Shirpur Gold Refinery Ltd Management Discussions.

Investors are cautioned that this discussion contains forward-looking statements that involve risks and uncertainties including, but not limited to, risks inherent in the Companys growth strategy, acquisition plans, dependence on certain businesses, dependence on availability of qualified and trained manpower and other factors. The following discussion with the Companys financial statements included herein and the notes thereto:

INDUSTRY STRUCTRE AND DEVELOPMENTS

Gold has the potential to play a pivotal role in society, enhancing safety, security and stability. Gold is different from almost any other asset because it appeals to both investors and consumers. Investors turn to gold as a diversifier and long-term savings tool. Consumers see gold as an adornment and a sign of wealth.

During the FY 2018-19, consumer demand rose in many key markets, supported by positive economic growth. But gold faced headwinds from investment. President Trumps tax cuts fuelled the long bull market in US equities for much of the year, while a strengthening dollar and rising US interest rates acted as further brakes on investment demand for gold.

Global Scenario

Demand

Gold demand grew modestly in 2018, reaching 4,345t, in line with the five-year annual average. A 50-year high in central bank buying drove this growth, supported by an acceleration in bar and coin investment in the second half of the year. Central banks added 651.5t to official gold reserves - the highest level of demand since the end of US dollar convertibility into gold in 1971 - as more central banks turned to gold as a diversifier. Retail investment in gold bars and coins posted annual growth of 4%. Coin demand surged to reach a five-year high of 236.4t, the second highest on record. Demand for gold bars held steady, a fifth year in succession of holding in a firm 780-800t range.

Demand for gold as a reserve asset strengthened considerably in 2018, rising by 74% compared to 2017, in response to the geopolitical and macro-economic environment. This was borne out by events, with over 20 central banks purchasing gold in 2018. This included many new buyers or central banks that had been dormant in the gold market for several years. Even some European central banks bought gold, with the national banks of Poland and Hungary both making sizeable purchases. The central banks of Russia, Kazakhstan and Turkey also remained prolific buyers. The desire to de-dollarise foreign exchange reserves, in response to deteriorating geo-political relations in some parts of the world, fuelled some purchases. While other central banks bought gold for diversification reasons and, in Hungarys case, partly as a hedge against structural changes in the international financial system.

Following the launch of the Shariah Standard on Gold, which was developed to open up a new asset class for Islamic investors, new Shariah compliant gold-backed products were launched in Dubai and Malaysia this year, catering to both the institutional and retail investment markets.

Annual jewellery demand was virtually unmoved, down just 1t from 2017. Growth in China and the US cancelled out weakness in the Middle East and Turkey. Gold demand in technological applications reached its highest since 2014. Growth was strongest in the electronics sector, primarily due to strong demand for consumer electronics and ongoing electrification in the automotive sector.

Since its inception nearly 15 years ago, the US physical gold-backed ETF industry continues to experience an average of 27.3% AUM growth per year in US$ terms. This is driven by diverse factors including the rapid adoption of robo/self-directed solutions, a wide range of options for exposures, management fee compression, and ease of use relative to other investment vehicles.

Supply

Total supply grew fractionally in 2018. growth was supported by similar y-o-y increases in mine production and recycled gold. Gold mine production rose by 1% in 2018. Although slowing in recent years, this is now the tenth year of annual growth and the highest level of annual mine output. Australia, Russia, Papua New Guinea and Canada were some of the bright spots for annual production growth. Annual Chinese production dropped for a second successive year due to the impact of more stringent environmental regulations; while the closure of some loss-making projects and industrial action compounded the pressure on South African miners as national output fell 18% y-o-y.

Indian Scenario

Annual Indian gold jewellery demand weakened marginally to 598t, from 601.9t in 2017. Demand was constrained in 2018 as there were relatively few auspicious wedding days in the Hindu calendar. At a time of higher and more volatile local gold prices, the market saw a rise in the number of consumers preferring to exchange existing gold for new pieces. This was particularly prevalent in the south and west regions, where some retailers reported an increase of up to 45% in exchange activity. The market was therefore well supplied with gold, and this was reflected in local price discounts.

Indias bar and coin market faced challenges throughout the year. The weakness of the Indian rupee pushed the gold price to Rs31,900/10g during October 2018, its highest level since June 2012. And Indias leading stock market – the SENSEX – continued to hit new highs, grabbing the attention of many urban investors. Finally, the governments continued clamp down on illicit money has removed an element of demand from the market.

Yet despite these challenges, Indias gold investment market continued to innovate. Mobile apps and online platforms such as PayTM Gold, Phone Pe, MobiKwik and Safe Gold continued to gain traction, albeit from a very low base. Businesses such as these allow investors to gain exposure to gold for as little as one rupee and, according to media reports, have seen rapid growth in their customer base.

India holds a strategically important position as the second largest consumer of gold and the holder of the largest stock of gold, yet its policies on gold in the past have not kept pace with the needs of a dynamic industry. Over the last five years, the World Gold Council have been advocating the need for a comprehensive gold policy to make gold a mainstream financial asset and part of the organised sector of the Indian economy. As a consequence of their efforts, 2018 marked a significant shift in government policy.

In Februarys Union Budget, Indias Finance Minister indicated the governments commitment to define comprehensive gold policies that would establish gold as an asset class, together with the creation of a gold exchange. This reflected a profound change in approach. Leading on from this commitment, the governments think-tank, NITI Aayog, released a gold policy report with recommendations to transform the gold market over the coming years. During 2019, a syndicate will be established to work with the policymakers to drive implementation.

In November 2018, Indias first assay institute was launched in collaboration with MMTC-PAMP. To support and sustain this initiative, six large national trade associations came on board as patron members in an unprecedented fashion. The institute will be transformative for the industry, as a new generation of skilled assayers will help eliminate the systemic under cartage of gold jewellery and bring integrity to the gold market, thereby instilling trust and confidence in consumers.

Company Overview

Shirpur Gold Refinery Limited, a part of the Essel Group, has the largest installed capacity in India of refining gold and silver from the raw gold (Dore) stage to 99.99% purity. The technical capabilities include achieving fineness of up to 999.9 parts per thousand for gold and silver, casting the refined bullion into bars of various denominations, minting of coins and manufacturing of Jewellery in various designs.

Refining of Gold from the raw gold (Dore) stage and Jewellery scrap to achieve the desired purity of 0.995, 0.999 and 0.9999 fineness is the principal business of the Company. The products manufactured under Companys ‘Zee Gold brand consist of gold bars of 100g, 1 kg. gold and silver coins or different denominations of different purities as per market demand to the highest specifications of global standards.

The State of Companys Affairs/ Developments

The company continues to maintain its commitment to the highest level of production efficiency and excellence in quality. As such at the company has always kept abreast of the ever-changing technologies and processes.

Gold industry in India has always been greatly impacted by the government regulations and controls. Changes implemented by the regulatory authorities has been challenging for the industry and so for the company. The company is well compliant with all directions, changes and regulations implied by the government on gold industry from time to time.

STRENGTHS, OPPORTUNITIES, THREATS, RISKS & CONCERNS:

A) Strengths

(i) Product Range

Currently, The Company is selling its gold bars, Jewellery and coins in different denominations under the brand ‘Zee Gold.

(ii) Product Quality

The company compares its quality standards with the best in the world. The products positioned are comparable with the highest levels certified and accepted internationally. The production processes and controls along with stringent quality control systems has ensured a Zero-defect record over the term.

(iii) Laboratory

The Companys laboratory is a NABL Accredited Lab (National Accreditation Board for Testing & Calibration Laboratories) Government of India for ISO / IEC 17025; 2005 in the discipline of chemical analysis and the scope covers testing of Gold and Silver by Fire Assay, Chemical and

Instrument Assay. NABL Accreditation provides formal recognition to Companys lab, thus providing a ready means for users to find reliable testing and calibration services in order to meet their requirements.

(iv) Responsible Sourcing of Raw Material

The company follows acceptable standards of due diligence and responsible sourcing of raw materials. The company ensures adequate compliance following all international regulations covering anti money laundering and terrorist financing. The management is fully committed to establish and maintain strict adherence to international compliance standard for sourcing of raw material. Companys aim is to continually maintain and update its compliance policies with respect to procurement of dore, supply chain management and trading.

(v) Economy of Scales

The production processes established by the Company and continuous monitoring of the same ensures that the Company is in position to reduce the production time with economies of scale and cost reduction through modular structure.

(vi) Distribution network

Your Company has further strengthened the existing strong distribution network created over years. The necessary steps have been initiated to increase penetration in all the gold consuming centers. The company has already created a strong customer base in the international market by having strong and solid channel partners in main hubs of UAE and Hongkong.

(vii) Financial Strengths

The Company is financially sound and has been able to take the advantage in operations.

(viii) Strong operational, technical and management team

Standard Operational Procedures (SOPs) are implemented and policies are put in place by the management to ensure that the work force is adequately monitored and efficiency levels maintained. New trends and practices in the refining areas are evaluated and implemented under the able guidance of technical experts of the Company having on its panel.

B) Opportunities

India is the largest consumer of gold in the world. Gold demand in India is expected to maintain the same pace around 700+ tones/year for 2019.

In 2019, structural economic reforms should support gold demand for jewellery, technology and long-term savings. Increased market uncertainty and protectionist economic policies should make gold increasingly attractive as a hedge. And suggestions that the US economy will experience weaker growth this year could curtail rising interest rates and limit dollar strength.

India is one of the largest markets for gold, and growing affluence is driving growth in demand. Gold has a central role in the countrys culture, considered a store of value, a symbol of wealth and status and a fundamental part of many rituals. Among the countrys rural population, a deep affinity for gold goes hand in hand with practical considerations of the portability and security of jewellery as an investment.

India has been actively modernising its economy, reducing barriers for commerce and promoting fiscal compliance. The country is expected to grow by 7.5% in 2019, significantly outpacing most global economies. Gold is well positioned to benefit from this expansion, as there is an unequivocal link between jewellery demand and growing consumer wealth.

At present only LBMA accredited Refiners are only allowed to deliver in the exchanges. Domestic Refiners in India are closely watching the policy developments of regulators and government bodies which is likely to boost the refining business in India. Regulators were showing interest to move towards a delivery method of settlement in Gold rather than cash settled in Exchange based trading.

Large organised players in the Indian gems and Jewellery sector will see a positive trend towards higher demand for studded and wedding Jewellery. This will be driven by rising per capita income leading to higher discretionary spending.

The Gems and Jewellery sector are witnessing changes in consumer preferences due to adoption of western lifestyle. Consumers are demanding new designs and varieties in Jewellery, and branded retailers are able to fulfil their changing demands better than the local unorganized players. Moreover, increase in per capita income has led to an increase in sales of Jewellery, as Jewellery is a status symbol in India.

C) Threats

Global slow down may occur due to following risks :

- The potential negative long-term effect of higher tariffs amidst trade tensions between the US and its trade partners

- Geopolitical tensions between the US and Iran

- Uncertainty surrounding Brexit and other political and economic concerns in the UK and Europe.

This year, the gold industry see higher levels of risk and uncertainty across four key metrics: global stock market volatility; potential increases in inflation; political and economic instability in Europe; and increasing concerns about a global recession.

Weaker economic growth and the possible impact of higher gold price volatility may result in softer consumer demand this year, especially in emerging markets that make up the lion share of annual demand. Gold demand is linked to jewellery, technology and longterm savings, and these are important determinants of long-term performance. In the short and medium term their impact is felt predominantly when there are significant changes to demand. Conversely, gold investment demand amidst higher uncertainty – including speculative activity – can sway prices in a meaningful way in the short and medium term but its effects level off in the long run.

Despite being the second largest consumer of gold in the world, Indias gold market has long suffered from a lack of transparency, uncertain quality and differentiated pricing. A successful Gold Spot Exchange could remedy many of these issues.

D) Risks & Concerns:

(i) Market Risks

The Company is largely dependents on domestic customers. The Company continues to work towards diversifying its customer mix and to focus on building relationships with customers spread geographically.

(ii) Regulatory Risks

The Company is exposed to regulatory uncertainties facing the gems and Jewellery industry in India. Any changes in the duty, rules and regulations, Import and Export policies or requirements by the Government of India may require the Company to revise business strategies which may impact its financial position adversely. The Company in order to reduce loss of revenue and market share due to any changes in the policies of the Government of India, has diversified sales mix, product range, and raw material mix. However, the management cannot totally eliminate the risks involved in such volatile trades.

(iii) Operational Risks

The Company adopts a sustainable production platform. Continuous availability of gold dore and scrap is critical for the production plans of the company. The company has tied up with global miners for continuous supply of gold dore. The Company is also in process of entering into off-take agreements with miners for supply of gold Dore. The Company is also procuring SR bars and scrap materials from local markets. However, the management cannot totally eliminate the risks involved in such volatile trades.

(iv) Commodity Price Risks

The prices of Gold and Silver are largely governed by movements at major precious metal exchanges of London, New York, Tokyo and others. The local precious metal prices are an algorithm of these movements on ‘spot basis and Indian currency Rates. Prices may fluctuate widely for all products affecting demands in the market. The Company has adopted adequate hedging mechanisms to effectively counter the risk that arises during operations. However, the management cannot totally eliminate the risks involved in such volatile trades.

(v) Currency Risk

This exposes the Company to metal and foreign exchange risks. The Company has established a dealing room and placed hedging policies and procedures for mitigating the risks in gold prices and foreign exchange transactions. However, the management cannot totally eliminate the risks involved in such volatile trades.

(vi) Competition Risk

Significant additional competition in the gold trade may result in reduced off-take and thereby negatively affect the Companys revenues and profitability. The Company may also face competition arising from new technology/ automation leading to new products acceptable to customers. For maintaining or increasing the market share, Company has taken initiatives of effective marketing, ability to improve processes, introducing new products & technology.

(vii) Internal Control Systems

The company follows a standard operating procedure in all its operations, documentation and trades which is best as per industry standards. The management ensure all the activities and operations are well informed to the concerned and risk management policies are followed in all its endeavors.

(viii) Attrition Risk

The Company has a strong management and technical team to oversee the operations and growth of its business. The Companys ability to sustain its growth largely depends, on its ability to attract, train, motivate and retain high skilled employees. An increase in the rate of attrition of experienced employees, would adversely affect the Company business. In view of above, to curtail attrition of high potential employees, the Company always strives to create conducive work environment, platform for innovation & creativity, creation of learning & growth opportunity and sense of belongingness. As a part of its retention strategy the Company is putting its endeavor to identify & ring fence of "High Potential Employees".

SEGMENTAL PERFORMANCE

The Company is in the business of refining, manufacturing and marketing of precious metal which is considered as the only reportable segment.

OUTLOOK

Emerging markets account for around 70% of gold consumer demand, led by China and India. Both countries are implementing economic changes that will promote growth and income levels over many years. gold jewellery demand will benefit from positive consumer sentiment in 2019. Even if uncertainty affects confidence in certain jurisdictions, global demand should still increase marginally.

Global financial markets are valued at more than US$150tn. Investment in gold amounts to less than 1% of that total. Raising awareness of the role that gold can play within a diversified portfolio could benefit investors all over the world and also have a material impact on overall demand.

Increasing Disposable income of one of the largest middle-class population of the world has reflected in thriving gold physical demand in India, traditionally gold is the psychological safe haven for Indian community. Further to that Increasing Investment supported by expansion of domestic market has offered strength to the growing market in India. Recent policy announcement Gold Monetisation enables an individual, trust and other mutual find to deposit gold with banks and earn interest. Being one of the youngest middle-class workers and with a population of around 547 million by 2025. Any drop-in consumer sentiment could easily get reversed within a short span of time.

Jewellery market in India is home to around 3,00,000 participants and it is run largely run by scattered rural and semi urban players. Respective Industry association expects market size to reach around 100 $ industry by the year 2025 from currently around $75 Billion USD. Recently we have seen that the retail business in gold is getting organized funding and tremendous growth potential for coming years specially the untapped rural markets by branded retail chains in India. Rising middle class population and increasing income levels are the key drivers for the demand of gold and other Jewellery in India. The demand for Jewellery is expected to be significantly supported due to these factors.

Zee Gold DMCC, Dubai (100% subsidiary) is actively engaged in the precious metals trading business and tapping opportunities in countries like Middle East, Africa, Indian sub--3Continent, South East and Central Asia, The Americas, Turkey and the former CIS countries.

The central location of Dubai and a time zone that facilitates trading with all global markets provides an ideal base from which to develop a major precious metals business. The business is focused on Wholesale physical bullion trading, incorporating sales of the full range of the companys physical gold and silver products, including value added investment bars and coins. Sourcing of both primary and secondary supplies of gold and silver.

Certification on Financial Statements of the Company

We, Subhash Pareek, Manager and Sharvan Kumar Shah, Chief Financial Officer of Shirpur Gold Re3nery Limited (‘the Company), certify that:

a) We have reviewed the financial statements and cash flow statement for the year ended March 31, 2019 and that to the best of our knowledge and belief:

i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

ii) these statements together present a true and fair view of the Companys affair s and are in compliance with existing accounting standards, applicable laws and regulations.

b) To the best of our knowledge and belief, no transactions entered into by the Company during the year ended March 31, 2019 are fraudulent, illegal or violative of the Companys code of conduct.

c) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of the Internal Control Systems of the Company pertaining to financial reporting and have disclosed to the Auditors and Audit Committee, de3ciencies in the design or operation of such internal controls, if any, of which we are aware and the steps we have taken or proposed to take to rectify these de3ciencies.

d) During the year: i) there has not been any significant change in internal control over financial reporting; ii) there have not been any significant changes in accounting policies; and

iii) there have been no instances of significant fraud of which we are aware that involve management or an employee having significant role in the Companys internal control system over financial reporting.

For Shirpur Gold Re3nery Limited

Subhash Pareek Sharvan Kumar Shah
Manager Chief Financial Officer

Place: Mumbai

Date: May 18, 2019