Ajooni Biotech Ltd Management Discussions.

Your Directors have pleasure in presenting the Management Discussion and Analysis report for the year ended on 31st March 2019.

INDUSTRY STRUCTURE, DEVELOPMENT:

Livestock plays an important role in national agriculture policy because of its social and economic role. For sustaining profitability of livestock enterprise economically balanced ration is must as fodder and feed contributes to a major portion of expenses in rearing livestock. Dairy farmers rely basically on green fodder to fulfill the requirement of high producing dairy animals as fodder have good nutritive value particularly NDF which is relished by rumen micro flora, hence fodder is said to be the backbone of dairy nutrition. Since India possesses the largest animal production in the world therefore, we need a large amount of cultivable land to feed them but due to rapid growth in human population the area under the cultivable land are shrinking and moreover farmers are shifting their agriculture towards cash crops and cereals. Thus, providing adequate good quality feed to livestock is a major challenge to scientists and policy makers all over the world. Two lean periods May-June and Nov-Dec of fodder scarcity further decrease the livestock productivity. Crop residues like straws and Stovers are being used as replacement of fodder having poor nutritive value (low energy, protein, minerals and digestibility) which cannot provide adequate nutrients to the animals. By adopting cross breeding programs high yielding animals are being produced to meet the ever-increasing milk demand whereas no serious efforts have been made to meet the fodder requirements. At present, the country faces a net deficit of 61.1% green fodder, 21.9% dry crop residues and 64% concentrate feeds. In Punjab area under fodder cultivation is 8.6 Lac hectare and annual production of fodder is about 673 Lakh ton and availability of fodder is around 30kg/ animal. Hence, there is shortage of fodder compared to demand and this major cause of low productivity of livestock. Therefore, there is always search for new, novel, high quality and cheap source of energy and protein for livestock feeding. The fodder alternative not only decrease the feed cost but also solve economical and ecologic problem of waste disposal.

SEGMENT-WISE PERFORMANCE:

The Company deals in a single segment business.

OPPORTUNITIES, STRENGTHES THREATS, RISKS & CONCERNS:

i. Opportunities and Strengths:

- Increase market share by leveraging presence in existing business:

Your company will continue to focus on improving the market share in own Brand. Since sector in which your Company operates are largely unorganized, cost leadership will be a key enabler for your company to increase the market share of products. Your Companys ability to increase sales will be strengthened by continued focus on introducing innovative products which help in gaining market share.

- Focus on inorganically growing business offerings:

Your company will evaluate inorganic growth opportunities, in keeping with the strategy to grow and develop market share or to add new product categories. Your Company may consider opportunities for inorganic growth, such as through collaborations, exploring export market among other things consolidate our market position to achieve operating leverage in key markets by unlocking potential efficiency and synergy benefits. Your Company can also look at opportunities which strengthen and expand product portfolio and increase sales and distribution network.

ii. Threats, Risks & Concerns:

The Indian agriculture industry faces a few risks that can temporarily impact the business. Few key risks which can impact our businesses are:

- Unfavourable weather patterns may have an adverse effect on our business, results of operations:

As an agri based company, our businesses are sensitive to weather conditions, including extremes such as draught and natural disasters. The availability of raw materials that are required for operations and the demand for products may be adversely affected by longer than usual periods of heavy rainfall in certain regions or a drought. Occurrence of any unfavorable weather patterns may adversely affect business, results of operations and financial condition.

- Availability of raw materials and arrangements with suppliers for raw materials:

Animal feed businesses depend on the availability of reasonably priced, high quality raw materials in the quantities required by operations. The price and availability of such raw materials depend on several factors beyond your Companys Control, including overall economic conditions, production levels, market demand and competition for such materials, production and transportation cost, duties and taxes and trade restrictions. It typically sources raw materials from third party suppliers or the open market which exposes to volatility in the prices of raw materials and dependence on third-party for delivery of raw material. Also, any inability to procure raw materials from alternate suppliers in a timely fashion, or on commercially acceptable terms, may adversely affect operations.

- Improper handling, processing or storage of raw materials or products:

The products that your Company manufactures or processes are subject to risks such as contamination, adulteration and product tampering during their manufacture, transport or storage. Inherent business risks exist in form of product liability or recall claims in the event that products fail to meet the required quality standards or are alleged to result in harm to customers. Such risks may be controlled, but not eliminated, by adherence to good manufacturing products practices and finished product testing.

- Seasonal variations in our businesses:

Certain of your Companys businesses are subject to seasonal variations that could result in fluctuations in our results in fluctuations in our results of operations. For example, in animal feed business, your Company sells lower volumes of cattle feed during the monsoons due to the availability of green fodder. As a result of such seasonal fluctuations, sales and results of operations may vary fiscal quarter, and the sales and results of operations of any given fiscal quarter may not relied upon as indicators of the sales or results of operations of other fiscal quarters or of future performance.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company remains committed to improve the effectiveness of internal control systems for business processes with regard to its operations, financial reporting and compliance with applicable laws and regulations. Your company is now ISO-9001 and GMP Certified and has a proper system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly.

MATERIAL DEVELOPMETS IN HUMAN RESOLURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

Our workforce is a critical factor in maintaining quality and safety, which strengthens our competitive position and our human resources policies focus on training and retaining our employees. The Company trains employees on a regular basis to increase the level of operational excellence, improve productivity and maintain compliance standards on quality and safety. Employees are offered performance-linked incentives and benefits and conduct employee engagement programs from time-to-time. Your company also hires contract labour, from time to time. Further, your company would like to sincerely appreciate the valuable contribution and support of employees towards the performance and growth of the Company. The management team comprises of professionals with proven track record. Your company continues to remain focused and sensitive to the role of human resources in optimizing results in all its areas of working and its industrial relations also continue to be cordial.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys Structure, projections, estimates, expectations may be forward-looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates/ would operate, changes in the Government regulations, tax laws and other statutes and other incidental factors.