MANAGEMENT'S DISCUSSION AND ANALYSIS

This report covers the operations and financial performance of the Company for the year ended 31st March, 2015 and forms part of the Directors' Report.

Overall Review:

Indian Textile Industry has made a major contribution to the national economy in terms of direct and indirect employment generation and net foreign exchange earnings. The sector contributes about 14% to industrial production. The textile sector is the second largest provider of employment after agriculture. Thus the growth and all round development of the industry has a direct bearing on the improvement in the Indian economy. In spite of the adverse market conditions brvailing in various businesses in which the Company operates, the overall performance of the Company during the year has improved compared to that of the brvious year.

The Company is in the business of manufacturing of textiles and real estate. The Company had achieved an overall turnover of Rs.16468 lacs.

2. Segment Review

Business Segment - Cotton,  Synthetics Yarn and Fabrics. Industry Structure and Development:

Raw material costs have fairly stabilized during the year under review and are expected to remain stable. The recovery of the textile industry seems to be round the corner as domestic demand is expected to pick up this year on account of improved economic sentiments. A clear policy on TUF Scheme and timely release of TUF subsidies would go a long way in the recovery of the industry.

Opportunities and Threats:

The country's domestic market offers much potential for growth and numerous business opportunities as demand for textile products are expected to keep pace with increased purchasing power augering well for the Industry. Moreover, government's initiatives to revive manufacturing industry with textile as key segment in its 'Make in India' program also adds to the positive for the sector. Further, increasing labour cost in China, which is likely to witness slow down, also offers an opportunity for Indian mills to increase their market share.

Lack of uninterrupted power, increased power costs, higher transaction costs, high cost of labour, uncertainty in labour reforms are hindering the progress. However, we are making all out efforts to cope with all these challenges by continuous efforts at cost reduction, process improvements, diversification of products and improving productivity by improving efficiencies.

Review and Analysis:

The financial performance of our textile has stabilized and is showing improvements including in capacity utilization. As a result, the sales have improved aided by increasing demand in the domestic Markets. The costs of inputs have been comparatively stable during the year.

In order to increase our share in the domestic market and to provide newer varieties of fabric to meet the consumer demand, our Research and Development Department continues to remain actively engaged in development of new shades, finishes and varieties in an economical and environmentally sustainable manner. After the commissioning of new processing facility we are trying to develop different finishes for various fabrics. Efforts are continuously being made for value addition to enable the customer to have accessibility to a wide range for exclusive varieties. Additionally, several new fabric blends are being developed with unique finishing processes to cater to the ever changing consumer demand.

Outlook:

The company is taking all efforts to improve the quality and productivity to get more orders at competitive rates. Due to well-established Spinning and Weaving units at Dhamni and Khursundi the company is able to quote better rates and maintain high quality & productivity in the finished goods manufactured. Barring unforeseen circumstances the company is confident of achieving better results in the current year.

Risks and Concerns:

Delays in labour reforms, scarce availability of manpower resources, high attrition rate are some of the concerns and risk which poses threats to the company. Further weakening of the rupees will push up the input costs. High inflation has already added significantly to the labour cost as well as other inputs costs and continues to pose a threat as the unit is not in a position to pass on this burden to end user consumers.

Business Segment - Real Estate.

Industry Structure and Development:

The commercial real estate sector stayed relatively weak. Reduction in new office developments, decline in leasing activity, lack of apbrciation in capital values, combrssion in yields and lease rentals across major Indian cities were a few factors that impacted overall performance. The real estate industry continued to remain subdued in FY 14-15.The sector witnessed slowing demand due to reduction in affordability, increase in asset prices and cumbersome government regulations.

In the long term, commercial real estate is expected to witness robust demand with an increasing number of companies looking to expand operations and setting up offices. Issuance of new banking licenses will stimulate increased demand from the BFSI sector

Threats and Opportunities:

The Securities and Exchange Board of India (SEBI) has notified final regulations that will govern REITs and Infrastructure Inventment Trusts (InvITs) which will enable cash strapped projects easy access. Growing requirements of space from sectors such as education, healthcare and tourism provide opportunities forIT parks. The prospects of India's real estate sector are closely linked with the state of the economy. Unfavorable changes in government policies and the regulatory environment can adversely impact the performance of the sector.

In order to realize the long-term growth potential of the sector, there is a growing need to introduce reforms. Year 2014-15 has witnessed various measures initiated by the Indian Government to revive growth in the real estate sector, which if executed correctly, will encourage transparency, corporate governance and investment and improve the industry's long-term prospects. It is our hope that various regulations also incorporate provisions to address challenges the sector currently faces in terms of receiving project approvals

Debrssed demand, together with increased constructions cost(both men and materials), delays in approvals will put brssure on the cost of the projects and thereby the profit margin. High borrowing costs coupled with rising price levels due to rapid inflation in input costs impacted affordability for buyers across markets. Lack of supporting infrastructures like roads, highways, electricity can also hamper the growth of the sector.

Outlook:

The current market environment calls for increased dynamism. RML is reinforcing the advantages of its differentiated business proposition and competitive strengths by focusing on remaining capital efficient.

Risks and Concerns:

Risks and threats are an imminent part of any business. The major risks and threats to our business are Constraints of funds, Human Resources, Legal etc

The company has adequate and appropriate systems in place to ensure that the impact of these risks are minimised and interests of the Company are protected.

Internal control systems and their adequacy:

The Company has proper and adequate systems of internal controls in order to ensure that all assets are safeguarded against loss from unauthorised use or disposition and that all transactions are authorised, recorded and reported correctly. Regular internal audits and checks are carried out to ensure that the responsibilities are executed effectively and that adequate systems are in place. The Management continuously reviews the internal control systems and procedures to ensure orderly and efficient conduct of business. The emphasis of internal control will be further strengthened across functions and processes, covering the entire gamut of activities including manufacturing, finance, supply chain sales & distribution, marketing etc. The Company has adopted Risk management policy. The implementation of the ERP system shall ensure internal controls in finance, supply chain, sales distribution and marketing.

Company's financial performance and analysis:

The turnover and other income of the Company during the year is Rs. 23929. lacs as against Rs. 22679 lacs in the brvious year. The profit from ordinary activities before Tax is Rs.6595 lacs as against Rs.5054 lacs in the brvious year. The net profit after debrciation, taxation is Rs.5394 lacs as against Rs.4490 lacs in the brvious year.

Human Resource Development / Industrial Relations:

The Company firmly believes that motivated and empowered employees are the cornerstone of competitive advantage. The Company's employee value proposition is based on a strong focus on employee development, providing a satisfying work environment, performance appraisal and counseling and appropriate empowerment.

The Company continues to maintain and enjoy a cordial relationship with its employees, providing positive environment to improve efficiency with regular investments in upgrading the knowledge and skills of the employees.

Cautionary Statement:

Statements made herein describing the Company's expectations or brdictions are "forward-looking statements". The actual results may differ from those expected or brdicted. Prime factors that may make a difference to the Company's performance include market conditions, input costs, govt. regulations, economic developments within/outside count