Grandeur Products Ltd Management Discussions.

A. CAUTIONARY STATEMENT:

The statements in the "Management Discussion and Analysis Report" describe your Companys objectives, projections, expectations, estimates or forecasts within the meaning of the applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied herein due to risks and uncertainties. Important factors that could influence the Companys operations, inter alia, input availability and prices, changes in government regulations, tax laws, economic, political developments within the country and other factors such as litigations and industrial relations.

B. OVERVIEW

After registering GDP growth of over 7 per cent for the third year in succession in 2016-17, the Indian economy is headed for somewhat slower growth, estimated to be 6.5 per cent in 2017- 18, as per first Advance Estimates released by Central Statistics Office. This is slightly lower than the range of 6.5 per cent to 6.75 per cent being currently projected based on recent developments. Even with this lower growth for 2017-18, GDP growth has averaged 7.3 per cent for the period from 2014-15 to 2017-18, which is the highest among the major economies of the world. In addition to the introduction of GST, the year also witnessed significant steps being undertaken towards resolution of problems associated with non-performing assets of the banks, further liberalization of FDI, etc., thus strengthening the momentum of reforms.

At the sectoral level, agriculture and allied activities are estimated to have registered a moderate growth rate of 3.4% for the last fiscal. Agriculture is the primary source of livelihood for about 58 per cent of Indias population. Gross Value Added by agriculture, forestry and fishing is estimated at Rs 17.67 trillion (US$ 274.23 billion) in FY18.

C. INDUSTRY STRUCTURE AND DEVELoPMENT

During 2017-18 crop year, food grain production is estimated at 279.51 million tonnes, as per third advance estimates while rice and wheat production in the country is estimated at 111.52 MT and 98.61 MT, respectively in the same period. Milk production was estimated at 165.4 million tonnes during FY17. Total area in India, sown with rabi crops reached 64.29 million hectares in February 2018.India is the second largest fruit producer in the world. Production of horticulture crops is estimated at record 307.16 million tonnes (MT) in 2017-18 as per second advance estimates.

Total agricultural exports from India grew at a CAGR of 16.45 per cent over FY10-18 to reach US$ 38.21 billion in FY18. In April-May 2018 agriculture exports were US$ 6.43 billion. India is the largest producer, consumer and exporter of spices and spice products. Spice exports from India reached US$ 3.1 billion in 2017-18. Tea exports from India reached a 36 year high of 240.68 million kgs in CY 2017 while coffee exports reached record 395,000 tonnes in 2017-18.

D. OUTLOOK

The size, diversity and the overall steady growth of the Seed industry in India offer great potential for the company to proactively adopt strategies to sustain leadership position in the Industry. Also, the company is focused on strengthening the front end and back end business activities with a view to have better visibility of end products in the market place across the spectrum and sustainable sourcing and origination capabilities to capture the value chain. The focus is also targeted towards achieving continuous improvement in products, processes and service offerings to serve our customers. The company is in the processing of adding businesses with diversification to support growth strategy, leverage upstream and downstream strengths and sustain presence in agriculture segments, within the overall product portfolio in agriculture sector.

Traditionally, India has been an agrarian economy with livelihood of over 58% of the population still dependent on agriculture despite having just about 20% share in total gross value added (GVA) in FY17 (at current prices). Due to rising contribution from the food processing segment, the Indian food industry is expected to grow at a faster clip with enormous potential through value addition. Indian food processing segment accounts for over 32% of the total food market enjoying higher growth rate. Globally, India ranks sixth in domestic food and grocery market which is dominated by retail.

E. FINANCIAL REVIEW

During the financial year, your Company posted a net loss of Rs. 32.10 Lakhs due to the said uncertain market condition. The Company is taking steps to improve the Companys performance and increase the profitability in the future.The key highlights of the Standalone and Consolidated Financials for the Financial Year ended March 31,2018 are as under:

Particulars Standalone Consolidated
Total Income 71,88,537 11,80,32,452
Profit before Taxation (43,22,738) (3,49,39,040)
Provision for Taxation - 4,29,959
Profit After Tax (32,10,300) (3,25,91,389)

F. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate and appropriate systems of internal controls commensurate with its size and the nature of its operations and these have broadly withstood the test of time. The systems have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information complying with applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorizations and ensuring compliance of corporate policies.

G. OPPORTUNITIES AND THREATS

Your Company has acquired Tierra Agrotech Private Limited (TAPL) which is established in year 2013 as a technology focus agriculture company. It is engaged in the business of sales, marketing and distribution of Seeds. Currently TAPL is one of the germplasm enriched company in the country, particularly in cotton after acquisition of Monsantos India cotton business and Dupont - Pioneers Cotton company Xylem. Your Company will continue to focus on improving the market share present products as well as in launching new products. Your Companys ability to increase sales will be strengthened by continued focus on offering a wide range of innovative products which will help in gaining market share.

India is expected to achieve the ambitious goal of doubling farm income by 2022. The agriculture sector in India is expected to generate better momentum in the next few years due to increased investments in agricultural infrastructure such as irrigation facilities, warehousing and cold storage. Furthermore, the growing use of genetically modified crops will likely improve the yield for Indian farmers. India is expected to be selfsufficient in pulses in the coming few years due to concerted efforts of scientists to get early-maturing varieties of pulses and the increase in minimum support price.

Rising global population, demographic shifts causing urbanization, increasing demand for food grain, stagnated agricultural land, marginally improving arable land & irrigated land, and depleting water table remain cause of concern for feeding the undernourished and increasing population. Except for the developed countries, open pollinated (OP) seeds are used by farmers which lower the productivity as well as quality of the crop. Hence, requirement of quality seeds with characteristics such as suitable for different agro climatic conditions, yield improvement, quality improvement etc. are quintessential. We believe that the rising demand for quality food grain to remain a significant growth driver for seeds sector globally.

H. RISKS AND CONCERNS

The performance of the seed industry is heavily dependent on monsoons, pest and disease incidences on crops. Major fluctuations in total rainfall and its distribution affect the crop acreages and overall productivity and have a direct correlation with sales. Over the period industry has become more fragmented which may Affect Companys profitability. Strong support produce prices and better availability of credit will ease the pressure on the farming community. Tightening regulations can be looked upon as an opportunity by committed enterprises.

Water scarcity has also become a growing issue as water is utilized for potable use and less water is available for farming. Water stress is and will be driven by degeneration of water table caused by usage, shifts in demand for water, and variation in availability of water resources due to climatic changes. During past few years the rate of expansion of area under irrigation is slowing down and it will be imperative to increase area under irrigation to reduce the usage of water by optimally utilizing the natural resource.

I. HUMAN RESOURCES

People are the key assets that are instrumental in driving the companys performance year on year. Their passion, commitment, sense of ownership and team work has enabled the Company to grow even in unpredictable and uncertain environment. The Company strives to offer a positive, supportive, open and high performance work culture where innovation and risk taking is encouraged.

Further, your Company would like to sincerely appreciate the valuable contribution and support of employees towards the performance and growth of the Company.

For and on behalf of the Board of Directors
sd/-
Vijay Kumar Deekonda
Chairman & Whole Time Director
(DIN:06991267)
Date: 5th September, 2018
Place: Hyderabad