Management Discussions & Analysis MACRO ECONOMIC ENVIRONMENT While Budget 2014-15 expounded the economic policy of the Government in a large measure, subsequent policy and legislative initiatives have been wedded to its development agenda. The Pradhan Mantri Jan Dhan Yojana, a landmark initiative combining opening of bank accounts with facilities of credit and insurance to those who stood excluded from the ambit of financial services so far. The Direct Benefit Transfer, linked to Aadhar, has progressed well with greater efficiency in the delivery of subsidies. The much-awaited Goods and Services Tax Constitutional Amendment Bill was introduced in the Parliament, and, in order to build trust between Union and States, the first tranche of Central Sales Tax (CST) compensation to be given during current financial year has been announced. The Expenditure Management Commission is looking into the requirements of expenditure reforms and will suggest ways to improve allocative efficiency. The Government has also launched an effective programme for divestment of Public Sector Undertakings. The government appears to be on track to achieve the targeted fiscal deficit to GDP ratio in 2014-15. There has been a durable decline in inflation both wholesale and consumer prices- in the recent months. The steep decline of international crude oil prices, combined with the tight monetary policy of the Reserve Bank of India (RBI) and the Government's commitment towards fiscal prudence may have helped the decline in inflation. The current scenario of price stability and related expectations seems to have convinced the RBI, focused on a glide disinflationary path, on gradual monetary easing to support growth. The RBI has, in two successive announcements, reduced the repo rate by 25 basis points (to 7.75 per cent) and SLR by 50 basis points (to 21.5 per cent). REVIEW OF OPERATIONS The operational performance of the Company during the year was satisfactory looking to the weak market scenario, high input cost, lack of demand by consumers due to high inflation rate, steep competition in profit margin of products, increase in cost of production due to high wages and cost of electricity etc. Gross Sales for the year was of Rs. 2976.07 Lac in comparison to last years' sales of Rs. 2451.98 Lac. Other income contributed for the year was of Rs. 20.06 Lac in comparison to last years' figure of Rs. 22.03 Lac. In term of Net Profit, the Company has earned a profit of Rs. 2.04 Lac in comparison to last years' net profit of Rs. 22.01 Lac (before considering Tax and Extra-Ordinary Items). BUSINESS SEGMENT During the year, the Company is into the business of fabric manufacturing i.e. manufacturing of Synthetic Fabric, a part of textile products in accordance with the Accounting Standard 17 notified by Companies (Accounting Standards) Rules 2006. OPPORTUNITIES The future looks bright for the Indian textile and apparel industry. There are positive drivers which indicate future growth opportunities. There is plenty of cotton with a good potential for higher yield. There is the chance to produce yarn instead of exporting cotton. There is growing export as well as domestic market demand. The Government supports modernization of the industry with a particular focus on closing the gaps in the textile value chain. To convert the potential into reality, the country first of all needs entrebrneurs who are willing to invest. Investment prospects depend on a business-friendly environment and good business expectations. The Government has taken several measures to create those positive impulses. But there are still some improvements possible. The industry waits for the proposed reforms in labor law, support to develop a skilled work force and programs to bind talents to be able to translate market needs into quality products. Export means commitment to mutual free trade supported by excellent logistics based on strong infrastructure for power supply, transport and communication technology. Improvement in logistics is urgent in particular for the textile industry where fashion has to meet strict deadlines. Being creative and flexible with short response times is as important as competitive pricing. For the textile and apparel industry the rising need in easy care necessitates a higher share of blends of synthetic fibers with cotton. When entrebrneurs meet an inviting investment climate and good business opportunities they will formulate an investment strategy. Entrebrneurs who are going to invest in spinning value and those who are aware of the total cost of ownership will surely talk to Rieter. THREATS & CONCERNS We have identified following Threat and Concerns in Indian Textile Industry - • Scarcity and high cost of raw materials and decline in the purchasing power of people due to high inflation. • Slow pace of development of infrastructure, availability of power etc. • High cost of meeting strict environmental standards. • Increased competition from competing countries through exchange rate manipulation, hidden subsidies; • Preferential tariff regimes for close competitors in certain major markets. • Continuation of recessive trends for an extended period will cast its long shadow on textiles industry. • Old Machinery in textile industry led to low productivity and inferior quality. In the developed countries, the textile machinery installed even 10-15 years ago has become outdated and obsolete, whereas in India about 60-75 per cent machinery is 25-30 years old. • Power supply to most cotton textile mills is erratic and inadequate which adversely affects the production. • Changing brferences of the Indian consumers in terms of taste, merchandise, and technology. • Cheap imports from emerging / developing countries like China, Vietnam, Sri Lanka and Indonesia. • Although textiles is the second largest employer in India, after agriculture, labour and staff are finding new avenues and shifting from the labour intensive field to easier job such as e-commerce, warehousing, delivery etc. • Low barriers to enter into the power loom sector due to availability of cheaper Chinese machineries; imports will increase competition and add on to bottom line brssure. • Labour productivity in India is extremely low as compared to some of the advanced countries. On an average a worker in India handles about 2 looms as compared to 30 looms in Japan and 60 looms in the USA. If the productivity of an American worker is taken as 100, the corresponding figure is 51 for U.K. 33 for Japan and only 13 for India. • Labour strikes are common in the industrial sector but cotton textile industry suffers a lot due to frequent strikes by a labour force. The long drawn strike in 1980 dealt a severe below to the organised sector. It took almost 23 years for the Government to realise this and introduce legislation for encouraging the organised sector. HUMAN RESOURCES The Company recognizes that its success is deeply embedded in the success of its human capital. During 2014-2015, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives. CORPORATE SUSTAINABILITY AND SOCIAL RESPONSIBILITY The Company constantly strives to meet and exceed expectations in terms of the quality of its business and services. The Company commits itself to ethical and sustainable operation and development of all business activities according to responsible care and its own code of conduct. Corporate Social Responsibility is an integral part of the Company's philosophy and participates in activities in the area of education and health. CAUTIONARY STATEMENT Certain statements under "Management Discussion & Analysis" describing the Company's objectives, projections, estimates, expectations or brdictions may be forward looking statement within the meaning of applicable securities laws and regulations. Although the expectations are based on reasonable assumptions, the actual results could materially differ from those exbrssed or implied, since the Company's operations are influenced by many external and internal factors beyond the control of the Company. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events. COMPLIANCE The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company is continued to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Company's Board of Directors and the Company's Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis. New Instructions/Guidelines issued by the regulatory authorities were disseminated across the Company to ensure that the business and functional units operate within the boundaries set by regulators and that compliance risks are suitably monitored and mitigated in course of their activities and processes. New products and process launched during the year were subjected to scrutiny from the Compliance Standpoint and proposals of financial services were screened from risk control prospective. The Company has complied with all requirements of regulatory authorities. No penalties/strictures were imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital market during the last three years. By order of the Board For TUNI TEXTILE MILLS LIMITED Narendra Kumar Sureka Chairman DIN : 01963265 Registered Office : 63/71, Dadiseth Agiary Lane 3rd Floor, Kalbadevi Road, Mumbai-400002. Place : Mumbai Date : May 29th, 2015 |