MANAGEMENT'S DISCUSSION & ANALYSIS

1. FORWARD-LOOKING STATEMENT

The report contains forward-looking statements, identified by words like 'expects', 'will', 'forosse', 'hopes', 'confident', 'competent', 'believes', 'projects, 'estimates' and so on All statement that address expectations or projections about the future, but not limited to the Company's strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements. Since these are based on certain assumptions and expectations of future events, the Company cannot guarantee that these are accurate or will be realized. The Company's actual results, performance or achievements could thus differ from those projected in any forward-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events.

Industry Overview and Developments

The global economy in FY 2014-15 witnessed divergent trends among major economies. Despite unbrdictable headwinds, the global economic recovery is gaining momentum.

India's economy is looking up with brighter prospects amongst the world's major economies today. The Indian economy grew at 7.3 per cent in 2014-15 due to improvement in the performance of both services as well as manufacturing sectors which indicate that the economy is in "recovery mode" and is poised to return to its high-growth path, mainly contributed by lower fiscal and current account deficits, falling inflation, benign commodity prices, and structural reforms to boost investments.

The share of investments in Gross Domestic Product (GDP) is at 29% (compared to 33% in 2007) and is expected to pick up.

Technology and capital efficiency improvement are likely to drive near-term growth. The manufacturing sector is likely to benefit from lower interest rates.

Structural Changes have occurred in the Indian manufacturing sector in recent years. However, they were not fast enough to change the trajectory of development. Manufacturing is an export driver and creates productive employment and business opportunities, but has not taken place adequately in Indian economy.

The flagship initiative of the Government 'Make in India' is contributing to growth of the manufacturing sector. It is a clear political mandate for reform and being external environment which is expected to propel India on to a double digit trajectory.

During 2014-15, "Gross Value Added (GVA)", was introduced by CSO as a new concept to measure the level of economic activity, The GVA of manufacturing sector grew by 7.1 per cent during the year as against 5.3 per cent in 2013-14 and Per Capita Income at current prices grew by 9.2 per cent to X 87,748 as against X 80,388 in the brvious fiscal.

The Company: Overview and recent developments

Gulshan Polyols Limited ("GPL") is a multi location, multi product manufacturing company and has become a market leader in most of its products in India with global brsence in 35 countries, across 3 continents. Its business portfolio covers Starch Sugars, Calcium Carbonate; Alcohol business; Agro based Animal Feed, & On-site PCC plants with production facilities at Muzaffarnagar in Uttar Pradesh, Bharuch in Gujarat, Dhaula Kuan in Himachal Pradesh, Abu Road in Rajasthan, Patiala in Punjab, Tribeni in West Bengal.

Gulshan Polyols Ltd. caters to wide range of industry & niche markets in core sector encompassing pharmaceuticals, personal care products, footwear, tyres, rubber & plastics, paints, alcohol, value added paper, agrochemicals, food and agro products. It caters to leading industrial units of the country such as Colgate, Palmolive, Hindustan Unilever Ltd, Dabur, Asian Paints and ITC etc.

The company has consistently been exporting its products and is recognized by Government of India as STAR EXPORT  HOUSE.

The Company is setting up new projects in the state of Uttar Pradesh and Madhya Pradesh for manufacturing Agro based Animal Feed, DMH, MDP, Liquid Glucose and green field grain based Distillery unit to manufacture ENA. Both the projects are expected to become operational by March 2016. The Company expects additional revenue of X 250 Crore from both the projects in FY 2016-17.

GPL is the first Indian Company to produce rice based Dextrose Mono-Hydrate (DMH), Maltro-Dextrin Powder (MDP), and Liquid Glucose for which it has recently set up manufacturing unit at Muzaffarnagar (U.P.).

The Company has also undertaken capacity expansion of Starch Sugar viz Liquid Glucose, MDP, DMH, and Glucose Powder at Muzaffarnagar (U.P.).

2. COMPANY'S PRODUCT CATEGORIES:

2.1. Starch Sugars Business: includes product of Sorbitol-70% solution, Liquid Glucose, Maltro-Dextrin Powder (MDP), Dextrose

Mono-Hydrate (DMH).

The Grain Processing Plant set up at the Muzaffarnagar has started commercial production of Liquid Glucose, MDH, and DMH. The quality is well accepted in the market.

The Company has undertaken capacity expansion of Starch Sugar viz MDP, DMH, LG at its plant in Muzaffarnagar, (U. P).

Starch Sugars are fastest growing business in the world. In major producer countries like China, year on year growth in this segment had been more than 20% in last decades. The company expects the same growth path in our country in this segment. Hence, it is brparing itself to take up future challenges ahead of competition.

2.2. Agro based Animal Feed business: After extracting the starch sugars out of corn and rice as raw material, there are other key by-products such as Germ, Gluten, Animal feed. These high value added products contains high nutrition including proteins and fats and popularly used for cattle and poultry feed and corn oil extracting.

Our country is now focusing on 'shwet kranti', in other words country needs up scaling of milk production manifold. Consequently, cattle need to be developed, more requirement of nutritious food for them, which implies higher demands of grain by-products.

2.3. Calcium Carbonate business: Your company also produces over 19 grades of Calcium Carbonate (Precipitated, Activated, Wet and Ground Natural Calcite Powder) used in various industries. The Company has four integrated facilities to manufacture Calcium Carbonate sbrad across the country.

The Calcium Carbonate is used in PVC irrigation and Cables, Paints, Dentifrice, Detergents, Rubbers, Plastics etc. Your company has imported technology from IVA Industrieberatung GmBH, Germany, for Ground Natural Calcite Powder. In order to make eco-friendly, all the plants of the company are well equipped with desired facilities.

2.4. Onsite PCC/WGCC Plants: The Company is the 'FIRST' to introduce the concept of On-site PCC manufacturing plant for Value Added Paper industry. Company's achievement has been recorded in the Limca Book of Records in 2010. The Company has successfully installed three Onsite PCC plants for paper industry including one for ITC Limited, Tribeni which was commissioned in year ended 31.03.2015 and has exported two On-site PCC and WGCC plants on turnkey basis for paper mill in Bangladesh. These plants are expected to be commissioned in this Financial Year.

The Onsite Plants at ITC as well as in Bangladesh were awarded to the company in global bids with reputed MNCs operating in this field. The Company has entered into an agreement with Orient Paper Mill, a C.K. Birla Group Company, for setting up an Onsite PCC plant for their Value Added Paper manufacturing plant in Madhya Pradesh. The Plant is expected to be operational in the current financial year.

The management hopes for the exponential growth in this segment in the country, in line with the developed nations, where on-site PCC has become an integral part of Value Added Paper such as printing, photo copier, tissue paper and writing paper.

Your company is the only Indian company which is offering such technology & providing plants to Indian and overseas companies engaged in manufacturing Value Added Paper.

2.5. Alcohol Business: During the year, the company has also started IMFL bottling plant at Borgaon, Madhya Pradesh. Further, the Company has started implementing ENA manufacturing facility at the same location which will enhance the revenue and profitability of the Company as well as it will strengthen the positioning of the existing IMFL business and Country Liquor.

3. OPPORTUNITIES & THREATS

Despite a challenging operating environment and heightened competitive intensity, your Company continued to drive volume growth, improve realizations and sustain its market standing during the year. This was achieved by focusing on identified end-use segments, investments in quality systems and processes, and optimizing the energy cost. The Business consolidated its clear market leadership position in supplying On-site PCC plants for leading VAP manufacturers in the country as well as in export market.

The Company foresees the significant growth in this field which has been successfully tried in international market by manufacturers of VAP. The Company is confident of securing large contracts in global bids where there are many established suppliers over whom the company has been able to obtain brference on account of the price at which it is offering the high quality of the product.

The Company is also foreseeing significant growth in the On-site PCC plant for its clients by adding the adequate manpower and enhancing competence and other capabilities required to be a leading player in the market. The company is confident of winning and executing large contracts against stiff competition.

Calcium carbonate (Activated Calcium Carbonate and Precipitated Calcium Carbonate) is linked to growth of PVC irrigation & Cables, Paints, Dentifrice, Detergents, Plastics etc. Since the per capita consumption of these products is regularly increasing in our country, the growth in this field is evidently perpetual. There are inherent opportunities available to the Company to which it catering since may decades such as pharmaceuticals, personal care products, footwear, tyres, rubber & plastics, paints, alcohol, value added paper, agrochemicals, food and agro products. The company is actively harnessing the growth opportunities by enhancing its production capacity and redesigning the product mix to cater the growth in demand.

Besides domestic growth, the Company has identified exports as a key future growth driver and is seeing untapped opportunity in export markets for starch sugars business. Your company is continuing to earn valuable foreign exchange by exporting starch sugar and is further gearing up to cater to the growing demand in international markets.

The company operates in commodity types markets. It is therefore important to manage its cost, to ensure it has an edge in pricing over its competitors.

The company regularly diversifies its products portfolio and also develops new export markets. It is also investing in projects to strengthen cost competitiveness.

The general threat perception on the company's products is linked to vagaries of weather, shortfall in rain resulting increase in raw material prices, Government policies linked to Energy cost, Foreign exchange volatility, Import-export policies and competition from un-organized sectors to a certain extent in Calcium Carbonate business.

In this scenario, your Company is fully competent to counter such threat from time to time and gearing up to minimize the effect of these threat by improving the efficiency in terms of consumption and yield.

4. RISK AND CONCERNS

While there is a proper structure for risk management, which is regularly implemented across the organization, there are certain regular risks and concerns that surface in the business. Our primary raw material is "Corn and Rice" for Starch Sugar business as well as for Animal Feed & Alcohol business. Corn and rice are agricultural products and its supply and quality are subject to forces of nature. Being items of commodity market, their pricing is to be carefully managed in order to ensure that the company maintains an edge in pricing over its competitive.

As a risk mitigating strategy, the company has diversified its product portfolio, and uses alternative raw material considering its viability in terms of brvailing market conditions. The other main raw material is lime stone for Calcium Carbonate business, which we source from the domestic market. The location of our plants is in close vicinity to the source of lime stone due to which we are able to maintain our edge effectively to manage our cost and quality of procuring lime stone.

Power and Fuel are the other major inputs of manufacturing cost. Increase in cost of Power and Fuel has negative impact on the profits of the company. Over the past year, tariff prices for power have been increasing. The Company has set up captive power plant for co-generation of energy to mitigate the adverse impact of rising cost of power. Advancement in technology may require us to make additional capital expenditure for upgrading our manufacturing facilities. However, the Company's diversified product profile, quality approach, value-added segments, manufacturing flexibility, modern technology & strong marketing network has saddled the company to successfully counter the effect of such adversities.

The Management being well acquainted us saddled to take care of the risks and concerns and takes appropriate and timely measures as and when the need arises.

5. INTERNAL CONTROL AND SYSTEMS

Your Company believes in formulating adequate and effective internal control systems and implementing the same to ensure that the assets and interests of the Company are safeguarded and reliability of accounting data and accuracy are ensured with proper checks and balances.

The Company has proper and adequate internal control system commensurate with its size and complexity. The Company has a system of monthly physical verification of all types of stocks viz. finished goods, semi-finished goods and raw materials from the Internal Auditor in addition to yearly verification of stores. The monthly monitoring and verification of these stocks help the management to analyse and focus on the consumption and efficiency of raw materials viz. a viz. production output.

The remedial measures, if required, in any process or plant with respect to discrepancy of increased raw material consumption, etc. is taken up immediately to avoid re-occurrence.

The financial statements are brpared in conformity with the established Accounting Standards and Principles. The regular internal audits are carried out to ensure that the systems are adequate. The internal audits are conducted by the Independent Auditors.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control system and suggests improvements for strengthening them. The performance review of the internal audit system as well as the reporting system adopted in the Company give the required confidence to the management.

6. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance during the year under reference has been imbrssive in terms of sales. Even though there has been a decent increase in the turnover, the volume of profits has slightly decreased. The decrease in profitability is due to increase in debrciation and prices of raw material.

During the year under review, your company has achieved gross Revenue from Operations of Rs.  43033.92 lacs as compared to Rs.  34970.88 lacs in the brvious year. The profit before tax stood at Rs. 3181.47 lacs as compared to Rs.  3096.31 lacs during the brvious year. After providing for taxes and other adjustments, the Profit after tax stood at Rs.  2547.65 lacs as compared to Rs. 2712.31 lacs during the brvious year.

7. HUMAN RESOURCE DEVELOPMENT AND INDUSTRIAL RELATIONS

People are the most valued assets of the Company. They work individually and collectively contributing to the achievement of the objectives of the business. The relation between the employees and the Company remained cordial throughout the year. Your Company's corporate culture and the vision and values help unite the workforce and provide standards for how your Company conducts the business.