MANAGEMENT DISCUSSION AND ANALYSIS

Forward-Looking Statements

This report contains forward-looking statements, which may be identified by their use of words like 'plans', 'expects', 'will', 'anticipates', 'believes', 'intends', 'projects', 'estimates' or other words of similar meaning. All statements that address expectations or projections about the future, including but not limited to statements about the Company's strategy for growth, product development, market position, expenditures, and financial results, are forward-looking statements, based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company's actual results, performance or achievements, could thus differ materially from those projected in any such forwa rd-looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events.

Overview General:

• Your Company enjoys a Star Export House status by the Director General of Foreign Trade and has certification of ISO 9001:2008 by Bureau Veritas (UKAS) and Bureau Veritas (NABCB).

• Your Company exports its product to countries in South America, Europe, Middle East, Africa, Far East, South East Asia etc.

Financial:

During the year the Company has registered:

• Net Sales and other income of Rs. 19169.17 Lacs as compared to Rs. 47276.74 Lacs of brvious year.

• PBDIT of Rs. 565.25 Lacs as compared to Loss (Rs. 4725.17) Lacs of brvious year.

• PBT for the year was (Rs. 10784.22) Lacs as compared to (Rs. 12760.31) Lacs of brvious year.

• The Company incurred Cash losses of Rs. 3245.63 Lacs as compared to Cash losses of Rs. 5615.17 Lacs of brvious year.

• The Company incurred a Net Loss of Rs. 7486.38 Lacs & EPS of (Rs. 2.81) as compared to Net Loss of Rs. 8776.28 Lacs & EPS of (Rs. 3.29) of brvious year.

• Export of the Company during the year was Rs. 1225.27 Lacs.

Industry outlook:

Indian Textile Industry Overview

India is the second largest manufacturer of textile and apparel in the world after China. Indian industry accounts for almost 24% of the world's spindle capacity and 8% of global rotor capacity, making India the second largest producer of spun yarn. India is the 2nd largest exporter of textile and apparel with exports of US$ 40 billion (2013-14) out of the total world export of US$ 760 billion, contributing a share of approx. 5%. India is the 7th largest apparel exporter in the world with a share of 3.7% of the total apparel trade. India has its manufacturing capacities equipped at each level of the production chain supported by availability of raw material, inexpensive and easily availably labour.

Currently Government is running various schemes to support the sector including. Revised and Restructured Technological Upgradation Fund Scheme (RRTUFS), Scheme for Integrated Textile Parks (SITP), Technology Mission on Technical Textiles (TMTT), Integrated Scheme for Powerloom Development Sector (ISPDS), Integrated Skill Development Scheme (ISDS), Swarnjayanti Gram Swarozgar Yojana (SGSY), etc. In addition, various states also have developed textile sector specific policies to promote investments.

Global Polyester Sector Scenario

Global consumption of polyester filament has grown with a CAGR of 8% and stood at around 27 million tons in 2014. China accounts for the major share of around 74% of the total polyester filament consumption followed by India with a share of around 9%.

The global consumption is expected to grow at a rate of 4% from 2010 to 2020. Whereas a higher growth rate of 9%, is expected in India.

Indian Polyester Sector Scenario Polyester Filament Yarn (PFY)

PFY is used for making fabric for different uses like dress materials, home furnishing, upholstery, tapestry, industrial fabrics, hose pipes, etc. Production of PFY has increased from 2,200 mn. Kg in 2010-11 to 2,950 mn. Kg in 2013-14 at a CAGR of 6%. Similar trend has been shown by consumption PFY has grown with a CAGR of 5% in the same period from 1,880 mn. Kg to 2,400 mn. Kg.

More than 50% of the domestic capacity is located in the western India due to the proximity of raw material suppliers and downstream weaving units at Surat and Bhiwandi.

India's export of PFY has grown from 389 million kg in 2010­11 to 646 million kg in 2013-14 with a CAGR of 13%. In terms of value, India exports have increased significantly in 2014­15. In the first 9 months of this FY, India exported PFY worth US$ 1.2 bn; while in 2013-14 the export was worth US$ 1 bn. Imports of PFY in India is relatively a small amount.

Turkey and Brazil are the major importers of PFY from India with a trade share of 26% and 22%, respectively in India's total exports of PFY. Egypt, Bangladesh and Korea are other major export markets.

Fully Drawn Yarn (FDY)

Consumption of FDY yarn has grown from 345 million kg in 2010-11 to 497 million kg in 2014-15 with a CAGR of 8%.

Drawn Textured Yarn (DTY)

DTY yarn is mainly used in weaving & knitting of fabrics for making clothes, home furnishings, seat covers, and bags. DTY can be used as a substitute of cotton in coarser count application DTY is manufactured by texturizing partially oriented yarn. Almost 90% of the texturizing units are located in the Silvasa and Amritsar. Consumption of DTY has grown at a CAGR of 4% from 1,535 million kg to 1,870 million Kg between 2010-11 and 2014-15.

Industrial Drawn Yarn (IDY)

Application areas of IDY includes conveyor belt, rope, geo-grid, automotive seatbelt, industrial fabric, tarpaulin, swing threads, bill boards, awnings etc. The consumption of IDY has increased from 23 million kg in 2010-11 to 38 million kg in 2014-15 with a CAGR of 11%

Polyester Fabric

Polyester fabric (100% polyester and blended) production has decreased from 30 billion sq. meter in the year 2010-11 to 27 billion meter in 2013-14. Woven polyester fabric accounts for almost 90% share of the total production and stood at 24 billion sq. meter in year 2013-14.Most of the fabric produced in India is consumed in the domestic market.

Export of polyester fabric from India has grown from 620 million sq. meter in 2010-11 to 1 billion sq. meter in 2013-14 at a CAGR of 18%. The first half of the financial year 2014-15 reported exports of around 870 million sq. meter which is way ahead of the exports in 2010-11.

Production of woven polyester fabric takes place majorly in Gujarat, Maharashtra and Rajasthan. UAE, Afghanistan and Saudi Arabia are top three importers of polyester fabrics from India.

Factors impacting Indian Polyester Industry Raw Material

Domestic supply of PTA in India is depended on 3 major supplier viz. Reliance Industries Limited, Indian Oil Corporation Limited, Mitsubishi Corporation with a combined capacity of around 5 million tons. The domestic supply is not sufficient to meet the domestic demand, hence India imports significant amount of PTA. A reduction has been witnessed in the cost of both the PTA and MEG in the end of the FY 2014-15 due to reduction in the crude oil prices.

Over next few years, there will be major capacity addition of PTA and MEG in India. 4.3 mn. tons of PTA capacity will be added by 2016 while capacity of MEG will increase by 0.75 mn. tons. As a result of this capacity addition India will become a net exporter of PTA from a net importer at brsent. Higher domestic capacities will keep a rein on price inflation in addition to ensuring seamless availability

Market Demand

The global fibre and textile industry has faced demand recession in consumer segment during the few years due to volatile economic situation in the US & Europe and geopolitical disturbances in Africa and the Middle East Region. Only Asia's fibre consumption has managed to increase modestly while that for the rest of the world declined.

The slowdown in economy led to muted growth of polyester demand, whereas the capacity was surplus. This caused price reduction of yarns as buyers turned cautious given the slow downstream demand and few units closed to cut losses. As the result the overall market liquidity suffered.

Challenges for Polyester Industry

Polyester based textile industry of India faces following challenges over the common challenges faced by Indian textile industry:

• Absence of Value added Textile manufacturing

• Disparity of excise duty between cotton and Manmade -The industry has witnessed a discrimination against cotton in form of higher excise and custom duties. 5% custom duty, 4% special addition duty and 12.36 % excise duty or countervailing duty beside antidumping duty leads to cost 22% higher amount for MMF as compared to international prices.

• Weak Links in Polyester Based Textile Value Chain -Fabric manufacturing and processing are the two major weak links in the polyester based value chain. These two segments are catered by small and medium scale capacity units, which tend to use old technology and do not follow the standard norms of manufacturing sector.

Opportunities:

> Buoyant domestic economy leading to higher market growth.

> Growth of organized retail would increase the consumption of apparel.

> 100% FDI allowed in textile sector through the automated route.

> Export demand expected to pick up with global economic recovery leading to increased opportunities in export market.

> Demand of Man-made Fibers (MMF) is likely to improve, primarily driven by increased substitution of cotton by MMF.

Threats:

> Volatility of input costs.

> Shortage of raw material in domestic market.

> Cost increase in crude oil based raw materials due to weak rupee.

> High fluctuation in INR/USD rates has adversely impacted company's cost structure as the company was rely on imports of its main input raw material viz. PTA.

Internal Controls:

RRIL's well defined organisation structure, policy guidelines, brdefined authority levels and an extensive system of internal controls, ensure optimal utilisation and protection of resources, IT security, accurate reporting of financial transactions and compliance with applicable laws and regulations.

> RRIL has adequate system of internal control in place to ensure that assets are safeguarded against loss from unauthorised use or disposition, and that transactions are authorised, recorded and reported correctly.

> RRIL's internal audit function is empowered to examine the adequacy, relevance and effectiveness of control systems, compliance with laws, regulations and policies, plans and statutory requirements.

> RRIL has an exhaustive budgetary control system. Actual performance is reviewed with reference to the budget by the management on an ongoing basis.

> RRIL's Audit Committee of the Board reviews the findings and recommendations of the internal auditor.

The system is improved and modified continuously to meet changes in business conditions, statutory and accounting requirements.

Research & Development:

The Company always strives to be innovative and cost competitive, aided by its fully equipped R & D facilities. Besides producing POY of Denier range fine to coarse, the Company's array of products includes yarn of various cross sections namely Round, Trilobal and Octalobal, as also Full Dull, Semi Dull, Bright Yarns, Cationic Yarn, Doped Dyed Yarn, Fire Retardant and Anti Microbial yarns.

Quality Management:

RRIL continues to take quality improvement measures to enhance quality of various polyester yarns and polyester chips. The Company's ISO certification in respect of its products and processes stands upgraded to ISO 9001:2008 by Bureau Veritas (UKAS) and Bureau Veritas (NABCB).

Environment and Safety:

Being conscious of the need for environmentally clean and safe operations, the Company conducts its operations ensuring safety of all concerned, compliance of statutory and industrial requirements for environment protection and conservation of natural resources to the extent possible.

Human Resources and Industrial Relations:

The Company recognises that Human Resources are its most valuable assets that provide competitive edge to stay ahead. The Company's focus is on developing the most superior work force so that the Company and individual employees can accomplish their work goals in service to customers.

The Company's strategy for development of Human Resources is through providing a motivating work environment, recruiting the best talents, providing challenging goals and by creating a culture for learning and growth. Industrial relations remained cordial in all the plants