MANAGEMENT DISCUSSION & ANALYSIS REPORT INDUSTRY OUTLOOK: Indian Textile Industry is one of the leading textile industries in the world. Though it was brdominantly an unorganized industry even a few years back, but the scenario started changing after the economic liberalization of Indian economy in 1991. The opening up of economy gave the much-needed thrust to the Indian textile industry, which has now successfully become one of the largest in the world. Indian textile industry largely depends upon the textile manufacturing and export. It also plays a major role in the economy of the country. India earns a major percentage of its total foreign exchange through textile exports. Further, the textile industry of India also contributes nearly 14% of the total industrial production of the country. It also contributes around 4% to the GDP of the country. Indian textile industry is also the largest in the country in terms of employment generation. It not only generates jobs in its own industry, but also opens up scopes for the other ancillary sectors. Indian textile industry currently generates employment to more than 35 million people. In the hierarchy of human needs, clothing occupies the second top most priority coming only next to the food. The use of socks by the armed forces fighting in high altitude and in adverse climatic conditions have now been finding ways among executives, school children and general masses altogether. Wearing of any kinds of shoes without socks is termed as incomplete. Socks are simple items and one of the basic necessities of people of all ages and income strata. Socio-economic changes and fashion awareness amongst the masses have brought in sea change in the living styles in India. The Management Discussion & Analysis Report has been included in adherence to the spirit enunciated in the code of Corporate Governance approved by the Securities and Exchange Board of India. The report herein brsents the Company Overview, SWOT Analysis, Initiatives by the Company and overall outlook of the Company for the future. This outlook is based on the assessment of the current environment which may vary due to future economic and other developments in the universal arena. COMPANY STRUCTURE AND DEVELOPMENTS The Company has recovered itself from the sickness status and has recovered its losses up to an extent. The Company has already paid its entire debt and now is a debt free company. The Company adopted series of measures to boost its activities. But, due to non availability of strategic or financial partner, the unit cannot be yet revived in a fully fledged way. During the year under review, there has been significant improvement in the performance of the Company as compared with the brvious year. Our total income has been increased to Rs. 89.10 Lacs from Rs. 53.76 Lacs in the brvious year, at a growth rate of 65.73%. Consequent to this, the net loss after tax from operations during the year under review was Rs.1.35 Lacs as against Rs. 22.77 Lacs in the brvious year. The Company is suffering from losses and even could not able to afford the fixed expenses of the factory unit but it's just trying its best to cope up everything with small amount of sales. In spite of the above, the Company has not lost its hope to get a financial partner and our assiduous efforts continue for the same. The Company is looking for a strong future ahead and targeting the significant growth in the next year. Its future aim is to improve its financial position. Though the Company and its management is fully devoted towards producing new range of socks, wrist bands, head bands and other related products in order to fulfill its object of increasing profits. SWOT ANALYSIS 1. STRENGTHS: • The Company has most strategically chosen the locations for its plants and has adopted advanced production techniques. • We are also pleased to inform you that apart from DEMAT connectivity with CDSL, the Company is now connected with NSDL also w.e.f. 11th February, 2013. Consequent to such connectivity with both the depositories, the market lot of the Equity Shares on BSE has also been reduced from 100 Shares to 1 Share. This has benefited the shareholders in terms that they may trade in Company's shares more conveniently. This all has become possible due to your support to the Company. • The Company due to past experience and its marketable goodwill and its good business relations with the world's best exporters it has captured the foreign market in a short span of time. • Since the Company has the capability of making socks of different deigns /sizes/patterns, it is able to expand its market globally. 2. Weakness: • The current financial position of the Company is not evitable with the required capital standard. The management is trying its best to bring the Company's financial position up to mark by next year. 3. Opportunities: • Due to expansion of the manufacturing base of the company, there will be substantial increase in demand of Company's products. • The Board of Directors of the Company had proposed to go for merger of the Company with High Street Fashions Limited. The business interest of both the Transferor Company as well as the Transferee Company is common in the field of manufacture of computerized knitted Socks and other allied knitted articles. The merged entity will have enhanced shareholder's value accruing from consolidation of the manufacturing operations resulting in economies of scale, efficient utilization of capital, optimum utilization of infrastructure and other resources as well as jointly setting up and commissioning of projects in hand, contributing to the overall growth prospects of the combined entity. • The Company will be able to use much available potential now in the domestic market on which every Multi National Company has set their eyes upon in India. 4. Threats: • Due to high competitive brssure in the market, the Company has to operate in this competitive scenario and acquire a grip in the market to hold its foot firmly and upkeep the brand name. • The textile sector in India is unorganized and fragmented. Around 90% of the players operate in the unorganized sector mostly in family run operations. The nature of the sector brvents it from achieving economies of scale. • Adverse change in the Government Policies may affect in the business operations of the Company. • Technology Obsolescence: These are the days when technology takes no time to become obsolete. Thus to be at par with its competitors the Company has to ensure that it constantly updates and upgrades its technology. RISK AND CONCERNS Risk is the most inevitable characteristic of any business. One of the potential risk factor is the fluctuations in the prices of Textile material .The competition is getting more local and regional with large players and organized players getting into the business. The company is also subject to international market and regulatory risk. The fast changing consumer taste and fashion is also a constant risk in the business. Evolution of rapidly increasing varied types of branded fashion pose a tough competition for the company which in turn may affect the turnover and profitability of the company .The Board is at its verge trying to mitigate and minimize these risks by constantly studying the market demand and changing the variety of products it delivers to its customers. INTERNAL CONTROL SYSTEMS The Company has professional & adequate internal control systems which ensure protection against misuse or loss of the Company's assets. It ensures that all the assets are safeguarded and used productively. The Audit Committee and the internal control procedures and corrective action taken by the company where needed. The Company's system primarily covers the aspect such as: 1. Control over operating parameters and various factors relating to production. 2. Efficient use and protection of resources. 3. Accuracy and promptness of financial reporting. 4. Compliance with laws and regulations. HUMAN RESOURCE DEVELOPMENT The company strongly believes that a right workforce makes all the difference in catapulting an organization to the highest echelons of success and achievement. The management continues to lay emphasis on identifying, developing the talent on organization with a view to retain them and further training to those who capable of handling additional responsibilities .Working together , we intend to develop and own a workforce strategy that will be integral to the business strategy of our customers. FINANCIAL PERFORMANCE Financials of the Company is detailed in the Financial Accounts of the Company forming part of the Annual Report.The Financial Statements have been brpared in compliance with the requirements of the Companies Act, 1956 and Generally Accepted Accounting Principles (GAAP) in India. CAUTIONARY STATEMENT Statements in the Management Discussion and Analysis Report describing the Company's objectives, projections, estimates, expectations or brdictions may be considered to be forward looking statements and are stated as required by applicable laws and regulations. Actual results could differ from those exbrssed or implied and are determined by many factors including global and domestic demand -supply conditions, process, raw material availability, tax laws, governmental policies and other statues which may affect results which may be different from what the Directors envisaged in terms of future performance and outlook. For and on Behalf of the Board of Directors Sd/- (Bhagwan Singh) Whole-time Director DIN: 02305246 Place: Jaipur Date: 14-08-2014 |