Management Discussion and Analysis

a. Corporate Overview:

Swasti Vinayaka Synthetics Limited (SVSL) is a leading textile and branded apparel Company having its corporate office in Mumbai.

b. Overview of the Economy:

As per the latest GDP growth estimates, Indian economy grew by 7.4%o in FY 15 compared to 6.9% in FY 14, mostly driven by improved economic fundamentals and revision of GDP methodology calculation. Even inflation showed signs of moderation, a welcome sign- wholesale price and consumer price inflation declined to 4.2% and 7.4% respectively, compared with last year's 6.3% to 10.1%. Reduced inflation, falling crude oil prices, stable rupee, improved purchasing power and consumer spending, higher capital inflows supported by the government policy reforms have already put India on an accelerating growth track and improved the business outlook.

The Government envisages GDP growth to accelerate to 8% in FY 16 driven by strengthening macroeconomic fundamentals and implementation of policy reforms recently announced. Reforms like e-auctions of coal mines and telecom, FDI insurance, speedier regulatory approvals, etc. will be critical growth enablers to de- bottleneck stalled projects, improve the investment outlook and the ease of doing business in the country. Reforms currently underway such as GST implementation, Amendment on Land Acquistion Bill, Labour Reforms, etc. are expected to provide the requisite thrust for growth in the medium-term.

c. Industry Structure and Developments:

The Textile and Apparel industry contributes around 6% to India's GDP, 11% to export earnings and is the second largest employer

after agriculture. The industry has shown continued growth with a potential to increase its global trade share from the current 4.5% to 8% in the next 5 years supported by a rich abundance of raw material, skilled labour and talent.

In F.Y. 2015, the textile industry is estimated to have contributed USD 42 Billon (4%) to India's GDP, and 27% to the country's foreign exchange inflows.

d. Business Overview:

The Company deals in Textiles Fabrics, Readymade Garments and Yarn Doubling. SVSL has a very strong brsence in India which can fetch viable business opportunities in the Company's business segment. The Company has launched aggressive marketing schemes and introduced variety of linen cotton and P/C shirting fabrics to cater to the demand of the RMG and Corporate sector. Company has good corporate relationship with Raymonds Ltd, Trent Limited., Future Group, Reliance Industries Limited., Arvind Lifestyle Brand Ltd., etc. and they are regular customers of the Company. There is a great potential in the Company to increase its market share in this segment as our relationship and understanding with the customers is very strong.

e. Opportunities and Threats:

Textile industry is one of the largest employers in India and has strong linkages with the rural economy. The growing young middle-class population is a source of great potential and provides immense opportunities to spur growth in the industry going forward.

The major challenge that the textile and apparel industry is facing is rising production costs, arising out of rising wages, power and interest costs.

Your Company is continuously improving its designing skills and introducing high end fabric by combination of various fibers to have an edge over its competitors. It will continue to stress on improving quality standards, reducing lead time in supplying orders, competitive pricing of product and more stress on product innovation and designing to meet the new set of challenges.

f. Internal Control systems and their Adequacy:

Your Company has an effective Internal control and risk-mitigation system, which is constantly assessed and strengthened with new/revised standard operating procedures.

The Company has entrusted the Internal & operational audit to Messrs. Sanjay Raja Jain (Membership No. 108513), a firm of Chartered Accountants. The main thrust of the internal audit process is test and review of controls, independent appraisal of risks, business process and benchmarking internal controls with best practices.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen them.

The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors.

g. Cautionary Statement:

Statements in this Director's Report & Management Discussion after agriculture. The industry has shown continued growth with a potential to increase its global trade share from the current 4.5% to 8% in the next 5 years supported by a rich abundance of raw material, skilled labour and talent.

In F.Y. 2015, the textile industry is estimated to have contributed USD 42 Billon (4%) to India's GDP, and 27% to the country's foreign exchange inflows.