krypton industries ltd Management discussions

Management Discussion and Analysis Report as required Listing agreement with Stock Exchange: -

A. Industry Structure & Developments: -

Krypton Industries Limited (KIL) had tremendous year and increased its topline as well as bottom line at same time. Despite higher input costs and very difficult market conditions due to our efforts in reductions of costs and increased efficiency we overcome this difficult time effectively.

Companys primary focus is expansion in Indian Markets as well as Exports for all its product line which includes MCP tubeless tires and hospital/disabled support equipment business. Company is also focusing on high end products like hospital beds/ power wheelchairs for disabled persons and to increase its product portfolio. Also, company is aggressively betting for government tenders for Wheelchairs & other support equipment.

We are currently focusing of Rehab care business which has tremendous growth outlook as this industry is in very nascent stage in India. Also, our government are pushing very hard to improve the health care infrastructure in India which we can contribute in very positive way.

B. Outlook and opportunities

Your Company has identified the following opportunities and future building business areas:

The companys major focus is on MCP tubeless tires in bicycle industry and rehab care business which has very promising in future. Primarily, the PU tire for Bicycle, rehab care products and tyres for industrial application will be our main focus this year and years to come for the domestic as well as international market.

With Rehab care / disabled support equipment business, the company is now considered as one of major domestic brand in India with brand name "ICARE" for rehab care products & we have also launched affordable new model of wheelchair in the Brand Name "UDAAN" which was accepted in highly competitive market, with our current product portfolio & brand recognition in market the future looks very promising. With government focus on "Divyang" section of society, huge demand from both government sector as well as from market will come in future. We have been also accredited with certain quality certification which will help company to participate tenders from Defense, NGOs, Hospitals & other government organizations. Company is also continuously making efforts to increase its product portfolio to stay competitive from imports and other emerging players in the segments.

C. Outlook on threats, risk and concern

1. Business Risks:

Companys major product portfolio is MCP tubeless Tires & castor wheels for industrial applications. It faces major competition from rubber tires which is cheaper than our products in same industry. Also, rubber prices are much stable than polyurethane. Also, our bicycle tyre is new entrant in our portfolio which is still in growing stage and has a huge potential but at the same time its a completely new product for the market and acceptance will take some time to establish. Our positive side is that life & quality of our product is much more superior than rubber tyres.

In rehab care / Hospital furniture business our company is facing biggest competition from cheap & low-quality Chinese products. Also, further increase in prices in steel & other raw material items will hurt our bottom line in future. Also passing on additional cost is very difficult in this industry. But we are seeing the peak of this commodity cycle and hopefully it will cool down in near future.

Company is normally import Raw Materials and export finished goods during its course of business which exposes it to exchange fluctuation risks and international crude & petrochemicals prices affects the raw material prices.

Also due to higher inflation interest cost are getting higher rapidly which will another dent in our business.

2. Financial Risks:

Majority of raw material are imported, so any major fluctuation in US$ can affect the performance of the company. Company is trying to leverage this risk by sourcing more from local vendors. Although foreign exchange risks somewhat balanced by exports and company is regularly covering such risk.

The interest cost started rising again and RBI started increasing interest rates. Company is exploring the other means to reduce interest cost.

3. Legal & Statutory Risks

Company is complying regularly with all the regulatory requirements with respect to manufacturing, taxations, statutory requirements, company law, SEBI etc., with new laws coming in, this exercise will need more inputs which company is working towards.

4. Political Risks

Any major change in local, national or international can affect the business but as, at the moment, company does not have any business with government entities, the risk is minimal. Although company is trying to secure government business at the moment, this can impact positively as well as negatively in a small percentage of growth of the company.

D. Internal Control System and their adequacy:

Your Company believes that Internal Control is a required principle of governance that freedom of management should be exercised within a framework of appropriate checks and balances. Your Company remains committed to ensuring an effective internal control environment that provides assurance on the efficiency of operations and security of assets.

The company has an Audit Committee, the details of which have been provided in the Corporate Governance Report. Internal auditor performs their duty and audit committee reviews internal auditor reports and other reports and provides suggestions for improvement /takes corrective actions. The committee also meets the Companys Statutory Auditors to ascertain, interalia, their views on the Adequacy of Internal Control Systems in the company and keeps Board of Directors informed from time to time.

E. Financial Performance

Over all financial Performance of the company is satisfactory in current market scenario, we are cautiously improving in costing point of view which will further add to our margins. Our company will surely improve out topline and bottom line this year and in the years to come.

F. Human Resource Developments:

During the fiscal 2022-23 company has more than 133 persons on its payroll. Apart from this company has generated indirect employment to more than 500 persons in nearby locations. Company is working to restructure the total organization to help its growth with further recruitment in the top and middle management level at different positions.