MANAGEMENT DISCUSSION AND ANALYSIS Overview: The company manufactures synthetic fabrics in the form of semi-finished sarees and dress materials. These products are offered in various designs as per customer requirements. Semifinished sarees and dress materials manufactured by the Company are further processed by our customers before selling to the end-users. The main raw material for our product is man-made yarn, which is sourced from local markets. The Company based on its experience and its standards, conforms to major specifications and customer requirements. Industry, Structure & Developments: The man-made fibre textile industry is one of the largest organized industries in the country in terms of employmentand number of units. Besides, there are a large number of subsidiary industries dependent on this sector, such as those manufacturing machinery, accessories, stores, ancillaries, dyes and chemicals. Surat is known as the textile city of Gujarat. The textile industry is one of the oldest and the most widesbrad industries in Surat. A major part of the city's population is associated with the textile industry. The textile industry in Surat is mainly engaged in the activities of yarn production, weaving, processing as well as embroidery. Surat is well known for its synthetic products market. It is mainly engaged in the production and trading of synthetic textile products. Nearly 30 million metres of raw fabric and 25 million metres of processed fabric are produced in Surat daily. The city has several textile markets that exist since times immemorial. Zampa Bazaar, Bombay Market, JJ Textile Market and Jash Market are among them. Katat Gam, Magdalla and Udhana are the areas in Surat where manufacturing is mainly concentrated. In the course of time, people from various other places like Rajasthan and Kolkata have settled in Surat in order to carry out their textile business. The famous brands of Garden and Vimal textiles evolved from Surat. A few other brands like Parag and Prafful from Surat became famous within a short time. The main market for Surat's textile products are India and other Asian countries. Around 90% of polyester used in India comes from Surat. The Middle East is the major export market for Surat's textile products. The Surat textile industry has grown considerably over time. As per recent figures, textile production in Surat has grown by10% in the last 5 years, while the market for embroidery has grown from an almost negligible amount to around Rs.30,000 million over the same period. One of the main reasons behind the growth of Surat's textile industry is the city's ability to adapt to changes and the latest trends. The city is quick to respond to any changes in the brference of people. The industrialists here have strong entrebrneurial skills. Operational Performance During the current period, your Company has shown an increase in revenue to the extent of 16.34 % from Rs.95.60 Lakhs during FY 2013-14 to Rs. 111.22 Lakhs during FY 2014-15. PAT has shown an increase of 58.29 % from Rs. 6.13 Lakhs during FY 2013-14 to Rs. 9.71 Lakhs during FY2014-15. Outlook Indian economy is adversely affected by persistent inflation over the last few years. The rising incomes propped the purchasing power of the population, driving consumption demand in sectors, where supply lagged particularly, in food-grain and non-food-grain commodities, etc contributed to inflationary brssure. The Government has been going very slow on various reforms, expected by large investors and market. Market participants were particularly concerned about subsidies— fertilizer, food and fuel; falling rupee against dollar; widening current account and fiscal deficits. Net Buys by the Foreign Institutional investors have been declining during the year as compared to these of the earlier years. Economic situations in Euro Zone countries and other priced the Capital Market towards losses. Risk & Concerns The largest component of costs involved in making Synthetic Fabric is attributable to raw materials. Given the volatile trend in Fabrics and demand for Fabrics for competing applications the brssure on input costs can be expected to fluctuate. Adequacy of Internal Control System The Company has adequate internal control systems for the business processes in respect of all operations, financial reporting, compliance with laws and regulations etc. The management information system forms an effective and sound tool for monitoring and controlling all operating parameters. Regular internal audits ensure that responsibilities are executed effectively. The Audit Committee reviews the adequacy of internal controls on regular basis. Human Resource Development The Company recognizes that its human resource is its strength in realizing its goals and objectives. Cautionary Statement The Statement in this Management Discussion and Analysis report, describing the Company's outlook, projections, estimates, expectations or brdictions may be "Forward looking Statements" within the meaning of applicable securities laws or regulations. Actual results could differ materially from those exbrssed or implied. For and on behalf of the Board Kavita Fabrics Limited Harish Chandak (Chairman & Managing Director) Shailesh Chandak (Executive Director) Date: August 31, 2015 Place: Surat |