Alps Industries Ltd Management Discussions.

I. TEXTILES INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian experience in fighting the spread of novel corona virus disease (COVID-19) has developed a great understanding of the pandemics profound impact on around a billion people. With various measures in place to contain the spread of the virus, the time has now come to focus on getting the wheels of our economy rolling. The process so far has not been smooth given the staggered opening and the instinct to "go home" that has gripped the migrant labour force due to the extended lockdown and the ensuing economic hardships. Even the "in-house" labour force wants to return home at the first sign of normalcy, before committing to return to work. As regards the COVID VIRUS, the challenge before the State & District Authorities is to guard against any community spread and move to flattening the curve, as quickly as possible. In the case of the Lockdown, a clearly defined roadmap moving swiftly away from the system of "passes and permissions" can help us plan our return to normalcy. The industry on its part would have to ensure a pandemic resilient manufacturing environment with functional exchange of peoptudle and goods. This process will help us to quickly realign ourselves with the global and domestic economies. In addition, strategic use of inventory locations should also be planned. The Government on its part needs to rethink existing bilateral and multilateral treaties and look at strengthening bilateral trade relationships, especially with the countries that are less impacted by the global pandemic.

COTTON

India has a lot of largest titles when it comes to cotton! One of the largest producers of cotton in the world, the largest net exporter of cotton and cotton yarn, and also the worlds largest area under cotton cultivation - India is ruling the cotton games! China is the closest competitor of India in terms of cotton production, but India has the lead with a huge margin, since China ends up as a net importer of cotton. Textiles ministry was kind enough to consider the issues facing the industry like, demand creation, need for additional working capital, liquidity crunch etc. It is proposed to include the entire textile value chain under the ROSCTL/ RODTEP Scheme so that all the taxes are reimbursed to the exporters of Cotton Yarn, Fabrics and Madeups, to include items like, Quilted products as there is huge potential to increase exports especially when countries like the USA are seriously considering alternative suppliers to China in the post - pandemic scenario. Important issues affecting exports of cotton textiles are being taken up through representations being made to the Government.

YARN - A SIGNIFICANT SEGMENT

The industry suggested that that Cotton Yarn should be included in the Interest equalisation scheme. Apart from the above issues difficulties faced by exporters in accessing funds as per the RBIs announcements were also brought out. The ministry suggested that the industry should bring out the specific issues being faced with the banks so that the Ministry of Textiles can take it up with the Ministry of Finance. The relief measures announced by the Government and the Reserve Bank of India (RBI) on various fronts will take time to percolate to the unit level through the commercial banks and NBFCs. The industry need to be in close touch with bankers so that the benefits announced by the RBI are available. Todays volatile market it is necessary to maintain the highest quality of the yarn in order to maintain high standards, at Alps we believe that nothing comes above

the quality of our products. Matching specifications is always a challenge but Alps takes it all in its stride and goes beyond the call to provide expert services from sourcing, developing, and packaging for safe dispatch to global destinations. Yarn demand was moderate.

II. OPPORTUNITIES AND THREATS

The novel corona virus disease is holding the world in a vice-like grip. It is uncertain and hard to predict whether the containment measures will be effective or not. If international borders continue to be closed for too long, the situation will become catastrophic for many countries in the world. The global economy is heading in execrably into recession. The volume of world trade can shrink by 13-32 per cent in 2020, as projected by the World Trade Organization. The deteriorating global economic conditions, including foreign and fiscal exchange constraints, have already effected supply chains and consumption of goods and services. While many of firms continue their efforts to build resilience into the supply chains, the prevailing trading patterns need to be reviewed. Efforts should be made to accelerate the trading engagements with local, regional distribution channels rather than only the global supply chain networks. Considering the scale of the impact on businesses, the economy and trade, the Government has been announcing relief measures which are a mix of credit guarantees, liquidity infusions into Banks and other financial institutions rather than the economy per se. A package of relief measures for SMES has also been announced including changes in the definition. Apart from investment, the criteria of turnover has also included in the definition.

A. Government policies-Textile Sector

The government is active to industry expectations to avail of un-interrupted benefits under the Foreign Trade Policy 2015-20 which has now been extended till March 31, 2021. Important issues affecting exports of cotton textiles are being taken up in industry to avail of un-interrupted benefits under the Foreign Trade Policy 2015-20 which has now been extended till March 31, 2021. The present times government have expedited the need for digitalisation on account of the compliance requirements like social distancing, touch-free transactions and remote engagement of staffers. In the past few years, India has already seen a gradual introduction of few of the business software like CLO software for apparel designing, PRO 9 software for showcasing products for sale and AXIND software for entire PLC management. As the spread of Corona virus is picking up speed, Government is not only preparing the strategies to combat COVID-19 but also effectively plan for life after the virus. IMF has already suggested that one of the measures to fight against COVID-19 must include a plan for recovery that will reduce potential scarring effects of the pandemic through policy action. Government is exploring new financial lending institutions to support small-scale units.

III. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

In terms of the Ind AS, there is only one reportable segment i.e. Textile Segment. Hence the segment wise reporting is no applicable.

IV. OUTLOOK

Nobody expected that a small VIRUS originating in Wuhan City, capital of the Hubei province in China would cause so much havoc across the world putting lives and livelihoods at stake. Now that it is upon us and is on the verge of peaking and fading away, albeit not fully, we need to look ahead, pick up the pieces and move on. Innumerable challenges confront us as we

move towards restoration of normalcy but they need to be overcome with forbearance and fortitude. The path is not easy. It has been mentioned that these are trying times as country are waging a war against COVID-19 pandemic as well as the economic instability caused by it. It is expected to work in tandem and urged the industry to maintain a positive attitude during this time to tide over this crisis.

V. RISKS AND CONCERNS

Raw Material Price Risk: Cotton are the major raw materials used by the Company for textile. Volatility in prices impacts the overall cost of production, and thus, the profitability.

Currency Risk : As the Company deals in the International market, it is exposed to currency volatility, which impacts the overall revenue of the Company.

Geographical Risk

Concentration in a particular territory leads to a depleting market presence of the Company.

Policy Risk

Implementation of any policy which is not in favour of the Company hampers the operations of the Company.

Competition Risk

There are many emerging countries, where production costs are relatively lower than that of India. This poses a potential threat to the Company.

COVIND-19

As regards the COVID VIRUS, the challenge are to guard against any community spread and move to flattening the curve, as quickly as possible. In the case of the Lockdown, a clearly defined roadmap moving swiftly away from the system of "passes and permissions" can help the plan to normalcy. The industry on its part would have to ensure a pandemic resilient manufacturing environment with functional exchange of peoptudle and goods.

Mitigation Strategy

• Strong relationship with vendors and proximity to the raw material sources ensures easy availability. The Company also plans to save land costs and inventory management keeping in view the historical cycle of input prices. From time to time, the Company hedges raw-material against order book.

• Currency risks are managed by constant monitoring exposures and limiting the same in view of applicable margins

under the relevant Market engagements. Also, some portion of the foreign currency is hedged to mitigate any adverse movements in currency fluctuations.

• The Government of India has come up with various incentives such as rebateon state levies, duty drawback, and

ATUFS, among others. The Company has leveraged on these initiatives to stay ahead in the market.

• The Company benefits out of economies of scale, cutting-edge technology, and loyal partnerships to offer competitive rates to its clients across the globe.

VI. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal control systems for financial reporting. High accuracy in recording and providing reliable financial & operational support is ensured through stringent procedures. The Companys internal team and Audit Committee monitor business operations and any deviations are promptly brought to the notice of the Management board. These findings provide input for risk identification and assessment, post which prompt risk mitigation strategies are deployed towards a seamless growth of the Company. Internal audit process verifies whether all systems and processes are commensurate with the business size and structure. Adequate internal control systems safeguard the assets of the company with timely identification and intervention to assuage risks. The internal audit report is discussed with the senior management and members of Audit Committee to keep a check on the existing systems and take corrective action to further enhance the control measures. Regular internal audits and checks are carried out to ensure the robustness of the system. The Management also reviews from time to time the internal control systems and procedures to ensure their proper application. The emphasis on internal controls prevails across functions and processes, covering the entire gamut of various activities.

VII. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Your company is focusing more on to the heavy vehicles segments, Technical Textiles and Defence sector since your company expecting change in the policy for procurement of indigenous products. Your company also looking forward to expand the business in other segments during the current financial year. The company has started new products during the period under review in Yarn segment. This are value added items with good demand in domestic and exports markets. The efforts to change the Product Mix at our Yarn Spinning Mill at Haridwar. With changing global demands & stiff competition, your company has taken many steps towards its constant improvements, in creating new benchmarks in the industry, like constant improvements in design & development w.r.t advanced & versatile equipments, competent team which helps in reducing turnaround time from CADs to actual physical sample, ability to offer specific developments along with coordinated product across categories. Your company is aggressively increasing share of business with existing customers & focusing on getting new strategic customers, focusing on increasing share of product categories, opening up for outsourcing products & services to meet the market demands. Under the Made-up & Fabric Products, your company offers a range of furnishing products for house and office use and Under the Constant efforts are being made to increase the throughput & reduce the OE. While we continue to strive and deliver through performance, we maintain our endeavour to be a socially responsible corporate. Several initiatives were taken for update the quality and changing the product mix. However due to nationwide Lock down by competent authorities the performance of the company in coming year will be impacted adversely.

However due to nationwide Lock down by competent authorities the performance of the company in coming year will be impacted adversely.

During the period under review your company has incurred a negative EBITDA, which comes to Rs.604.40 Lacs in comparison to positive of Rs. 599.01 Lacs in previous year. The PAT for the period is also negative at Rs. 11509.58 Lacs in comparison to the previous year of Rs. 6325.05 Lacs, which is partly due to impairment on assets in current year and due to low volume of turnover as there was economic slowdown and continuation of fixed expenses and further better in previous year due to exceptional profit for the reason of write back of debt payable to lenders because of settlement with them.

VIII. MATERIAL DEVELOPMENTS ON HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The focus during the year has been on the optimization of available Manpower resources as the on-going challenges created due to market slow-down in the previous year continued this year as well. Learning from Theory of Constraints (TOC) proved very useful in this endeavor, the concept cascaded across all the hierarchy amongst the team. Focus remained on Continuous improvement / BTB (Better-Than-Before).Learning from TOC helped in strengthening some of the critical functions in terms of appointing competent personnel in the concerned leadership roles like in Marketing for Fabric as well as Made-ups business and in Maintenance and HR in Yarn Business. Though, challenges with ongoing slow-down continued this year as well across the country, efforts made effectively in order to retain the talent with traditional as well as innovative retention strategies. With continued efforts to improve the female workers/employees ratio, particularly at the shop floor, in-line with the national policy of gender equality and policy to restrict the sexual harassment, there has not been any case of sexual harassment reported and homogeneity of the Work environment is maintained. Besides, efforts were made for regional balancing of Workers in our Haridwar Unit, significant efforts were made to control Labour Losses. The companys concerns for welfare of its workforce continued during the year and accordingly Group pension/Accident Insurance policy/ESI/WC policies were continued further as in the past. The company has been consistently maintaining harmonious & cordial relations with the employees at all the locations. The Company continues to lay emphasis on building and sustaining an excellent organizational culture focusing on performance. During the year, with consistent review and efforts for optimization of available manpower resources, average employment, has been 1555, slightly less than that of last year. Pursuit of proactive policies for industrial relations has resulted in a peaceful and harmonious situation on the shop floors of all the plants.

IX. MEDIUM-TERM AND LONG-TERM STRATEGY

In terms of SEBI/HO/CFD/CMD/CIR/P/2018/79 May 10, 2018 the disclosure of Medium and Long-term strategy of the company, for the next financial year ending on March 31, 2021 is within the limits set by its competitive position and the long-term metrics specific to the companys long term strategy measurement of the progress will be reflected in coming years.

X. VSTATUTORY COMPLIANCE

The Executive Director makes a declaration at each Board Meeting regarding the compliance with the provisions of various statutes, after obtaining confirmation from all the units of the company. The Company Secretary ensures compliance accordance to SEBI regulations and provisions of the Listing Regulations.

XI. DETAILS OF SIGNIFICANT CHANGES

As required the details of changes of 25% or more as compared to the immediately previous financial year in key financial ratios along with detailed reasons therefore are as under:

Particulars Current Year 31.03.2020 Previous Year 31.03.2019 Reasons of change.
1. Debtors /Turnover 12.08 12.32 No material variations.
2. Inventory/ Turnover 7.66 8.30 No material variations.
3. Interest Coverage Ratio (1.00) (0.09) As per Ind AS and also refer to note no. 38 of financial statement.
4. Current Ratio 0.15 0.17 No material variations.
5. Debt Equity Ratio (1.41) (1.87) No material variations.
6. Operating Profit Margin (%) (18.38)% (1.46)% No material variations.
7. Net Profit Margin (%) (35.75)% (16.76)% Due to impairment on assets in current year and due to low volume of turnover as there was economic slowdown and
8. Change in Return on Net Worth (0.21) (0.14)
continuation of fixed expenses and further better in previous year due to exceptional profit for the reason of write back of debt payable to lenders because of settlement with them

XII. CAUTIONARY STATEMENT

The Management Discussion and Analysis Report containing your Companys objectives, projections, estimates and expectation may constitute certain statements, which are forward looking within the meaning of applicable laws and regulations. The statements in this Management Discussion and Analysis Report could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in the Governmental regulations, tax regimes, forex markets, economic developments within India and the countries with which the Company conducts business and other incidental factors. It is much more unpredictable due to COVID VIRUS, the challenge are to guard against any community spread and move to flattening the curve, as quickly as possible to get normalize the market trends. The Management has made these statements based on its current expectations and projections about 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. The management cannot guarantee that these forward-looking statements will be realized, although it believes that it has been prudent in making these assumptions.