MANAGEMENT DISCUSSION AND ANALYSIS The Management of ORBIT EXPORTS LIMITED brsents its Analysis report covering performance and outlook of the Company. The Report has been brpared in compliance with the requirements of Corporate Governance as laid down in the Listing Agreement. The Management accepts responsibility for the integrity and objectivity of the financial statements. However, investors and readers are cautioned that this discussion contains certain forward looking Statements that involve risk and uncertainties. Global Economy The global economy is still under stress for gaining momentum as many high-income countries continue to grapple with the past impacts of the global financial crisis. Emerging economies continue to remain as less vibrant than in the past. After rising slightly in 2014, to 2.6 percent, world GDP will grow by an estimated 3.0 percent in 2015 and 3.3 percent in 2016, supported by gradual recovery in high-income countries, low oil prices, and receding domestic headwinds in developing countries. Developing economies are projected to see a raise in growth from 4.4 percent in 2014 to 4.8 percent and 5.3 percent in 2015 and 2016 respectively. The global average reflects a combination of upsides and downsides. Downward revision are primarily due to a major GDP decline in Russia (from +0.8 to -3.5 percent) and moderate declines in the Euro Area (1.6 to 1.4 percent), Japan (1.1 to 0.6 percent), and Brazil (1.5 to 0.5 percent). Upward revisions include the United States (2.6 to 2.9 percent), Mexico (2.8 to 3.5 percent), and India (5.5 to 5.9 percent). The adjustments to India, however, do not reflect the recent substantial statistical upward revisions in India's GDP growth measures, the reliability of which is still debated. Indian Economy After years of diminutive growth the reform momentum has picked up in India. Inflation has declined by over 6 percentage points since late 2013, and the current account deficit has shrunken from a peak of 6.7 percent of GDP (in Q3, 2012-13) to an estimated 1.0 percent in the coming fiscal year Going ahead it is widely expected that a further momentum to growth will be provided by declining oil prices and increasing monetary easing facilitated by ongoing moderation in inflation. Simulating the effects of tax cuts, declining oil prices will add spending power to households, thereby boosting consumption and growth. Oil is also a significant input in production and declining prices will shore up profit margins and hence balance sheets of the corporate sector. Indian Exports Due to fragile global economic situations the India exports were also impacted. India's exports dipped deeper in the negative zone recording a decline of 21% in March 2015, the biggest fall in the last six years, pulling down the total shipment for 2014-15 to US $310.5 billion, missing the annual target. Exports have been on downward spiral since December last year. The brvious biggest decline in export was in July 2009, when it dipped by 28.4%. Falling exports and an increase in gold imports have widened the trade deficit to four-month high of US $11.79 billion in March. The trade deficit for April-March, 2014-15 was estimated at US $ 137014.46 million, which was higher than the deficit of US $ 135797.90 million during April-March, 2013-14. Opportunities and Challenges Opportunities: 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. • Availability of greater investment and FDI opportunities. • Emerging retail industry and malls provide significant opportunities for the apparel, handicraft and other segments of the industry as the market is gradually shifting towards branded readymade garments. • Cheaper oil is boosting real incomes and consumer sentiment, and there is continued support from accommodative monetary policy, despite the projected gradual rise in interest rates. Challenges: • Entry of multinational in domestic markets. • Stiff competition from other countries (The performance of global competitor's in fabrics and garments indicates that there are at least 4 countries ie, China, Indonesia, Thailand and Pakistan). • Adoption to fast changing fashion demands. • The major challenge that the textile and apparel industry is facing is rising production costs, arising out of rising wages, power and interest costs, restrictive labour laws and intensified competition from other low cost countries like Bangladesh. Such issues need to be addressed to result in unlocking maximum industry growth potential. Financial Performance of the Company Your Company continued to progress in utilizing all the opportunities during 2014 - 2015. The highlights of the financial performance are: 1) Net Sales increased by 14.88% from Rs.13,701.52 Lacs in 2013-2014 to Rs.15,740.48 Lacs in 2014-15. 2) Earnings before interest, debrciation, tax (EBIDTA) increased by 36.35 % to Rs. 3391.92 Lacs in 2014-15 against Rs.2487.68 Lacs in 2013-2014. 3) Profit after tax (PAT) was Rs.2669.89 Lacs registering a decline of 33.45% over Rs.2000.61 Lacs PAT generated in 2014-15. 4) Debrciation and Amortization expenses decreased by 36.68% to Rs.477.50 Lacs in 2014-15 against Rs. 349.35 Lacs in 2013-14. 5) Interest expenses decreased by 18.95% to Rs. 127.43 Lacs in 2013-14 against Rs. 157.23 Lacs in 2013-14. The Company is making all efforts at improving value additions reducing operating costs and improving efficiencies to overcome higher input costs. Consolidated Financial Performance of the Company The key highlights of the consolidated financial performance are: 1) Net Sales of the Company was Rs.15,820.75 Lacs in the year 2014-15. 2) Earnings before interest, debrciation, tax (EBIDTA) was Rs.3224.96 Lacs in 2014-15. 3) Profit after tax (PAT) was Rs.2688.37 Lacs in 2014-15. 4) Debrciation and Amortization expenses during the year 2014-15 was Rs.480.65 Lacs. 5) Interest expenses during the year 2014-15 was Rs.127.43 Lacs. Credit Rating The Company's financial discipline and prudence is reflected in the strong credit ratings ascribed by ICRA Limited as given below: Instrument Rating Long Term Debt ICRA A (Stable) Short Term Debt ICRA A1 Outlook The company is taking all efforts to improve the quality and productivity to get more orders at competitive rates. The expansion program by improving efficiency by installation of new and high tech machinery will push volume growth. The company's business is committed to achieve world benchmark quality besides expanding on new product offering from new clients. Further the business will continue to focus on improving its cost competitive position. These measures will ensure the company maintaining its leadership position in the world market. Due to the own manufacturing facilities, the company is able to maintain safety of products high quality & productivity in the finished goods manufactured. Barring unforeseen circumstances the company is confident of achieving better results in the current year. Internal Control Systems and their Adequacy The Company has an adequate internal control system commensurate with the size and complexity of the organization. The Company has undertaken a combrhensive review of all internal control systems to take care of the needs of the expanding size of the Company. A system of internal audit to meet the statutory requirement as well as to ensure proper implementation of management and accounting controls is in place. The Audit Committee periodically reviews the adequacy of the internal audit functions. The internal control is designed to ensure that the financial and other records are reliable for brparing financial statements and other data, and for maintaining accountability of persons. Financial and operational performance The financial statements have been brpared in compliance with the requirements of the Companies Act, 2013 and Generally Accepted Accounting Principles in India. Please refer Directors' Report in this respect. Human Resources/Industrial Relations The Company treats its human resources as its important asset and believes in its contribution to the all round growth of the Company. The Company's HR philosophy is to establish and build a high performing organization, where each individual is motivated to perform to the fullest capacity to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realize the full potential of our personnel. Research and Development: Increased globalization has made the marketing of products and retention of customers highly competitive. The need of the hour is total customer satisfaction and value for money from the products marketed. Keeping this objective as paramount, the research and development activities were focused into prompt attention to major customer complaints/ suggestions in order to retain/ enhance customer satisfaction. The Company has started launching products of better quality and new look as per customer requirements. Cautionary Statement All Statements made in this Report may be "forward looking statements" within the meaning the meaning of applicable securities laws and regulations. These statements are based on certain assumptions and expectations of the future events that are subject to risks and uncertainties. Actual future results and trend may differ materially from historical results, depending on variety of factors like changes in economic conditions affecting demand/ supply, price conditions in which the Company operates, Government regulations, tax laws and other statues and incidental factors. |