CDG Petchem Ltd Management Discussions.

a. Industry Structure & Development

CDG Petchem Limited (Formerly Known as Urbaknitt Fabs Ltd) founded by a team of professional entrepreneurs & qualified experts with the main objective to supply high quality product services to the discerning clients. It will be a leading business entity in India engaged in the activities Merchant Export & Third country Trade, Imports – Marketing & Distribution of Mats / Mattresses ,Insulation Sheet and Pillows.

Your Company has diversified its business profile through its 100% subsidiary company (Morbido Merchandise Private Limited) for the purpose of Imports – Marketing & Distribution Services of world class products (Chemicals) to several industries ranging from Plastics, Polymers, Construction, and Paint etc. It also offers to our Indian customers a broad range of products from leading producers located worldwide through Imports, Marketing & Distribution of multinational company.

The subsidiary Company will participate in growth of CDG Petchem Limited by expanding its customer base of Chemicals to several industries ranging from Plastics, Polymers, Construction, and Paint etc with international collaborations .

b. Opportunities The Indian Plastic Industry clearly has the potential to continue its fast growth. It is expanding at a phenomenal pace, with plastic being significantly used in innovating new applications in industries like food processing, packing, healthcare thereby increasing demand for plastic altogether. The industry has many growth opportunities owing to the wide applicability of Plastic / disposable products. The Demand for companies Products has been constantly on an increase in the market.

c. Threats, Risks & Concerns

Investors should read the Risk Factors mentioned in this Information Memorandum.

Over the next few years, competition in the industry is also expected to rise considerably, as a result of Global trends. To survive competition both polymer manufacturer and processors will need to adopt radically new methods and approaches to reduce costs, improve market and customer services and management performance. The international oil Prices have been constantly fluctuating leading to up and down in raw material prices. The threats/ risks for the industry relate to stiff competition throughout and lesser margins. The same can gradually overcome by the industry in view of the wide usage of the PP products and also growing of demand with new technologies to reduce costs to become more competitive.

d. Segment wise performance

The segment wise performance is not applicable as the company has only one segment.

e. Outlook

The Company is expecting a growth rate as well as stabilization of production of PP Disposable wares and reaches optimum capacity utilization. The company is expecting high growth rate in this area.

f. Discussion on financial performance with respect to operational performance

During the year under review the company has achieved a turnover of 2013.44 lakhs as against 302.10 lakhs in the previous year. During the Year the companys Net Profit before tax of 20.35 lakhs as against a profit of 16.61 lakhs in the previous year.

g. Internal Control system and their adequacy

The Company has an internal control system commensurate with the size and nature of its business. There is a proper and adequate system of internal controls to ensure that all activities are monitored and controlled against unauthorized use or disposition of assets. The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

The Audit Committee supervises the checks and controls exercised, and reports any suggestions or deviation on a continuing basis. The authority and responsibility of every employee is defined, thus, leaving no space for any deviations.

h. Material developments in Human Resources/Industrial Relation front, including number of people employed

The focus is on capability development, performance management and employee engagement. This is expected to improve cost competitiveness through greater levels of employee participation, commitment and involvement. The Company recognizes the importance and contribution of its employees to the growth and development of the Company. The Company continued to maintain cordial relations with employees and staff. The Company has 8

II. Financial /operational performance: Sources of Funds 1. Share capital

The Company has only one class of shares- equity shares of par value Rs. 10/- each. Our Authorised share capital is Rs. 5,00,00,000 (50,00,000 shares of Rs. 10/- each) and issued and paid-up capital is Rs.3,07,75,000( 30,77,500 shares of Rs. 10/- each)

2. Reserves and Surplus

At the beginning of the year the company has Reserves as follows:

Share Premium Nil, General Reserve Nil and debit balance of Profit and Loss Account of (Rs. 60,02,331/-.) and at the end it was (Rs. 39,66,590/-.)

Application of Funds 3. Fixed Assets

During the year the company did not incur any capital expenditure.

5. Deferred taxes – Assets and Liabilities

The Company has Deferred Tax Liability (Net) amounting to Rs. 2,50,366/- as against a liability of Rs. 42,046/- in previous year, attributable to difference between depreciation as per companies act 2013 and Income Tax Act- 1961

6.Trade Receivables

During the year the company has trade receivables of Rs. 2,60,46,127/- as against Rs 1,47,43,307/- in previous year.


During the year the company has inventories are Rs. 1,91,28,203/- as against of Rs. 2,02,88,844/- in previous year.

8.Cash and Cash Equivalents

The opening balance of cash and cash equivalents as at the beginning of the year is Rs 3,20,686/-. The closing balance of Cash and Cash Equivalents is Rs 2,31,383/- held as cash, balances in current account and in deposit accounts.

9. Liabilities

The company has Rs. 3,26,07,179/- as long term liabilities as on 31st March, 2020. 10. Trade Payables

Trade payables at the beginning of the year were at Rs. 54,23,020/-.and at the end of the year were Rs. 1,57,98,113/-.

11. Provisions

During the year the company has provisions of Rs 2,03,910/- as against Rs 3,34,981/- in previous year.

III . Results of Operations

1. Income

The Company has generated income from business operations of Rs. 20,13,44,521/-.

2. Other Income- Rs. 19,46,743/-

Other income of the company includes interest income, commotion and sundry balances.

3. Net Profit

The company had reported a Net Profit of Rs. 20,35,741/- as against a Net Profit of Rs 16,61,660/- in the previous period.

4. EPS after Exceptions

Positive Earnings per share for the year was 0.66 as against 0.54 in the previous year.

5. Liquidity

The Company has adequate working capital and is not depended on external resources for filling up of the gap. The company may consider to raising further equity to improve the working capital position and also for future business requirements.

6. Related Party Transactions

Transactions with related parties have been made at an arms length basis and hence are not prejudicial to the interest of the company. These have been discussed in detail in Notes on Accounts to the standalone financial statements in this Annual report.

IV. Opportunities and Threats

- Our Strengths

- Our Strategy

- Our Competition

We compete with small and midsized companies in Government and large corporations in Manufacturing Sector.

V. Outlook, Risks & Concerns

- Our revenue and expenses are difficult to predict and can vary significantly from period to period.

- Our success largely depend upon retaining skilled technology professionals and our ability to hire, motivate and retain them.

- We are a company in mid segment space and may not be providing adequate confidence to companies / customers for long term contracts.

- We may not be able to sustain the working capital cycles.

- Our success depends on our management team and key personnel and our ability to attract and retain them.

- Our failures to complete fixed price and fixed time frame contracts or transaction based pricing contracts within budget and on time may adversely affect our profitability.

- We may not be able to provide end to end business solutions for our clients which could lead to clients discontinuing their work with us which in turn could impact our business.

VI. Internal Control Systems and their adequacies

The CEO and CFO certification provided in the Annual report discusses the adequacy of our internal control systems and procedures.

VII. Material Developments in Human Resources / industrial relations, number of people employed.

Human Capital

As at March 31st 2020, the company employed about 8 employees which includes, trainees, process executives and administration.

Risk Management Framework:

In todays economic environment, Risk Management is a very important part of business. The main aim of risk management is to identify, monitor and take precautionary measures in respect of the events that may pose risks for the business. Your Companys Board believes that to ensure sustainable business growth with stability of affairs and operations of the Company, periodical review of various risks having a bearing on the business and operations is vital to proactively manage uncertainty and changes in the internal and external environment to limit negative impacts and capitalize on opportunities. Further, it is also belief of your management that Risk Management Framework enables a systematic approach to risk identification, leverage of any opportunities and provides treatment strategies to manage, transfer and avoid or minimize the impact of the risks.

Keeping in view of the above, your Companys risk management is embedded in the continuous business processes and as a part of review of business and operations, your Board with the help of the management periodically reviews various risks associated with the business and products of the Company and considers appropriate risk mitigation process. However there are certain risks which cannot be avoided but the impact can only be minimized.

The risks and concerns associated with each segment of your companys business are discussed while reviewing segment-wise Management and Discussion Analysis. The other risks that the management reviews also include:

a. Industry & Services Risk: this includes Economic risks like demand and supply chain, Profitability, Gestation period etc.; Services risk like infrastructure facilities; Market risk like consumer preferences and distribution channel etc.; Business dynamics like inflation/deflation etc.; Competition risks like cost effectiveness

b. Management and Operational Risk: this includes Risks to Property; Clear and well defined work process; changes in technology / up gradation; R&D Risks; Agency network Risks; Personnel & labour turnover Risk; Environmental and Pollution Control Regulations etc.; Locational benefits near metros

c. Market Risk: this includes Raw Material rates; Quantities, quality, suppliers, lead time, interest rates risk and forex risk.

d. Political Risk: this includes Elections; War risk; Country/Area Risk; Insurance risk like Fire, strikes, riots and civil commotion, marine risk, cargo risk etc.; Fiscal/Monetary Policy Risk including Taxation risk.

e. Credit Risk: this includes Creditworthiness; Risk in settlement of dues by clients and Provisions for doubtful and bad debts

f. Liquidity Risk: this includes risks like Financial solvency and liquidity; Borrowing limits, delays; Cash/Reserve management risks and Tax risks

g. Disaster Risk this includes Natural calamities like fires, floods, earthquakes etc.; Man made risk factors arising under the Factories Act, Mines Act etc.; Risk of failure of effective disaster Management plans formulated by the Company.

h. System Risk this includes System capacities; System reliability; Obsolescence risk; Data Integrity risk & Co- ordination and Interface risk.

i. Legal Risk: this includes Contract risk; Contractual liability; Frauds; Judicial Risk and Insurance risk

h. Government Policy: This includes Exemptions, import licenses, income tax and sales tax holidays, subsidies, tax benefits etc. Further your Board has constituted a Risk Management Committee, inter-alia, to monitor and review the risk management framework

Sd/- Sd/-
Manoj Kumar Dugar Renu M Dugar
Chairman & Managing Director Director
DIN: 00352733 DIN: 00235675