CIAN Agro Industries & Infrastructure Ltd Management Discussions.

OVERVIEW

This Management Discussion & Analysis report presents the key performance highlights of the year 2018-19 pertaining to the Companys business. This review should be read in conjunction with the Integrated Report presented in the earlier sections of this Annual Report, the Companys financial statements, the schedules and notes thereto and the other information included elsewhere in this Annual Report. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS), complying with the requirements of the Companys Act 2013 and the guidelines issued by Securities and Exchange Board of India (SEBI).

Company Background

The Company is engaged in the processing of Soybean/ other oilseeds, marketing of edible oils in domestic market and deoiled cakes in domestic and international markets. The Company has a Solvent Extraction Plant & Refinery located at Village Kolari, Tahsil Chimur, Dist. Chandrapur (Maharashtra).

The Company has also started to establish itself into Healthcare & Hygiene segment by sanitary napkins of various range under own its brand name of "Klaren".

The Company has strengthened its infrastructure sector and through its subsidiary Company, Jairam Infraventure Private Limited aims to become one of the prominent manufacturers and suppliers of an extensive range of Aluminum Sheets in Central India.

The Company has also diversified into Home-care products under the brand name "NEU" which are effective as well as ecofriendly, based on Sugar Polymers.

Current Scenario

Fast moving consumer goods (FMCG) are the 4th largest sector in the Indian economy. There are three main segments in the sector - food and beverages which accounts for 19 per cent of the sector, healthcare which accounts for 31 per cent and household and personal care which accounts for the remaining 50 per cent.

The sector is projected to grow 11-12 per cent in 2020. It witnessed growth of 16.5 per cent in value terms between September-December 2018; supported by moderate inflation, increase in private consumption and rural income. It is forecasted to grow at 12-13 per cent between April- June 2019. FMCGs urban segment is expected to have a steady revenue growth at 8 per cent in FY19-20 and the rural segment is forecasted to contribute 15-16 per cent of total income in FY 19-20.

Growing awareness, easier access, and changing lifestyles are the key growth drivers for the consumer market. The focus on agriculture, MSMEs, education, healthcare, infrastructure and tax rebate under the Union Budget 2019-20 is expected to directly impact the FMCG sector. These initiatives are expected to increase the disposable income in the hands of the common people, especially in the rural area, which will be beneficial for the sector.

Spices, Infrastructure Sector, Home care products and Healthcare & Hygiene Sector has witnessed strong expansion into existing and new regions of the country. The Company is now a gradually evolving into a Fast Moving Consumer Goods distributor company.

Industry Structure & Developments

The FMCG Industry continues to see robust growth as a consequence of continued economic progress. We expect therefore that the Foods business which is the primary focus of your Company will continue to show strong momentum driven by new consumers entering these categories.

Key to capturing the benefits of this economic growth will be on the one hand distribution capabilities to reach out to consumers across the breadth of India and on the other a low cost structure in terms of Capital and Operating Costs. This will enable Companies to benefit from the scale of acquiring millions of consumers at the entry level while also using the scale to deliver innovation to improve Margin.

Opportunities

The continued growth of the FMCG market represents an enormous opportunity for a steady growth in Revenues and Profits.

To capture this opportunity, your Company has steadily built up a powerful portfolio by adding various variants in Spices range which are registering steady growth enabling your Company to maintain a Revenue CAGR of c 17% over the last decade. Going forward, the intention is to continue to grow the current businesses while accelerating growth through entry into new but related categories where we believe we have competitive advantage and a "right to win".

In the light of the financial turmoil in the developed countries and subsequent impact in India and more specifically in the Commodity prices your Company has taken steps to strengthen its position and seek out opportunities in adversity. The approach has been on containing costs and growing brands.

The Company has been taking measures to keep its brands relevant to the customers and also ensuring that they remain competitively priced. It is also exploring all possible avenues to reduce costs of inputs and raw materials without compromising on the quality of the product.

Threats & Challenges

For the FMCG industries especially for the edible oils division, the biggest challenges being faced are now are policy related. As edible oils are not governed by the antidumping regulation and with consumption far superseding domestic production, imports are a necessity in this industry. As a result of which margins of edible oil manufacturers and refiners are quite low. Your company is taking necessary steps to address this issue.

Business segments like Spices products and Healthcare products are highly competitive with several larger multi-national companies now present in India with world renowned brands. Competing for a piece of the pie will be an uphill battle, but it is one your company is well geared to take on.

Road Ahead

Rural consumption has increased, led by a combination of increasing incomes and higher aspiration levels; there is an increased demand for branded products in rural India. The rural FMCG market in India is expected to grow to US$ 220 billion by 2025 from US$ 23.6 billion in FY20. In FY20, FMCGs rural segment contributed an estimated 10 per cent of the total income and it is forecasted to contribute 15-16 per cent in FY 20.

On the other hand, with the share of unorganised market in the FMCG sector falling, the organised sector growth is expected to rise with increased level of brand consciousness, also augmented by the growth in modern retail.

Online portals are expected to play a key role for companies trying to enter the hinterlands. The Internet has contributed in a big way, facilitating a cheaper and more convenient means to increase a companys reach. It is estimated that 40 per cent of all FMCG consumption in India will be online by 2020. The online FMCG market is forecasted to reach US$ 45 billion in 2020 from US$ 20 billion in 2017.

Audit and Internal Controls

An extensive program of internal audit conducted by the internal audit team, reviewed by the Audit Committee, and requisite guidelines and procedures augment the internal controls. The internal control system is designed to ensure that financial and other records are reliable for preparing financial statements and other information. These procedures ensure that all transactions are properly reported and classified in the financial records.

Human Assets

Success of any organization depends upon the engagement and motivation levels of its employees. In Human Resources, our emphasis is to give autonomy to people at different levels and create a sense of ownership in order to unleash their potential

The Human Resources Department is playing an important role in achieving the overall business objectives by creating a vision, building capability amongst people and more importantly, with a view to motivating and retaining talent and providing growth opportunities for them in their respective work areas, identified talent has been given new challenges through engagement, mobility and special projects.

Forward Looking Statement-Cautionary Statement

Forward-looking statements in the Management Discussion and Analysis section are based on certain assumptions/ expectations of future events and are stated as required by applicable laws and regulations. Actual results could differ materially from those expressed or implied. Major factors that could make the difference to the Companys operations could be agro-climatic conditions, government policy, domestic & international market conditions and such other factors, which are beyond control of the management.

For and on behalf of the Board
Place: Nagpur
Date: 29th August 2019 Gouri Chandrayan
Chairperson
DIN:07143914