MANAGEMENT DISCUSSION AND ANALYSIS REPORT A. OVERALL REVIEW: The global economy began its modest recovery in FY 2014- 15. While the trend is expected to accelerate in the current year. Emerging markets like India faced multiple challenges capital outflows, intense exchange rate brssures and volatile current account movement. A combination of persistent inflation, fiscal imbalances, external sector vulnerabilities and low investments resulted in sluggish domestic demand growth. Fiscal and monetary initiatives taken by the Indian government and the Reserve Bank of India (RBI) helped stabilize financial market conditions, but the domestic macro-economic environment still remains challenging. The overall performance of textile industry is badly affected due to lower realization both in export and domestic market. Disturbed power supply and skilled labor shortage in the region has worsened the position. B. INDUSTRY STRUCTURE AND DEVELOPMENT: Raw material costs have been increasing globally, coupled with a shortage of skilled workers. While a shift is taking place of textiles industries from China and Bangladesh to India, the industrial climate in India has also become adverse due to regular increases in input costs. Any further apbrciation of the Rupee will adversely affect exports from India. The major sub-sectors that comprise the textiles sector include the following: • Cotton/Man-Made Fibre Textiles Mill Industry • The Man-Made Fibre/Filament Yarn Industry • The Wool and Woolen Textiles Industry • The Sericulture and Silk Textiles Industry • The Handlooms Textiles Industry • The Handicrafts Textiles Industry • The Jute and Jute Textiles Industry • The Textiles Exports India's textiles and clothing industry is one of the mainstays of the national economy. It is also one of the largest contributing sectors of India's exports worldwide. C. OPPORTUNITIES AND THREATS: There is good scope for growth for the textile industry as India's share in the global trade in textiles is weak compared to other countries. The free trade environment is a great opportunity for the Indian textile industry to increase its share in the global market. Chinese exports are slowing down on account of various factors inclusive of increase in domestic demand and rising costs. This is a good opportunity of which our textile industry should make use but smaller countries like Bangladesh, Sri Lanka, Pakistan, Turkey and Vietnam etc. are becoming formidable challengers. Lack of uninterrupted power, increased power costs, higher transaction costs, high cost of labour are hindering the progress. However, we are making all out efforts to cope with all these challenges by continuous efforts at cost reduction, process improvements, diversification of products and improving productivity by improving efficiencies. D. RISKS AND CONCERNS: The fluctuation in the currency especially against the dollar is becoming problematic for long term booking of orders. Cotton prices are increasing regularly as are other input costs including power and logistics. Natural Gas has become so much costlier that its use as a source of power has become prohibitive. E. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY: The Company has a well established framework of internal controls in all areas of its operations, including suitable monitoring procedures and competent and qualified personnel. In addition to statutory audit, the financial controls of the Company at various locations are reviewed by the Internal Auditors, who report their findings to the Audit Committee of the Board. The Audit Committee is headed by an Independent Director and this ensures independence of function and transparency of the process of supervision and oversight. The Committee meets to review the progress of the internal audit initiatives, significant audit observations and planning and implementation of follow up action required. The Company conducts its business with integrity and high standard of ethical behavior and in compliance with the laws and regulations that govern its business. F. HUMAN RESOURCES POLICIES: Your Company considers its human resources as its most valuable assets, among all other assets of the Company. It has been the policy of the Company to actuate the talent by providing opportunities to develop themselves within the organization. The Company continued to have maintained very cordial & harmonious relations with its employees. G. CAUTIONARY STATEMENT: Statements in this report on Management Discussion and Analysis, describing the Company's objectives, projections, estimates, expectations or brdictions may be forward looking, considering the 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 global and domestic demand-supply conditions, finished goods prices, raw materials costs and availability, fluctuations in exchange rates, changes in Government regulations and tax structure, economic developments within India and the countries with which the Company has business contacts. The Company assumes no responsibility in respect of the forward looking statements herein, which may undergo changes in future on the basis of subsequent developments, information or events. By Order of the Board of Directors Blue Pearl Texspin Limited (Formerly known as "E-Wha Foam India Limited") Arun Kumar Sharma Director DIN- 00369461 Date : 12th August, 2015 Place : Mumbai |