Rollatainers Ltd

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

The current wave of economic development in India is being seen from all over theworld. As Infrastructure, manufacturing and services grow at high rates the packagingIndustry is also showing great variety and depth in its growth. India recovered relativelyfaster from the effect of global economic crisis of fiscal 2008-09 and witnessed a boostin demand in fiscal 2010. This faster recovery was also augmented by the various stimuluspackages provided by the Government.

Out of the packaging segments, flexible packaging segment is the fastest growingsegment in the Industry and is growing at about 6% on annual basis. Asia is expected toemerge as the largest regional flexible packaging market by 2014, At a compound annualgrowth rate of 17%, the flexible packaging market is one of the most dynamic and fastestgrowing markets in India. In the recent years, the Indian markets are witnessing a hugeshift from unpacked to packed products which is driven by the availability of high qualityaffordable packaging.

2. OPPORTUNITIES:

The market volume of the Indian Packaging Industry amounts to about 80,000 Crores andhas constantly grown by approximately 15 percent year on year. The pace of growth isexpected to accelerate to between 20-25 percent over the next five years. The largegrowing middle class, liberalisation and organised retail sector are the catalysts togrowth in packaging. Also food and Pharma packaging are the key driving segments. Indiancompanies are now placing increasing emphasis on attractive and hygienic packaging. Thispromises enormous potential for the future.

THREATS:

Packaging in India presents unique challenges. Climatic conditions vary from extremecold to extreme hot and humid. Constantly developing infrastructure adds to thiscomplexity. Manufacture of packaging material needs to factor in these circumstances inproviding packaging solutions. Augumentation of capacities in a highly price-competitivemarket is a cause for concern in the medium term. There is clearly a demand for higherquality packaging innovation, and increasing safety standards in packaging. We feel wehave an edge in this area to meet the demands of our discerning customers.

3. SEGMENT-WISE PERFORMANCECARTON MANUFACTURING DIVISION

The Division has registered a turnover of Rs. 48.70 crores during the financial yearunder review.

MACHINERY DIVISION

The Division has registered a turnover of Rs. 5.70 crores during the financial yearunder review.

4. OUTLOOK

In the view of the Company, the future trends in the Packaging industry in thepackaging segment are:

• The per capita consumption of packaging in India will grow to meet the worldaverage.

• In the next five years, the sector is expected to triple to around $ 60 billion.

• There might be volatility in the prices of draft paper

• Affiliated industries will support the growth.

• Increasing demand and high volumes will trigger consolidation and setting up tolarge automatic plants.

Competition in the Industry

Company operates in a competitive scenario comprising of Indian, registered,unregistered and small business players and also multinational players resulting in astiff competition from all these players.

Changes in Government policies

Changes in Government policy, changes in interest rates, revision of duty structure,changes in tax laws, changes in environmental regulations and emission norms etc. may havean adverse impact on the profitability of Company. Due to the competitive nature of themarket, the cost increases as a result of these changes may not be easily passed on to thecustomers.

Legal and Compliance Risk

We will be subject to extensive regulation by SEBI, Stock Exchanges, RBI and othermarket regulators in India. New laws / rules and changes in any law and application ofcurrent laws / rules could affect the manner of operations and profitability.

Sensitivity to economy and extraneous factors

Company's performance is highly correlated with the economy. The macro economicvariables such as consumer spending, unemployment levels affect the business performanceof the Company. Any adverse development on economic front may affect the profitability ofCompany.

Terrorist attacks and other acts of violence Terrorist attacks and other acts ofviolence or war, including those involving India, the United States, the United Kingdom orother countries may adversely affect Indian and worldwide financial markets. These actsmay result in loss of business confidence and have other consequences that could adverselyaffect our business, results of operations and financial condition. Increased volatilityin the financial markets can have an adverse impact on the economies of India and othercountries, including economic recession.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in operation a good system of internal control considering the size andnature of operations. The internal control system covers following aspects of businessprocess and reporting systems:

• Financial propriety of business transactions

• Accurate financial reporting of transactions as per applicable AccountingStandards and Policies

• Safeguarding assets of the Company

• Compliance with prevalent statutes, Listing Agreement provisions, managementauthorisations, policies and procedures

• Review of information technology and other business process systems so as tosuggest ways and means of cost optimisation.

An independent internal audit function is an important element of the Company'sinternal control system. The management and the internal auditors continuously monitor theoperation of the internal control system. Internal audit reports are regularly discussedand corrective measures, where required, are taken.

Further, the Audit Committee meets the internal and statutory auditors to be assured ofthe operations of the internal controls. The audit Committee also reviews the internalaudit findings.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year under review, due to pressure of inadequate working capital, Company'sturnover continued to be adversely affected. For the year ended September 30, 2010 yourCompany recorded a turnover of Rs. 50.48 crores as against previous year turnover of Rs.52.47 crores. Losses during the year were recorded at Rs. 7.53 crores as compared to lastperiod's Rs. 4.20 crores. A brief review of the performance of different divisions of theCompany during the period is given herein below:

CARTON MANUFACTURING DIVISION

The Division has registered a turnover of Rs. 48.70 crores during the financial yearunder review as compared to Rs. 49.66 crores in the previous period.

MACHINERY DIVISION

The Division has registered a turnover of Rs. 5.70 crores during the financial yearunder review as compared to Rs. 3.42 crores in the previous period.

8. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT

A cordial industrial relations environment prevailed at all the manufacturing units ofthe Company during the year. There was constant focus on all round organizationaldevelopment. A well defined Performance Management System has been introduced to monitorthe progress made by all members. Regular promotions are granted and succession plans areeffectively implemented. Our system of compensation is as per the market trends and jobrequirements. Other benefits to employees are provided for motivation.

9. CAUTION STATEMENT

Statements in the Management discussion and Analysis describing the Company'sobjectives, projections, expectations and estimates regarding future performance may be"forward-looking statements" within the meaning of applicable securities lawsand regulations and are based on currently available information. The management believesthese to be true to the best of its knowledge at the time of preparation of this report.However, these statements are subject to future events and uncertainties, which couldcause actual results to differ materially from those may be indicated by such statement.