Alka India Ltd Management Discussions.

Management Discussion & Analysis Report pursuant to Regulation 34(3) and 53(f).


The Management of Alka India Ltd. has prepared and is responsible for the financial statements that appear in this report. These statements are in conformity with accounting principles generally accepted in India. The statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates and expectations may be ‘forward looking statements within the meaning of applicable laws and regulations. The Management has made these statements based on its assessment, expectations and projections about the future events. Wherever possible, it has tried to identify such statements by using words such as

‘anticipate, ‘estimate, ‘expect, ‘project, ‘intend, ‘plan, ‘believe and words of similar substance. Such statements, however, involve known and unknown risks, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other financial costs which may cause actual results to differ materially. The Management does not guarantee that these forward-looking statements will be realised, although it believes that it has be imprudent in making these assumptions. The Management undertakes no Obligations to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

1. Industry Structure and Development:

The Companys products can be classified under the Textile Products. The Company is taking all necessary steps to maximize the profitability of the Company Textile sector in India is one of the oldest industries, representing rich and diverse spectrum of activities and it plays a key role in Indian economy by way of significant contribution to GDP, manufacturing output, employment generation and export earnings. Thus textile industry is one of the largest source of employment generation in the country. The global focus is shifting to India due to cost and stability factors in Textile industry. The Governments positive steps are also expected to help this shift. The consumption of the textile products in the domestic as well as international market is expected to increase in the years to come. The textile Industry, ingeneral, had a negative impact due to the after effects of structural transformation that took place in the form of implementation of demonetization and GST. Further, post GST, import duty has come down sharply, thus making imports cheaper for the domestic industry which has placed pressure on selling prices for the textile industry as a whole. Consumers preference to going for e-commerce / on-line sales and reduction in export benefits have reduced margins, thus hindering the promotion of exports.

Indian Economy

Indias economy affected due to COVID-19 and the gross domestic product growth is expected to be better in the F.Y. 2021-22 as compare to F.Y. 2019-20. The structural reform of The Goods and Services Tax (GST) within a year of demonetization is expected to provide boost to the economic growth and investments in the long run. With an improving business ecosystem, stable macroeconomic indicators and a liberal FDI regime, foreign capital inflow has provided impetus to the domestic economy. According to World Banks Global Economic Prospects report, Indias GDP is expected to rise to 6.9% in FY 2021-22 and 7.2% in FY


Indian Textile Industry

The Indian textiles industry is among the oldest in the country. It is projected to reach USD 230 billion by 2021 from around USD 120 billion. Currently, the domestic textiles industry contributes 10% to the manufacturing output of the country, generates about 4% to its GDP and employs more than 45 million people. Importantly, the sector contributes 15% to the export earnings of India. Mitigating the repercussions of currency fluctuation remains a challenge. Exports have been a core feature of Indias textile sector. The Indian textile export market, estimated at $ 18 billion, is expected to growth at a CAGR of 4% compared to the global CAGR of 3% over 2016-26.

2. Opportunities and Threats:

Our product is intermediary product for user industries and the development will be based on dependent other industries. The Company is making continuous efforts to trading different grades of products to meet the requirement of its customers. The Company is making efforts for exploring other avenues to increase it sales of different varieties of Garments. Any changes in international price of its products and fluctuations in foreign exchange will have effect on the profitability of the Company.

Chinas slow investment in textiles and shift to high tech industries will have a positive impact on Indian exports in the coming years. Further, USAs withdrawal from Trans-Pacific Partnership (TPP) and chances of termination of North American Free Trade Agreement (NAFTA) between USA Canada Mexico for free trade will increase their cost due to application of import duties amongst their countries. Consequently, Indian industry should have opportunity to promote its own exports. The international brands like Marks & Spencer, IKEA, Zara, H & M, Walmart etc. who have multiple sources to cover fabrics and convert into garments in Bangladesh, Vietnam and Cambodia etc. for retailing in India at better prices will make it difficult for Indian textile industry to compete with them apart from e-commerce / online business and cheaper imports.

3. Segment or Product wise performance:

The Company operates in single business segment i.e. Textile comprising cotton, yarn, fabrics etc.

4. Outlook:

The outlook for the Company appears bright on a long term basis. The Company is hopeful that its performance in the years to come would be encouraging, as the Company is planning to start the trading in bullion & textile garments in national as well as international market. The Company has looking for investment in other sector. The focuses on cost optimization, introduction of new markets and offering of new product development with special fiber, other than cotton, with sustainable finishes. According to the International Monetary Fund (IMF), the global economic activity is picking up with a long awaited cyclical recovery in investment, manufacturing, and trade. It has projected economic activities to improve in both advanced economies as well as EMDE since CY 2021 and CY 2020, with global growth projections at 4.7% and 3.9%respectively.

5. Business Risk and Risk Management:

The Company is exposed to a number of risks. Some key risks have been mentioned below:

1. TheRawmaterialpricesaremarketdrivenbeinganagriculturalproductandanynaturalcalamity such as drought/ flood will affect the profitability of the Company.

2. GST has led to reduction in import duties across the segments, leading to a serious threat of imports from China, Indonesia, Thailand and Bangladesh. Down ward revision in duty draw back rates has added to the woes of the Indian Textile sector. The poor global retail sales and slow down of business in the domestic market, are matters of concern for the industry.

3. Adverse volatility in raw material prices can affect the performance.

4. Uncertain availability of PTA from domestic suppliers on account of their frequent breakdowns can reduce capacity utilization at times.

5. Any change in the fashion will also have bearing on the profitability of the Company.

6. Risk is an inherent part of any business. There are various types of risks that threaten the existence of a company like Strategic Risk, Business Risk, Finance Risk, Environment Risk, Personnel Risk, Operational Risk, Reputation Risk, Regulatory Risk, Technology Risk, Political Risk, etc. Your company aims at enhancing and maximizing shareholders value by achieving appropriate tradeoff between risk &returns.

6. Internal Control Systems and their adequacy:

The company has adequate systems of internal control covering all financial and operational activities. The internal control are designed to provide reasonable assurance with regard to maintaining proper accounting controls, protecting assets from unauthorized losses and ensuring reliability of financial and operational information and proper compliance with regulations. In the opinion of the Board, an internal control system adequate to the size of the Company is in place.

Internal Control System is embedded in your Companys operating framework. Your

Company believes that managing risks helps in maximizing returns to stakeholders. Internal audit reports are prepared to create awareness and to take corrective actions on the respective units or areas, which need rectification. These reports are then reviewed by the management team and the Audit Committee for follow-up action.

7. Financial Performance:

For the financial year Net Loss after tax is Rs. 33.09 lakhs against Loss of Rs. 16.78 lakhs during the previous year.

8. Human Resource / Industrial Relations:

The Company is regularly conducting seminars and works hops to improve the safety. The Company is deputing employees for attending seminars, for updating their skills and knowledge. Consistent and fair HR policies ensure that industrial relations continue to be peaceful and cordial and results in increasing in productivity and effectiveness. The Company aims at creating development oriented approach for its employees by building systems, processes and focusing on recruitment of top quality manpower. Focus on transparent performance appraisal and productivity linked incentive schemes have resulted in highly motivated workforce and increased productivity. The Company appreciates the productive cooperation extended by its employees in the efforts of the management to carry the Company to greater eights.