Arora Fibres Ltd Management Discussions

Annexure H

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Global Economic Condition

The world economy is going through turmoil. Europe in particular is going through a difficult economic situation. Greece has defaulted on loan repayment and even Spain and Portugal are in stress. The growth in the United States is still tepid. In Asia Chinese growth rates have come down to 7%

Overview of Indian Economy

Indian economy showed early signs of growth post various initiatives and reform measures undertaken by the Central Government. Post the revision in the base year for calculation of GDP to FY12 from FY05 earlier, FY14 GDP at factor cost stood at 6.6%. Advances estimates from the Central Statistics Office pegs the FY15 growth estimates to 7.4% (YoY) The Company believes that public and private investment spending to drive the capex growth will be critical to Indias growth outlook. The Government has taken measures to boost spending by increasing the capex allocation towards infrastructure projects by reforms in the budget. The Government is also taking various initiatives to unlock stuck investments in the core and infrastructure projects, revive investments from the private sector by reforming policy environment, improving the ease of doing business and accelerating the project related approvals. The Reserve Bank of India is also reducing the lending rates which will help to spur growth

Our business and Performance

The polyester staple fibre market was volatile throughout the year. In the first half demand was on the higher side while in the second half there was sharp contraction in demand. The Companys sales of polyester staple fibre declined during the year. The revenue from operations was Rs.35.51 crores as compared to Rs.62.83 crores of the previous year. The Company registered a profit before depreciation of Rs.1.93 Crores as compared to a profit of Rs.4.68 Crore in the previous year. After providing for depreciation the net loss before extraordinary item was of Rs.0.84 Crores as compared to Profit of Rs.3.71 Crores in the previous year. As the Government scrapped the retrospective excise duty the provision for the same of Rs.3.02 crores made in earlier year was reversed which is shown as extra ordinary item. The profit after tax and extra ordinary item was Rs.2.18 crores.