MANAGEMENT DISCUSSION AND ANALYSIS REPORT.

CAUTIONARY STATEMENT

Statements on the Management Discussion and Analysis and current year’s outlook are Management’s perception at the time of drawing this report. Actual results may be materially different from those exbrssed in the statement. Important factors that could influence the Company’s operations includes demand and supply conditions, availability of inputs and their prices both domestic and global, changes in government regulations, tax laws, economic developments within the country and other factors such as litigation and industrial relations.

OVERVIEW OF GLOBAL BUSINESS ENVIRONMENT

The sentiments in the global business were steady during the year even though certain segments witnessed divergent trends. Generally, all the major player countries performed better than brvious years. The global business environment is expected to continue in this Financial Year.

The performance of the global economy in current financial year is also at positive notes at the moment. The interest rates of major countries are at historic low, with a few in negative also. This is resulting in low cost of borrowing. It also has dual positive impacts of lower borrowing cost for industries. At the same time investors are deploying surplus fund in alternate products like Stock & short terms market related funds. On currency front also USD performed very well vis-à-vis major peer currencies. It apbrciated in the range of 16% to 22% vis-à-vis all other major currencies. Certain economies have shown recovery and positive changes are gaining momentum. Financial Year 2015-16 seems to have more pleasant surprises!

INDIAN ECONOMY, INDUSTRY & SCENARIO

The Indian economy also performed with less volatility. In past few years, generally the Indian economy has performed somewhat in reverse direction, to the global trends. However during the last financial year it largely performed at par with global economy.

The stability of political climate set the stage for speedier economic development. Many economic indicators have shown improvement. Market sentiments have become positive leading to momentum of reforms. Indian economy witnessed lower physical and current account deficits, controlled inflation and infrastructure development to boost investments. RBI policies are also likely to be supportive of industry sector. Improved macro economic indicators have bettered GDP growth in 2014-15 estimated at 7.4% as against 6.9% in 2013-14. However, there is still scope for improvement in demand conditions leading to increased industrial production.

The Indian economy revival efforts which started in early September 2013, gave its results of low inflation, steady domestic interest rates with periodic marginal reduction and steady exchange rate of INR which remained in the range 60.40 to 61.10 in Financial Year 2014-15. The INR exchange rate high, and low range also narrowed down to 63.78 – 58.33 in Financial Year 2014-15 vis-a- vis 68.61 – 53.66 in Financial Year 2013-14. The INR apbrciated in 2014-15 in spite of huge apbrciation in USD vis-à-vis other major currencies. As referred earlier that Indian economy has tendency to perform in reverse direction to global trends and INR has apbrciated heavily by 2013-14, when USD was debrciated vis-à-vis majors. This also has helped huge apbrciation in exchange rate of INR vis-à-vis other currencies like EURO, GBP, JPY,CHF

To summarize, the Year begins with chanting of ACHHE DIN and EASE OF DOING BUSINESS, which certainly gave hope to corporate as well as AAM AADMI. It will certainly take time to see FEEL GOOD OUTCOME of both these. However the Indian Economy should take this positively and each of its contributors must try to digest the MAN KI BAAT and efforts of government of good governance.

INDUSTRY STRUCTURE & DEVELOPMENTS & COMPANY’S PERFORMANCE

The Company is operating in 3 diversified Segments of Yarn, Agro Products and Maize Processing. As said in earlier reports, maize processing segment has become now core segment of the Company as it has better steadiness than that of two Segments.

The overall performance of the Company remained steady during the Financial Year 2014-15 although the top line has reduced by about 18% in absolute terms, it is not negative as the reduction is largely on account of deflationary trends in commodity of agro processing segments & trading activities. The lower top line has no impacts on yield and profitability ratios of the company although it reduced in absolute terms there is improvement on percentage terms. The Company also continued its commitment to be environment friendly initiatives by investing in new Solar Project in Madhya Pradesh.

Segment wise Performance

The Company’s brsence is in the segments of Agro Processing, Cotton Yarn, Maize processing & Power generation.

Agro Processing Segment

It has two major products of Deoiled cake (DOC) and Edible oil. The DOC is traditionally exported and India used to export nearly 90% of its total production. However in the Financial Year 2014-15, there has been a major shift in this. The domestic demand of DOC registered steady growth since end of Q3 of financial year 2013-14. In the current financial year domestic demand growth is significant due to extensive use of DOC by animal husbandly industry. On the other hand, due to bumper crop in American & China blocks the international price of DOC always remained reasonably low than domestic price in India. The Government of India has enhanced the export benefit on export of DOC from 2 pct to 5 pct from April 2015, which also failed to match the parity in price of domestic vis-à-vis international market. The domestic demand is steady, but is in phased manner and in small quality. This has affected the top line of this segment by 30% negative, with a huge fall in exports revenue by 82%. The refining activity was at steady although in absolute terms it is lower by 19% due to deflation in commodities prices.

The outlook for this segment is reasonably good as the company is now focusing on development of value added Soya derivatives like granules, defatted flour, which has better returns in domestic as well as international market.

Cotton Yarn Segment

The segment affected most due to volatility in international and domestic cotton yarn Industry. The top line was down by 29% with a huge fall in export by 51%.

The domestic revenue was up by 22 %. In fact since its inception in 1994, the domestic revenue was higher than exports revenue.

The major factors affected to this segment are replacement manufacturing of weaving activity to manufacturing of hosiery & garments by major importing countries. This has restricted the demand of yarn from such countries. This is also reason for higher domestic sales in India with higher demand from weaving industries. Apart from this the company is also under process to replace its old manufacturing line with latest technology. The process would completed by end September 2015. This would help the company to go for production of higher yielding counts.

The company started to operate at cash profit since April and hope to be this segment again in green.

Maize Processing Segment

In the last report, we have named this segment as golden triangle. This is in fact is now a reality and the segment contributed like gold and took care of the 2 old aged segments of the Company, like a grown child take care for parents. The total revenue, profitability and cash generation registered positive growth, with a huge jump of 73% in exports revenue. The segment in fact is now the higher contributor in top line of exports revenue of the company. The Company hopes that the segment would also replace agro processing segment in domestic revenue also in current FY. The EBIDTA and other profitability ratios have improved in Financial Year 2014-15.

The Company has added manufacturing facilities of value added derivative Sorbitol in Uttarakhand. The Company would also add more value added derivatives in Karnataka Plant in 2015-16. This along with normal CAPEX in wet milling would help this segment to be NUMBER UNO for the Company. The Company is hopeful for this segment and named it as golden triangle in the last report. The Company assures that it will again rename it as RECTANGULAR DIAMOND in the next annual report. The Company also ensures members to begin segment wise analysis with this segment in next report.

Power division and contribution to Renewable Energy

The Company is always active in encouraging the use of renewable energy and contributing for the environment friendly projects. As reported earlier, the Company has invested decent amount in wind turbines and non conventional source of energy (Biomass). The power plant at Himatnagar is also performing well.

To continue its efforts in use of non conventional energy based power plant, the Company has set up 5 MW rice husk based co-gen power plant at Uttarakhand Unit. The contribution from all power related activities has helped the manufacturing segments of the Company to keep power cost at reasonable level.

Financial performance with respect to operational performance & over all Analysis The performance during the last financial year as a whole is satisfactory considering the decent topline under brsent economic scenario. Opportunities, Threats, Risks and Concerns

Opportunities

The coming years might see major shift in the policies of Government of India. This could be challenging for industry to reciprocate and make efforts for a contribution of nation growth. The industry is very optimistic during this transition period.

The major opportunities for the Company in the market are following;

1. The focus of the Company to target the products having higher value addition and use of latest technology.

2. The ability of company to put accumulated cash in proper segment.

3. The long standing of the company with reasonable growth in the bearish market conditions.

4. Continuous awareness and readiness to adopt latest technologies.

Risks & Threats

The business risks are part of cycle for any industry. It varies from industry to industry and region to region. The quantum of risks is depend on how you mitigate

it. The Company is facing the following type of risks;

1. The merry go round trend in global business.

2. The inherent business risks attached with segments in which the company is operating.

3. The ground reality risk of doing international trade

4. The political strengths of the competing countries to dictate the trade policies of other weak countries as this have been affecting the exports of India.

Internal Control System and their adequacy

The Company has adequate and effective internal control system. The effective and adequate internal control systems helps to achieve resource utilization at the optimum level, safeguarding of assets and interest, proper authorization, recording and reporting of transactions, protection against unauthorized use and disposition of assets. With the help of internal control systems, among other things, there is a reasonable assurance to the fact that the transactions are executed with management authorization and they are recorded in all material respect to permit brparation of financial statements in conformity with established accounting practices. At GAEL, an effective internal audit function, independent of the external auditors, to review the effectiveness of risk management system is also in place. The internal control systems are supplemented by an extensive programme of internal audits and review by the management. The top management, Audit Committee and Statutory Auditors of the Company are periodically apprised of the activities and internal audit findings and action taken reports. The Company also has budgetary control system and the management periodically reviews actual performance. The Company has also in place established SAP system for its accounting operations and all units, branches, depots are linked and integrated.

OUTLOOK FOR THE YEAR 2015-16

The global economic climate continues to be volatile, uncertain and prone to geo-political risks. The marked slowdown in global markets is expected to continue in 2015. The sharp fall in growth of emerging markets, notably China, will continue to keep commodity prices including oil, which is significantly lower than last year, volatile.

In this global backdrop, India is expected to perform better, aided by improving macroeconomic fundamentals. However, execution of the reform agenda and kick starting the investment cycle will be key determinants of India’s economic performance. While currently inflation is benign, upside brssures on inflation from the vagaries of monsoon or sudden changes in the rupee, could have a significant bearing on inflation.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES /INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED.

The Company recognizes human capital as an extremely important and strategic resource and honors the dignity of each employee irrespective of position and highly values the cultural diversities of employees. Your Company believes in employee empowerment across the entire organization in order to achieve organizational effectiveness. Further, special efforts are made to identify specific training needs to hone the skills of the employees. Human Resources continue to get primary focus of the management and the Company regards its Human Resources amongst its most valuable assets. The Company has invested in people during the course of the year through various training programmes in order to keep its employees competent and updated in the changing business environment. Employees at all levels are exposed to continuous training and development. Industrial relations continue to be cordial. As at the financial year ended 31st March, 2015, there were 3509 total number of employees and workers on the roll of the Company.