Angel Fibers Ltd Management Discussions.

SPECIAL NOTE ON CORONAVIRUS PANADEMIC

By mid of March 2020, the outbreak of Coronavirus (COVID-19) pandemic has been rapidly spreading throughout the world, including India causing significant disturbance and slowdown of economic activity.The immediate lockdown resulted muted sales due to closure of factory, office and transportation. As the company is under the substantial acquisition of shares and takeovers process, the new management took benefit of this lockdown in checking and maintenance of machinery. As the operation of all the plant isshut down, management find it better time to repair the same with the help of some labours, who were living in the factory premises only. The companys manufacturing facilities were shut down from 23rd March, 2020 for 32 days. Looking at current situationthe company does not predict any significant effect of Covid-19 on profitability. The Company is continuously monitoring the situation and taking necessary actions in response to the developments, to minimize the impact on the business of the Company.

COMPANYS BUSINESS

The Companys principal line of business is manufacturing of Cotton Yarn,The Companyhasspinningunits near Rajkot, Gujaratwith aninstalled capacityof 39648spindles. Company has setup2spinning units, out of which capacity of 1st unit isof19584spindlesand2ndunit isof20064 spindles.

OVERALL REVIEW

The overall profitability of the Company during the year under review, as compared to the previous year, has been adversely affected due to unfavourable market conditions prevailing for a major part of the year in all the business segments and to some extent towards the latter part of the March profitability also got impacted on account of the lockdown pursuant to Govt.s directives to prevent spread of pandemic COVID 19.

Moreover,as you are aware, the Board of Directors of the Company,entered into share purchase agreementon 17th march,2020, for which purpose letter of offer was filed on 26th may,2020 and the open offer was started on 3rd June,2020 and closed on 16th June,2020. All the shares offered by the public shareholders was accepted and consideration was paid on 25th June,2020.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The COVID 19 break down in the second half of Marchled to lockdown and spread worst effect in alleconomies world-wide.The above break down has put a lot of pressure on Textile industry in India which was already facing a lot of challenges due to delays in receiving the GST refunds as well as delay in receiving theexport benefits. Indian textile industry is facing huge liquidity crunch and uncertainty pertaining to future orders

OPPORTUNITIES

First half of FY 21 is expected to be very tough and the second half is expected to give some relief to the business and the society in general if all the countries specially India is able to control the COVID 19 Pandemic. There could be a positive side for textile business as USA and EU customers who will be looking for alternative for China, may move to other countries such as India, Vietnam, Bangladesh etc. Hence it is expected that demand will increase in textile fabrics for exports, but we need to ensure that we prepare ourselves to take the advantage of the expected business which might drift away from china.

SEGMENTAL REVIEW AND ANALYSIS

Despite of facingadverse atmosphere in domestic textile industryand COVID-19 pandemic,there is nosignificant decrease in annual turnover of the company. However, it didnt touch the desired target, but the turnover of our company is quite goodcompared to other textilecompanies.

RISKS AND CONCERNS

Overallthere is no such material negative impact on companyis expectedbecause market started its routine functions as government declared unlock activities.Textile industry is affected due to this pandemic but after unlocking the demand started and many domestic as well as foreign orders are pending.However,growth of the company may not reach as it was targeted but there will not be significant material effect.

OUTLOOK

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand.The main reason for increase in domestic consumption is the government mission for self-reliant India, government and many socialist promotes domestic consumption and after this pandemic human mentality also got changed and favours "Made in India" products. Moreover, US and EU countries are also looking for alternative of china and therefore it is also expected for increase in exports.

An importantdevelopment in the global textile trade is thefall inChinas predominance, whichpresents aray of hope for India to up its market share. However, thefast emergenceof new textile manufacturing hubs like Vietnam and Bangladesh can upset Indias calculations in a changing market, driven by market access and the policy support given by the respective governments to empower the textile chain. Also, emerging regional trading agreements can script a paradigm shift in future trade and investment flows. Further, India has to work towards eliminating trade barriers, and needs to take measures to expand market access.

India should aim to strengthen the textile value chain. Out of its total exports of textiles and apparel, more than 50% is contributed by textiles. The scope of value addition is higher in downstream activities like fabric processing and weaving. These steps are necessary to promote self-reliant India mission.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has adequate internal control procedures and systems commensurate with its size and nature of its business for purchase of raw materials, plant and machinery, components and other items and sale of goods. The checks and controls are reviewed by theAudit Committeefor improvement in each of these areas on a periodical basis. The internal control systems are improved and modified continuously to meet with changes in business conditions, statutory and accounting requirements.Moreover, thenew management has expert team fortechnical staff, who are already trainedand are able to manage production cycle smoothly.

FINANCIAL PERFORMANCE WITH RESPECT TOOPERATIONAL PERFORMANCE

The financial performance of the Company has been discussed at length in Directors Report to theMembers.

HEALTH, SAFETY AND SECURITY MEASURES

The Company continues to accord the highest priority to health and safety of its employees and communities it operates in. The Company has been fully committed to comply with all applicable laws and regulations and maintains the highest standard of OccupationalHealth andSafety and ensures safer plants by conducting safety audits, risk assessments and periodic safety awareness campaigns and training to employees. We believe in good health of our employees.

Currently to prevent the spread of pandemic COVID-19, the Company has taken all precautionary measures required, such as social distancing, use of masks and sanitizers etc., at all its plant and construction sites as well as at office locations. Your Company is in full compliance of all Government directives issued in this behalf.