MANAGEMENT DISCUSSION AND ANALYSIS

Industry Structure & Develop ment:

SKY INDUSTRIES LIMITED is a dominant player in the Narrow Woven fabric industry in India having its brsence felt in various product categories viz Hook & Loop Tape Fasteners, Elastic Tapes, etc. Traditionally, this industry is an accessory supplier to major industries like Textiles, Leather, Footwear etc.

The Company had ventured into the manufacture of Carpet yarn in earlier years, apart from its brsence in elastic tapes. However, the Company, with a view to focus on the core competency, has exited these businesses.

Opportunity and Threats:

The Company's strength is built around the robust domestic and international marketing network. The Company has a network of over 800 Corporate customers and over 50 channel partners as a part of its domestic network, which are comprised from various industry segments, allowing the Company to derisk its business.

The Company does face threats from imports and other new emerging players in these product lines. However, they are mitigated partly by the Anti Dumping Duty levied against the imports of sub standard quality goods in the Hook & Loop Tape category, which for the next review period has been changed to fixed rate of duty, which is expected to be a more effective.

The Company has also moved up the value chain in the segments like Hook and Loop Tape Fasteners and is focusing on increasing the share of revenues from the value added products.

As in any economy, there is a first mover advantage and the Company has already strengthened its position in the various product lines it is currently in. The Company realizes the possibility of the entry of competition in the product lines that the company is currently brsent in.

Also there is a possibility of newer fastening applications being developed, which is a threat to the major product of the Company.

Segment Reporting:

The Company has one segment of activity namely "Narrow Woven Fabrics". Hence, Accounting Standard on Segment Reporting (AS - 17) issued by the Institute of Chartered Accountant of India does not apply.

Outlook

With the dismantling of the quota regime, there are new opportunities and avenues available to the Company which is expected to take the Company on the growth trajectory. Overall, the oudook looks positive for the industry as a whole and the Company in particular.

Exports

During the year under review the Exports were at Rs. 711 lacs, a drop from the brvious year. The drop was mainly on account of conscious decision to avoid the riskier markets, as well as Companys decision to exit the allied businesses , which were largely instrumental in getting higher export orders in the brvious year.

Risks and Concerns

The Company faces various risks which are incidental to the Company's operations in the various product lines viz. Hook and Loop Tape Fasteners and Velvet tapes like new competitor setting up business or expanding of the existing players owing to the market available.

The concerns amongst others are Company facing rising input costs on account of Raw Materials pricing being steadily rising as well as inability of the Company to pass on the increase in costs to its customers being the main concern.

Also, the volatility in Exchange Rate has its own costs, all of which may not be possible to be passed on to the customers.

The Company is looking however to address the above risks and concerns by setting up a robust risk management system.

Internal Control systems and their adequacy

The Company has commensurate internal audit systems in relation to the size of the Company. The Company also has appointed an Internal Auditor Ms/ Sitendu Sharma, who have been conducting internal audit of the systems that have been strengthened.

Operations

The turnover during the year was Rs. 5539 Lacs as compared to brvious years Rs. 5508 Lacs, a flat growth. The Company faced external brssures as well as managed to overcome a mini—crisis in form of labour unrest at its Vashi plant. However, the Company was able to service its customers and brvent a loss of market share by having alternate arrangements.

As in earlier years, the Company focused on increasing the share of the Value Added products.

Human Resources & Industrial Relations:

Your Company continued to have cordial relations with its employees. The Company has a team of able and experienced industry professionals in its ranks. As of 31st March, 2015, the total number of employees on the rolls of the Company was 86.