Tulsi Extrusions Ltd Management Discussions.

ECONOMIC OVERVIEW

India is reaching a higher global perspective during the year in all spheres of the world. The economy of India is the sixth-largest in the world measured by nominal GDP and the third-largest by purchasing power parity (PPP). The country is classified as a newly industrialized country, and one of the G-20 major economies. The long-term growth prospective of the Indian economy is positive due to its young population, corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy.

Our country ranks second worldwide in farm output. India is continuously going as a progressive economy with wide challenges and reaching global market smoothly. The Governance norms including various measures and incentives taken by the Country shall give various in-house businesses and developments in the Country during the year. The Governments initiative towards Swachh Bharat Abhiyan is running in a fair and broad manner to improve the situations in the country and gives a message for cleanliness. Our Honble Prime minister Vision of Clean India and a New India is also working in a progressive as well as innovative manner. The main focus is to strengthen the infrastructure, increasing road connectivity, affordable houses for all and creation of smart cities in a large scale. The Governments major move for industry in the form of various initiatives i.e. Ease of doing business and the Make in India will boost the economy to a great extent.

Our Honble Prime Ministers vision of New India by the year 2022 in the 75th year of our Independence will also have major ambitions for Affordable Houses for all by 2022 and Doubling the farmers income by 2022.

This broad ideology in mind will boost the rural sector as well as the agriculture sector. Your Company in the coming era will get higher benefits and business development in this span of time.

During the year, the Governments bold and courageous decision of Demonetization by the 8th day of November, 2016 gives a robust effect to the economy, which continues to affect business till the end of the financial year. Our sector also affects in a great manner, as the end user of our products is farmers and during this period of demonetization and later on, they suffered a lot for both banking and working arrangements. The inadequate rainfall also affects the business and the situation of drought in many regions show a slowdown in the business. The later move of implementation of Goods and Service Tax (GST) will give a new and innovative change in the indirect tax structure of the country. This new regime affects the business of unorganized sector, but overall, this move of government will temporary slowdown the business, but its result will be seen in the long run. These measures initiated by the Government will take our country on higher annual growth in the years to come. By this move, millions of fresh jobs will be there in all sectors every year. All these major initiatives will lead the country to the path of a higher and increased GDP growth per year. India after adopting Make in India campaign in a broad manner will take in-house business and growth in the country which shall also result as increase in export demand.

PRODUCTS GROUPS

The products of the Company are as follows:

Plastic Piping System: UPVC Pipes, Injection Molding PVC Fittings and Fabricated Fittings, ASTM Pipes, SWR Pipes & Fittings, HDPE Pipe Systems, LLDPE Pipe and Drip irrigation system, CPVC Pipes and Fittings.

FINANCIAL REVIEW

The Company mainly operates in two categories, i.e. Poly Vinyl Chloride [PVC] Pipes & Fittings and Micro Irrigation Systems (MIS). In comparison to the previous year, there was increase in sales, while expenses of the Company decreased, which results in lesser amount of loss. However, from the last many years, the Company facing continuous losses, the financial position of the Company due to the banking issues is moderately weak, which is given in the Board report of the Company as a whole.

INDUSTRY OUTLOOK

PVC RESIN BUSINESS

The Indian plastic processing sector comprises three segments namely injection molding, blow molding and extrusion, catering to the requirements of a wide array of applications like packaging, automobile, consumer durables, healthcare, among others. According to the All India Plastics Manufacturers Association (AIPMA), domestic consumption of plastic has been growing at 10-12% CAG Rover the last decade.

Indian plastics industry is set to buck the global trend of sluggish growth by emerging as one of the fastest growing markets with 12 percent growth rate this year. By 2020, plastics consumption of the country is expected to increase from the current 12 million metric tonnes per annum (MMTPA) to 20 MMTPA. The Plastindia Foundation will organise Plastindia 2018 event in Gujarat in the month of February, 2018. The export of plastics finished goods is expected to nearly double from $ 7.9 billion currently to $ 15 billion in next 5 years.

PVC PIPES BUSINESS

The demand for PVC Pipes has been continuously strong during the year under review. The bulk of your Companys PVC Pipes production is sold in the rural markets for Agriculture and Irrigation. Given your Companys vast network spread across the length and breadth of the country, your Company has been able to reach even the remotest villages where the demand for PVC Pipes exists. Due to the slow-down in the Building Construction Industry, your Company was unable to post a growth in the sale of Plumbing and Sanitation Pipes. But unfortunately due to bank and shortage of working capital may be affecting your business.

COMPANY STRENGTHS & ITS DRIVERS

Your Companys primary focus is to play a catalyst in providing value added long lasting solutions through its product and services to problems of water security, food security and energy security. In pursuance of Companys goal, "Ek Vichaar ... Ek Abhiyaan..." - Samridh Kisan... Desh ki Shaan... and Companys motto Lets nurture the green era, the Companys management is planning to train and educate the farmers and locals through its well established network of dealers about importance of water resources and its best management along with optimum utilization.

Besides the major grown drivers are:

QUALITY OF THE COMPANY

Your Company has ISO 9001:2008 Certification in respect of its quality management systems and regularly doing ISO Audit in all operating plants of the Company. Your Company maintains quality at all stages of manufacturing process starting from raw material procurement to manufacture of the finished product. All of the Companys finished products are tested in its well equipped quality control laboratory to ensure that they adhere to the laid down quality standards. Your Company also facilitates third party inspection upon the request of its customers.

MARKETING AND DISTRIBUTION NETWORK

Sales are made through direct marketing through the Companys network of dealers and distributors and by the Companys sales personnel. Presently, your Company has more than 1000 dealers covering seven states viz. Maharashtra, West Bengal, Madhya Pradesh, Rajasthan, Chhattisgarh, Gujarat and Karnataka. The Company also has branches at Mumbai, Kolkata (West Bengal), Indore (Madhya Pradesh), Jaipur (Rajasthan), Raipur (Chhattisgarh), Surat & Vadodara (Gujarat) and is continuously approaching and working to reach more areas and go nationwide as well as worldwide.

DIVERSIFIED PRODUCT MIX

Your Company has a product mix to cater to the increasing requirements of its customers. Its product offerings include PVC Pipes, PVC fabricated fittings, PVC casing and screen pipes, ASTM plumbing pipes and fittings, LLDPE pipes and fittings, HDPE pipes and fittings, SWR Pipes and Fittings, Moulded Fittings, Crates, Column Pipes and elastomeric sealing pipes. The products are primarily used in irrigation sector, industrial sector, and infrastructure and housing sector. Your Company believes that this range of products would allow its existing customers to source most of their product requirements from a single vendor and also enable it to expand its business from existing customers, as well as address a larger base of potential new customers.

EXPERIENCED MANAGEMENT TEAM

Your Company has a well diversified management team with experience in different areas of PVC pipes and fittings industry including production, quality control, sales, marketing, finance, accounting secretarial and manufacturing activities. The management team is supported by workforce who has deep experience in the industries in which it operates.

Your Companys management team works under Mr. Sanjay Kumar Taparia, Chairman & Managing Director, who has more than 26 years of experience in trading and marketing of PVC pipes and fittings. The management team also has long-standing relationships with many of the major customers, distributors/dealers and suppliers. Further, the Company has a strong local sales force, which together with the management team gives the Company an excellent understanding of the needs of the domestic customers.

INTERNAL CONTROL SYSTEM

Your Company has adequate internal audit and control systems. The auditors independently evaluate the adequacy of internal control system. Based on the audit observations and suggestions, follow up, remedial measures are being taken including review and increase in the scope of coverage, if necessary. The Audit Committee of Directors, in its periodical meetings, reviews the adequacy of internal control systems and procedures and suggests areas of improvements. Needless to mention, that ensuring maintenance of proper accounting records, safeguarding assets against loss and misappropriation, compliance of applicable laws, rules and regulations and providing reasonable assurance against fraud and errors will continue to remain central point of the entire control systems.

FUTURE OUTLOOK (OPPORTUNITIES)

UNION BUDGET HIGHLIGHTS 2017-18

• A sum of Rs. 10 lakh crore is allocated as credit to farmers, with 60 days interest waiver

NABARD fund will be increased up to Rs. 40,000 crore.

• Government will set up mini labs in Krishi Vigyan Kendras for soil testing.

• A dedicated micro irrigation fund will be set up for NABARD with Rs. 5,000 crore initial corpus.

• Sowing farmers should feel secure against natural calamities

• Irrigation corpus increased from Rs. 20,000 crore to Rs. 40,000 crore.

• Issuance of soil cards has gained momentum.

• Dairy processing infrastructure fund will be initially created with a corpus of Rs. 2,000 crore.

• A model law on contract farming will be prepared and shared with the states.

CHALLENGES

Your Company faces normal markets competition in its businesses from Indian as well as international companies. Tulsis globally competitive cost positions and sound business strategies have enabled it to retain its leading market positions. Your Company has maintained its operating margins and consistently improved its financial performance through the cycles of PVC business. Tulsi has consistently delivered superior value to its customers. Your Company has a portfolio of about 26,000 sq. mtrs. Tulsi has been working with the leading international technology and service providers for the development in its product range. Tulsi has wide network of marketing over 1000 dealers across the country. Tulsi will leverage its project execution skills and organizational strength in setting up the marketing network. Tulsi will create state-of-the-art dealers, offering a wide variety of consumer choices and services, in the hitherto controlled marketing segment. Basically, due to the collapse of mega project, the Company still suffers financial crisis business activity remained on low scale during the current financial year also. The Company now expecting for a scope for smooth running and functioning of operations of Company, in the interest of all stakeholders associated with the Company.

Your Company through its operational excellence, technical superiority, extensive marketing and distribution network, and deep customer relationship maintain its unique position in the domestic marketplace. Tulsi endeavors to enhance its competitive advantage, through a process of continuous improvements, and by implementing appropriate business strategies. Tulsis coherent business strategy and disciplined financial framework have provided stability and platform for growth in a volatile global environment.

HUMAN RESOURCES

The function of Human resource is considered as key to the future growth strategy of the Company and looks upon to focus its efforts to further align human resource policies, processes and initiatives to meet its business needs. In order to focus on keeping employees abreast of technological and technical developments, the Company provides opportunity for training and learning in a wider perspective. During the year under review, there are in all 27 additions of employees, while 31 employees left the Company and as at March 31,2017, the total associates of the Company were 326.

Industrial relations at all the units and locations are cordial and in co-operative manner. Your Company values the human resources, their contribution and potential, as one of the foundational pillars for achieving the organizational vision. Your Company sustained harmonious and healthy industrial relations in all manufacturing plants. Tulsi takes pride in the fact that our people, organizational culture and values enable us to be decentralized and entrepreneurial. Tulsi is committed to creating a transparent organization and a highly conducive environment that is focused on people and their capability, enabling them to deliver superior performance. At Tulsi, we have constantly focused on getting the top talent for our businesses. Human resource development happens through structured approaches for employee engagement, resourcing, performance and compensation management, competency based development, career and succession planning and organization building. We follow a Balanced Scorecard based performance management system that forms the backbone of this process. Tulsi provides growth opportunities for its employees through job rotation, cross geography/ function movements etc.

ROOF WATER HARVESTING

In the present scenario management and distribution of water has become centralized. People depend on government system, which has resulted in disruption of community participation in water management and collapse of traditional water harvesting system.

As the water crisis continues to become severe, there is a dire need of reform in water management system and revival of traditional systems. Scientific and technological studies need to be carried out to assess present status so as to suggest suitable mitigate measures for the revival to traditional system/wisdom. Revival process should necessarily be backed by peoples initiative and active public participation.

Living creatures of the universe are made of five basic elements, viz., Earth, Water, Fire, Air and Sky, Obviously, water is one of the most important elements and no creature can survive without it. Despite having a great regard for water, we seem to have failed to address this sector seriously. Human being could not save and conserve water and it sources, probably because of its availability in abundance. But this irresponsible attitude resulted in deterioration of water bodies with respect to quantity and quality both. Now, situation has arrived when even a single drop of water matters. However. "Better late than never", we have not realized the seriousness of this issue and initiated efforts to overcome those problems.

System of collection rainwater and conserving for future needs has traditionally been practiced in India. The traditional systems were time-tested wisdom of not only appropriate technology of rainwater harvesting, but also water management systems, where conservation of water was the prime concern. Traditional water harvesting systems were Bawaries, step wells, jhiries, lakes, tanks etc. These were the water storage bodies to domestic and irrigation demands. People were themselves responsible for maintenance to water sources and optimal use of water that could fulfill their needs.

TRANSPARENCY IN SHARING INFORMATION

Transparency refers to sharing information and acting in an open manner. Processes, instructions and information are directly accessible to those concerned with them, and enough information is provided to understand and monitor them. Your Company believes in total transparency in sharing information about its business operations with all its stakeholders. Your Company strives to provide maximum possible information in The Management Discussion and Analysis Report in the Annual Report and also through other means to keep the stakeholders informed about the business performance.

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 would influence the Companys operations include cost of raw materials, tax laws, interest and power cost and economic developments and such other factors within the country and the international economic and financial developments.