shayona petrochem ltd Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Pursuant to Clause 49 (IV) (F) of the Listing Agreement, your Directors report as follows:

MACRO ECONOMIC OVERVIEW:

Indis GDP grew at a healthy 8.5% in 2010-11 as against 8.0% in 2009-10.This growth was largely due to a significant growth in the Agriculture sector at 5.4% (0.4% in 2009-10) ; the services and Industrial sector s maintained their previous year growth momentum. The accelerated growth in the Industrial sector in the first half of 2010-11 at 10.2% was hit by instability in the Capital goods segment in the second half of 2010-11.

The confidence in the Indian growth story was witnessed in the record FII inflows in the economy and the revival in domestic investor confidence which helped the Indian Stock market regain pre- crisis record levels .Net Capital inflows increased US$13.7 billion to reach US$36.7 billion as on March 31, 2010 ; foreign exchange reserves grew US$ 20 billion to cross US$ 300 billion threshold - at about US$305.49 billion.

Trade deficit expanded from US$ 120.5 billion in 2009-10 to US$ 132 billion as imports outpaced exports in absolute numbers. What is heartening is that export growth at 31.6% in 2010-11 surpassed growth in imports at 22.6% -highlighting the growing acceptance of the "Made in India" tag. If a similar trend continues over the coming years we can expect the trade deficit to decline.

Even as the Macroeconomic numbers displayed a strong performance, they were marked by significant volatility evident not only in numbers but also in the sentiments primarily driven by the global cues and policy responses to cater to inflation

The headline inflation witnessed a relentless rise during the first half of 2010 .The uneven monsoon during 2009, domestic supply side constraints coupled with the rising international prices of food grains pushed the prices of primary food articles which eventually drove inflation in the manufacturing goods and service sectors.

The Company and its performance.

Shayona occupies a unique position in Petrochemicals market. The Company so as to tide over its present position is in Marketing of Spray Oil / White Oil which is used as antistatic Oil in Textiles <perfumes ,Petroleum Jelly etc. It is also used in Rubber plantations and also used as protection of crops and orchids>the Company also markets Mineral Turpentine Oil used in Paints Industries, Heat transformer Oil used in Textile and Pharmaceutical Industries. The Company has during the year managed to earn Net Profit of Rs 28.7 lakhs .There is a steady increase in the profits of the Company and the Company is confident that it will be able to turn corner and revert back into Manufacturing Activities in very near future.

Opportunities.

Since your Company is in a Product range of Marketing which has varies and vast Applications the Company is confident that the Company can achieve good Results and pay back its Investors handsomely in very near future.

Threats, Risks and concerns.

The Company has to depend on marketing of products which are not being directly manufactured in a way there is threat that the Company is creating market for its competitors .Thus this is a risk and concern which would mitigate once the Company starts its own manufacturing activities.

Risk Management

Shayonas Risk mitigating initiatives is a result of its detailed risk management framework that comprises prudent norms , structured reporting and control. The risk management approach conforms to the Companys Strategic direction , in line with Shareholders desired returns and its desired risk appetite.

Internal Control Systems and its adequacy.

The Company has a policy of reviewing and if necessary revising its systems and procedures to ensure controls at appropriate levels .All operating parameters are periodically monitored and strengthened. The Audit committee of the Board of Directors reviews the effectiveness of Internal controls and suggests improvements for strengthening them whenever required.

Development of Human Resources.

The Company endeavors to keep work place and working environment cheerful by having good HR practices, implementation of various welfare Schemes , celebration of certain events by having active participation of all employees, developing leadership qualities amongst them etc. The Company aims to retain deserving employees who can also be nurtured to take Leadership roles. The Company has been aiming to have behavioral as well as technology related training programmes to improve the general attitude and also to upgrade the competency of the employees .

Corporate Social Responsibility

The Company is flagship organization of L P Group of Companies .The Group is alive to and collectively undertakes its corporate Responsibility towards society. The Group has continued to carry out socially beneficial activities.

Cautionary Statements

Certain statements in the Management Discussion and Analysis Report relating to the Companys objectives, projections , outlook, expectations , estimates etc may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results may differ from such expectations , projections etc whether express or implied. Several factors could make significant difference to the Companys operations .These include

climatic conditions , economic conditions affecting demand and supply , government regulations and taxation , natural calamities and other force majeure conditions etc. over which the company has no control.