aikyam intellectual property consultancy ltd share price Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS

A. BUSINESS ENVIRONMENT AND OUTLOOK

Growing demand of polypropylene from end-use industries such as packaging, automotive and consumer products is expected to drive the market. In addition, factors such as changing lifestyles and increasing disposable incomes in Asia Pacific are further driving the market for various end-use industries. Automotive was the second largest end-use industry in terms of volume and is expected to grow at a CAGR of 5.7% from 2013 to 2019. The demand of polypropylene in consumer products was 7.1 mln tons in 2012. China dominated the polypropylene market that was valued at US$23.73 bln in 2012. It is expected to be the fastest growing market due to high demand of polypropylene from end-use industries. The consumption of polypropylene is phenomenal in automotive industries of Europe. The European market in terms of revenue is expected to grow at a CAGR of 5.9% from 2013 to 2019. The demand for polypropylene in Rest of Asia Pacific was 7.01 mln tons in 2012. Product innovation and capacity addition is expected to drive the market growth. Demand within the polypropylene market has been forecast to increase at a compound annual growth rate (CAGR) of 4.5% over the next nine years, rising from a total of 42.3 million tons in 2011, to reach 62.4 million tons by 2020.

B. RISKS & CONCERNS

Growing environmental issues and volatile raw material prices are expected to inhibit the market growth. Increasing demand for bio-based polymers has shifted the focus of polypropylene manufacturers from synthetic to bio-based polypropylene. Changing consumer food habits and high competition in consumer products sector in emerging economies is expected to escalate market growth. The global polypropylene market is highly fragmented as top five players accounted for nearly 35% of the market. Some of the major players which dominated the market include Braskem, LyondellBasell, INEOS, Sinopec, SABIC, PetroChina, Reliance Industries Limited and Borealis among others.

C. INTERNAL CONTROL SYSTEMS

The company has well defined control systems and procedures to ensure optimal use of Company’s resources and protection thereof, facilitate accurate and speedy compilation of accounts and management information reports and compliance with laws and regulations. The Company has a well defined organization structure, authority levels and internal guidelines and rules for conducting business transactions. Internal/ External auditor’s observations and recommendations and adequacy of internal controls are also periodically reviewed by the Audit Committee of the Board of Directors.

D. FINANCIAL CONTROLS

The Companys management is committed to evolve strategy to achieve enhancement in the shareholders value through the adoption of strong fiscal discipline, improvement in operating efficiencies and resource utilization.

E. HUMAN RESOURCES

The Company firmly believes that Human Resources and knowledge capital is vital for business success and creating values for share holders. The Company’s philosophy is based on a pluralistic leadership and empowerment model, a performance driven and transparent culture.

F. CAUTIONARY STATEMENT

Statement in the Management Discussion and Analysis describing the Company’s objectives, expectations or projections may be forward looking statement within the meaning of applicable securities, law and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operation include global and Indian demand supply conditions, finalized goods prices, changes in Government regulations tax regimes, economic development within India.