I. ECONOMIC OVERVIEW

Global economic overview

In the year 2020, lives and livelihoods both faced dire threat due to world wide spread of COVID-19 infections. Economic wheel came to a standstill due to imposition of strict lockdowns in most parts of the world and could resume activity only after some period of total shutdown. Economic activity picked up some pace in second and third quarter, however different mutations of COVID-19 again caused surge in infections as second & third waves resulting in disruption of economic activity. As a result global economy contracted 3.5 per cent in 2020.

With introduction of aggressive vaccination programs and financial stimulus packages by various Governments the global economy is expected to grow at 6 per cent in 2021 and 4.4 per cent in 2022. However global economic prospects continue to remain uncertain.

Indian economic review

India was no exception and national lockdown was announced in March, 2020 leading to disruption of economic activity. The economic activity resumed with a slow pace from second quarter of FY 2020-21 with expected V-shaped recovery. India recorded the real DGP (gross domestic product) growth of 0.4% in the third quarter of FY 2020-21. This was mainly on account of announcement of special economic package by Government of India of Rs 21 Lacs Crore to support various sectors of Indian economy. However Indian economy has contracted at 8% during FY 2020-21 as per second advance estimates by NSO (National Statistical Office).

Just when everyone was thinking of return of the economic activity to its pre-covid levels a more severe surge in cases in March 2021 again compelled many State Governments to impose strict lockdown like restrictions thus adversely affecting rebounding economic activity. The economic outlook therefore is difficult to assess, however with the aggressive vaccination of Indian population and with various stimulus packages being announced by Indian Government we are hopeful of significant economic growth in FY 2021-22

II. INDUSTRY STRUCTURE AND DEVELOPMENTS

The COVID-19 pandemic has reemphasized the indispensable role of plastics in our daily life. Plastics in terms of personal protective equipment (PPEs) and other single-use medical equipment along with packaging solutions owing to their inherent properties have emerged as a life-savior for protecting the health and safety of the frontline health workers and the common citizens during the pandemic. This has resulted in plastics industry being affected to a lesser degree as compared to other sectors. Many plastic manufacturing units were operating as essential commodity even in the period of lockdown in various parts of the world supplying utmost important personal protective equipment, face marks, face shields etc. for protection of world population. The World Health Organisation (WHO) estimated requirement of 89 million medical masks, 76 million examination gloves and 1.6 million goggles for COVID-19 response every month. The pandemic has revealed the true potential of plastics. Its importance has grown manifold during the pandemic due to demand for hazmat suits, N-95 masks, gloves, visors, goggles and shoe covers - all of which are made of polypropylene / plastics.

Indian plastic Industry has over 50,000 plastic processing units employing more than 50 Lacs people across the Country. Almost 80% to 90% of the total manufacturing units are in small & medium scale sector. The Industry is very fragmented and majority of the manufacturers are from unorganized sector and very few are from organized sector. Plastic industry consumes around seventy five percent of the petrochemicals production, which is quite significant.

One of the vital components of plastics industry worldwide is masterbatch, which consists of pigments and additives used for imparting required color and characteristics to the end products. It is a concentrated mixture of pigments and additives encapsulated during a heat process into a carrier resin, which is then cooled and cut into a granular shape. It imparts various properties like Ultraviolet light resistance, Flame retardation, Anti-fouling, Anti-static, Lubrication, Anti-slip, Antimicrobial, Anti-oxidant etc to end products. Use of Masterbatches in production process offers many benefits like cost-effectiveness, easy to use, helps achieve the desired color and ensures a dirt-free production environment. Your Company is leader in manufacturing of Masterbatches and has presence in practically all segment of Masterbatch i.e. White / Black / Colour / Additive / Polywhite (filler) unlike most of other competitors who are not present in all segments.

III. FINANCIAL HIGHLIGHTS WITH RESPECT TO OPERATIONAL PERFORMANCE

The revenue from Operations was Rs 57,733 Lacs for FY 2020-21 as against Rs 60,849 Lacs for FY 2019-20. Earnings before interest, tax, depreciation and amortisation (EBITDA) increased from Rs 7,208 Lacs in FY 2020-21 from Rs 7,007 Lacs in FY 2019-20, an increase of 2.87%. Profit before tax increased from Rs 5,319 Lacs in FY 2020-21 from Rs 5,154 Lacs in FY 2019-20, an increase of 3.21%. Profit after tax increased from Rs 3,735 in FY 2020-21 from Rs 3,718 Lacs in FY 2019-20, an increase of 0.46%. Other financial details are as given in the Directors Report.

IV. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Your Company operates in one segment only - masterbatches.

V. BUSINESS OUTLOOK, OPPORTUNITIES AND THREATS

This year masterbatch market was driven by the increased demand from the e-commerce market. Online shopping, witnessed an increase in the demand for packaging products for the shipment of products sold. It is fostering the demand for plastic, thereby fueling growth in the masterbatch market.

Global masterbatch market is projected to rise to USD 14 to 15 billion by 2025 and Indian masterbatch market is expected to grow at a CAGR of over 11% through 2025, on account of strong growth in the packaging, building construction, agriculture, favorable Government regulations, rapid industrialization and commercialization.

Increasing demand for plastic packaging is one of the major growth divers for masterbatch industry. The current plastics packaging market size is estimated at around $ 240 billion. Which is expected to grow at a CAGR between 3% 4% and is expected to cross USD 325 billion by 2027. Global e-commerce plastic packaging market is expected to reach $28.6 billion by 2027, growing at a CAGR of 14.6%. Growing internet penetration and considerable investments in the consumer electronics are the major factors propelling the market growth. Asiapacific and Europe are estimated to be dominant in demand growth for masterbatches in coming years.

Global pipes and fittings market is expected to grow upto $20.47 billion by 2027 growing at a CAGR of 7% driven by increasing infrastructure growth and growing demand of plastic pipes in replacement of traditional metal pipes.

Indian plastic consumption remain at 13 kg which is one tenth that of what is consumed by per person in developed Countries and there is huge potential for growth. Various Government initiatives like Atmanirbhar Bharat, Make in India, Pradhan Matri Krishi Sinchayee Yojana, Smart City Project, establishment of plastic parks, Production Linked Incentive are expected to boost demand in plastics Industry. Government has prioritized the sector and import duty on naphtha has been reduced from 4.00 % to 2.5% in order to make Indian exporters more competitive in global market. All these Industry friendly policy measures, tax subvention will promote fresh investments and boost new capacities inthe near future.

VI. RISK AND CONCERNS

Risk management is embedded in your Companys operating framework. Your Company believes that managing risks helps in maximizing returns. The Companys approach to addressing business risks is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. The risk management framework is reviewed periodically by the Board and the Audit Committee.

Pursuant to the Companies Act 2013 and the SEBI Regulations, the Board has authorized the Audit Committee to review the risk management systems of the Company from time to time. Apart from the usual risks and concerns that affect any commercial, manufacturing operational, the key business risks and concern areas identified by the Company are as under:

a. Operational Issues

The Company has long term raw material supply contracts and majority suppliers of the Company are regular in nature. b. Financial Risks i) Currency value and interest rate fluctuations

The Companys policy is to actively manage its foreign exchange risk. The Company actively manages the interest rate risk by adopting suitable strategies to minimise the impact of interest rate fluctuations, including maintaining an optimal balance of different loan types and maturities.

ii) Credit Risk

The Company sell their products by extending credit to customers, with the attendant risk of payment delays and defaults. To mitigate the risk appropriate measures like periodic review and rigorous follow-up are put in place for timely collection of dues from the customer. In last 2 years the debtors balance has reduced significantly. Credit availability and exposure is another area of risk. However all exports and domestic sales of the Company are covered under receivable insurance Policy which further mitigate the risk.

iii) Liquidity Risk

The Company realizes that its ability to meet its obligations to its suppliers and others is linked to timely and regular collection of receivables and maintaining a healthy credit rating. Review of working capital constituents like inventory of raw materials, finished goods and receivables are done regularly by the respective Divisions and closely monitored by Corporate Finance.

c. Strategic risks

Emerging businesses, capital expenditure for capacity expansion etc, are normal strategic risks faced by the Company. However, the Company has well-defined processes and procedures for investments in capacity expansions and is focused on its core activity.

d. Regulatory risks

The Company is exposed to risks attached to various statutes, laws and regulations. The Company is mitigating these risks through regular review of legal compliances. The Company has implemented an enterprise-wide compliance management system, capable of effectively tracking and managing regulatory and internal compliance requirements.

e. Cyber risk

The failure of Information Technology (IT) systems due to malicious attacks and / or non-compliance with data privacy laws can potentially lead to financial loss, business disruption and / or damage to the Companys reputation. The Company has in place a data protection policy. It maintains a cyber security infrastructure. The Company uses standardised backup tools, services and procedures to ensure that information and data are stored at two or more diverse locations.

VII. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS

THEREFORE

Financial ratios with significant changes of more than 25% are as below:

Ratio	FY 2020-21	FY 2019-20	% Change	Remarks
Inventory Turnover Ratio (Days)	59	40	49	Primarily due to supply chain constraints / holding strategic inventory
Interest Coverage Ratio	18.63	38.37	(51)	In previous financial year interest subsidy of Rs 385 Lacs received

VIII.DETAILS OF CHANGES IN RETURN ON NETWORTH :

There has been decrease in return on net worth from 13.08% for FY1920 to 11.96% for FY2021.

IX. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company has a system of internal controls which is commensurate with the size and nature of operations. These controls ensure that all the assets are safeguarded and protected against loss from unauthorised use or disposition and that the transactions are authorised, recorded and reported diligently. There are well established policies and procedures in place across your Company.

Internal Audit Team consists of well experienced members, which constantly review various aspects of control systems and conduct audit under well laid down audit programmes to ensure effectiveness of the controls. The said internal audit team continuously review the control system and undertakes audit of special areas in-depth.

X. HUMAN RESOURCE

"I am convinced that nothing we do is more important than hiring and developing people. At the end of the day, you bet on people, not on strategies." Lawrence Bossidy, American Author

We believe that our manpower is the part of our extended family. We take care of them, the moment they get their offer letters. Starting from an elaborate on-boarding process, handholding and socialization, we ensure that we have a great start for our new family members.

Even in this unprecedented crisis, we ensured that our employees have their salaries and wages and even going ahead with the increments, whatever was humanly possible and our training process did not halt, we organized many training programs like Six Thinking Hats, how to make meetings more effective, cost saving among many others. We had many town hall sessions with our Leaders wherein we renewed our sense of bonding with our team. During these tough times, we did what we could to make the morale of our team high. We had regular one-to-one connection session with our employees where we enquired their wellbeing and offered the support that we could.

At all our locations the measures like regular sanitization, measuring temperature on entry and exit, providing Ayurvedic "Kadha" to boost immunity, providing Homeopathic medicines, issuing regular advisories, taking all the steps that not only helped us comply to the Government norms, but ensuring the safety of the employees who are serving the organization, regularly providing masks among many others. We as an organization ensured that our people were taken care of and were provided the best of everything to work without fear of the pandemic.

And we are happy to tell that even in these trying times, our Organization did not lose focus on the Standards - ISO 9001, ISO 14001 and ISO 45001. Regular trainings pertaining to these standards are being conducted with the adequate social distancing norms. Moreover, we have already taken a giant leap towards our undying commitment towards Quality and Operational Excellence We are working full throttle on the Six Sigma Project. Our efforts are always directed towards customer delight, exceeding customer satisfaction. No. of people employed on the rolls of the Company was 479.

XI. CAUTIONARY STATEMENT

Estimation and expectation made in the Report may differ from actual performance due to various Economic Conditions, Government Policies and other related factors.

	For and on behalf of the Board
Place : Mumbai	Satyanarayan G. Kabra
Date : May 20, 2021	Chairman & Managing Director
	(DIN : 00015930)