Gujarat Raffia Industries Ltd

a. Industry Structure and Developments:

The Industry is dependent on performance of core sectors like agriculture, fertilizer,cement and exports. Due to indifferent monsoon during last few years and in generalrecessionary economies, the performance of the above sectors was hit. The policy changesin infrastructure and good monsoon during the year will lead towards the brighter futureof the company.

b. Opportunities and Threats:

The HDPE/PP woven Sacks/Bags industry as a whole will be benefited by 40%relaxation ofJute Mandatory and Packaging order which will be enable food corporation of India andother agencies to pack 40% of food grains in HDPE/PP Bags, HDPE/PP Bags sector is thebiggest sector in India for packaging. The Company has successfully initiated its effortsfor increasing exports and has set a target of exporting 50% of its production.

c. Segment wise Performance:

The Company is operating only in one segment. The production/turnover/performance ofthe Company have been disclosed in the Directors report under the Head Production, salesand working results.

d. Recent Trend and Future Outlook:

The recent trend in quite favorable for the industry in view of good monsoon as theCompany has sizable presence in fertilizer sector. The opening up of food grains sectorwill enable the woven sacks industry to see better times again.

e. Risks and Concerns:

The industry is plagued by intense competition due to major petrochemical manufacturersmaking available cheap raw material abundantly.

f. Internal Control Systems and their adequacy:

The Company has a adequate systems of Internal Controls commensurate with its size andoperations to ensure orderly and efficient conduct of business. These controls ensuresafeguarding of assets, reduction and detection of fraud and error, adequacy andcompleteness of the accounting records and timely preparation of reliable financialinformation.

g. Financial Performance with respect to operational performance:

The financial performance of the company for the year 2006-2007 is described in theDirector's report under the head " Review of Operations".

h Material Developments in Human resources and Industrial Relations Front:

The Company has continued to give special attention to Human Resources/Industrialrelations development. Industrial relations remained cordial throughout the year and therewas no incidence of strike, lock out etc.

i. Cautionary Statement:

Statement in this Management Discussion and Analysis Report, describing the Company'sobjectives, estimated and expectations may constitute "Forwarding LookingStatements" within the meaning of applicable laws or regulations. Actual resultsmight differ materially from those either expressed or implied.