Kothari Industrial Corporation Ltd Management Discussions.

Your Directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31,2019.

1. INDUSTRY STRUCTURE, DEVELOPMENT: India is the third largest producer and consumer of mineral fertiliser globally. Over the years, the Indian fertiliser industry has grown significantly on the back of favourable demand, governments support and increasing agricultural output. Presently, the Government is actively focusing on addressing balanced crop nutrition and improving soil health. During the period under the review, the Company had been operating in Fertilizers activityi.e manufacturing of Fertilizers product. The Fertilizers industry has always been an important part of peoples lives in India. The fertilizers industry in India is one of the oldest manufacturing sectors in the country and is currently its largest.

2. OPPORTUNITIES & THREATS: Governments vision to double farmers income by 2022 is likely to increase agri inputs consumption. Improved awareness about soil health and sustainable practices to promote balanced organic fertilizer. Central and State governments support towards drip and microirrigation adoption to improve the resource use efficiency and promote water soluble fertiliser usage. The Government is committed to encourage the healthy growth of Capital Market for development of the Economy.

3. SEGMENT-WISE PERFORMANCE: The Companys main business activity is trading of Fertilizers product and its related activities which fall under two reportable segments. The company has rentals income on its property leased out to various tenants subsequent to the close of the financial year. Major portion of the companys rentable space have been parted pursuant to the approval of the shareholders at the Extra-ordinary General Meeting held on 26th February 2019. The rental income is likely to be significantly reduced going forward.

The Company has majorly focused on quality and production. During the year, the Company has recorded a turnover of Rs. 1926.93 Lacs as compared to Rs. 1,845.75 Lacs in the previous year.

4. OUTLOOK: The Company continues to explore the possibilities of expansion and will make the necessary investments when attractive opportunities arise. Company will continue to focus on improving the quality of customer engagement, creating new infrastructure & strengthening existing operations, promoting a safe work environment, enabling culture for happy and satisfied employees, thereby enhancing its stakeholders value creation. Overall, with a normal monsoon expectation and strengthened business processes, KICL expects to sustain its growth momentum in 2019-20. The company is exploring other significant business opportunities as part of diversification scheme which would generate financial outlay and the profitability of the company during the rest of the current financial year 2019-20.

5. RISK & CONCERNS: Risk management is a very important part of the Companys business policy. Risk Management structure spans across different levels and the Company, continuously identifies, classifies and formulates mitigation measures. The key risk management practices include risk assessment, measurement, monitoring, reporting, mitigation actions and integration with strategy and business planning. The Company has a robust Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Companys competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments. The Company has identified various risks and also has mitigation plans for each risk identified.

The risks associated with the Companys businesses are broadly classified into 4 major categories:

Economic Risk: Due to downturn or adverse political situations which may negatively impact on the Companys organizational objectives.

Regulatory Risk: Due to inadequate compliance to regulations, contractual obligations or any other statutory violations, this may lead to litigations and loss of reputation.

Financial Risk: Due to major fluctuations in currency market, rise in interest rates and possible non recovery of debts, this could impact the organization.

HR & Legal Risk: Due to attrition of any Key Managerial Person or disruptionof operations due to any other human resources issue.

6. INTERNAL CONTROL SYSTEMS & THEIR

ADEQUEACY : Company has adequate internal controls consistent with the nature of business and size of the operations, to effectively provide for safety of its assets, reliability of financial transactions with adequate checks and balances, adherence to applicable statutes, accounting policies, approval procedures and to ensure optimum use of available resources. These systems are reviewed and improved on a regular basis. The Companys operating and business control procedures ensure efficient use of resources and comply with the procedures and regulatory requirements. There are adequate internal controls to safeguard the assets and protect them against losses from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly. The Audit Committee periodically reviews the internal controls systems and reports their observations to the Board of Directors. The

Directors have appointed M/s. N. Ganesan Associates, Chartered Accountants as the Internal Auditors of the Company for the FY 2018-19.

7. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE : During the year, the Company has recorded a turnover of Rs.1926.93 Lacs as compared to Rs.1,845.75 Lacs in the previous year. The Company has made net profit of Rs. 61.11 Lacs as compared to net loss of Rs. (253.46) Lacs of the previous year after providing depreciation, tax, etc. for the year ended 31st March, 2019.

8. HUMAN RESOURCE DEVELOPMENT : Human resources are the most important resources in an organization and need to be used efficiently, because success, stability and growth of an organization depend on its ability in acquiring, utilizing and developing the human resources for the benefit of the organization. There were no incidents of sexual harassment reported during the year under review, in terms of the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company believes that the human resources are vital in giving the Company a Competitive edge in the current business environment. The Companys philosophy is to provide congenial work environment, performance oriented work culture, knowledge acquisition / dissemination, creativity and responsibility. As in the past, the Company has enjoyed cordial relations with the employees at all levels. The Company continues to run an in-house training program held at regular intervals and aimed at updating their knowledge about issues. Total number of employees as on 31 st March 2019 was 49.

By Order of the Board of Directors
For KOTHARI INDUSTRIAL CORPORATION LIMITED
Place : Chennai PRADIP D KOTHARI
Date : 10.08.2019 CHAIRMAN