Kakatiya Cement Sugar & Industries Ltd Management Discussions.

MANAGEMENT DISCUSSION AND ANALYSIS 2017

a) Industry Structure and Development:

The company has a well developed net work of dealers located in the states of Telengana and Andhra Pradesh and the company therefore is in a reasonably comfortable position in securing orders from its clients. Moreover, the developmental activities that have been adopted by the state of Telengana are expected to boost the opportunities for the company. On a similar note, the development of infrastructure and construction activities that are being carried out in the capital region of Andhra Pradesh might in all probability throw up lot of opportunities for the cement industry.

Good rainfall and availability of proper irrigation facilities will determine the fortunes of sugar industry, it being an agro-based industry.

The company produces power with bagasse as fuel when the sugar division is active during its crushing season. The company had earlier produced power with coal as an alternative fuel during the off-season of the sugar division upon receipt of approval from the government. Of late, the Government, as matter of policy, has not been permitting power entities to produce power with coal as an alternative fuel.

The company will however endeavour its best to obtain the approval from the Government for usage of coal as an alternative fuel for production of power during off-season in the sugar industry.

b) Opportunities and Threats:

The company is desirious of reaping the benefits of its well positioned dealer net work across the states of Telengana and Andhra Pradesh and therefore the company will make every effort to overcome the bottlenecks in achieving the targeted operations in Sugar and Power Divisions.

c) Segment or product-wise performance:

Segment-wise and product-wise performance has been furnished elsewhere in this Report.

d) Outlook:

Division-wise outlook has been furnished elsewhere in this Report.

e) Risks and concerns:

The Cement, Sugar and Power industries being core industries, there is no risk of product obsolescence or steep fall in demand by way of product substitution or otherwise and, therefore, your Directors do not foresee any major risks and concerns in the near future except as discussed elsewhere in this Report.

However the company shall make its best efforts to position the machinery in all the divisions in robust condition so as to keep the bottlenecks at bay.

f) Internal control systems and their adequacy:

As stated elsewhere in this Report, the Company has adequate internal control systems and the Reports of Internal Auditors are being placed before the Audit Committee and corrective measures, if any, are being taken care of by the Company. The Chief Financial Officer will monitor the Internal audit Reports and brief the Audit Committee in case any deficiency in the system is noticed.

g) Financial Performance with respect to operational performance:

This has been discussed elsewhere in this Report.

h) Human Resource Development and Industrial Relations:

The company believes that the quality of its employees is the key to success and is therefore committed to provide necessary human resource development and training opportunities to equip employees with additional skills to enable them to adapt to contemporary technological advancements.

Industrial Relations during the year continued to be cordial through effective communication, meetings and negotiations with the work force.

The Companys strength consists of 609 employees directly and indirectly as on 31st March 2017.

i) Corporate Social Responsibility:

In compliance with Section 134(3) (a) of the Companies Act, 2013 read with the Companies Corporate Social Responsibility

(CSR) policy Rules 2014, the company has established CSR Committee comprising of Shri K Venkat Rao as Chairperson, Shri P Veeraiah and Shri J S Rao as members. The committee is responsible for formulating and monitoring the CSR policy of the Company.

The annual report of CSR activities forms part of this Report. (Annexure-5)

PARTICULRS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013.

There are no loans, guarantees or investments made or given under Section 186 of the Companies Act, 2013.

CAUTIONARY STATEMENT

Statements in this "Management Discussion & Analysis" may be considered to be "forward looking statements" within the meaning of applicable securities Laws or Regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, increased installed capacity, finished goods prices, raw material availability and prices, cyclical demand and pricing in the Companys markets, changes in Government Regulations, tax regimes besides other factors such as litigations and labour negotiations.

ACKNOWLEDGEMENT

Your Directors take this opportunity to place on record their sincere thanks to the Banks, the Director of Sugar and Cane Commissioner, the Transco Authorities of Telangana and Andhra Pradesh States and to various departments of the Central Government and the State Governments of Telangana and Andhra Pradesh for their support to the Industry.

The Directors thank the entire net work of dealers who have enabled the Company to achieve the desired volumes despite the market being sluggish for a considerable period during the year under review.

The Directors record their appreciation for committed support to the Company by all the employees at all levels throughout the year under reference.

The Directors record their gratitude to all the Shareholders who have been reposing confidence in the Company and its Management.

By order of the Board
for Kakatiya Cement Sugar & Industries Limited
P Veeraiah
Chairman and
Place : Hyderabad Managing Director
Date : 26th May, 2017 DIN : 00276769