MANAGEMENT DISCUSSION AND ANALYSIS REPORT OVERVIEW OF THE ECONOMY The world economy slowed down further in calendar year 2015 on account of lower global economie growth, as compared with calendar year 2014. Global activity continued to decelerate, triggered by slowing growth in emerging and developing markets as they contribute to about 70% of the global growth. In 2015, world economy grew at slower pace of 2.4 percent as against 2.6 percent in 2014. Overall growth in developing-countries slowed in 2015 to 4.3 percent from 4.9 percent in 2014. In contrast to other developing countries, growth in India remained robust, buoyed by strong investor sentiment due to positive government initiatives and higher real incomes due to recent fall in oil prices. The Indian economy is trending as bright spot amidst a flat global economy. The economie growth accelerated to 7.6 percent in 2015-16, as compared to 7.2 percent in 2014-15. INDIAN TEXTILE INDUSTRY The fundamental strength of Indian Textile Industry flows from its strong production base of wide range of fibres/yarns -from natural fibres like cotton, jute, silk and wool to synthetic/man-made fibres like polyester,viscose, nylon and acrylic.The Indian textile industry is likely to continue its strong growth, buoyed by both strong domestic consumption as well as export demand. It is currently estimated at around USD 108 billion and is expected to grow at a CAGR of 8.7 percent to reach USD 223 billion by 2021.The industry is the second largest employer after agriculture, providing employment to over 45 million people directly and 60 million people indirectly. The Indian Textile Industry contributes approximately 5 percent to India's gross domestic product (GDP) and 14 percent to overall Index of Industrial Production (IIP). India accounts for 63 percent of global market share of textiles and garments. India accounts for about 14 percent of world's production of textile fibres and yarns. India's textiles sector is one of the oldest industries in Indian economy dating back several centuries. Even today, textiles sector is one of the largest contributors to India's exports with approximately 11 per cent oftotal exports. The Government has been overall supportive in encouraging textile industry in India. Textiles and garment industry has been included in list of 25 sectors of 'Make in India' initiative of the Government of India. With the right Government policies, we believe that the Indian Textile Industry is well poised to benefit from the large opportunity offered in the domestic and export market. OPPORTUNITIES • 100 percent foreign direct investment (FDI) under the automatic route in the textile sector. • New Textile Mega Cluster will be set up in Surat and kutch, Gujarat. • The Government has introduced the Amended Technology Upgradation Fund Scheme (ATUFS) to give a further boost for technology investment in the textile industry. The ATUFS targets employment generation, exports, conversion of existing looms to better-quality technology looms and improved quality of processing industry. The long awaited National Textile policy to be announced shortly will further accelerate growth in this sector. • The Government of India has implemented several export promotion measures such as Focus Market Scheme, Focus Product Scheme and Market Linked Focus Product Scheme for increasing share of India's textile exports. CHALLENGES • Competition from low cost neighbouring countries which will have to be addressed to sustain the growth momentum of the industry. • inflexible labour laws, poor infrastructure • Debrciation of euro against Indian Rupees adversely affecting textile business RISKAND CONCERN • High Fragmented Industry with large number ofsmall-Size and technologically outdated plants. • Lack ofTrained Manpower and low labour Productivity due to lack of Technological Development • High Energy cost and transportation cost are matter of Concern. BUSINESS OUTLOOK Your Company has 16 Texturising Machines, 150 High Speed Shuttle-less Looms and 144 Conventional Shuttle Looms with a capacity to manufacture 21,000 tonnes of Draw Texturised Yarn (DTY) per annum and 12 Million meters Grey fabrics per annum. Your Company's textile products has a Competitive edge of Quality, design, Innovative Product but still company is taking ail efforts to improve the quality and productivity to get more orders at competitive rates. The company is in process ofexpansion of Kim Plant by installing eight new texturising machines and thereby increasing the manufacturing capacity by 40 % i.e. 9000 Tonnes of DTY per annum. Construction of new building for expansion of textile division of the company, at Kim, is going on. The company has recorded export turnover of Rs. 5584 lacs. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The Company has a proper and adequate Internal control System to ensure that ail assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorised, recorded and reported correctly. The Internal control is exercised through documented policies, guidelines and procedures. It is supplemented by an extensive program of Internal audits conducted by in house trained personnel. The audit observations and corrective action taken thereon are periodically reviewed by the audit committee to ensure effectiveness of the Internal control System. The Internal control is designed to ensure that the financial and other records are reliable for brparing financial statements and other data, and for maintaining accountability of persons. RISK MANAGEMENT Risk is inherent in ail kinds of business and is an integral part of the textile business. In the normal course of business, a company is exposed to various risks like Credit risk, Market risk and Operational risk, besides other residual risks such as Liquidity risk, Interest rate risk, Regulation risk etc. With a view to efficiently manage such risks, your Company has put various risk management System and practices. Your Company aims at enhancing and maximizing shareholders value by achieving appropriate balance between risks and returns. The risk management strategy adopted by your Company is clearly based on a clear understanding of the risk and the level of the risk appetite and that is dependent on the willingness to take the risk in the normal course of business. Various committees operate within the broad policy framework to ensure and enhance the risk control and governance framework. HUMAN RESOURCES/ INDUSTRIAL RELATIONS The Company's HR philosophy is to establish and build a high performing organization, where each individual is motivated to perform to the fullest capacity: to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realize the full potential of our personnel. The Company is giving direct employment to 310 employees and workers. Industrial relations are cordial and satisfactory. Disclaimer Statement The discussion contains forward-looking statements and reflects our current views with respect to future events and financial performance. Actual results may differ materially from those anticipated in these forward-looking statements. No rebrsentation is made on the accuracy and combrhensiveness through the same is based on sources believed to be reliable. Utmost care has been taken to ensure that the opinions exbrssed by us herein contain our view on the significant events having impact on the Company's operations but it is not exhaustive. |