Kavit Industries Ltd Management Discussions.

The management of Kavit Industries Ltd. presents the analysis of the Company for the year ended on 31st March, 2019 and its outlook for the future. This outlook is based on assessment of the current business environment. It may vary due to future economic and other developments both in India and abroad. This

Management Discussion and Analysis ("MD & A") of Kavit Industries Ltd. for the year ended on 31st March, 2019 contains financial highlights but does not contain the complete financial statements of the Company. It should be read in conjunction with the Companys audited financial statements for the year ended on 31st March 2019.

Indian Economy and Business Outlook

The past year had seen a challenging growth for Indian economy. Since the launch of Goods and Services Tax (GST) in July 2017 and with changes in monetary policy at such scale, scope, and complexity, the transition unsurprisingly encountered challenges for the informal sector. Fiscal 2018-19 saw a GDP growth between 6.75 and 7.50 percent year on. Due to series of major reforms undertaken over the past year will allow real GDP growth to reach 6.90 percent this fiscal and will rise to 8.0 percent in 2019-20, thereby re-instating India as the world‘s largest growing major economy.

Overview of Indian Edible oil Industry

Indian edible oil industry is the worlds fourth-largest industry after USA, China and Brazil and accounts for around 9% of the worlds oil seed production. It is highly fragmented with extreme variation in the consumption pattern of Indian consumers of edible oil. The Indian edible oil industry continues to be underpenetrated and thereby holds immense business opportunities. Vegetable oil consumption has increased due to rise in overall household income, surging retail sector, increasing health awareness, growing population and increasing demand. In India, oilseeds are grown in nearly 26-27 million hectares. The consumption growth is rising by nearly 5.5 to 6.0% per annum. Palm Oil is consumed the most by lower income category of Indian society. Consumption of Palm oil in India is now nearly 45% of the total oil consumption followed by Soybean oil and Rapeseed oil. Also the Indian edible oil demand is quiet elastic and does reduce or increase to an extent with change in prices. Indias cooking oil imports rose about 10 per cent to 15.57. The central government allowed 100%

FDI in oil palm plantations which is one of the important steps in helping fill the gap of edible oil deficit in India. The alarming declines of Indian oilseeds production KAVIT INDUSTRIES LIMITED and crushing are going along with booming import demand for vegetable oils, have brought oil meal exports from India almost to a standstill.

ABOUT "KAVIT" EDIBLE OIL

The vision to be a leader in Edible Oil Industry commenced in the year 2016 by having Edible Oil segment of KAVIT INDUSTRIES LTD. Today the company stands strong as KAVIT INDUSTRIES LIMITED. In Business Market and the Brand is recalled as "KAVIT" across Indian Families. Making a mark the creative delegates of the company Mr. Jayesh Raichandbhai Thakkar have passionately adhered to the objective of making only world-class products and started the business with three firm pillars - Quality, Research and Integration on which they have successfully build the business empire which today produces 1550 M.T. refined oil per day with complete vertical integration. Marking one of the major milestones,

"KAVIT" became Indias renowned Edible Oil Company to get Food & Safety Quality Management Certification of ISO 22000:2005.

"KAVIT" is a well communicated and trusted edible oil brand in India. Its market positioning as balanced cooking oil, helped it attach with its consumers on the health and fitness ground and soon the brand became a household name across Gujarat. The company offers different types of edible oils to consumer market. To produce best quality edible oil, company has procured best available technology and machinery over the period of time. Knowledge, Technology and Process up-gradation has always enabled Kavit Industries to be a market leader in Edible

Oil segment. Kavit Industries Limited is one of those very few companies which have also invested in vertical integration to add a value of quality to all their end products. Company has its own manufacturing plants to manufacturer and packs Tins, Bottles, Jars. To serve Industrial Segment, Kavit Industries planning to offer export quality edible oil and its Derivatives across the Globe. The vision to make the brand "KAVIT" as a Star Export House and to make it as one of the largest exporters of India.

Risks and Concerns

In the coming decade, the main focus would be on enhancing efficiency and productivity, and on innovation, driven by changing customer demands. Price sensitivity of the Indian consumer, cost optimization needs of manufacturers and increasing focus on environmental concerns will drive critical changes in the market. Future strategies of the auto companies will have to focus on increased environmental safety concerns, rising fuel prices and cost-effectiveness in the rising market competition. Innovation has to focus on increasing efficiency and reducing emissions. Customer experience will be key factor to retain the existing ones and reach out to the new ones. After-sales service is an important aspect which will help in winning the loyalty of the consumer.

Forward Looking Statements

Investors are cautioned that statements in this management discussion and analysis describing your Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect your Companys operations include a downtrend in the automobile industry global or domestic or both, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relation and interest costs. The Company has processes to measure, monitor and improve environmental performance through various initiatives focusing on energy, water and waste. Water efficiency and conservation initiatives, rainwater harvesting systems, domestic sewage treatment and recycling facilities are a part of design in all its units towards becoming zero water discharge

Financial performance:

Financial performance of the Company detailed in the Boards Report.

Segment wise or product-wise performance:

Segment-wise detailed performance provided in the Notes to the financial statement.

Opportunities:

Edible oil market is increasing day by day but in todays time people are getting more and more conscious about being healthy so the Healthy Oil market has a great potential. Growing population, economic growth and rising disposable income will drive Indias vegetable oil consumption growth, which is expected to grow by three per cent annually to exceed 34 million tonnes by 2030. Increasing income, urbanisation, changing food habits and deeper penetration of processed foods will be key drivers of future consumption growth of edible oil in the country. Palm oil, soy oil and sunflower oil are expected to penetrate regional markets further in the future.

Threats:

Rainfall imbalance and price of raw materials are high threats for edible oil industries.

Human Resources/ Industrial Relations Front:

The Company is working on enhancing its competencies to take care of current and future business. Human Resource and Industrial Relations departments have developed systems and policies on recruitment, performance management, learning and development, and employee engagement. The high level of motivation of the employees and their identification with the company is the basis for the creation of a strong team, who continuously advance the innovative brands and superior technologies with their inventive talent and pioneering spirit. The training courses are evolved to internalize the principles of sustainable development and to uphold the Companys corporate culture based on fairness and team spirit.

INTERNAL CONTROL SYSTEMS AND ADEQUACY:

The Companys internal control policies are in line with its size and nature of operations and they provide assurance that all assets are safeguarded, transactions are authorised, recorded and reported properly following all applicable statutes, General Accepted Accounting Principles, companys Code of Conduct and corporate policies. The Company has an Audit Committee, which conducts audit in various functional areas as per audit plan approved by the Audit Committee. Audit planning and executions are oriented towards assessing the state of internal controls, making them stronger and addressing the risks in the functional areas of the Company and suggests improvements for strengthening them. Similarly, the Internal Auditors are also monitoring the Internal Control Systems.