Hexa Tradex Ltd Management Discussions.

OVERVIEW - FINANCIAL PERFORMANCE Company overview

The main object of Hexa Tradex Limited is to carry on the business, in India and abroad, of dealer, trader, import and export agents, representatives, contractors, buying and selling agents, brokers, importers, buyers, sellers, exporters and to buy, sell, or otherwise trade and deal in goods, produce, articles and merchandise of all types, on a wholesale cash and carry basis, including minerals and metals, stainless and special steels, alloys and ferrous, non-ferrous metals, auto parts, tools and implements, dies jigs, steel pipes and tubes and pipe

ttings, iron and steel products, cast iron, steel and tubular structural, scrap, tubes and allied products, chemicals and petrochemicals, capital goods, household articles; and general merchandise, house-hold and groceries items such as packaged food items, fruits, vegetables, toiletries and electronic items, electrical appliances, general merchandise, apparels, accessories, stationery items, over the counter drugs, home and officefurnishing, beauty products.

OUTLOOK

The Global Economy

The COVID-19 virus has spread with alarming speed, infecting millions and bringing economic activity to a near-standstill, with countries imposing tight restrictions on movement, to soften the curve. The heavy toll on health and human lives has led to the largest economic shock the world has experienced in decades.

As per a publication produced by the International

Monetary Fund (IMF) in June 2020, providing an update on the global economic outlook, global growth is projected at - 4.9 percent during 2020. The COVID-19 pandemic has more severely impacted economies in the first half of 2020 than anticipated, and the recovery is projected to be slower than in the previous forecast. In 2021, global growth is projected to stand at 5.4 percent.

This pandemic is a global public health crisis without precedent in living memory. In order to contain the spread of the virus and save lives, most governments throughout the world have imposed stringent containment measures, although some have not entirely succeeded. Economic activity across several sectors, such as travel and tourism, hospitality, etc are at an all-time low. This has resulted in short term economic disruption and tighter financial conditions.

Future economic trends appear uncertain. Recovery is likely to be gradual and could be interrupted by another outbreak, if containment measures prove ine ective.

In addition to the pandemic, world trade has been impacted by nationalism in various countries, a trade war between USA and China, and trade protective measures taken by multiple governments. An increasing number of countries are using non-tari measures to control or restrict import, in order to support local industry or curtail imports from targeted trade partners for muscle exing.

The Indian Economy

At the beginning of the year 2021, India was projected to follow a steady and strong recovery rate, having adapted to the new normal following the first wave of the COVID-19 pandemic. According to the IMF, the country was expected to grow by 12.5 % during 2021-22, a higher growth rate than the single digit growth estimated for several of the advanced countries. However, the second wave has thrown this recovery o track, with the nation turning its focus on improving its health infrastructure and strengthening the vaccination drive across rural and urban India and all sections of society.

The pandemic ended up impacting the Indian economy with more severity than ever predicted. This, in spite of the governments strategy of dealing with the pandemic based on the economys many inherent vulnerabilities such as high population density and the considerable size of the aging population (one of the largest in the world).

The lockdown during the first wave that came into effect in March 2020 offered a much-needed opportunity to step up medical testing and enhance the existing health infrastructure. The first quarter of the Financial Year 2020-21 witnessed a 23.9% contraction in the GDP. With the V-shaped recovery in the second quarter, the decline moderated to 7.5%. Overall, the Indian economy was expected to have contracted by 8% in Financial Year 2020-21.

However, the second wave and the subsequent lockdowns in several states threw a spanner in the recovery process. As a result, both demand and supply have been impacted, the labour market has plummeted, disposable incomes shrunk and businesses adopting cost optimisation measures to cope with the near-collapse circumstances that the pandemic has posed.

In order to remedy the situation, the Government of India has shifted gears from a consumption-led growth to an investment-led economic revival, through a massive infrastructure push. The considerable budget allocation to infrastructure in the Union Budget 2021-22 is estimated to uplift the economy.

While there has been a visible decline in consumption due to the new trend of discretionary spend and precautionary savings in the majority of the population, India remains a favourite destination of foreign investors attracting record FDI in flows of an estimated US$81 billion in FY 2020-21.

Micro, Small and Medium-sized enterprises have been acutely affected by the crisis, resulting in a sharp hike in unemployment and lack of capital resources. On the other hand, the rural economy has thrived based on a steady agricultural growth and a fruitful monsoon. In order to lighten the burden, the Reserve Bank of India has adopted various liquidity measures to reduce interest rates, with the aim of boosting the Indian economy, and the rest depends on how effectively fiscal measures are implemented.

Outlook

The economy seems to be in the throes of uncertainty. The pandemic has caused widespread disruptions across most sectors and industries. While the lockdown took a toll, with the opening up of the economy once again following the decline of the second wave, various economic parameters are improving, though at a slower pace. There are concentrated damage control efforts being made despite limitations on resources and policies, and it is estimated that within a span of two years, most sectors would have recovered. However, some sectors of the economy will take longer and several may not be able to reach pre-pandemic levels. The pandemic has altered and continues to alter peoples work habits and culture, causing businesses and establishments to reorient their activities and products to meet new aspirations and circumstances of their customers and employees.

Opportunities and Challenges

A large customer base, slow developing economy, vast middle class section of society and a growing population of youngster with spending power, sets India as an important target for any establishment seeking a market for its product and services. Several multinational establishments consider India as a prominent market that contributes significantly to their top line and bottom line reported financial gures.

However, the pandemic has brought on its share of financial and liquidity challenges for small and medium enterprises, in terms of availability of working capital nancing. This is where Hexa Tradex is exploring the opportunity to trade in the open market, beyond the O.P. Jindal Group.

Challenges

Trading businesses are associated with various risks and challenges which can be faced on account of domestic and global economic scenarios, geo-political conditions, competition, trade protection measures by various economies, and more. The success of any business always depends upon its ability to face challenges and survive. Towards this end, Hexa Tradex consistently works on developing various systems and strategies, while applying latest technologies and arti cial intelligence to face risks and challenges.

Risk Management

There is a considerable risk involved in trading and

financing businesses. Risk is defined as the likelihood of an event and its consequences. Risk management is the practice of using processes, methods and tools for managing these risks. Hexa Tradex believes that risk management is not a one-o exercise.

Continuous monitoring and reviewing are crucial for the success of the risk management approach, which ensures that risks have been correctly identified and assessed, and the right controls put in place. It is also a way to learn from experience and make improvements.

Hexa Tradex has identified the following major risks to its business:

a) Strategic Risk: Trading businesses are highly competitive in nature.

b) Commercial Risks: Failure of the vendors or customers poses a risk to the business.

c) Financial Risks: Trading businesses are also exposed to financial risks because of non or delayed payments by customers. Increase in financial costs also poses a risk, which can impact the margins and pro tability significantly. Hexa Tradex takes into account the pro tability on a case-to-case basis. However, it does not compromise significantly on the credit risk, unless the transaction is with regular customers.

d) Geo Political Risks: Cross-border trading transactions are subject to political and global economic risks.

Hexa Tradex upholds an effective strategy and system to safeguard itself against a wide range of risks. The management of the company considers various elements, analysis the risks involved and then takes effective steps to reduce the risk against the business of the company. The management system is reviewed periodically, and suitable changes are made depending on the risks prevailing in the market at that time.

Financial Performance

The companys total revenue from operations, for the year under review isRs.0.92 lakhs as compared to

Rs.1.44 lakhs in the previous year. The Company has su ered loss of Rs.137.64 lakhs for the year under review, as compared to loss of Rs.217.00 lakhs in the previous year. The Companys reserve & Surplus increased to Rs.1,15,092.48 lakhs as at March 31, 2021 as compared to Rs.24,797.54 lakhs as at Mar 31, 2020. The increase is due to recognition of gain of Rs.90,432.58 lakhs (net of taxes) in Other Comprehensive Income (OCI) on account of fair valuation of investments (Quoted and Unquoted) of

Rs.90,432.14 lakhs (net of taxes) for the year under review. As of March 31, 2021 the net worth of the company increased to 1,16,197.39 lakhs as comparison to 25,902.45 lakhs as of March 31, 2020.

Adequacy of Internal Control System

Hexa Tradex has a reliable and adequate system of internal control to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition, and that all transactions are authorised, recorded and reported correctly. The company has an internal audit and control department to monitor, review and update internal controls on a regular basis. It has put into place a well-de ned organisational structure, authority levels and internal guidelines for conducting business transactions. The internal audit and control department conduct audits of all key business areas, as per the pre-drawn audit plan. The audit plan is approved by the audit committee, which regularly reviews compliances to the plan. All audit observations and follow up actions are reported to the committee. It periodically reviews audit plans, observations and recommendations of the audit report with reference to significant risk areas and adequacy of internal controls.

Human Resources and Industrial Relations

Recruitment and retention of human resources is always a challenge in growing business organisations. The business as of now involves a limited number of professionals. However, keeping with the companys growth, there may be a requirement to hire additional talent with the requisite experience and quali cations.

Cautionary Statement

The statement in this Management Discussion and Analysis report, describing the Hexa Tradexs outlook, projections, estimates, expectations or predictions may be a "forward looking statement" within the meaning of applicable securities, laws or regulations. Actual results could differ materially from those expressed or implied.

CERTIFICATE REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE

To

The Members of Hexa Tradex Limited

We have examined the compliance of the conditions of the Corporate Governance by Hexa Tradex Limited

("the Company") for the Financial Year ended 31st March, 2021, as stipulated in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46(2) and para C, D and E of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [hereinafter referred to as "Listing Regulations"]. The compliance of the conditions of the Corporate Governance is the responsibility of the Management of the Company. Our examination was limited to review of the procedures and implementation thereof, adopted by the Company for ensuring compliance with the conditions of Corporate Governance as stipulated in the said

Regulations. It is neither audit nor an expression of the opinion on the Financial Statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us and the representations made by the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned "Listing Regulations" as applicable during the year ended 31st March, 2021.

We further state that such compliance is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the a airs of the Company.

For N.C. AGGARWAL & CO.
Chartered Accountants
Firm Registration No. 003273N
G.K. Aggarwal
C. NO. NCP/2021-22/116 Partner
Place : New Delhi M.No.086622
Dated : 10th August, 2020 UDIN: 21086622AAABLL2006