midland polymers ltd Management discussions

The Board presents before you the Companys 25th Management Discussion & Analysis Report for the year 2016-17 along with the Compliance Report on Corporate Governance.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The flexible packaging market is considered to be one of the most dynamic packaging markets exhibiting diversified types of packaging and materials used across the globe. The Packaging Industry is increasingly becoming technology oriented with innovation driving the markets and this is expected to lead to packaging that increases shelf life, reduces cost. The global flexible Packaging market is projected to grow at a Compound Annual Growth Rate (CAGR) of 5.1% from 2013 to 2018. Polyethylene dominates this global market by materials accounting nearly 32% of the total market share and is projected to grow at a CAGr of 5.1% during the above said period. Polypropylene accounts for the second largest share in the segment growing at a CAGR of 4.9% during the period under review. (sources: Markets & Markets)

The global packaging industry witnessed influence of technology innovation and development, a key reason for the industrys robust growth over the last few decades. Over the years, technology development has been moving in sync with growing consumer demand for convenient and quality packaging.

OPPORTUNITIES AND THREATS Opportunities

Following development in the business environment which may help the Company to grow:

? Indias retail growth and increased consumption of consumer products is driving the demand for packaging industry in the country.

? The Indian food processing market is one of the largest in the world in terms of production, consumption and growth prospects, which provide the opportunity to the industry in which Company is engaged to grow.

Threats

? Immense Competition from the domestic and international player.

? Tight liquidity in the Market and inflationary pressure.

? Regulatory constraints.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Our polypropylene film material is a clear mono-axially oriented polypropylene. Polypropylene is a thermoplastic polymer from the monomer propylene, which has good clarity, resistance to UV light, excellent chemical and abrasion resistance, and a smooth surface. The clear material has a reasonable scuff resistance and a great acid resistance. Our material is also inert to most mild chemicals and has a fair heat resistance.

During the Year under review there was no production so no disclosure in this regard has been given herewith. Further the operations of the Company are restricted to single Product and single geographical region therefore no segment - wise and product-wise analysis is given.

OUTLOOK

Your Company is optimistic, that some turn-around strategy may be developed to cope up with the current crisis like situation due to regulatory constraints put on the industry which has significantly affected the Demand Function. Alternatives usages in other market areas are being explored. Boards of Directors are also considering the new segments of the Businesses in which Company can engage.

RISK & CONCERN

The Company is exposed to the risk factors relating to the business of the company and the industry in which it operates i.e. risk arising from within the industry itself (structural risk), risks arising from the expected future performance of the industry (growth risk) and risk arising from fo rces external to the industry like regulatory measure hindering the growth of industry, competition from the other players within the same industry etc .

The Company manages these risks by adherence to best practices, internal control measures and risk management systems.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has a proper and adequate system of internal controls commensurate with its size to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly. Proper controls and checks are exercised by the company by following the procedures prescribed in the various manuals. The Audit Committee of the Board reviews Internal Control Syst ems of the company on periodical basis.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During the year under review the company has achieved a turnover of Rs. 7.66 lakhs as against a loss of Rs. 10.77 lakhs in the previous year.

Presently, Your Company was not engaged in business activity However management of the Company is continuously looking to generate some positive vibes by exploring new projects, contracts from different sectors of industries and committed to generating profits into the company.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED.

Your Company recognizes the value of human resource, therefore, the human resource policies are framed in such fashion that they not only aim at achieving the organizational goal but also recognize, appreciate and develop the individual interest of the employees. The Human Resource Development policies of the company are so framed that it is in the best interest of the organization as well as employees of the company.

Human Capital

As at March 31st 2017, the company employed 05 employees which includes, trainees, process executives and administration.

Risk Management Framework:

In todays economic environment, Risk Management is a very important part of business. The main aim of risk management is to identify, monitor and take precautionary measures in respect of the events that may pose risks for the business. Your Companys Board believes that to ensure sustainable business growth with stability of affairs and operations of the Company, periodical review of various risks having a bearing on the business and operations is vital to proactively manage uncertainty and changes in the internal and external environment to limit negative impacts and capitalize on opportunities. Further, it is also belief of your management that Risk Management Framework enables a systematic approach to risk identification, leverage of any opportunities and provides treatment strategies to manage, transfer and avoid or minimize the impact of the risks.

Keeping in view of the above, your Companys risk management is embedded in the continuous business processes and as a part of review of business and operations, your Board with the help of the management periodically reviews various risks associated with the business and products of the Company and considers appropriate risk mitigation process. However there are certain risks which cannot be avoided but the impact can only be minimized.

The risks and concerns associated with each segment of your companys business are discussed while reviewing segment-wise Management and Discussion Analysis. The other risks that the management reviews also include:

a. Industry & Services Risk: this includes Economic risks like demand and supply chain, Profitability, Gestation period etc.; Services risk like infrastructure facilities; Market risk like consumer preferences and distribution channel etc.; Business dynamics like inflation/deflation etc.; Competition risks like cost effectiveness

b. Management and Operational Risk: this includes Risks to Property; Clear and well defined work process; changes in technology/up gradation; R&D Risks; Agency network Risks; Personnel & labour turnover Risk; Environmental and Pollution Control Regulations etc.; Locational benefits near metros

c. Market Risk: this includes Raw Material rates; Quantities, quality, suppliers, lead time, interest rates risk and forex risk.

d. Political Risk: this includes Elections; War risk; Country/Area Risk; Insurance risk like Fire, strikes, riots and civil commotion, marine risk, cargo risk etc.; Fiscal/Monetary Policy Risk including Taxation risk.

e. Credit Risk: this includes Creditworthiness; Risk in settlement of dues by clients and Provisions for doubtful and bad debts

f. Liquidity Risk: this includes risks like Financial solvency and liquidity; Borrowing limits, delays; Cash/Reserve management risks and Tax risks

g. Disaster Risk this includes Natural calamities like fires, floods, earthquakes etc.; Man made risk factors arising under the Factories Act, Mines Act etc.; Risk of failure of effective disaster Management plans formulated by the Company.

h. System Risk this includes System capacities; System reliability; Obsolescence risk; Data Integrity risk & Co-ordination and Interface risk.

i. Legal Risk: this includes Contract risk; Contractual liability; Frauds; Judicial Risk and Insurance risk

j. Government Policy: This includes Exemptions, import licenses, income tax and sales tax holidays, subsidies, tax benefits etc.

Further your Board has constituted a Risk Management Committee, inter-alia, to monitor and review the risk management framework

CAUTIONARY STATEMENT

Statements in Management Discussion and Analysis describing the Company objectives, projections, estimates and expectation may be "forward looking" within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied in the statement.