Aunde India Ltd

ECONOMY & BUSINESS OVERVIEW

The automotive industry (passenger cars) which is amid the top ten in the world with anannual yield of over 2 million units may not be looking so vibrant as of today butcertainly has very good future potential for India once the recessionary dust settles.

As the potential of the technical textiles in India, they are promising areas forinvestment. Though slowly but the production of various technical textiles items isgrowing at a steady pace. The Indian technical textile industry is seen to grow between$12-15 billon by 2012, representing 12 percent of the global worth. In addition, thecountry's overall consumption of technical and nonwoven textiles is believed to record anadditional growth of 150 percent in 2012, in line with the GDP growth of the country. Inthe current state of affairs, technical textiles are recognized as a significantly buddingfield for promotion of the Indian textile industry.

In the drive towards lowering weight for reducing both fuel consumption and C02emissions, many current developments are looking at new uses for fabrics, and by 2020, itis predicted that the passenger cars will contain 35 kg of textiles, which will have apositive impact on the automotive textile industry like never before. Further, woven andknitted fabrics have a predominant share of the global market for automotive textiles,followed by composites - which have the greatest growth potential.

AUNDE India is the only local player to have tie-up with AUNDE Global Group, whichgives access to the latest technology and new products which are in the internationalmarkets especially in USA and Europe. The Company has already obtained nomination forexport of fabrics to GM-Global Programme for its plants in Thailand, Indonesia andUzbekistan.

Currently circular knitted fabrics are extensively used in car interiors for seatcovers, headrests, door panels, headliners, sunroofs, pillars, parcel shelves and bootcovers. Warp-knitted fabrics are characterized by their wide range of applications and arealso employed as door panels, headliners, pillars and boot covers.

AUNDE India is in the process of expansion of its existing capacities by installationof machines and technology required for the manufacture of knitted and warp knittedfabrics. These additional capacities will be utilized to seize the market share in knittedand wrap knitted fabrics.

AUNDE India is creating a competitive advantage worldwide by building global sourcingcapabilities by developing and manufacturing low cost fabrics and introducing newperformance fabrics for OEM's. AUNDE India designers are now teaming with Aunde Globalgroup designers for new launches worldwide.

With this competitive advantage over our competitors, the Company looks forward forbetter and more upbeat times when the full potential of the Company can be actualized withgenuine inclusive growth of the Company in the coming years.

Internal Control Systems and its adequacy

The Company maintains a system of internal controls designed to provide a high degreeof assurance regarding the effectiveness and efficiency of operations, the adequacy ofsafeguards of assets, the reliability of financial controls, and compliance withapplicable laws and regulations. The organization is well structured and the policyguidelines are well documented with pre-defined authority. The Company has alsoimplemented suitable controls to ensure that all resources are utilized optimally.Financial transactions are reported with accuracy and there is strict compliance with allapplicable laws and regulations.

The Company has put in place sufficient system to ensure that assets are safeguardedagainst loss from unauthorized use of disposition and that transactions are authorised andreported. The Company also has an exhaustive budgetary control system to monitor allexpenditure against approved budgets on an ongoing basis.

Human Resources / Industrial Relations

Human Resources represent the collective expertise, innovation, leadership andmanagement skills of organization. The Company is of the strong belief that the employeesare the most vital resources giving the Company an edge over its competitors in thedynamic business environment. On the industrial front, your company has had cordial andharmonious relationship with its employees and unions.

Pollution and Environmental Controls

The Company has made progress in improving energy efficiencies and waste management andhas complied with all applicable environmental laws and regulations. Utmost safety andhealth of the people working in the premises of the Company is of prime importance to themanagement of the Company and management has taken all possible steps to ensure the sameincluding providing the appropriate safety equipments at the work place.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Company'sobjective, projections, estimates, expectations or predictions may be forward lookingstatements within the meaning of the applicable corporate laws and regulations. It may benoted that the actual results may differ from that expressed or implied herein.