Kranti Industries Ltd Management Discussions.

Corporate overview:

Our Company was incorporated on December 5, 1995, as "Kranti Precision Tools Private Limited" under the provisions of the Companies Act, 1956 with the Registrar of Companies, Bombay bearing Registration Number 095016. We subsequently changed the name of our Company from "Kranti Precision Tools Private Limited" to "Kranti Industries Private Limited" pursuant to shareholders resolutions passed at the Extra Ordinary General Meeting held on February 8, 2002. A fresh Certificate of Incorporation consequent upon name change was granted to our Company on March 11, 2002 by the Registrar of Companies, Pune. Subsequently, our Company was converted into public limited company pursuant to Shareholders Resolution passed at the Extra Ordinary General Meeting held on July 31, 2015 and the name of our Company was changed to "KRANTI INDUSTRIES LIMITED" vide a fresh Certificate of Incorporation dated August 17, 2015 issued by the Registrar of Companies, Pune. The Corporate Identification Number of our Company is U29299PN1995PLC095016.

Prior to the incorporation of the Company, our founder promoter Late Shri. Subhash Vora was conducting the business through the erstwhile partnership firm namely M/s Kranti Industries ("the Firm"). In the year 2001-2002 our Company became a partner of the M/s Kranti Industries. Subsequently in the financial year 2002-2003, upon retirement of all the partners of the firm (save and except our Company), our Company took over the running business of the firm including all the assets and liabilities of the Firm as on March 31, 2002 and the said Firm was dissolved with effect from April 1, 2002.

Currently, Today the operations are spread over 2 units located in Pirangut, Pune and a Subsidiary unit in Pune and Associate concern at Rajkot. Shop Floor area at present is around 70000 Sq. ft, with all the required infrastructure in place. Customer Profile includes renowned OEMs in respective industry.

After the sad demise of our Promoter Subhash Vora in 2011, today the entire operations are managed by his sons viz. Sachin Vora and Sumit Vora. In February 2019, the Company is listed on BSE- SME platform.

In the year 2019-20, the Company is planning to expand the activities by having additional factory premises in Pirangut Pune as its 3rd Unit to cater the increasing requirements of customers.

INDIAN ECONOMIC DEVELOPMENT & GROWTH REPORT:

Introduction

The Indian auto-components industry has experienced healthy growth over the last few years. The auto-component industry of India has expanded by 18.3 per cent to reach at a level of US$ 51.2 billion in FY 2017-18.

The auto-components industry accounts for 2.3 per cent of Indias Gross Domestic Product (GDP) and employs as many as 1.5 million people directly and indirectly each. A stable government framework, increased purchasing power, large domestic market, and an ever-increasing development in infrastructure have made India a favourable destination for investment.

Market Size

The Indian auto-components industry can be broadly classified into the organised and unorganised sectors. The organised sector caters to the Original Equipment Manufacturers (OEMs) and consists of high-value precision instruments while the unorganised sector comprises low-valued products and caters mostly to the aftermarket category.

The total value of Indias automotive exports stood at US$ 13.5 billion in 2017-18 as compared US$ 10.9 billion in the year 2016-17. This has been driven by strong growth in the domestic market and increasing globalisation (including exports) of several Indian suppliers. Growth is further expected to accelerate to 8-10 per cent in FY19 due to pick up in global scenario. **

According to the Automotive Component Manufacturers Association of India (ACMA), the Indian auto-components industry is expected to register a turnover of US$ 100 billion by 2020 backed by strong exports ranging between US$ 80- US$ 100 billion by 2026

Investments

The Foreign Direct Investment (FDI) inflows into the Indian automotive* industry during the period April 2000 – December 2018 were recorded at US$ 20.85 billion, as per data by the Department of Industrial Policy and Promotion (DIPP).

Some of the recent investments made/planned in the Indian auto components sector are as follows:

Schaeffler India, the Indian arm of Germanys automotive and industrial parts maker, is planning to invest Rs 300 crore (US$ 46.66 million) per annum over FY18-19.

As of December 2018, German automotive major Continental has planned investments of Rs 180 crore (US$ 25.65 million) for setting up a premium surface materials facility in Pune. The facility will have an initial capacity of five million square metres and is expected to start production in 2020.

In October 2018, IMI Precision Engineering inaugurated its second largest manufacturing facility in the Asia Pacific region. The company is planning to expand its product and technical offerings over the course of the next few years.

As of September 2018, air-compressor manufacturer Elgi Equipments is going to invest Rs 18 crore (US$ 2.56 million) for setting up of a motor production facility in India. The facility is expected to be commissioned in Q1 FY20.

Achievements

• Following are the achievements of the government in the past four years:

The FAME – India Scheme formulated by Department of Heavy Industry led to a continuous increase in registered OEMs and vehicle models. Also, the scheme enhanced the sales of electric vehicles and about 261,507 electric/ hybrid vehicles were supported under the scheme up to December 6, 2018. In February 2019, the Government of India approved the FAME-II scheme with a fund requirement of Rs 10,000 crore (US$ 1.39 billion) for FY20-22.

Under National Automotive Testing and R&D Infrastructure Project (NATRiP) various facilities including passive safety labs comprising of crash core facility and crash instrumentations including dummies were established at ICAT-Manesar & ARAI-Pune

To give a fresh thrust to e-mobility in public transport, Department of Heavy Industry announced the launch of public & shared mobility based on electric powertrain.

Government Initiatives

The Government of Indias Automotive Mission Plan (AMP) 2006–2016 has come a long way in ensuring growth for the sector. Indian Automobile industry is expected to achieve a turnover of $300 billion by the year 2026 and will grow at a rate of CAGR 15 per cent from its current revenue of $74 billion.

Government has come out with Automotive Mission Plan (AMP) 2016-26 which will help the automotive industry to grow and will benefit Indian economy in the following ways:

• Contribution of auto industry in the countrys GDP will rise to over 12 per cent

• Around 65 million incremental number of direct and indirect jobs will be created

• End of life Policy will be implemented for old vehicles

Road Ahead

The rapidly globalising world is opening up newer avenues for the transportation industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe and reliable modes of transportation. Over the next decade, this will lead to newer verticals and opportunities for auto-component manufacturers, who would need to adapt to the change via systematic research and development.

The Indian auto-components industry is set to become the third largest in the world by 2025. Indian auto-component makers are well positioned to benefit from the globalisation of the sector as exports potential could be increased by up to US$ 30 billion by 2021E.

BUSSINESS PERFORMANCE Highlights

Your Company is in the business of manufacturing of auto mobile parts during the financial year 2018-19, despite the challenging business environment your companies total sales registered a growth of 38.23% Total sales being Rs 5788.11 Lakhs in the year 2018-19.Your company Net Profit margin stood at Rs. 202.45 Lakhs. The increase in profit is mainly due to the increase of sales.

Market Presence:

We specialize in manufacturing precision machined components for automotive and its ancillary industries based on technical specifications and designs provided by our customers. Given the nature of our products and the sector in which we operate, we believe that our customers have high expectations for product quality and delivery schedules. Adherence to quality standards is a critical factor in precision machined components manufactured by your Company.

Our Competitive Strength:

We believe we have the following competitive strengths:

• Quality standards and IATF certified organisation

• Experienced and professional management team

• Stable customer base

• Wide product range and product segments

• Well established manufacturing facility

• Use of green energy

OPPORTUNITIES:

The company mainly caters to the requirement of automotive and tractor segment. The company enjoys an unstinted confidence from its valued customers by providing superior quality products. Indias economic growth will present tremendous opportunities for growth in automobile and non-automotive segment. The company strives to create sustainable, profitable growth by using superior technology and maintaining product quality and offering wide range of products to different market segments, which will give us a competitive edge in the market. The company has got excellent potential for growth in Domestic market, as well as Export market which is still untouched.

THREATS:

The company is aware of competition from established players with strong financial backup as well as players in unorganised sector. Instability in prices of power, freight and other input cost are perceived as threats. Input costs including labour cost is increasing day by day.

In a global market, opportunities can spring up anywhere, anytime just as threats can come from any part or segment of global industry.

Internal Control System and their Adequacy:

The Company has adequate internal control system, commensurate with the size of its operations. Adequate records and documents are maintained as per statutory requirements. The audit committee reviews adequacy and effectiveness of the companys internal control environment and monitors the implementation of audit recommendations. The audit committee gives valuable suggestions from time to time for improvement of the companys business processes, systems and internal controls. All efforts are been made to make the internal system more effective.

Human Resources and Industrial Relations:

Your companys HR philosophy is to build a high performing organization, where everyone is motivated to perform to the fullest capacity to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realise the full potential of our personnel. Your company continues to maintain positive work environment and constructive relationship with its employees with a continuing focus on productivity and efficiency. Your company is focused on building a high-performance culture with a growth mindset. Developing and strengthening capabilities of all employees has remained an ongoing priority.

For and on behalf of Board of Directors

KRANTI INDUSTRIES LIMITED

Sd/-

Sachin Vora

Chairman & Managing Director

DIN : 02002468

Date: July 26, 2019