Mold-Tek Packaging Ltd Management Discussions.

FORWARD LOOKING STATEMENT

The financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended by the Companies (Indian Accounting Standards) Amendment Rules, 2016 and Companies (Indian Accounting Standards) Amendment Rules, 2017, the relevant provisions of the Companies Act, 2013 (the Act) and guidelines issued by the Securities and Exchange Board of India (SEBI), as applicable. The management accepts responsibility for the integrity and objectivity of these financial statements as well as for various estimates and judgments used therein. These estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, in order that the statements reflect, in a true and fair manner, the state of affairs and profits for the year. This report may also contain certain statements that the Company believes are or may be considered to be forward looking statements which are subject to certain risks and uncertainties.

OVERVIEW

GLOBAL ECONOMY

Global economic output growth declined from 3.8 per cent in 2017 to 3.6 per cent in 2018. The slowdown in the world economy and Emerging Market and Developing Economies (EMDEs) in 2018 followed the escalation of US China trade tensions, tighter credit policies in China, and financial tightening alongside the normalization of monetary policy in the larger advanced economies.

Global growth has continued to soften this year. Momentum remains weak and policy space is limited. A subdued recovery in investment growth in emerging market and developing economies (EMDEs) dampens potential growth prospects and hampers progress toward achieving the Sustainable Development Goals. Risks remain firmly on the downside, including the possibility of escalating trade tensions, sharper-than-expected slowdowns in major economies, and renewed financial stress in EMDEs. Meanwhile, rising debt constrains the ability of EMDE governments to support economic activity in the event of adverse developments, as well as finance growth-enhancing investments. This highlights the need for policy actions to undertake reforms to boost private investment and productivity growth. These reforms are particularly urgent in low-income countries, which face more significant challenges today than they did in the early 2000s.

Eurozones economic growth dipped to 1.8% in 2018 from 2.4% in 2017 due to weak export performance and low domestic demand. Chinas growth rate also fell to 6.6% from

6.9% in 2017 as tight monetary policy reduced demand in the domestic market. The US economy, however managed to buck the trend and register a 2.9% growth in 2018. Good employment rates, favorable business conditions and marginal inflation helped the worlds largest economy grow at its strongest pace in nearly a decade.

INDIAN ECONOMY

India continues to remain the fastest growing major economy in the world in 2018-19, despite a slight moderation in its GDP growth from 7.2 per cent in 2017-18 to 6.8 per cent in 2018-19. Indias growth of real GDP has been high with average growth of 7.5 per cent in the last 5 years (201415 onwards). The Indian economy grew at 6.8 per cent in 2018-19, thereby experiencing some moderation in growth when compared to the previous year. This moderation in growth momentum is mainly on account of lower growth in Agriculture & allied, Trade, hotel, transport, storage, communication and services related to broadcasting and Public administration & defense sectors.

Net Foreign Direct Investment (FDI) inflows grew by 14.2 per cent in 2018-19. Among the top sectors attracting FDI equity inflows, services, automobiles and chemicals were the major categories. By and large, FDI inflows have been growing at a high rate since 2015-16. This pick up indicates the improvement in confidence of the foreign investors in the Indian economy.

The growth in manufacturing sector picked up in 2018-19, although the momentum slowed down towards the end of the financial year with a growth of 3.1 per cent in fourth quarter of the year, as compared to 12.1 per cent, 6.9 per cent and 6.4 per cent in first, second and third quarter respectively. The growth rate in Q4 of 2018-19 moderated considerably, on account of lower NBFC lending, which in part led to sales in the auto sector.

Indian banking sector has been dealing with twin balance sheet problem, which refers to stressed, corporate and bank balance sheets. The increase in Non-Performing Assets (NPA) of banks led to stress on balance sheets of banks, with the Public Sector Banks (PSBs) taking in more stress.

Service sector is the most dynamic sector in the economy and has remained the key driver of economic growth along with being a major contributor to GVA and export basket of the Indian Economy. Service exports has become one of the mainstay of Indias total exports increasing manifold, from 0.746 lakh crore in 2000-01 to 14.389 lakh crore in 201819, raising its share in total exports from 26.8 per cent to 38.4 per cent. Share of India in world service exports has also increased from 2 per cent in 2005 to 3.5 per cent in 2017.

This share is much higher than that of manufacturing exports which stands at 1.8 per cent in 2017.

Green shoots in the investment activity appear to be taking hold as also seen in the pickup in credit growth to industry. Credit to, both, large and micro, small and medium enterprises has seen pickup in growth. The growth of bank credit to micro, small and medium enterprises was contracting in 2016 and 2017, but has started picking up in 2018. Credit growth to large industry started declining since March 2016 and entered negative territory by October 2016. It has recovered since early 2017-18 and the momentum has picked up in the second half of 2018.

In year 2011-12, industry sector had the highest investment rate, followed by services, whereas the agriculture sector had investment rate much less than half of that of services. In 2017-18, investment rate in services sector became the highest. Investment rate in agriculture still continues to lag behind and now is half the investment rate in the industry sector. Simultaneously, there has been a decline in savings rate as well, with the household sector entirely contributing to the decline. Household savings declined from 23.6 % in 2011-12 to 17.2 % in 2017-18.

The trend of growth of exports and imports was different in 2018-19 in rupee and US dollar terms. While growth of both export and import declined in US$ terms, it increased in rupee terms (at current prices) in 2018-19. This happened due to the depreciation of rupee vis-a vis US dollar in 201819.

Gross Value Added reflected a decline in economic activity, registering a growth of 6.6 per cent in 2018-19, lower than 6.9 per cent in 2017-18. Grow th of net indirect taxes was 8.8 per cent in 2018-19, lower than that of 2017-18 on account of loss of momentum of economic activity.

Rupee depreciated by 7.8 per cent vis-a-vis UD dollar, 7.7 per cent against Yen, and 6.8 per cent against Euro and Pound Sterling in 2018-19. During 2018-19, Indian rupee traded with a depreciating trend against UD dollar and touched Rs 74.4 per US dollar in October 2018 before recovering to Rs 69.2 per US dollar at end March 2019.

The foreign exchange reserves in nominal terms (including the valuation effects) decreased by US$ 11.6 billion end- March 2019 over end-March 2018. Within the year, foreign exchange reserves were declining until October 2018 due to RBIs intervention to modulate exchange rate volatility. Indias foreign exchange reserves continue to be comfortably placed at US $ 422.2 billion, as on 14th June 2019.

INDUSTRY STRUCTURE AND DEVELOPMENT

Plastic Industry is taking a very significant part in the contribution of the progress of our country. It has contributed greatly to different sectors in the country such as Automotive, Construction, Electronics, Healthcare,

Textiles, and FMCG etc. The plastic industry contributes to almost every daily requirement which is clothing, housing, construction, furniture, automobiles, household items, agriculture, horticulture, irrigation, packaging, medical appliances, electronics and electrical items Plastic Industry grows in the huge regional diversification of India, Western India accounts for 47%, Northern India for 23% and Southern India for 21%. Per capita consumption of the plastic Industry is increasing heavily.

The total plastic consumption in India is around 15 million tonnes and is expected to go up to 25 million tonnes in the next seven years. Indias plastics exports posted a growth of 31.6% at USD 4.59 billion during the period Apr 18-Sep 18 (H1 2018-19) as against USD 3.48 billion in same period during H1 2017-18. The Indian plastics industry offers excellent potential in terms of capacity, infrastructure and skilled manpower. It is supported by a large number of polymer producers, and plastic process machinery and mould manufacturers in the country.

STANDALONE FINANCIAL AND OPERATIONAL PERFORMANCE - OVERVIEW

Rs Lakhs except EPS

Particulars 2018-19 2017-18 2016-17 2015-16 2014-15
Income 39408 33946 30080 26846 27728
EBITDA 7328 6452 5343 4626 4082
Exceptional items* 1150 . . . .
PBT 3996 4857 4120 3678 2534
Net Profit 2410 3169 2689 2410 1687
EPS (Face Value of Rs 5) -(Rs) 8.70 11.44 9.71 8.70 7.20

During the year, your Company has registered a healthy growth of 16% on the topline and bottom-line at EBITDA level is up by 13.58% and at the PAT level (includes exceptional items) it is up by around 12.35%. The volume growth if you remove the factor of the raw material pricing the volume growth is actually 11.52% in production and in sales terms it is close to 9%. So the sales are effectively up by 9% and profits are up by about 12.35%.

During the financial year, in the FMCG sector sales have gone up from 61 Crores to 85 Crores, resulting a handsome growth of 40%. Edible oil packs have handsomely contributed to Companys growth, in this financial year. Sales of these packs gone up from Rs 7 Crores to Rs 22 Crores, a 214% growth.

During the year, the paint sector sales have gone up by 9.41% in value but the tonnage paint sales have gone up by 5%, lube sector up by about 7% and food and FMCG up by 57%. So overall rise in volume growth is 11.52%.

*Your Company has decided to substantially wind down the operations of the wholly owned subsidiary "Mold- Tek Packaging FZE, UAE in view of the reduced viability. The Company is not expecting to realize the investment made and accordingly the investment of Rs 1003.20 Lakhs is impaired and fully provided for. Further, a provision of Rs 146.83 Lakhs is also made towards expected loss on the realization of the trade receivables, the same has reported in financial statement as an Exceptional items.

FUTURE OUTLOOK

Your Companys two plants at Vizag and Mysore have just started production in the month of March 2019 for Mysore and in the month of May 2019 for Vizag. Your Company has successfully started supplies to APL in the 1st quarter of 2019. Orders from APL are gradually increasing for both Mysore and Vizag Plants.

Demand for our Square packs continue to grow and is on way to create a major trend in the edible oil market with conversion (for Edible oils and Ghee) of Tin to plastic by major edible oil players like N.K Protein, Goyal, Damani, Gulab, Halder Group, etc. The Company has successfully added/increased capacity for these packs. Capacity shifted from RAK has been mainly allocated to these packs and other food packing products.

Apart from 5, 15, and 17 liters packs, your Company introduced new 10 liter square packs for some major clients, including one of the largest Vanaspati producers in the country. And if this products clicks your Company might be creating Vanaspati market segment in the next coming quarters.

Our oval packs launched last year have continued to attract increasing demand and we expect to double our sales in this segment in the current year, when compared to last year. Twist packs meant for packing ghee, seeds, agro food and other applications, are expected to add revenue in next few quarters.

Your Company got allotted 4.3 acres of industrial land by TSIIC at Sultanpur, Sangareddy, Telangana, on 8th August, 2019 for future expansion in Hyderabad.

RISKS AND CONCERNS

The Company lays emphasis on risk management and has an enterprise-wide approach to risk management, which lays emphasis on identifying and managing key operational and strategic risks. Through this approach, the Company strives to identify opportunities that enhance organizational values while managing or mitigating risks that can adversely impact its future performance.

The Company continues its initiatives aimed at assessment and avoidance of various risks affecting its business and towards cost control and efficiency across its businesses and functions, taking appropriate measures and reviewing them from time to time. The Companys current and fixed assets as well as products are adequately insured against various risks.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an adequate system of internal control relating to purchase of stores, raw materials including components, plant & machinery, equipment and other similar assets and for the sale of goods commensurate with the size of the Company and nature of its business. The Company also has internal control system for speedy compilation of accounts and management information reports and to comply with applicable laws and regulations. The Company has an effective budgetary control system. The management reviews the actual performance with reference to budgets periodically. The Company has a well- defined organization structure, authority levels and internal rules and regulations for conducting business transactions. The Audit Committee ensures proper compliance with the provisions of the Listing Agreement with stock exchanges, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2016, the Companies Act, etc. reviews the adequacy and effectiveness of the internal control environment and monitors implementation of internal audit recommendations. Besides the above, the Audit Committee is actively engaged in overseeing financial disclosures.

HUMAN RESOURCES

During the year under review, the Company had undertaken extensive steps in optimizing the manpower at all plants, corporate office and field locations. Human relations were cordial throughout the year. Measures for safety of the employees, training and development continued to receive top priority.