MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Report herein brsents a brief discussion on the Industry structure and Development, company's performance and Human Resource Development. This discussion is based on the assessment of the current environment which may vary due to future economic and other developments in the universal arena

BUSINESS SCENARIO

Your Company has been involved in the production and export of industrial safety gloves and garments, which are considered essential elements in minimizing health related risks at the workplace all over the world. Export to European Companies account for more or less 80% of the annual turnover of the Company. Your Company has a reputed and established client base which generates repeat orders and reduces counterparty risks. Further your Company has since tapped customers in new geographies including USA and Latin America which mitigated its dependence on the European markets. The Company is basically an EOU production unit and it receives a significant amount of export incentives from the Central Government, which supports its profitability. However the same otherwise makes its profit margins highly sensitive to the export policies of the Government and exposure to the risks arising from volatility in exchange rate movements. As against this the Company's policy of utilisation of export packing credit in foreign currency, future bookings as well as conservative formula of foreign exchange conversion rates in book keeping and export receivable acts to mitigate the unforeseen risks to a great extent and on the contrary it appears that such conservative policy has resulted in the increased volume of exchange gain at the end of the year.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECTS TO OPERATIONAL PERFORMANCE.

The financial Statements have been brpared in compliance with the requirements of the Companies Act, 1956 and Generally Accepted Accounting Policies (GAAP) in India.

INTERNAL FINANCIAL CONTROLS

Your company has established a well defined organization structure having an extensive system of internal control to ensure optimum utilisation of resources, accurate reporting of financial transactions and strict compliance of applicable statutory laws and regulations at all times. Your company has adequate system to ensure that the assets of the company are safeguarded against loss from unauthorized use or debrciation and that all transactions are properly authorized, recorded and reported correctly.

An audit committee of the Board of Directors regularly reviews the audit plans, significant audit findings, adequacy of internal control and internal audit, compliances with applicable accounting standard and particularly reasons for changes in accounting policies and practices, if any.

RISK MANAGEMENT POLICY

In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Policy and the Audit Committee of the Board reviews the same periodically.

Most of your Company's sales contracts are denominated in foreign currencies, exposing it to risks arising from volatility in exchange rate movements. However, utilization of export packing credit in foreign currency as well import of some amount of raw material requirement mitigates such risk to a considerable extent.

The key risk areas for 2015-16 are outlined below:

1. Technology

An inability to leverage rapid technological advancements to improve production efficiency rebrsents a threat to the Company's competitiveness. To mitigate this risk, the Company continuously invests in Research & Development and allocates sufficient budget for machine and equipment upgrades. It also ensures change-readiness through constant market surveillance and intelligence, which enables the Company to continue producing consistently high quality gloves at efficient low cost.

2. Production

Interruptions to production is a risk that can cause a temporary shutdown of factory operations resulting in financial losses to the Company. The three major risks i.e. fire, water and labour as being able to cause interruption to production, are closely monitored by the respective Risk Owners, with risk mitigation plans proposed and implemented as follows:

a. Explored alternative water source;

b. Treated tube wells water, built on-site retention for rain water and recycled water to reduce water usage;

c. Strengthened fire brvention controls, improved housekeeping and cleaning routine and performed daily

d. checks on high risk areas; and

e. Alliance with various manpower supply organization to mitigate the risk of shortage of manpower.

3. Energy

The Company has to absorb any increase in the cost of energy that would result in higher production costs.

To mitigate this risk, the Company embarked on energy efficiency improvement projects at factories to reduce energy consumption to stay competitive and efficient.

HUMAN RESOURCES

Your Company treats its "human resources" as one of its most important assets.

Your Company continuously invest in attraction, retention and development of talent on an ongoing basis. A number of programs that provide focused people attention are currently underway. Your Company thrust is on the promotion of talent internally through job rotation and job enlargement.

DISCLAIMER

Statements made in Management Discussion and Analysis report include forward looking statements and may differ from the actual situation. The important factor that would make a difference to the company's operation include market factors, government regulations and policies, developments within and outside the country.