Tirupati Inks Ltd Management Discussions

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, expectations or predictions may be forward looking within the meaning of applicable securities, laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could in uence the Companys operations include overall global economic conditions, domestic manufacturing and service sector growth, foreign exchange stability, stable credit environment, Government policies, economic development, political factors and such other factors beyond the control of the Company.

Overview, Industry Structure & Developments

Our Company is mainly engaged in the business of manufacturing of Printing Ink and Allied Products. We emphasize on providing complete packaging solutions to our consumers and society at large. The fortunes of the printing ink industry are linked to the economy, particularly the publishing and packaging sectors. This will directly benefit our company. In the Ink industry there are new formulations and new materials being launched to cater to higher speed machines, with faster drying processes. The industry still grows at a healthy rate of 15%, so there is enough scope for the ink manufacturers to expand at a moderate space.

The demand for printing ink is expected to grow further, especially from publishing segment and packaging segment. The industry will be on a zooming track of growth within a short span of time. Flexible packaging has been one of the fastest growing sectors of the packaging market over the last decade having developed from simple wraps and bags to more complex products with sophisticated functionality. The flexible packaging has promising future both in India & globally due to increased consumerism, Asia taking a leading position in the world.

Presently the Company has suffered a loss of Rs. 14819.98 Lac in comparison to a loss of Rs. 7098.28 Lac in the previous year. The

Company has suspended manufacturing activity in the Factory situated at Greater Noida since 03.05.2016, consequent to some labour unrest and financial stress. The Company has not provided for any liability of wages or compensation which may arise after eventual settlement / adjudication. During the current financial year, due to depleting net worth and mounting losses, the company is unable to pay off salary to employees. Consequently, almost all the employees have left the organization and none are willing to join and also the Company could not honour its financial obligations with the banks. The banks have classified the accounts as NPA and have also initiated recovery actions under SARFAESI Act, 2002 and under RDDBFI Act, 1993.

Business Review

The main products of this business are laminates made with various combinations of Polyester, BOPP, poly, metalized & hologram films and others and supplied in roll form and in various pouches, manufacture of rotogravure cylinders for various types of rotogravure printing, Anilox/Coating, Rollers for flexo printing and Shims for holographic embossing and holograms and printing ink and adhesives and packaging & processing machines. This business involves customization according to the needs of customer. The company provides complete solutions to the packaging needs of customers.

Presently the Company has suffered a loss of Rs. 14819.98 Lac in comparison to a loss of Rs. 7098.28 Lac in the previous year. The Company is trying to overcome from the losses but because of the lack of funds in the Company, the operations of the company could not be revive.

The Company has suspended manufacturing activity in the Factory situated at Greater Noida since 03.05.2016, consequent to some labour unrest and financial stress. The Company has not provided for any liability of wages or compensation which may arise after eventual settlement / adjudication. During the current financial year, due to depleting net worth and mounting losses, the company is unable to pay off salary to employees. Consequently, almost all the employees have left the organization and none are willing to join and also the Company could not honour its financial obligations with the banks. The banks have classified the accounts as NPA and have also initiated recovery actions under SARFAESI Act, 2002 and under RDDBFI Act, 1993.

Opportunities and threats

The packaging industry is very dynamic and has undergone significant change because the environment in which it operates is changing e.g. laws & regulations, introduction of new products, the globalization of technologies and a general increase in competitiveness have accelerated in the last 10 years, but there are greater concerns with health and reliability issues such as greater commercial pressure for freshness in foods. In the drug sector, there is also pressure to inform the consumer greater details about the drug, its effects and side effects. Above all, the world perceives the packaging industry an environmental unfriendly and thus there is opposition to it in general. But all the products made by the Company are eco-friendly, thus do not have any effect.

The Company is going through the financial crisis and this is the biggest threat of the Company to overcome from the financial crisis.

Future Outlook

The printing industry growth is linked to the GDP growth of the country. The demand for the printing ink has become the vital aspect in sustaining the market growth. The industry depends heavily on the prices of raw materials, crude oil. Moreover, the price volatility of these commodities has prompted the companies to opt for counter measures. The demand for printing ink is expected to grow further, especially from publishing segment and packaging segment. The industry will be on a zooming track of growth within a short span of time. Flexible packaging has been one of the fastest growing sectors of the packaging market over the last decade having developed from simple wraps and bags to more complex products with sophisticated functionality. The flexible packaging has promising future both in India & globally due to increased consumerism, Asia taking a leading position in the world.

Risk Management

Over the years, the Company has achieved an appropriate balance between risk and returns by setting up an efficient risk mitigation system to meet various forms of financial and other risks. The primary risks that the company is exposed to credit risk, market risk and operational risk. Evaluation of risk and its management becomes more important in the global scenario, especially when your Company is trying to penetrate the global markets. Low demand, economic slowdown, political instability, higher inflation, natural calamities may affect the business. Business therefore cannot be risk free. What is therefore important is to correctly access the risk area wise and to take steps to mitigate the risk before it becomes a potential threat. General risk areas are statutory compliances, economy, financial, government regulations and policies, market related, operational, products and technology, intellectual property etc.

Internal Control Systems and Adequacy

The Company had earlier established internal control systems for ensuring optimum use of resources and safeguarding the assets. The Internal

Control Systems and procedure are not adequate and commensurate with the size of the Company.

But because of its depleting net worth and mounting losses due to lock out in the manufacturing facility located at Greater Noida, the company is unable to pay off salary to employees. Consequently, almost all the employees have left the organization and none are willing to join, In the absence of adequate staff the Board is unable to make regular assessment and monitoring of the same from time to time in order to be at par with changing situations, scenarios and circumstances of the market.

Human Resources

The Company endeavours to provide high priority to its employees and focus on talent retention. Your Company believes in building leadership capability through adequate training to ensure cohesive working environment and a contented team work for the organization. The Company believes in minimizing attrition levels so as to bring continuity of service leading to high performance by all employees. There is a focus on adopting best practices so as to ensure a better work life balance for all the members of the Company.

Segment Performance

Based on the guidelines of Accounting Standards on Segment Reporting (AS-17) issued by The Institute of Chartered Accountants of India, the Companys primary business segment is only Printing Inks & Allied Products and hence segment reporting under this head is not applicable. The secondary segment i.e. Geographical Segment is also not applicable since the Companys operations are situated in one geographical area i.e. India.

Details pertaining to remuneration as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

1. The ratio of the remuneration of each director to the median remuneration of the employees of the Company. The ratio of remuneration of Mr. Sanjiv Agrawal, Managing Director to the median remuneration of the employees of the Company for the financial year 2016-17 is 1.47.

2. The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary during the financial year 2016-17.

3. There is no percentage increase in the median remuneration of employees in the financial year 2016-17.

4. There were 10 permanent employees on the rolls of the Company as on the 31st March, 2017.

5. There is no increase in average percentage made in the salaries of employees other than managerial personnel in the last financial year i.e. 2015-16 with increase in the managerial remuneration for the same in the financial year 2016-17.

6. It is affirmed that the remuneration paid is as per the remuneration policy of the Company.