Claro India Ltd Management Discussions.

CLARO INDIA LIMITED ANNUAL REPORT 2009-2010 MANAGEMENT DISCUSSION AND ANALYSIS 1. INDUSTRY STRUCTURE AND DEVELOPMENTS: Regular production and sales of PF Resins liquid and powder have been established. However, due to various reasons including disadvantages of VAT benefits and higher Freight costs, our sales volumes have been affected in the all India market. The prices of inputs this year has steadily gone up and corresponding increase in the prices a of finished products were not readily possible from the customers. However, there has been steady progress in the development of bringing in new customers for the Resins. Competition from Import with much lesser customs duty has affected sales volume of Paraformaldehyde. However, regular customers continued to take the product. 2. OPPORTUNITIES AND THREATS: Presently, there is a good boom for Automobile Sector and Foundries in turn are also showing good progress. The demand for our products suitable for Foundaries, Brake Linings, Abrasives etc, would very much improve in the future. Due to locational disadvantages and tax benefit constraints, prices of products had suffered in the competition. 3. PRODUCT WISE PERFORMANCE: After establishing the products, namely Phenolic, liquid and powder resins, concentration was given to choosing proper customer profiles and this would affect comparative performance. However this strategy would benefit in the future. 4. OUTLOOK: Outlook for phenolic resin is bright. It may also require increasing the production capacity to meet the demand as expected, in view of the bright future for automobile sector. 5. RISK & CONCERNS: The high fluctuations in the input prices, different tax rates of sales tax, locational disadvantageous for raw materials and finished products, long approval times for validation of products and highly credit oriented market are risk factors to he considered. 6. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY: The company follows a systematic and adequate system of internal control in all areas of its operation. The company also has appointed the Internal auditors, a firm of chartered accountants, with periodic audit systems with regular reports, corrective measures etc. The company is under the process of obtaining ISO 9001 - 2000 Certificate for all its manufacturing and selling activities, confirming its systematic way of working. 7. MATERIAL DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS: Employee relations remained very satisfactory through out the year. Various steps are being taken for training the employees to improve their levels in all respect. 8. CAUTIONARY STATEMENT: Statements in this Management discussion and analysis, describing the companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied. On behalf of the Board of Directors Sd/- Sd/- Place : Chennai R.L. BIYANI N. MAHADEVAN Date : 13.08.2010 Director Director