farmax india ltd Management discussions

(Forming part of Directors Report)

Management Discussion and Analysis Report:

The Managements views on the Companys performance and outlook are discussed below:

Economic Outlook

The consumer durables market is expected to reach US$ 12.5 billion in 2015 and US$ 20.6 billion by 2020. Urban markets account for the major share (65 per cent) of total revenues in the consumer durables sector in India. There is a lot of scope for growth from rural markets with consumption expected to grow in these areas as penetration of brands increases. Also demand for durables like refrigerators as well as consumer electronic goods are likely to witness growing demand in the coming years in the rural markets as the government plans to invest significantly in rural electrification.

The FMCG sector has grown at an annual average of about 11 per cent over the last decade. The overall FMCG market is expected to increase at (CAGR) of 14.7 per cent to touch US$ 110.4 billion during 2012-2020, with the rural FMCG market anticipated to increase at a CAGR of 17.7 per cent to reach US$ 100 billion during 2012- 2025.Food products is the leading segment, accounting for 43 per cent of the overall market. Personal care (22 per cent) and fabric care (12 per cent) come next in terms of market share.

Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the consumer market. The Government of Indias policies and regulatory frameworks such as relaxation of license rules and approval of 51 per cent foreign direct investment (FDI) in multi-brand and 100 per cent in single-brand retail are some of the major growth drivers for the consumer market.

Performance of Businesses

Sales: During the year under review, Net Sales stood at Rs.1641.16 Lakhs as against Rs. 2104.56 Lakhs registering a considerable Decrease in sales.

Net profit/ (Loss): During the year under review the company has incurred a net loss of Rs. (978.13) Lakhs as against Rs. (210.11) Lakhs in the previous financial year.

Note: As per Bank Statement the bank has not charged any interest on the loans availed. And it is not possible to calculate the exact interest to debit the profit and loss account. Which resulted in decrease in loss.

Risk Management

Business, Finance & Operational risks

The Company has adopted adequate risk management policy. Adequate measures have been adopted by the Company to combat the various risks including business risks (competition, consumer preferences, technology changes), finance risks (cost, credit, liquidity, foreign exchange) and so on.

The Company has in place a very stringent and responsive system under which all its distributors and vendors are assessed before being selected. Further, there exists a system by which all distributors and vendors site and operations are periodically reviewed by the Company for managing risks, if any.

Regulatory and Compliance risks

Your Company operates within the letter and spirit of all applicable laws such as:

To obey all legal requirements at all times;

To understand exactly what legal requirements apply to the work function;

To consult the legal personnel if there are conflicting legal requirements in different jurisdictions;

To strictly follow the directions from the legal personnel;

To address and resolve, in a timely manner, any legal compliance issues that have been identified;

Absolutely no violation of any law;

To immediately report any instance of violations to the Legal Department.

Your Company has set in place the requisite mechanism for meeting with the compliance requirements, periodic monitoring of compliance, to avoid any deviations and regular updations to keep pace with the regulatory changes.

Security Risks

Your Company has installed comprehensive security programs to protect employees and assets at all its Offices and Plants.

During the Financial Year under review, no breaches or major accidents occurred at any of the Companys Plants. Your Company has installed the best of the security measures and processes to protect its personnel and assets.

Internal Controls & their adequacy

Your Company has put in place an adequate system of internal controls commensurate with its size and nature of operations to ensure that the transactions are properly recorded, authorized and the assets are continuously monitored and safeguarded. The internal control system is backed up by well-documented policies, guidelines and procedures and concurrent reviews are carried out by the internal auditors, who submit reports monthly to the Audit Committee of the Board and the Management. The internal audit process is designed, inter alia, to cover all significant areas of the Companys operations such as accounting, finance, inventory, insurance, treasury, safeguarding of assets, IT processes and protection against unauthorized use etc. The Audit Committee reviews significant observations made in the internal audit reports along with actions initiated and reports to the Board periodically.

Your Company has a well-defined internal control system which is being adequately monitored. Checks and balances and control systems have been established to ensure that assets are safeguarded, utilized with proper authorization and recorded in the books of account.

Human Resource Development and industrial relations

The Company operates in a highly competitive environment vis-a-vis attracting the best talent for its operations and therefore the human resources management has assumed vital importance in your Company. Your Company focuses on attracting, motivating and retaining the best talent. As we have been growing we are putting in place new HR programs to ensure that the organization is geared up to deliver the future. Your Companys Human Resource agenda for the year focused on strengthening four key areas: building a robust talent pipeline, enhancing individual and organizational capabilities for future readiness, driving greater employee engagement and strengthening employee relations further through progressive people practices at the shop floor.

Forward Looking Statement

The Statements in the Management Discussion and Analysis Report may be seen as forward looking statements. The actual results may differ materially for those expressed or implied in the statement depending on circumstances.

Cautionary Statement

Statement in the Management Discussion and Analysis describing the companys objectives, projections, estimates and expectations may be forward securities laws and regulations. As forward looking statements are based on certain assumptions and expectations of future events over which the company exercises no control, the company cannot guarantee their accuracy nor can it warrant that the same will be realised by the company. Actual results could differ materially from those expressed or implied. Significant factors that could make a difference to the companys operations include domestic and international economic conditions affecting demand, supply and price conditions in the hospitality industry, changes in government regulations, tax regimes and other statutes.

	For and on behalf of the Board of
	Farmax India Limited
	Sd/-
Place: Hyderabad	M. Srinivasa Reddy
Date: 29.08.2015	Managing Director
	DIN:00882956