western india cottons ltd Management discussions

1) Industry Structure and Development:

The Indian Textile Industry suffers from lack of stability in availability of raw material, high input cost and cost of conversion and low technology. The cheap goods coming from China and other neighbouring countries in volumes have affected the overall business. Only Companies having latest technology with mass production capacity and strength of capital can survive.

2) Risk Management

The Board of Directors take special care in envisaging and when occurred managing risks that affect the financial health and performance of the Company. On reviewing the reports, specially the quarterly performance results, the Audit Committee and the Board scrutinize the risks that affected the performance of the Company and remedial measures suggested. Through the quality system practiced in the past by the Company, the staff is well trained in foreseeing possible inconsistencies in operations and to bring to the notice of the top management. The risk management is keenly practiced through all processes of operations.

3) Risks, Concerns, Opportunities, and Threats.

The prices of raw materials were shooting up without any corresponding increase in the price of the finished products. The increase in cost of power, fuel, licence fees and taxes by the Government resulted in increased cost of products. The labour-laws prevailing in Kerala are very stringent to ensure smooth manufacturing process whereas in neighboring states they are flexible. Apart from non availability, the cost of labour is also comparatively very high and hence uneconomical.

Despite such adversities, the Company has been able to make its presence felt in the market though comparatively in a smaller way with a limited conventional product profile, which is attributable to its longstanding reputation, credibility and quality orientation.

The rent income during the year really came to the rescue of operational needs of the Company. Continuous efforts are on hand to increase the rent income by improving, including modernizing the godown facilities.

4) Segment-wise or Product-wise Performance Outlook

Trading operations could be carried out in a large scale only by considerably increasing the product profile from its present very few items of conventional bleached mull. This involves very high pitch of financing and risk bearing owing to stiff competition, for which resources have to be found. Immediate possibility of borrowing is ruled out in view of the present performance level and financial health of the Company. May be with the expected increase in rent income which has proven to be an encouraging source, increasing the product profile can be considered at appropriate time.

5) Industrial Relations

As there was no manufacturing operation due to suspension of operations, there were no dealings with the factory employees.

6) Internal Financial Control System

The Company has a well defined internal financial control system. Transactions are authorized and correctly reported. Control Systems are periodically reviewed by the Management and the Audit Committee. The Board is of the view that the existing control methods are operating satisfactorily and monitoring procedures are in place under the present policy of Internal Financial Control and Procedures.

7) Material Development in Human Resources and Industrial Relations including number of people employed :

Owing to the suspension of manufacturing operations since 2003 the Companys business is restricted to outsourcing the products on a far reduced scale. The operations are conducted through less than 10 nos. of staff from an office located in the town. The Staff are well trained under the umbrella of ISO, experienced and highly exposed to quality assurance and marketing strategy.

8) Discussion on Financial performance with regard to operational performance.

The Company concentrated on trading operations resulting in sales revenue of Rs.405.9 lakhs. The rent income during the year was Rs.78.30 lakhs and miscellaneous income of Rs. 8.84 lakhs. After meeting expenses towards fixed overheads and other related expenses as for an ongoing Company including maintenance of buildings in the Mill premises, which would have been otherwise an expensive liability,your Company could earn an operational profit of Rs.13.13 lakhs.

9) Cautionary Statement:

Statements in this report on Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectation or predictions may be forward looking. These results are based on certain assumptions and expectation of future events. Actual results may however differ materially from those expressed or implied. Important factors that could make a difference to the Companys future operations include global and domestic demand, raw material cost and availability, finished goods prices, changes in Govt. regulations and Tax laws, economic conditions within India and the countries with which the Company had business contacts and other environmental factors over which the Company does not have any control. Also the godown spaces leased out could not be a source of continuous income unless the buildings and facilities are restructured to suit the renewed requirement of modern godowns, which involves considerable investment.

10) Regulatory Compliance:

The Company has taken adequate steps to ensure compliance with various statutory and regulatory stipulations and guidelines within the restricted operational features after suspension of operation of the Mill in 2003.

11) Information on non mandatory requirements:

1. The Company has not issued any Shares, GDR\ADR\Warrants or any convertible Instruments

2. The Company is not maintaining a separate office for the Chairman

Place: Kannur	On behalf of the Board
Date: 08.08.2017	Managing Director