MANAGEMENT DISCUSSION AND ANALYSIS REPORT Disclaimer Statements made in the Management Discussion and Analysis and relating to company's objectives, projections, outlook, expectations, estimates, etc., may constitute forward looking statements within the meaning of applicable securities, laws and regulations. These statements are based on certain assumptions, which cannot be guaranteed by the Company. Several factors, over which the Company may not have any direct control, could make a significant difference to the company's operations. As such, actual results may differ materially from such projections, whether exbrssed or implied, since it would be beyond Company's ability to successfully implement our growth strategy. The Company undertakes no obligation or responsibility to update forward looking statements and to publicly amend, modify or revise to reflect events or circumstances after the date thereof on the basis of any subsequent development, information or events. The management of Visagar Polytex Limited brsents below its analysis on the performance of your Company during the year under review, i.e. accounting year end 31st March, 2015 (for the period July'14 to March'15). Economic Overview with specific reference to Textile Industry India is the second largest textile manufacturer in the world. The Indian textile industry is a global leader thanks to the economic liberalization. Though it used to come under unorganized sector few years back, the scenario has changed and a large part of the industry is now in the organized sector. Increased penetration of organised retail, favourable demographics and rising income levels to drive textile demand are contributing to the sector's growth. The Indian textile industry is one the largest and oldest sectors in the country and among the most important in the economy in terms of output, investment and employment. Contributing a hefty 14% to the country's Industrial production and 4% to the country's Gross Domestic Product (GDP) the segment also accounts for 13% of India's export earnings besides providing direct employment to over 45 million people and thus being the second largest provider of employment after agriculture in the country. After witnessing challenges during the year 2013 and for most part of 2014 given unfavourable economic conditions, the Indian textiles and garments sector has seen reversal of trends in second half of 2014. With domestic and global economic conditions gradually improving along with the focused efforts made by Ministry of Textiles, Indian textiles and garments sector is set for growth, buoyed by revival in domestic consumption and export demand. The Indian textiles industry is currently estimated at around US $108 billion. The potential size of the Indian textiles and apparel industry is expected to reach US$ 223 billion by 2021, according to a report by Technopak Advisors. Overview of the Sector & Business The current Indian ethnic wear market is highly unorganized with a few branded players operating primarily in metropolitan cities. The Saree market is huge, unorganized and growing at an incredible rate, comprising a major chunk of Women’s apparel segment. The 5000 year old apparel has seen rise and fall of regimes and has dominated the apparel market not even in toughest of economic downturns (recession) but has also been growing strongly ever since. ICRA research of 2006 quotes the Saree market size at Rs. 53000 crore, though a relatively recent one on Ethnic wear by Technopak quotes the Sarees market in 2009 at Rs. 24000 Crore. The Indian women wear industry will continue to grow at a healthy CAGR in the coming years. Your Company is into textile manufacturing, trading, wholesaling and retailing activities comprising of a number of independent as well as interdependent verticals viz. Ethnic wear (Saree/ Lehanga) wholesale, Ethnic wear (Saree/ Lehanga/ Suits) Manufacturing, Retailing (own/franchise) and Contract-based manufacturing. Your Company has a retail chain retailing designer sarees under its flagship brand Vividha, in addition to its combrhensive manufacturing and wholesale facilities at Kolkata & Surat. Manufacturing of Ethnic Wear During the year under review, your Company has further upgraded its R&D and product designing capabilities to enable designer catalogues for the forthcoming seasons and utilize designing monopoly and mix of knowledge and resources to achieve higher margins across your Company's manufacturing to retail spectrums. Your Company is evaluating the scope of retail, through franchising route, and ecommerce driven sales through online portals and own website as in-house designing & manufacturing capability will enable having trendier and wider portfolio of products at significantly decreased cost which will help a long way in establishing further retail chains across the country. Financial Overview During the nine months period ended 31st March 2015, your Company's Gross Income has been Rs. 609.32 Lacs as compared to Rs. 706.29 Lacs in the brvious financial year (June '13 to June'14). However, % increase in gross income cannot be depicted as the comparable periods are not same. But when it comes to increase in profit after tax from Rs. 116.20 Lacs (2013-14) to Rs. 230.97 Lacs (2014-15), i.e. increase of Rs. 114.77 Lacs, it is sure that the Company has increased profit margin. The change is attributed to favuorable business conditions, specifically input and procurement costs. Factors that may affect the results of operations Several factors may affect our result of operations that may make it difficult to brdict the future financial results. Such factors are: • Movement in Price of Fabric • Operating cost & Efficiency • Product and Market Mix • Exchange Rates • Government policies, rules and regulations relating to textile industries • Availability of Government Benefits & Subsidies • Ability to organise funds for projects • Availability of skilled human forces • Competition • Break down of machinery or plant • Disrupted power supply from state electricity board • Strike by labourers • Development / Innovation / Emergence of any substitute for our products • Natural Calamities & Disasters and other unforeseen/ unavoidable circumstances Development, Expansion & Future Outlook Your Company will continue to invest wherever it seems an opportunity to get healthy sustainable results. Our performance largely depends on the Textile market. Your Company is concentrating at streamlining its current business activities which will allow for greater operational efficiency in future. Providing quality products at a great value has always been our endeavour. Your Company will take this endeavour a notch upwards by enhancing its business activities. Your Company is in process to continuously upgrade its state-of-art manufacturing unit at Gothan, Surat to produce designer, value added Embroidery Sarees & Lehengas using latest technology and employing resources in best possible manner. The Embroidery market is huge and dominated by small unorganized players in view of lower entry barriers, offering a corporate player immense opportunity for innovation and improvisation. The Management is optimistic that your Company will soon be one of the key players in Saree/ Lehenga/ Suits segment. Our clients include stockists, wholesalers, semi-wholesalers, retailers and end-users of textile products. We have not been engaged in export of our products so far, as the domestic demand itself is vast. Having said so, we would like to explore the overseas market in the near-term. Your Company's aim is to build up knowledge, capital and human resources to specialize in designing, manufacturing hand/machine work Sarees & Lehengas (bridal wear) facilitating constant revival of products in innovative ways that will enable guaranteed success for us. During the year under review, the existing retail chain brand VIVIDHA has been refreshed to reflect who we are today and rebrsent our vibrant future. The change in logo communicates new Company philosophy and that the Company is evolving with modern times. The Company has also launched its first refreshed store in Jaipur bearing the refreshed corporate identity. This is the first showroom to carry refreshed brand logo and interior design theme which will be standard across all VIVIDHA franchise showrooms in future. The Company is currently establishing its VIVIDHA showroom in Mumbai which will also serve as centre for its unique Home Based opportunity scheme which will aim at empowering aspiring women and promoting successful home based businesses. The Company has plans to enhance its existing production capacities in Surat and also expand its retail brsence across India especially through franchise route. Taking step in this direction the Company has installed latest imported high speed computerised embroidery machines in its factory at Gothan, Surat that will nearly double the earlier manufacturing capacity. Through this expansion the Company will enjoy increased margins, complete product control, and greater innovation capabilities by use of latest machinery. Future plans and Outlook • Intensifying focus on R&D and production • Leveraging resources to deliver innovative and successful product portfolio • To bring in efficiency through consistent and continuous improvement process throughout all the levels in the Organisation • To develop a Customer Centric approach • To develop a Strong Marketing Network |