Shri Aster Silicates Ltd Management Discussions

EOCONOMIC OVERVIEW:

The financial crisis that shook the pillars of world economy is on the path of recovery. Global growth, after experiencing a sharp downturn in 2008-2009, has catapulted back to recovery phase with the global trade gradually picking up. In the wake of such recovery, prospects of developing countries are for robust recovery in the times ahead.

India, over a period of the year has posted significant recovery in terms of growth figures. GDP growth rate is around 5.7% for the first quarter of the financial year 2014- 2015. The manufacturing sector grew at 3.5%, against a 1.2 % contraction year-on-year. The Chemical industry in which your Company operates, shall continue to grow at a steady pace since the basic needs remain the same.

INDUSTRY STRUCTURE AND DEVELOPMENTS:

The Chemical Industry has been continuously growing and showing an upward trend since the Company began its operations in 1996. Today your Company serves various segments of producing sodium silicates such as food grade silicates, drilling grade silicates, detergent grade silicate, etc., and all are available in Glass, Liquid and Powder form. Your Company has state of the art latest technologies and facilities to keep pace with the emerging trends in the market.

Your Company has designed Bio-Gas plants which uses all types of biomass & generates bio-gas which is used in redesigned end fired triple pass regenerative furnaces to get temperature above 1300 degree Centigrade. The designs have been commercially accepted and market response for the same has been overwhelming.

The hike in the price of Raw material during the year has resulted into decrease in margin of your Company.

OPPORTUNITIES:

Your Company is a supplier for Sodium Silicates to toothpaste, Salt, Cosmetics, Tyre & Rubber Industry & Pesticides industry, especially food processing industry. The industry is expected to grow at a rate of 10% - 12% annually.

Keeping this in mind, potential for the growth of chemical industry is enormous.

Your Company is amongst the early movers to switch their raw material from soda ash to caustics, as the same is a better reactant as compared to the former, thus resulting in saving of fuel costs. We also saw great opportunity in moving from the conventional fossil fuels to biogas, resulting in additional cost savings.

THREATS, RISKS & CONCERNS:

Fluctuations in prices of raw material such as soda ash, sand etc. keep the margins under pressure. The exchange rate fluctuations have further increased the inputs costs. Also, being in the market, competition serves as one of the threats to the business operation of the Company.

Your Company endeavors to address these threats by monitoring, checking and discussing and gaining industry specialization and expertise.

OUTLOOK:

Your Company, keeping pace with overall sodium silicates market has grown significantly. The Management expects to continue this trend in the years to come, subject to favorable market conditions, and stable economic policies

INTERNAL CONTROL:

Your Company s Internal Control System is supplemented by extensive audit by an independent firm of Chartered Accountants as Internal Auditors, who discusses Internal Control System with Audit Committee. The Audit Committee thoroughly reviews the Internal Audit function and makes recommendations on scope of Internal Audit. Internal Audit reports are reviewed and observations are discussed. Corrective measures are taken wherever necessary. The Audit Committee also meets up with Statutory Auditors to discuss and have an overview on the operations of the Company.

CAUTIONARY STATEMENT:

Statements in the Management Discussion & Analysis Report describing the Company s expectations, opinion, and predictions may please be considered as forward looking statements only. Actual results could differ from those expressed or implied. Company s operations should be viewed in light of changes in market conditions, prices of raw materials, economic developments in the country and such other factors.