Modi Naturals Ltd Management Discussions.

1. Industry Structure and Development

Overview of Indian Economy and Industrial Outlook

The government has brought In a renewed focus on growth and is determined to make suitable reforms. Major reforms are taking time, but the India story is intact and growth is back at over 7%. With global commodity prices at a historical low, India, a Huge importer of commodities Is at a good position. The Reserve Bank of India (RBI) has reduced Interest rates to supplement the governments growth initiatives and to identify new avenues of growth.

Due to moderated level of inflation, reduced current account deficit and fiscal consolidation, the Country Is currently characterized as a stable macroeconomic situation. Furthermore, increased industrial production complimented by various government leading initiatives could further prove to be an impetus to the economy.

Rsmg incomes and growing youth population have been key growth drivers of the FMCG sector. Brand consciousness has also aided demand. Low penetration levels in rural market offers roam for growth.

2. Threats and Opportunities

The Indian  market continues to be underpenetrated and thereby holds Immense business opportunities. Vegetable oi consumption has Increased due to nse In overall household income, surging retail sector, increasing health awareness, growng population and increasing demand

Provided the positive macro and demographic fundamentals, the edib e o<i market has ( favourable demand growth outlook over the medium-to-iong term. The Indian edible oil market is expected to witness robust expansion in the near future. However, rising edible oil prices and lower priced competitors are expected to be trie challenges for this sector.

3. Segment, Product wise Performance

Modi Naturals is transforming from a pure play edible oil company to a diversified FMCG company by creating world class uniquely positioned value-added products that are gaining popularity.

Your company has created a me he market segment for itself through its high quality Olive oil products and strong distribution network. OiEEV* brand is positioned strongly In minds of customers and it caters to the premium segment of the market

Your company has Invested In development of new product packaging with Improved functionality in terms of convenience to customers and cost optimization In freight. Your Company is further looking to increase Its competitiveness by making Investment in modernizing the refinery complex to achieve greater operatiorafeffiaencv and capability to produce varied products.

In order to further Improve the overall business margin, your company is working on a strategy to identify high margin value added products for food and nutrition industry. These products shall align with our overall product offering and shall be processed In a cost- efficient manner. With continuous focus on Innovation, R&D and investment In new technology, your company Is confident of developing diversified products that will help us to cater to the needs of our customers and delivering the high return to shareholders.

The companys branded product portfolio Includes Oleev Olive oil, Oleev Active oil (Blend of Olive oil and Rice Bran Oil), Oleev Health Oil (Blended Oil) Oleev Smart Oil (Blended oil), Rizolo Rice bran oil. Miller Canola Oil and Ollvana Wellness Oil. The company has marked its presence in the ready-to-cook food market with the launch of Pipo, a new range of premium quality popcorn. In the non-branded segment, the company manufactures and markets Sunflower oil, Rice Bran oil, Mustard oil, Rice Bran wax and De-oiled cakes.

Your Company continues to support our flagship Oleev Active in this Category with adequate level of Investments to ensure that our position In this category remains healthy and profitable white delivering the highest returns to our shareholders.

4. Outlook

A steadily Improving outlook for business in India means that the Food industry as well Is recovering from a sluggish phase into a phase of more steady and sustained growth. Your Company is well placed to capture a fair share of this growth having taken significant measures In the last few yean in both manufacturing capacities and distribution expansion.

We expect to be able to continue to deliver strong growth and take advantage o< the significant capital investments we have recently completed behind products with dear competitive advantage.

5. Risk Management

Business risks exist for any enterprise having national and international exposure. Your Company also faces some such risks, the key ones being - a longer than anticipated delay in economic revival, unfavorable exchange rate fluctuations, emergence of inflationary conditions, rise In counterfeits and look-alikes and any unexpected changes in regulatory framework.

The Company is well aware of these risks and challenges and has put in place mechanisms to ensure that they are managed and mitigated with adequate timely actions.

6. Internal Control Systems and Its adequacy

Your Company has an adequate system of internal controls in ail areas of its operations such as purchase, sale, acquisitions of fixed assets, cash & bank, including suitable monitoring procedures and competent personnel. The Company has set up an Audit Committee comprising of Nonexecutive Independent Directors. The Company has also appointed the firm of Chartered Accountants to carry out Internal Audit, where one of their function is to review the Internal Control system regularfy, with a view to further strengthen the same.

7. Financial and Operational Performance

During fiscal 2019, your Company recorded revenue from operations of Rs, 29627.20 Lacs, a growth of 15.7856 over previous year, despite oil prices softening and the companys brand presence in premium categories, due to carefully crafted strategies, backed up by clinical execution.

The Companys EBIDTA and EBIOTA margins improved by 27.9% to Rs.552.96 Lacs as compared to the previous year.

> Ratio Analysis

S.no Ratios Units

IND-AS

FY 2019 FY 2018
1. Debtors Turnover Ratio Times 28.11 29.80
2. Inventory Turnover Ratio Times 4.04 4.07
3. Interest Coverage Ratio Times 2.47 1.04
4. Current Ratio Times 1.63 1.47
5. Debt-Equity Ratio Times 1.15 1.34
6. Operating Profit Margin % 1.42 1.06
7. Net Profit Margin % 0.85 0.04
8. Earnings Per Share 0.83 0.05

8. Human Resource and Industrial Relations

The Companys Industrial relations are cordial at all locations. The Company lays great emphasis on proper management of human resources and believes that this is the most important ingredient for achieving excellence In performance and sustainable growth. The Management of your Company put utmost efforts to strengthen the existing work force and retaining them to enhance the human resource capability In the Company.

The Directors of your Company deeply appreciate the spirit and commitment of Its dedicated team of employees.

9. Cautionary Statement

Estimates and expectations stated in this Management Discussion and Analysis Report may be "forward-looking statements" within the meaning of applicable securities, laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to your Companys operations include economic conditions affecting demand/ supply and price conditions In the domestic and international markets, changes in the Government regulations, tax laws, and other statutes and incidental factors.