Management Discussion and Analysis

Overview of Company

Your Company, Garware-Wall Ropes Ltd. (GWRL), is one of India's leading players in Technical Textiles with customers and end-users across the world. Deploying its expertise in engineering of Polymers and its in-depth knowledge of customer needs, your Company provides application-focused solutions for various sectors including Deep Sea Fishing. Aquaculture, Shipping, Agriculture, Sports. Infrastructure, Defence and Transportation. Your Company has three integrated manufacturing facilities in Pune, Wai and Silvassa, where a range of products are produced, including Ropes, Nets and Aquaculture Cages for capturing and breeding fish; Nets for Sports such as Tennis and Soccer; Insect and Shade Nets for high-value Agriculture; Coated Fabrics for Covers, Tarps, Tents, etc.; and products and solutions for water management, waste management, and erosion-control applications.

Driven by the mission to provide innovative, application-focused solutions to enhance value of customers globally, your Company has earned the trust of customers across all continents, in over 75 countries. End-users of your Company's products include Fishermen, Shipping Companies, Oil Drillers, Agriculturists, Packers, Transporters, Construction companies, Municipalities, Government Organizations, Clubs, Universities and Manufacturing Plants.

Your Company's sales are sbrad across several verticals and geographies, providing stability and hedge against fluctuations in particular business segments, and thereby ensuring a steady stream of revenue and profitability. Users of your Company's products are serviced through branches, depots, dealers and distributors located across the globe.

Marketing offices in USA, UK, Russia and Canada improve customer responsiveness in respective time zones and ensure better understanding of local needs.

Apart from being a leading player in the domestic market, your Company has a dominant share of markets in North America, and parts of Europe and Australia, for several products.

Your Company has a long history of paying dividend and is committed to enhancing stakeholder value through profitable growth in sales and earnings. With growing acceptance of your Company's new products in the overseas aquaculture industry and in the domestic agriculture market, your Company is on a growth trajectory.

Business Environment in Financial Year 2014-15

Compared to FY 2013-14, the Global Economy witnessed dynamic growth In FY 2014-15, especially in Europe and USA. As a result, there was growth in demand for your Company's products from Europe, Canada and USA, which are the key markets for your Company outside India. Improvement in the dollar-rupee rate was favourable for the Indian economy and resulted in a significant increase in your Company's export revenues, notably due to better performance in the Aquaculture, Fisheries and Sports-goods Sectors.

Your Company recorded good growth in the domestic market also, mainly in the Fisheries and Agriculture businesses.

Despite the persistent slowdown in the domestic infrastructure sector, your Company increased its Geo-Textile Business. Moreover, demand was good in some specific areas like erosion control and landfill lining.

Your Company improved its performance through innovative products and exploration of new business segments. Concerted efforts were made for addition of new customers across the globe to compensate for contraction in traditional markets. New business lines were further developed and this helped boost the Company's revenues. Innovative solutions launched in the Aquaculture Industry were particularly successful.

Opportunities and Threats

The near-term outlook for the Domestic and Global Economies appears good. Hence, your Company sees growing opportunities in both Domestic and Global Markets. With a relentless focus on providing reliable and innovative solutions, your Company sees the development of new markets and business segments as a key driver for revenue generation.

In the same vein, your Company's focus on the new business areas of Agriculture, Coated Fabrics and Defence is showing positive outcomes and potential.

In the Domestic Market, the economy is likely to grow once structural deficiencies, complex Labour laws and inefficient Policy Regulations in the manufacturing sector get addressed. With its "Make in India" initiative the Central government has sent positive signals to attract investment and encourage innovation by creating a world-class manufacturing infrastructure in India.

Your Company is maximizing existing and emerging opportunities with strong commitment and focus on quality. The quality culture permeates each level of manufacturing and all operations.

Company's Performance in FY 2014-15

Your Company registered total revenue of Rs. 786.60 Crores for the year ended 31st March, 2015, an increase of 14% over the brvious year's Revenue. Export Revenue accounted for 49% of the total Revenue. Compared to the brvious year, Export Revenue rose by 13%. Profit after tax in the year under review was Rs. 43.05 Crores, registering an increase of 61.5% over the brvious year.

Profitability was affected by steep increases in the cost of raw materials, interest, power, labour and transportation. Slowdown in the Domestic Fishery Sector, which is your Company's core business area, puts brssure on margins. Despite these challenges, your Company recorded increase in profitability. Cost increases were passed on in most customer segments. Several initiatives were undertaken to improve productivity per machine and person.

Key Financial Indicators

The Operating Profit Ratio of the Company is 7.19%.

The Current Ratio of the Company is 1.39. The Company has a total Debt-Equity Ratio of 0.13:1.

Opportunities and Threats

The near-term outlook for the Domestic and Global Economies appears good. Hence, your Company sees growing opportunities in both Domestic and Global Markets. With a relentless focus on providing reliable and innovative solutions, your Company sees the development of new markets and business segments as a key driver for revenue generation.

In the same vein, your Company's focus on the new business areas of Agriculture, Coated Fabrics and Defence is showing positive outcomes and potential.

In the Domestic Market, the economy is likely to grow once structural deficiencies, complex Labour laws and inefficient Policy Regulations in the manufacturing sector get addressed. With its "Make in India" initiative the Central government has sent positive signals to attract investment and encourage innovation by creating a world-class manufacturing infrastructure in India.

Your Company is maximizing existing and emerging opportunities with strong commitment and focus on quality. The quality culture permeates each level of manufacturing and all operations.

Risks and Concerns

Your Company's products are heavily dependent on petroleum-based raw material, power and labour. Cost increases under these heads are generally passed on, or mitigated, by delivering higher value to customers, and by improving manufacturing efficiency and productivity. However, as cost brssures are likely to continue, your Company faces the challenge of reducing operational costs and increasing productivity without compromising on quality.

As international sales constitute nearly 49% of your Company's sales, any uncertainty in Global Market conditions would be a matter of concern. The Company's strategy is to push for growth in all geographies and all product segments. Slow growth in the Domestic Industrial products sector remains a matter of concern.

Internal Control Systems

Your Company is committed to run its business in an efficient manner, in a conducive internal environment, to facilitate achievement of its objectives. During the year, your Company introduced the SAP enterprise solution, which facilitates greater focus on analytics, better and quick decision-making, accurate business information, and enhanced and reliable financial reporting.

Your Company continues to use elaborate systems to efficiently monitor and manage procurement, manage inventory, safeguard assets, and ensure manufacturing within clear quality and cost parameters, and delivery lead times. Accurate calibration of prices with costs enables your Company to deal effectively with rises in cost of raw materials and inputs. Together, these systems help the Company to limit financial risks. A rigorous Budgetary Control System ensures tight control over all internal costs and new-product development. Your Company has also taken steps to improve the speed and quality of responsiveness to customer feedback.

Human Resources Management

Your Company's biggest asset is its family of employees. Equipped with requisite domain knowledge and functional specialization, they are driven by a sharp focus on current and future customer needs in line with your Company's mission and values. In the year under review, a month-long, interactive workshop was organized to reiterate and reinforce alignment with values, across all levels of the organization. Employees' capacities were built continuously, on the job, through participation in challenging projects, classroom training sessions or offsite, residential programmes. Travel and health benefit policies were revised in tune with changing employee needs. A host of programmes and events were held to enhance internal and cross-functional bonds. Celebration of festivals and out-bound gatherings helped people break out of routines and return to work with refreshed.

Cautionary Statement:

Statements in this Management Discussion and Analysis describing the Companys objectives, protections, estimates and expectations may constitute "forward looking statsments" within the meaning of applicable laws and regulations. Actual results may differ materially from those exbrssed or implied.