MANAGEMENT DISCUSSION AND ANALYSIS REPORT

MANAGEMENT DISCUSSION

Industry Structure and Development

The Sewing Machines and Domestic Appliances industry in India continues to be dominated by the small scale sector with imports of appliances largely from China. The Make in India initiatives and the implementation of the Common Goods and Services Tax for all states are expected to impact these industries albeit others also to transform to higher growth with better productivity. The sewing machines market in India continues to maintain its low growth though more shifting to rural markets. The Zig Zag and Electronic Sewing machines offer higher potential for growth in the urban markets and also serve as the replacement market for the conventional sewing machines. The up gradation to high end artisan sewing machines is also being witnessed even with the household customers. .

Domestic appliances market offers a huge potential with sustained growth rate in India with rising households and income levels.

Outlook & Opportunities

Considering the current market share of your Company, there is potential to increase its share both in straight stitch and Zig Zag segments. The Company will expand its reach in the markets where it has gaps at brsent including formulating the strategy for entering rural markets in a phased manner.

The Domestic appliances market, which is a large and growing market, offers tremendous opportunity to the Company to expand this business with its strong brand recall.

Threats, Risks & Concerns

The Company had identified the following Risk areas in the Risk management policy.

1. Low growth of sewing machines market

2. Strong competition in all business segments

3. Sourcing

4. Foreign Exchange

. The Board of Directors of the Company and the Audit Committee of Directors will periodically review the risk management policy of the Company so that the Management controls the risks properly.

Segment-wise Performance

Sewing Machines Business

The Company's core business remains the sewing machines. Efforts would be directed to increase penetration in rural markets with specific models as the market requires. The artisan range will be more developed by introducing high end semi- industrial sewing machines.

The Zig Zag range which offers many features more than just sewing to the consumer to operate on mechanical, electronic and computerized machines will be expanded with reaching out to the target customers through digital marketing.

Sewing carded notions and other accessories have been added to the sewing products range to add to the turnover and expand reach to the customers.

Domestic Appliances

While the sewing machines business will be protected and expanded, the driver for growth in future will be the Domestic Appliances business. The segment results are given in the Note 49.

The Company has a wide range of kitchen and home comfort small appliances and the year under review the Company also had successfully introduced air- coolers and soon the heating range with water heaters will be introduced. These product lines will be expanded in future.

As the Domestic Appliances Business required initial investment in form of setting after sales service and logistics, hiring employees for this separate vertical, this business is not able to make profits with the turnover that was achieved during the year ended 30th June 2015.

The efforts are on to reach the break-even point for this business soon and make this business a profitable business eventually.

Internal Control Systems and Adequacy

The Company has adequate systems of internal controls for operations, optimum utilization of resources, effective monitoring and compliance with all applicable Rules. The internal control system is commensurate with the size and its nature of operations.

A firm of Chartered Accountants conducts internal audit on quarterly basis. The Audit Committee reviews Audit Reports submitted by the Internal Auditors. The Committee also meets Company's Statutory Auditors and the Internal Auditors to ascertain their views on the adequacy of internal control systems and keep the Board of Directors informed of its major observations from time to time.

Human Resources

The Company is committed to implement the highest standards of HR management principles and strict compliance with regulatory requirements at all times. The Company is making continuous efforts in respect of safety and proper education of the employees so as to attain the organizational goals effectively and efficiently.