MANAGEMENT DISCUSSION AND ANALYSIS

Industry structure and development Market overview Textile and Apparel:

The Indian Textile and Apparel (T&A) Industry has emerged from the economic slowdown and is regaining forward momentum. T&A, being an important industry, contributes 5.4 percent of India's GDP. It is estimated to grow at a promising CAGR of 9 percent over the next 10 years. This includes both the domestic market and exports. The value of the domestic T&A market is US$ 59 billion which exceeds the value of the exports market, reflecting higher domestic demand and consumption.

Shifting demographics, shrinking households, a greater number of educated consumers, the growing number of working women, changing fashion trends, rising disposable incomes, awareness levels, new retail formats, technological innovations and changing consumer behavior are the trends powering the growth of the domestic market. The apparel sector comprises 70 percent of the total domestic market, which in turn becomes the result of an increase in the per capita consumption by Indian consumers.

The domestic apparel market, which is split into menswear, womenswear, and kidswear, was worth US$ 45 billion in 2014, and is expected to grow at a CAGR of 9 percent to reach US$ 110 billion, in 2024. With a 42 percent market share, menswear leads the domestic apparel market followed by womenswear (38%), while kidswear accounts for 20 percent of the market. Menswear has been the focus for many brands and retailers and is therefore comparatively more organised, with higher brand penetration and greater degree of brand awareness. The size of the menswear market was US$ 17.3 billion in 2014; with growth at a CAGr of 9 percent expected over the coming decade, this may reach US$ 39.6 billion by 2024.

Although the womenswear market is relatively less organised and has lower brand penetration, its size was still US$ 15.5 billion in 2013; this is expected to grow, at a CAGR of 10 percent, over the next decade to reach US$ 38.9 billion in 2023 and thus nearly becoming equal to the worth of the menswear segment. The faster growth of this segment, as compared to the menswear segment, has attracted the attention of both national and international brands and retailers. Many menswear brands and retailers have also tapped into this opportunity and have extended their brsence into this segment as well.

Finance review: Please refer Board Report for financial performance review.

Outlook on strengths and Opportunities:

Strengths:

The Textile and Apparel Industry has a huge availability of production capacity and raw material. As India being the highest exporter of cotton and yarn and skilled affordable workforce. There is huge young customer base available for growth.

Opportunities:

In case of Textile and Apparel in general and innerwear market in particulars, there is huge scope in retailing and e-trade business as a result of change in the consumption pattern, increase in the income levels of individual customers, shift in buying pattern in terms of ready to wear, growing urbanisation and emergence of educated working women.

Outlook on Weakness and Threats:

The Industry is highly fragmented but growing at very higher pace and it mainly dependent on the availability of skilled labour. The prices of raw materials are highly fluctuating specially, the cotton, and it depends upon the monsoon and export policies of the government, which has impact on the manufacture. The Competition with domestic and international player in the industry is very high and it has been growing the years to come.

Internal control system and adequacy:

The Company's Internal Control Systems, commensurate with the size of the Company and nature of its business, and has well documented policies and procedures ensuring that all assets are safeguard and protected against the loss from unauthorised use or disposition.

The Company, in order to strength the internal control system has migrated from old software system to integrated SAP software system, which is more structured, disciplined and provide the best practices to synchronised the sales and production planning, the benefit of which results in more efficient handing of inventories.

As a process, internal auditor reviews the internal control, procedures and reports on the control adequacies to the Audit Committee which meets periodically to review the financial performance and the accuracy of financial records.

Human Resource Development:

Human Resource Development (HRD) is the frameworks for helping employees, develop their personal and organizational skills, knowledge and abilities. Human Resource Development includes such opportunities as employee training, employee career development, performance management and development, coaching, mentoring, succession planning, key employee identification, tuition assistance and organization development.

The industry in which Company operates is highly dependent on the manual labour and HRD is plays an important role both in hiring and retaining through training and development. The Company has started training for the works force at its both manufacturing location which will help in improvising the productivity and efficiency on the work.