MANAGEMENT DISCUSSION AND ANALYSIS REPORT

As required under clause 49 of the listing agreement, a detailed report on the Management Discussion and Analysis is given below:

introduction

The Company started its operations in the year 1975 to produce yarn Twisting machines. The Company diversified into textile spinning in the year 1993 and the textile operations which were handled by a wholly owned subsidiary have been merged by way of amalgamation with the Company from 01-04-2014. The Company has also invested in Wind Mills.

INDUSTRIAL SCENARIO

The prospects of the textile engineering industry are directly related to the prospects of the textile industry in India. The Indian textile engineering industry is not able to fully utilize its capacities because of fluctuating demand and also competition from foreign manufacturers who supply machines of latest/ sophisticated technology. Machines of latest technology with high level of automations are mostly imported and the local industry is not able to match the technology levels of foreign manufacturers. This is the main reason for low capacity utilization by local manufacturers.

HIGHLIGHTS OF OPERATIONS

Segmentwise/ Productwise Performance

The sale of Twisters is 100 nos of value Rs. 1687 Lakhs as against 165 nos of value Rs.2432 Lakhs in the brvious year. The sale of winders is 21 nos of value Rs.1858 lakhs as against 45 nos. of value Rs.3247 Lakhs in the brvious year.

Assembly/Random winder sales have increased to Rs.114 Lakhs from Rs. 113 lakhs. The facilities available to produce Aluminium die cast and Plastic injection moulded components have been used only for in-house requirement of components.

The sales from Textile Division is Rs.5776 lakhs against Rs.7485 lakhs in the brvious year.

The income from windmills is Rs.254 lakhs as against Rs.278 lakhs in the brvious year. Note: The values include that of subsidiary Company on amalgamation.

RISKS & cONcERNS:

Engineering Division

The user industry brfers machines of latest technology with high level of automation/productivity and low consumption of power. They also expect the local products to be available at lower prices than the imported machines, even if locally made machines are able to match the machines from foreign competitors in terms of performance and quality. The future of the company will depend upon its ability to keep pace with the technology levels of the competitors and offer lower prices than the foreign manufacturers.

With the discontinuing of the manufacture of automatic cone winders, the Company is left only with the Two for one Twisters and Assembly Winders. This will result in considerable reduction in the sales turnover of engineering division. New models and improvement in existing models are being made in Twisting machines mainly focusing on power consumption. The competition is intense for twisting machines and the Company has to operate with thin margins.

Textiles Division

Power shortage is a perennial problem faced by the Company resulting in under utilization of installed capacity. It also suffers from locational disadvantage of being away from cotton growing areas, which pushes up the cost of the main raw material.

Further, market for the product Cotton Yarn is not consistent whereby any long term planning is unreliable.

OUTLOOK

The Company will concentrate on development of new models of Two for one twisters with focus on power consumption, automation and improvement in quality and productivity of the yarn processed in twisters. The company will also explore the possibility of developing new models for industrial yarn, technical textiles etc to improve the sale volumes. The demand for twisters will be both from the new capacity addition and for replacement of the old machines. The sales turnover/profits will however depend upon the conditions in textile industry, conducive for capital investments.

As regards the textiles division, the future will depend upon the availability of uninterrupted power, stability in price of raw materials and also the end product. The increase in spinning capacity in northern states close to the areas from where raw materials are sourced and yarn is sold will make the spinning mills in the south less competitive. The Company proposes to produce value added products like twisted yarn and also knitted fabrics to the domestic and export market to realize better price/margins.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has a proper and adequate system of internal controls commensurate with its size and nature of business.

All the assets are safeguarded, properly utilized and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.

A Chartered Accountant carries out the audit on monthly basis to monitor the effectiveness of the internal checks and controls in different areas and reports/suggests improvement measures for review by the management.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Company has a dedicated team of professionally qualified/experienced personnel in all functional areas. Opportunities are provided for self-development and career growth and wherever necessary employees are sent for training program conducted in house and also outside by other professional bodies. The industrial relationship was cordial throughout the year.

cautionary statement

Statements in this report on management discussion and analysis describing the Company's future objectives, projections, estimate and expectations may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and expectations of future events, as they are perceived by the management at this juncture The actual results, however, may differ materially from those which have been made explicit or which are implied. The major factors that could make a difference to the Company's operations include the supply demand condition of the Company's products, both domestic and global, the price realizations, which are market related, and all other factors such as litigation and industrial relations.