MANAGEMENT DISCUSSION AND ANALYSIS

THE COMPANY HAS 3 DIVISIONS VIZ.

1. 100% EOU Unit at Nanjangud - Karnataka - Manufacturing High Quality Silk and Velvet Fabrics.

2. A Yarn producing unit at Sarandi - Ahmedabad - Manufacturing cotton, viscose, polyester and blended yarns mainly for exports.

3. Export Division at Kolkata - Exporting Industrial Leather Hand Gloves, Silk & cotton fabrics and made- ups manufactured on Handloom etc.

1. EOU UNIT AT NANJANGUD

A. INDUSTRY STRUCTURE AND DEVELOPMENT

The Textile Industry is highly power, man-power & capital intensive industry. We experienced mixed experience due to recovery in USA & financial crisis in European continent. China is still a big threat to us in International Market due to availability of cheap labour and high quality silk yarn in the country.

B. OPPORTUNITIES AND THREATS

The globalization of all markets, economic or political upheavals anywhere in the world affects all the markets & inflation and high volatility in exchange markets be cited as potential threats but the biggest threat for the time being is increase in cost of raw material in the international market and high power and labour cost in the country. Quality of Indian fabrics and the growth momentum in India, despite rising inflation, may be taken as an opportunity for Indian exports.

C. OUTLOOK

Due to recession worldwide the confidence of export market has badly affected. However, the Company has taken effective control measures to cope up slowdown and explore new markets. The Company is on way to better realization by way of cost curtailment and expecting better results in the current year.

2. YARN PRODUCING UNIT AT AHMEDABAD

A. Industry Structure and Developments

Textile spinning industry is a core sector industry with high power consumption, labour intensive and high infrastructure cost. In the recent time, there is a lack of demand from the international market mainly from USA & China which has forced the major exporters to sell their products in domestic market

B. Opportunities and Threat

The biggest threat to spinning industry is the increase in manpower cost, power cost and other overheads. Over and above, the lack of demand from the international market is the biggest threat to the industry at the brsent moment. We are not planning any expansion during the year 2015-16. Recovery in international market may be considered as an oppertunity for the Indian exporters.

C. Outlook

We are expecting improvement in international demand in the coming season which will start from November and the industry is expected to perform better.

3. TRADING DIVISION (LEATHER HAND GLOVES & SILK FABRICS MANUFACTURED ON HANDLOOM)

A. INDUSTRY STRUCTURE AND DEVELOPMENT

Due to recovery in USA & other continent, the sale started picking up. However financial crisis in Europe & recessions in Africa & other market had an adverse impact on our sales volume. However, we are continuously trying to improve quality output and addition of new markets, with increase in varieties of hand gloves.

B. OPPORTUNITIES AND THREATS

India's share in global market for Industrial Gloves is very minimal and hence, there exists big scope for future growth. In silk fabrics margins will be under brssure but there is scope for increase in turnover to new markets.

C. OUTLOOK

The future outlook appears to be better.

4. COMMON TO ALL DIVISIONS

A. Risks and Concerns

High power and manpower cost, stringent labour laws, and shortage of skilled workers are the biggest risk concerning this industry. High volatility in foreign exchange rates also poses a great risk as our unit is mainly into export business. The wide fluctuation in cost of Raw Material like Cotton, Viscose & Polyster Fibre, silk yarn & Finished leather has also become a major risk factor.

Foreign Exchange Risk

The Company's policy is to systematically hedge a part of its foreign exchange risks.

Interest rate Risk

The Company's borrowings are on floating rate basis. On account of inflation in the country, the company feels risk arising out of a change in interest rate structure by RBI is very much there on different loans of the company.

Commodity Price Risk

Due to continuing high inflation the company is exposed to the risk of price fluctuation on raw materials and other inputs. These risks are significant considering the brsent situation in the country.

B. Internal Control Systems and their adequacy

The company has appropriate internal control system for business processes across various divisions with regard to efficiency of operations, financial reporting, compliance with applicable laws and regulations. The company has kept highly skilled technical and administrative people at our mill, due to which the internal control systems are strictly maintained i.e. increasing productivity and cutting cost at every stage. Under the supervision of highly experienced technical people, we are able to produce highest quality of products for export market. Regular internal audits and checks ensure that responsibilities are executed effectively. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvements for strengthening them.

C. Financial performance with respect to Operational Performance

The Company could achieve a turnover of Rs.24867 lacs and net profit of Rs.. 8.47 lacs during the year under review.

E. MATERIAL DEVELOPMENT IN HUMAN RESOUCES/INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The company brsently has 651 employees on its rolls (As on 31/03/2015). These are basically human resource assets and are integral in Company's on-going success. They have played a significant role and enabled the company to deliver better performance year after year. The cost of staff and workers is increasing abnormally due to high cost of living and there is a shortage of skilled workers. We have to keep extra hands and train them to cover our requirement of workers. Strong emphasis is therefore given to build and nourish the human resource assets. The Company has had very harmonious relations with its workforce during the year.

F. CAUTIONARY STATEMENT

Statement made in this report describing the company's objectives, projections, estimates, expectations or brdictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could defer materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include global and Indian demand supply condition, finished goods prices, feed stock availability and prices, cyclical demand and pricing in the Company's markets, changes in government regulations, tax regimes, economic developments within India and the countries where the Company conducts its business and other factors such as litigations and labour negotiations.