MANAGEMENT DISCUSSION AND ANALYSIS REPORT

ECONOMY-OVERVIEW

The global economy is set for a modest growth of 3.5% in 2015, as against 3.4% in 2014, and IMF forecasts global growth to rise moderately to 3.8% in 2016. The US economy is poised to grow strongly, exceeding expectations on account of domestic demand, supported by the upward trend in the US economy in 2014. The UK is well on its way to recovery.

In 2014-15, Indian Economy grew at 7.3% (GDP Growth). India is set to become the world's fastest-growing major economy by 2016 ahead of China, the International Monetary Fund (IMF) said in its recent latest forecast. India is expected to grow by 2016 and it is likely to cross China's projected growth rate.

INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian textile industry is one the most important industries for the Indian economy. The textile industry is the second-largest employment generating industry in both rural and urban areas, after the agriculture industry.

The vast pool of skilled and unskilled workers, availability of labour at low costs, strong base for production of raw materials characterise the textile industry in India. The increase in domestic demand and ability of the units in the industry to process small or customised orders are some of the advantages for the textile industry in India.

The Company is engaged in the manufacturing of cotton yarn for different applications by Rotor Spinning. Rotor Spinning is economical, since the process is very short, consumes less energy and offer substantial cost benefits in the choice of raw material in comparison to Ring Spinning especially in coarse counts. The Company is also engaged in generation of power through Wind Mill for captive consumption.

OPPORTUNITY AND THREATS

Opportunities

With rising demand in domestic and international markets, we are hopeful that we will be able to grow our business. The high quality of Indian yarns is ensuring orders from international markets.

Threats

Cotton is raw material of the Company which is sourced from domestic market. Cotton is an agriculture product and its supply and quality are subject to force of nature. Any material shortage or interruption in the domestic supply are deterioration in the quality of cotton due to natural causes or other factors could results in increased production costs. High power costs, interest rates, and volatility in crude oil prices may have an adverse impact.

There is also an increasing anxiety in the industry due to recent developments in -Chinese cotton policy since China is the major importer of cotton and cotton yarns from India.

FUTURE OUTLOOK

The Indian textile industries has positioned itself as an international sourcing destination for a large number of international players and brands. It is also one of the largest contributing sectors of India's exports worldwide. The Company believes that the Government also has significant role to play in the growth of this industry.

RISK AND CONCERN

The Company has long been following the principle of risk minimization as is the norm in every industry; it has now become a compulsion. Therefore, the Board formally adopted steps for framing, implementing and monitoring the risk management plan for the Company. The main objective of this policy is to ensure sustainable business growth with stability and to promote a pro-active approach in reporting, evaluating and resolving risks associated with the business. In order to achieve the key objective, the policy establishes a structured and disciplined approach to Risk Management, in order to guide decisions on risk related issues. In today's challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks inter alia are: Company Assets and Property, Employees, Foreign Currency Risks, Operational Risks, Non-compliance of statutory enactments, Competition Risks, Contractual Risks, and Volatility in prices of Raw Material. The management is however , of the view that none of the above risks may threaten the existence of the Company as robust Risk mitigation mechanism is put in place to ensure that there is nil or minimum impact on the Company in case of any of these risks materialize. During the year, your directors have constituted a Risk Management Committee. These are reviewed periodically by the Board of Directors of the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal financial controls with reference to financial statements. All the transactions are properly authorized and recorded. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The Internal Audit is conducted by outside auditing firms which evaluate the functioning and quality of internal controls and check; and provides assurance of its adequacy and effectiveness. The Internal Audit Reports are reviewed by the Audit Committee and adequate remedial measures, if any, are taken and in time

During the year, not reportable material weakness in the design or operation were observed.

DEVELOPMENT IN HUMAN RESOURCE AND INDUSTRIAL RELATIONS

The Company believes that human resources are valuable assets of the Company and provides them an environment, where each employee is motivated to contribute his best to achieve the Companies objective. The Company lays great emphasis on proper management of human resources and believes that this is the most important ingredient for achieving excellence in performance and sustainable growth. The Company has a progressive HR policy for helping employees to develop their organization skills, knowledge and abilities to achieve greater efficiency.

The Industrial Relations of the Company with its personnel has continued to be cordial and friendly during the year. The Company has 106 employees on 31.03.2015.

CAUTIONARY STATEMENT

Statement in the "Management Discussion and Analysis" describing the Company's objectives, estimates, expectations or projections may be "forward looking statements" within the meaning of applicable laws and regulations. These statements are based on certain assumptions and expectation of future events. Actual results could, however, differ materially from those exbrssed or implied. Important factors that could make a difference to the Company's operations include demand/supply conditions, finished goods, prices, raw material costs, changes in government regulations, tax laws and other statues and other incidental factors.