins.

Our Strategy

Research and development are the foundation of this business and we continue to strengthen it, to ensure medium to long term sustainable growth in the business. These efforts have enabled us to develop a robust pipeline of products, which meet the evolving needs of the farming community such as tolerance to climate variations, disease and pests. The company is continuously taking all necessary steps to strengthen conventional breeding as well as biotechnology related initiatives. The Company has an applied biotechnology research program which is focused on supporting breeding programs through the use of latest molecular and bio-informatics tools, as well as on developing GM and Non GM traits to meet various farming challenges.

The business is strengthening its product portfolio and intensifying marketing efforts to create a demand pull for its products. The trade channel is also being enhanced.

International operations are going through tough times over last couple of yeaRs.We now expect that normal monsoons and new products introduced in the market should drive growth in the International operations, which is expected to take a couple of years to turnaround.

Fertilizer (Urea)

The company's Urea plant that operates at its integrated manufacturing complex at Kota, Rajasthan, is one of the oldest plants in the country with a reassessed capacity of 3,79,500 TRA of Urea. The company markets its products under the "Shriram Urea" brand, a trusted name that enjoys high brand equity amongst the farmeRs.The Company has an extensive distribution network over the entire Northern and Central India. The plant has been operating on Gas as feedstock since May 2009, post the conversion from Naphtha to LNG/Natural gas in 2006-07.

Business Performance

The business' production stood marginally up vis-a­vis last year. Revenue increase during FY 16 was on account of higher gas prices, which is a pass through. The increase in gas prices for the company was led by the Gas price pooling policy.

The business' earnings decline vis-a-vis last year was due to the tightening in energy norms under the New Urea Policy. The business' earnings continue to be weighed upon by the inadequate reimbursement of conversion costs and high levels of subsidy outstanding.

Industry Overview and Outlook

India is the second largest producer and consumer of Urea in the world. Urea is most brferred fertilizer and constitutes about 72% of entire fertilizer consumption in the country. Low farm gate price (fixed by government) and high nitrogen content has made it a brferred choice of farmeRs.The demand and consumption of Urea has been growing and the gap in demand/supply is currently being met by imports. During 2015-16, the total Urea production in the country stood at ~ 24.5 million MT and India imported 8.5 Million MT of Urea to meet its demand.

In 2015, the New Urea Policy came into effect from 1st June 2015 till March 31, 2019. Under this policy, energy efficiency norms for all the fertilizer units were further tightened with an objective to encourage improvement in energy efficiency by domestic fertilizer manufactureRs.

From 1st July 2015, the Govt. of India implemented the Gas Pooling policy under which gas would be supplied at a uniform delivered price to all fertiliser plants on the gas grid for production of urea through a pooling mechanism. For Fertilizer units such as ours that have access to a higher percentage of domestic gas this change has resulted in higher gas cost and hence higher subsidy outstanding leading to increase in working capital requirements.

In 2015, the Govt. of India mandated 100% of all Fertilizer produced in India to be neem coated.

Our Strategy

The Company has been making continuous efforts towards reduction in energy consumption which has seen decline over the period as well as containment of fixed expenses.

Other Businesses Fenesta Building Systems

Fenesta Building Systems is India's largest UPVC windows solutions provider with complete integration in terms of design, manufacture, fabrication, installation and service of brcision-engineered made-to-order UPVC window and door systems. Fenesta is an end to end service provider right from extrusion of UPVC profiles to installation of windows. The company operates in two segments, i.e 'Retail' and 'Projects' (Institutional).

Fenesta continues to enhance its product portfolio to meet customer needs. Strengthening of dealer network has resulted in enhanced brsence in cities across India. The business has nine own showrooms across the larger cities in India. New dealer showrooms modelled on the lines of 'Signature Studios' are expected to enhance brsence and customer experience. The Company while focused on 'Retail' Business to generate higher margins is also targeting the 'Projects' segment to provide profitable volumes growth.

Business Performance

During the year the business witnessed substantial improvement in performance with achievement of profitability at the PBT level as compared with loss last year. This was driven by a 21% YoY growth in overall sales volumes during the year. Sales volumes in FY 16 in 'Retail' and 'Projects' segment grew by 20% and 23%, respectively, over last year.

Our Strategy

In 'Retail', our strategy revolves around quality engagement with customers, influencers & business partners through structured programs. Our outreach programs have helped to improve the quality of engagement. We have put special focus on improving service quality and customer satisfaction this year.

In 'Projects' our focus continues to be on profitable execution. 'Projects' booking has improved significantly in the year. With the Launch of the new 'Project' Series, we expect it to keep improving in the year ahead.

The business is taking several steps in product innovation, capability building, capacity enhancement and enhancing productivity & efficiencies across all the business operations.

Cement

The company operates a Cement plant with a capacity of 400,000 TPA located at its integrated manufacturing facility at Kota. Calcium hydroxide sludge is generated in the process of manufacturing PVC resins through calcium carbide route, which is then converted to cement in an environmentally friendly manner using 'wet' process.

The Company produces high quality, brmium grade Pozzolana Portland Cement and Ordinary Portland Cement. The Cement is characterized by light colour, superior strength and early setting properties. These characteristics have made 'Shriram Cement' to be considered as a brmium brand especially in markets like Delhi/NCR and Rajasthan.

Business Performance

Revenues from the Cement business stood marginally higher at Rs 139 Crores vs. Rs 137 Crores last year led by volumes. Revenue increase during the year was moderated by realizations that were down 7% YoY. The business achieved PBDIT positive vs. a loss last year on account of higher revenue and improved cost efficiencies in FY 16.

Our strategy

The business is focused on further improving its efficiencies and optimizing its cost structure along product mix for generating higher returns.

PVC Compounds

The business is housed in a Company called Shriram Axiall Private Limited which is a 50:50 Joint venture with Axiall LLC USA. It is the largest commercial PVC Compounder in India. PVC Compounding business is approximately 5 lac MT per year in India. However only 60-65% business lies with organized players including self compoundeRs.Compounded PVC finds its uses in wires, cables, automotive profiles, rigid transparent applications etc. The business is equipped with modern compounding technologies and testing equipments that enables it to provide a vast range of high quality PVC Compounds to customers in different industries. The business' manufacturing plant has state of the art product development facility known as iPAC (Innovative Plastic Application Center) which provides the company an edge in terms of faster development of new products and service to the customer.

The Strategy platform for growth of the Joint venture is the transfer of technology from Axiall LLC, USA to India and focus on new engineered Vinyl applications in India. The Joint Venture is working on expanding its product domain into new applications.

Business Performance

In FY 16, the business's sales volumes went up by 16% vis-a-vis last year, with volumes of 'Wire & Cable' and 'Automotive' segments growing by 19% and 10%, respectively. During the year, the Company expanded its geographical reach in UAE and Egypt with higher penetration in the Western and Southern India markets. The Company is targeting to increase its volumes in these regions in FY 17.

The company's adherence to the best manufacturing practices, cost reduction initiatives and focus on introduction of new products will lead the business on the path of sustainable growth in the medium to long term.

Hariyali Kisaan Bazaar

The Company has limited its operations in this business to fuel retailing at the existing outlets. The Retail operations were rationalised in 2013.

The company is focused on the sale of remaining properties, which progressed slowly in FY 16 and is expected to take another 2-3 years.

Opportunities, Threats, Risks and Mitigants

The Company being a conglomerate is exposed to various opportunities and risks.

Opportunities:

• The company has brsence in three different verticals

i. Chloro Vinyl (Basic industrial chemicals/ polymers) where Opportunity/growth is linked with overall GDP growth / manufacturing growth. Besides growth in existing business, it offers opportunities for forward integration particularly in chemicals business.

ii. Agri-Inputs

o The Agri-inputs business of Bioseed and Shriram Farm solution will have opportunities over medium to long term with rising demand for food in the country along with need for higher productivity and resistance to climate, disease and pests. Approval to GM technology in India for crops such as corn, vegetables as and when it happens, will foster growth of hybrid seeds.

o Presence of company's seed business in overseas markets of Philippines, Vietnam and Indonesia provides opportunity to the business to grow along with the growth in Agri sector in these countries.

iii. Sugar - forward integration and growth in by­products, bagasse and molasses.

• The company's Fenesta Building Systems business provides it opportunities in existing windows business as well as in related building products.

• Strong brand in all businesses, which enjoy high level of Trust and Credibility with customers including farmers.

• Comfortable financials with healthy cash flows and good credit track record provides ability to continuously invest in growth.

Risk, Threats and Mitigants:

• Businesses such as Sugar, Fertiliser and some parts of Bioseed business are exposed to risk of regulatory intervention. Exposure to these businesses is kept at reasonable level. Further, we alongside with other industry participants and associates work with regulatory agencies on continuous basis to ensure a policy framework which benefits farmers (key stakeholder in all these businesses), consumers and industry.

• Substantial delay in payment of fertiliser subsidy bills by the Government increases the borrowings and hence the interest costs. The Company manages its working capital and tries to keep overall debt at low levels to enable handling such risks.

• Businesses like Chloro-vinyl are energy intensive. Rising energy costs as a result of rising domestic coal prices, freight, duties and levies, increases the cost of production. We continuously work and invest in improving our technology, efficiencies, fuel mix and sourcing, to ensure that overall cost of production is competitive.

• Chemicals, Plastics, Cement and Sugar are commodity products, hence their prices are led by global commodity prices along with domestic demand and supply position. The Company focuses on being amongst the lowest cost producers in these businesses.

iv. Compliance - Increasing regulatory enactments has brought in the need for additional compliances. With various statutes and regulations, non-compliance may not only lead to monetary penalties but also have an impact on the reputation of the organisation and the goodwill it enjoys. The risk is mitigated through regular monitoring and review of changes in the regulatory framework to ensure compliance with all the applicable statutes and regulations.

Internal Control Systems and their Adequacy

Our business is run on SAP ERP, which provides complete integration of all transactions including financial transactions and statements. The key business processes and policies are documented. Risk Control Matrix (RCM) has been brpared for all the key processes and business transactions. Process adherence and compliance effectiveness of control matrix is tested at three levels i.e. by the Business Accounts Team, Corporate Internal Audit Team and then the External Internal Auditor. The statutory auditors also carry out their audit on processes and internal controls on financial reporting. The internal audit for all processes is carried out regularly as per the plan approved by the audit committee. The audit observations are discussed and monitored by Corporate Office as well as the Audit Committee regularly. The company is also implementing GRC (Access Control and Process Control), which will further enhance the effectiveness of the internal control systems.

Human Resources and Industrial/Employee Relations

The Company through the year has been focused at building healthy employee relations, enhancing capabilities to drive performance and leading initiatives to create a vibrant culture and drive all round employee engagement. People Development has been a key agenda for the Organisation like every year because of its ability to impact business performance and outcomes. The commitment of the Organisation towards People gets reflected in the core values and beliefs of the Organisation and the various programs,policies and practices that have got institutionalized over the yeaRs.All this has led to the building of an enabling ecosystem and ethos in the Company.

People Productivity and Optimisation

The focus on driving people productivity and optimization has been carried out on a sustained basis in the Organisation across all businesses and units. It is seen as very fundamental and key to building competitiveness of products and services at the market place. There have been awareness programs and initiatives in all the businesses around building efficiency, raising productivity standards, improving quality and reducing costs. Technology up gradation, systems improvement and process enhancements have been significant areas of contribution towards raising the overall standard of manufacturing and performance. There have been various small group activities, including cross functional teams, action learning projects, idea circles and suggestion schemes to engage with a larger cross section of employees to ideate opportunities of improving productivity, profitability and cost optimization in line with the best industry benchmarks and practices. The sustained focus on such programs over the years has led to the building of a culture where employees proactively take initiatives and drive improvement programs.

Capability Building

Capability building has been seen as a significant driver of driving business performance all through the yeaRs. During the year the company has continued to invest in building skills, knowledge and competencies of its people resources across all the levels in the various businesses. Employees have been through structured training and development programs, attended best in class conferences and seminars and have been through systematic learning programs on the job, projects and assignments as part of the overall up gradation of capabilities relevant to the businesses and Organisation. Competencies across the entire spectrum - technical, functional and behavioural - have been focused as part of the development programs. There has been special focus on building IT awareness and skills as part of LEAP, an IT BPR initiative, that seeks to impact all the business processes by migrating to the most contemporary S4Hana technology platform of SAP. The focus, like the brvious years, has been also on talent and leadership development, mentoring and coaching programs based on specific developmental needs. The Company continues to encourage employees to get outside-in perspectives on an on-going basis by partnering with the best of the external partners so that the bar of performance gets raised and employees continuously look forward to opportunities of introspection and improvement across all the processes.

HR Initiatives and Interventions

The Company has been taking various strategic initiatives with a view to impact the long-term work place culture and consequent business / organisational performance. The more focused initiatives have been around Talent & Leadership Development along with Succession Planning to build a talent pipeline for tomorrow, Technology enablement of the complete H2R process using Success Factors as a Solution on the latest SAP platform to build efficiency and enable better decision making, Balanced Scorecard to ensure a sharper focus on deliverables and outcomes and Learning Academy to introduce most contemporary interventions and programs. Process teams and CFTs have been formed to pursue various process improvements and introduce new initiatives like payroll outsourcing, travel outsourcing, compensation rationalization etc. There has been a substantial focus on Change Management to enable the smooth implementation and adoption of LEAP initiative. Like every year, the Company carried out an extensive diagnostic study to measure Employee Engagement, in partnership with Aon Hewitt, and develop suitable action plans to impact the various engagement driveRs.

Employee / Industrial Relations

The relationship of the Company with its employees continues to be healthy and harmonious. The spirit of understanding, care and welfare has been sustained leading to mutual trust and faith. The general motivation and engagement level across various levels in the various businesses continues to be high, ensuring complete alignment of individual goals with those of the organizational goals and objectives. The Company has continued to build on its core values and beliefs of Respect and Dignity ensuring complete fairness and transparency. The ability to respond to the needs of the employees in a swift and proactive manner has led to a sense of belongingness amongst all employees and a family spirit.

The various initiatives undertaken from time to time and an authentic people philosophy of the Company has ensured that the workplace provided to the employees is vibrant, positive and enabling. It has ensured that the employees work with full commitment and zeal to give their best in achieving the organizational goals. The endeavour has been to see that employees take pride in their work and the Organisation.