DIRECTORS' REPORT & MANAGEMENT DISCUSSION AND ANALYSIS

To,

The Members

1. Your Directors hereby present the Forty Sixth Annual Report alongwith Audited Financial Statements of the Company for the financial year ended 31st March, 2016.

2. Operational Review

The Gross Sales amounted to Rs. 2,621.86 lacs (previous year Rs. 3,696.73 lacs) and Net Sales was Rs. 2,328.60 lacs (previous year Rs. 3,286.74 lacs). After providing for interest, finance charges and Depreciation, the Net Profit substantially declined to Rs. 192.46 lacs as against Rs. 721.54 lacs in the previous year 2014-2015. There was a steep fall in international crude oil price, due to which the prices of downstream products including Maleic Anhydride (MA) witnessed sharp fall.

The sales realization was low due to continuous fall in MA prices especially in the second half of the year. Imports of MA has increased off late, however with the rise in crude oil prices since February 2016, the MA prices improved and the trend is likely to continue in the current year.

The PA Plant at Raichur, Karnataka was closed since July, 2013 due to economic unviability and the management staff and a few workmen accepted the retrenchment compensation offered by the Company. 52 (fifty two) workmen have not accepted the offer and have approached the Labour Department, Government of Karnataka for further demands and the matter is pending before the Industrial Tribunal, Hubballi, Karnataka. The management is awaiting the outcome of the Tribunal's judgement in this regard.

Meanwhile the Company has filed a Writ Petition in the Hon'ble High Court of Karnataka, Bangalore, Gulbarga Bench. The hearing date is awaited.

3. Dividend

Your Directors are pleased to recommend dividend of Rs. 1/- (10 %) per equity share of Rs. 10/- each. The total outgo on account of dividend for the current year amounts to Rs. 79.24 lacs as against Rs. 159.23 lacs in the previous year (including dividend distribution tax).

4. Share Capital & Finance

4.1 Share Capital

The paid up Equity Share Capital as on 31st March, 2016 was Rs. 658.76 lacs. During the year under review, the Company has neither issued any shares nor granted any stock options or sweat equity. The Promoter shareholding as on 31st March, 2016 is 72.99%.

4.2 Finance

The Company does not have any secured debts as on date.

4.3 Fixed Deposits

The Company has not accepted any Fixed Deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Rules framed thereunder.

4.4 Particulars of Loans, Guarantees or Investments

The Company has not given any loans or guarantees within the meaning of the provisions of Section 186 of the Companies Act, 2013.

The details of the investments made by the Company are given in the notes to the Financial Statements.

5. Taxes and Duties

The Company has contributed Rs. 533.89 lacs (Rs. 971.17 lacs) to the Central and State exchequer by way of Excise Duty, Sales Tax, Income Tax and Professional Tax.

6. Economic scenario, opportunities, concerns and future outlook

The Indian economy enjoyed a relatively stable macro economic scenario during 2015 as compared to many other countries in the world. The GDP is expected to be around 7.6% in the current year 2015-16 amid expectations of higher investments in infrastructure and industry. Notwithstanding some slackening in a few sectors, manufacturing growth in 2015-16 was strong at 7.5% as compared to 6% growth in 2014-15. This spurt in manufacturing resulted in higher industrial production and revival in overall consumer demand. The outlook for India's national economy in the year 2016 and beyond shows a strong emerging potential.

There is steady rise in demand for MA in view of the growth in user industries viz. Resins, paints, plasticizers and newer applications of MA in certain user industries. The performance since the last quarter of the year has improved and continues during the current quarter and hence the Company is cautiously optimistic about the performance in the current financial year. The Company is the only producer of MA in India and sells its entire produce indigenously to local consumers.

The performance depends upon uninterrupted supply of Wash Water from IGPL. The Governments import policies and other environmental issues are the other areas which is a cause of concern. The Company's efforts in better working capital management and expected rise in demand will help to improve our operations.

7. Corporate Social Responsibility (CSR)

The Corporate Social Responsibility (CSR) Policy of the Company aims to bring a difference in the lives of the needy, under privileged persons of the society including children, women and senior citizens. During the year, the CSR Committee of the Company directed its spending on the sectors primarily in healthcare and education in accordance with its CSR Policy.

The Report on CSR activities is annexed herewith as "Annexure A".

8. Risk Management

The Company manufactures a single product MA which is recovered from the Wash Water made available by IGPL. MA is sold in local markets and there are no exports. Hence there are only the general business risks which are inherent to any business. The Board of Directors do a periodic assessment of risks through properly defined frame work and its mitigation resulting in minimization of risks.

The key business risks identified by the Company and its mitigation plans are as under:

a. Technical/Operational risk

During the year under review the MA Plants operations were smooth except on certain occasions due to minor technical problems and less availability of Wash Water from IGPL. The maintenance department at the Plant takes care of the day to day maintenance. The Company's Plants are adequately insured viz. Fire Policy, Loss of Profit Policy etc.

b. Exchange rate risk ( Procurement of raw material and sale of finished goods)

Wash Water is supplied from IGPL Plants for recovery of MA and the product is sold locally. Hence there is no exchange rate risk for the product. There are no forex transactions and hence there is no exchange rate risk.

c. Interest rate risk

The Company does not have any secured debts from Banks/Institutions. There are only unsecured debts from group Companies. Interest as per Bank rates is paid regularly to the Companies from whom inter-corporate loans are accepted. The Company reviews the position on regular basis and keeps the loan/interest cost at minimum level.

d. Economic and Geo Political risk

The political situation and the Government policies viz. import duty, taxes etc. and the international situation have an impact on the overall corporate growth. There was a steep fall in the international crude oil price from a high of about US$ 115 to US$ 28 during the past one year due to which all the downstream petro products including MA witnessed a sharp fall in the prices. The Company keeps abreast with the domestic and international economic developments and works on the strategies favourable to the Company. The Company maintains minimum inventory levels of finished goods in order to minimize the loss due to external factors.

9. Vigil Mechanism/Whistle Blower Policy

The Company has a Vigil Mechanism Policy to deal with instance of fraud and mismanagement, if any. The details of the Policy is explained in the Corporate Governance Report and also posted on the Company's website www.mysorepetro.com . There was no fraud or irregularity noticed during the year under review

10. Directors

Shri. Nikunj Dhanuka, Director retires by rotation and being eligible has offered himself for re-appointment.

The Company has received necessary declarations from all Independent Directors of the Company as required under Section 149(7) of the Companies Act, 2013 that they meet the criteria of independence laid down in Section 149(6) of the Companies Act, 2013.

10.1 Board Evaluation

As mandated under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the annual performance evaluation of the Directors individually vis-à-vis the Board and its committees have been carried out during the year. The manner of such evaluation has been disclosed in the Corporate Governance Report.

10.2 Remuneration Policy

The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and determination of their remuneration. The Remuneration Policy forms part of the Corporate Governance Report.

10.3 Meetings

During the year five Board Meetings and four Audit Committee Meetings were convened and held. The details of the same are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Act.

11. Key Managerial Personnel

The following persons have been designated as Key Managerial Personnel of the Company pursuant to Section 2(51) and Section 203 of the Act, read with the Rules framed thereunder -

1. Mr. M M Dhanuka, Managing Director & CEO

2. Mr. Paras Jain, Chief Financial Officer

3. Mr. Anand Kadkol, Company Secretary & Compliance Officer

There are no changes in the Key Managerial Personnel during the year under review.

12. Directors' responsibility statement

To the best of our knowledge and belief and according to the information and explanation obtained by us, in terms of Section 134(3)(c) of the Companies Act, 2013 we state:

a) that in the preparation of the annual financial statements for the year ended 31st March 2016, all the applicable accounting standards have been followed and no material departures have been made from the same;

b) that appropriate accounting policies have been selected and applied consistently and have made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March 2016 and of the profit of the Company for that year;

c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing/ detecting fraud and other irregularities;

d) that the annual financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively;

f) that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

13. Related Party Transactions

The Company has certain existing long term related party transactions which are on arm's length basis and in the ordinary course of business. In terms of Regulations 23(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all existing material related party contracts entered into prior to the date of notification of these regulations and which continues thereafter shall require approval of the shareholders at the genereal meeting.

Accordingly the resolution for material related party transaction is placed at the forthcoming Annual General Meeting for approval of the shareholders. Information on Related Party Transactions are given in Annexure 'E'.

14. Auditors

14.1 Statutory Auditors

M/s. Hariharan and Company, Chartered Accountants, Bengaluru (Firm's Registration No. 001083S) were appointed as Statutory Auditors in the last Annual General Meeting (AGM) to hold office until the conclusion of the 47th AGM of the Company to be held in the year 2017. The said appointment was subject to the ratification by the Members at every AGM till the expiry of their present tenure. The Auditor has provided a written confirmation to the effect that their appointment, if ratified, would be in conformity with the limits specified in Section 141(3) (g) of the Companies Act, 2013. As required under Regulation 33 of the SEBI Listing Regulations, the Statutory Auditor has also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI).

The Members are requested to ratify the appointment of the Auditors as aforesaid and fix their remuneration. The Auditors' Report does not contain any qualification, reservation or adverse remark.

14.2 Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s. Makarand M Joshi and Associates, Practicing Company Secretaries (CP No. 3662) to conduct the Secretarial Audit of the Company for the Financial Year 2015-16. The said Report is annexed herewith as "Annexure B".

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

15. Listing of Shares

Your Company's shares are listed on BSE Limited (BSE) under Scrip Code No. 506734. The ISIN code is INE741A01011.

16. Corporate Governance

The disclosures as required under Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are attached and forms part of this report.

17. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is annexed herewith as "Annexure C".

18. Extract of Annual Return

Pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in Form MGT-9 is annexed herewith as "Annexure D".

19. Internal Control System

The Company has internal controls commensurate with the size of its business and has established framework of internal controls to ensure that the assets are safeguarded and are productive. Necessary checks and balances are in place to ensure that transactions are adequately authorized and reported correctly. The Company is following all the Accounting Standards for properly maintaining the books of accounts and the reporting of financial statements. The Company has appointed the Internal Auditors to review various areas of the operations of the Company. The audit reports are reviewed by the management and the Audit Committee of the Board and corrective actions are taken by the Company when needed.

20. Human Resource Development/Industrial Relations

The PA Plant at Raichur, Karnataka has closed down its operations since July, 2013 and the settlement with the workers is in progress.

Industrial relations continued to remain cordial at the manufacturing unit at Taloja, Maharashtra.

21. Cautionary Statement

Statements made in this report describes the Company's objectives, projections and estimates and may be forward looking and are stated as required by applicable laws and regulations. Actual results may differ substantially or materially from those expressed or implied. Important developments that could affect the Company's operations include market conditions, Government regulations, exchange rate fluctuations, interest and other costs.

22. Particulars of Employees

During the year, there are no employees who are in receipt of the remuneration exceeding the limit specified in Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

The information relating to remuneration in respect of directors/employees of the Company as required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be provided to the members upon request.

23. Acknowledgements

Your Directors sincerely thank the various Central and State Government Departments and various Organizations for their continued help and co-operation extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for their excellent support. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.

For and on behalf of the Board

M M Dhanuka

Chairman & Managing Director

Mumbai

20th May, 2016