Chandra Prabhu International Ltd Management Discussions.

FORWARD LOOKING STATEMENTS

Forward looking statements are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The Companys actual results, performance or achievements could thus differ materially from those projects in any such forward- looking statements. The Company assumes no responsibility to amends, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

Chandra Prabhu International Ltd. is a well known name in the trading of Coal and Synthetic Rubber for last many years. At CPIL, we acknowledge that the real value of any organization is determined by the value it delivers to its stakeholders. Across all our business and operations, we have been working towards achieving profitable growth in an ethical, environment friendly and socially responsible manner.

The Industry: opportunities & Threats.

During the Fiscal year 2018-19, The Indias Economy grew at an impressive 8.2 percent in the first quarter i.e 30 June of Financial Year 2018-19 on the back of a strong core performance and a healthy base. This is the highest growth in two years and strongest since the first quarter of Year 2016.

However, India continues to remain the fastest growing major economy in the world in 2018-19, despite a slight moderation in its GDP growth from 7.2 per cent in Year 2017-18 to 6.8 per cent in 2018-19. Indias growth of real GDP has been high with average growth of 7.5 per cent in the last 5 years (2014-15 onwards). The Indian economy grew at 6.8 per cent in 2018-19, thereby experiencing some moderation in growth when compared to the previous year.

Agriculture has shown a growth rate of 2.9 percent as against previous years growth rate of 5.0 per cent. The mining and quarrying sector on the other hand has shown a growth rate of 1.3 percent as against previous years growth rate of 5.1 percent and production of Rubber in the world was considered to be very unstable during the last few years. Comparatively, with the world India production of rubber is consistent at the rate of 6% per annum. The Industry is expected to grow at over 8% per annum in this decade.

The Company being trading Company, the activities of the Company can be broadly divided into three business segments viz Coal, Agro Food Products and Synthetic Rubbers.

Coal

Industry Outlook:-

Coal plays a vital role in meeting global energy needs and is critical to infrastructure development. 38% of the worlds electricity and 71% of the worlds steel is produced using coal. Coal is a global industry, with coal mined commercially in over 50 countries and used in over 70.

While India has ample domestic thermal coal supplies and its government has expressed a desire to end imports, continued reliance on thermal coal imports appears inevitable for the foreseeable future. First, the countrys planned shift to supercritical and ultra-supercritical power plants after Year 2017 favors continued dependency on high-quality coal imports needed to run those plants. Indian coal, which has high ash content and low calorific value, presents a challenge for efficient functioning of supercritical boilers. Second, Indias infrastructure for transporting coal from inland deposits to its two dozen coastal power stations remains poor. The share of Indias coastal-based power, which operates completely on imported coal, is expected to increase from the current 17% to 23% by 2030. Finally, state support of domestic coal production has historically been weak, and recent reforms have promoted port-to-rail connectivity, effectively paving the way for increased coal imports.

India is said to have coal reserves of up to 300 billion tones. India is expected to import up to 185 million tonnes of thermal coal in 2019, the head of thermal coal at consultancy Wood Mackenzie shared it that about 13 percent higher than its estimate for 2018.India was the worlds second largest producer of coal in 2017, the latest year for which data is available, according to the International Energy Agency (IEA). The country produced a tenth of the worlds coal, while China topped the list with 45% of global production. India was also the second largest coal importer, with a 16% share. China accounts for nearly half of global coal consumption, with Indias share at 13%.

Companys Performance:-

The company has performed well and out of total revenue of Rs. 9042.46 Lakhs, company has generated revenue of Rs. 6457.41 Lakhs for the financial year 2018-2019 i.e. 71.412% of revenue from coal segment has been attributed towards the total revenue of the company. Our company continues to perform well and exploit the available opportunities by effectively utilizing its resources.

Rubber

Industry Outlook:-

Indian rubber industry has been growing in along with the strength and importance, as a part of Indias burgeoning role in the global economy. The global rubber market is expected to grow at a CAGR of 4.66% during the period 2017-2021.

The prospect of growth is further enhanced by a boom in the vehicle industry, improving living standards of people and rapid over all industrialization.

Synthetic rubber is mostly used in the manufacture of tyres, besides in cycle tyres and tubes, footwear, belts and hoses, among other items. Consumption from the automotive sector is rising. Demand from the automotive sector is rising, and synthetic rubber finds usage in various automotive applications.

The Indian rubber consumption is mostly used in Automotive tyre sector( 50% consumption of all kind of rubber), Bicycles tyres and rubber( 15%),Footwear( 12%),Belts and hoses: 6% & Other Products: 10%

Challenges Ahead:

The major threats which can affect the company are as follows:

• Competition from domestic and international companies.

• Cheap imports from China

Demand in the rubber industry depends on economic growth and/or infrastructure development. Any slowdown in economic growth across region will impact the industrys fortune. With the government focus on GST, emission norms and safety standards, the automotive industry is likely to experience significant technology advancements over next 4-5 years.

Companys Performance:-

Our Company deals in trading of synthetic rubber , during the year under review the companys revenue from synthetic rubber was depressive as compared to Industry look. However, Company continue to strive hard despite of challenges faced and generated revenue amounting to Rs. 549.02 Lakhs i.e. 06.07% for the financial year ended as on 31 March, 2019.

Agro Food Products

Industry Outlook:-

Economic Survey indicated that the government was keen on doubling farmers income by 2022, for which it has launched several new initiatives that encompasses activities from seed to marketing. The Indian food industry is poised for huge growth, increasing its contribution to world food trade every year due to its immense potential for value addition, particularly within the food processing industry. The Indian food and grocery market is the worlds sixth largest, with retail contributing 70 per cent of the sales. The Indian food processing industry accounts for 32 per cent of the countrys total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. It contributes around 8.80 and 8.39 per cent of Gross Value Added (GVA) in Manufacturing and Agriculture respectively, 13 per cent of Indias exports and six per cent of total industrial investment.

India is principally an agricultural country. Agriculture, with its allied sectors, is unquestionably the largest livelihood provider in India. Most of the industries also depend upon the sector for their raw materials. Steady investments in technology development, irrigation infrastructure, emphasis on modern agricultural practices and provision of agricultural credit and subsidies are the major factors contributed to agriculture growth.

Threats

• Volatility in raw material prices

• Seasonality of crops.

Companys Performance:-

Company has performed well and generated revenue of Rs. 2036.03 Lakhs (22.52%) from its Agro Products mainly is pulses, red lentils etc. during the year under review and it indicates an increment in revenue from Agro based segment as compared to last year revenue for the financial year 2017-18.

Business Outlook and Overview:

The company has managed to achieve profit despite of the challenging environment. Chandra Prabhu International limiteds distribution network, marketing strategy and innovation in product manufacturing distinguish it from other player. Company believes in achieving higher level of economic productivity through diversification, technological upgrading and innovation.

Company believes that a highly diverse, inclusive and collaborative culture is the key ingredients to fuel faster growth. Company has maintained diversification by dealing in business of coal, synthetic rubber and agro foods and aims to exploit the opportunities available in different sector and which provides benefit to the company.

For and on behalf of the board of directors

Chandra Prabhu International Ltd.

Gajraj Jain Prakash Goyal
Chairman Cum Managing Director Director
DIN: 00049199 DIN : 02598736

Date : August 28, 2019

Place : New Delhi