Shri Mahalaxmi Agricultural Developments Ltd Management Discussions

To avoid duplication between the Directors Report and the Management Discussion and Analysis Report for the year, we pre sent below a composite summary of performance of the various business & functions of the Company.

Industry Overview:

World economy grew at 2.3% in 2016, compared to growth of 2.7% in previous year. Against weak global growth, expansion in Indian economy was noteworthy. Despite some decline in growth due to slowdown in manufacturing and demonetization, India remained the fastest growing major economy with ~7.1% yoy growth (forecasted). While the demonetization of 500 and 1,000 currency bill impacted consumer demand for some time, the economy weathered the storm well and came out fairly unscathed. Considering Indias growth is primarily driven by Government spending and private consumption, latter of which got impacted by demonetization, strong growth numbers provided a lot of comfort on the strength of the economy. Not only growth but Indian economy did well on other macro-economic parameters also. Crude price rose again after remaining weak for last couple of years. However, in spite of higher crude prices, inflation remained under control. Consumer Price Index averaged below 5% for the year, a significant improvement over last few years when double digit inflation was the norm. India also saw passing of long awaited GST bill. GST is likely to be implemented from July 1st and will provide a huge fillip to industry as it simplifies the tax structure in the country significantly and will likely provide an impetus to the private investment in the country. While in the long term, implementation of GST is a positive development, its impact, especially on exports, in the near future is still unclear as many export incentives are likely to be discontinued. The net impact of the new tax law will be known only after further details are shared. Domestically, however, the new law is likely to dilute the present tax arbitrage, which is available to unorganised players, moving the market towards organised players. Country is still facing challenges on account of lower service exports and weak manufacturing growth. Indian currency strengthened significantly against US$ towards the end of the year creating another set of challenge for Indian exporters. By the end of FY 2017, Indian rupee was at its highest level against both USD and EUR in almost one and a half years.

Business Overview:

The company has relatively good strength in textile trading. Total revenue of the company grew in Financial Year 2017 primarily on the back of strong growth in our brands and retail business. Our Operating Earnings (excluding other income) before Interest Depreciation and Taxes (EBITDA) increase marginally by 1%.

Adequacy of Internal Control:

The Company has robust internal control systems in place which are commensurate with the size and nature of the business. The internal controls are aligned with statutory requirements and designed to safeguard the assets of the Company. The internal control systems are complemented by various Management Information System (MIS) reports covering all areas. Increased attention is given to auto generation of MIS reports as against manual reports to take care of possible human errors or alteration of data. The Management reviews and strengthens the controls periodically.

Human Resource Development:

The Company recognizes the importance of Human Resource as a key asset instrumental in its growth. The Company believes in acquisition, retention and betterment of talented team players. With the philosophy of inclusive growth, the Company has redefined its performance management system. The new system focuses on progression of individual employees together with organizational goals. Under the new system increased thrust will be on job rotation and multi-skilling.

Manpower:

The company recognizes the importance of human value and ensures that proper encouragement both moral and financial is extended to employees to motivate them.

Segment-Wise Performance:

The Company is into single reportable segment only.

Compliance:

The Compliance function of the Company is responsible for independently ensuring that operating and b usiness units comply with regulatory and internal guidelines. The Compliance Department of the Company is continued to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis. New Instructions/Guidelines issued by the regulatory authorities were disseminated across the Company to ensure that the business and functional units operate within the boundaries set by regulators and that compliance risks are suitably monitored and mitigated in course of their activities and processes.

Cautionary Statement:

Investors are cautioned that this discussion contains statements that involve risks and uncertainties. Words like anticipate, believe, estimate intend, will, expect and other similar expressions are intended to identify "Forward Looking Statements". The company assumes no responsibility to amend, modify or revise any forward looking statements, on the basis of any subsequent developme nts, information or events. Actual results could differ materially from those expressed or implied.