Binny Mills Ltd Management Discussions.

(Pursuant to regulation 34(2) (e) and Schedule V of the Listing Regulations) This report is part of the Directors Report

Economic scenario

In both the advanced and emerging market economies, global economy gathered momentum from the beginning of the year 2018. But, in the middle of the year, the global growth became uneven withrising trade tensions.The economic activity of emerging marketeconomies had decelerated in the middle of the year on account ofweak domestic demand, rising trade tensions, elevated oil prices,tightening of financial conditions, etc.In the latter half of the year,global economic activity showed increasing signs of weakness onrising trade tensions.

The Indian economy grew at 8% growth in the Gross Domestic Product (GDP) in April to June 18 quarter on strong performance by manufacturing sector and improved consumer spending. But in the next quarter it slowed down to 7% due to slower consumer spending and farm growth. The growth of the economy further slowed down in the third quarter to 6.60% due to weak consumer demand and lower Government spending. The second advance estimates for 2018-19 released by the Central Statistical Organisation in February 2019 revised India s real GDP growth to 7% from 7.2% in the first advance estimates.

Opportunities and threats and Industry Structure and developments

The Company is engaged in retail sale of textile products. The Company s future relies on the Textile industry s growth.

Government Initiatives

In the Interim Budget presented in February 2019, Finance Minister Piyush Goyal has proposed Rs 5,831.48 crore budgetary allocation for the textile ministry for 2019-20, which is 16.01 per cent lower than the financial year 2018-19.

As per the budget document the revised expenditure (RE) for the textile ministry has been pegged at Rs 6,943.26 crore during 2018-19. The original budget proposal was Rs 7,147.73 crore to fund various programmes and schemes for the textile sector.

According to the budget document, Rs 700 crore has been allocated towards the Amended Technology Upgradation Fund Scheme (ATUFS) for the next fiscal, as against Rs 622.63 crore for 2018-19. Besides, a provision of Rs 1,000 crore has been made towards the Remission of State Levies (ROSL) as compared to Rs 3,663.85 crore for 2018-19.

The low allocation for ATUF & ROSL schemes for textiles is worrisome as it is clearly not sufficient to meet obligations under the schemes, both backlog and expected fund requirements in 2019-20.

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand.

The threats to the textiles industry are in the form of lack of enough skilled workforce and urgent need for labour reforms in this sector. There is a need for attracting more investments in the industry. The technology up gradation of the textile mills is another area of serious concern. The biggest challenge facing the Indian textile industry is competition from the other low cost neighbouring countries which attract more business from the international market because of lower production costs, ease in doing business and easier trade routes, according to an industry expert.

Risks and concerns

The company is engaged in trading business. Hence, the risks associated with the stiff competition in retail textile business are the major risk for the Company. But, the company has built up reputation among the buyers and has created a brand image for its products. Hence, it is confident of mitigating the effects of the risks.

Internal control systems and their adequacy

The Company has proper and adequate internal control systems commensurate with its size and nature of operations, to provide reasonable assurance that all assets are safeguarded, transactions are authorised, recorded and reported properly and that all applicable statutes and corporate policies are duly complied with.

Human Resources Development and Industrial Relations

The Company attaches considerable importance to Human Resource Development and harmonious industrial relations. There are senior and experienced professionals managing the operations of its divisions. The company takes all efforts to train its employees to make them a skilled employee. The overall industrial relations, during the year, were cordial.

Environmental protection

The Environmental Policy of your company is maintaining clean and green environment and ecofriendly atmosphere. Your company has been complying with applicable environmental regulations and preventing pollution in all operations.Your company continues to strive for energy saving and conservation of natural reserves.

Risk Management

Risk Management is an ongoing process. The Board of directors has constituted a Risk Management Committee of three members, all of whom are directors on the Board. The Risk Management Committee has approved the revised Risk Management Policy. The Board has defined the roles and responsibilities of the Risk Management Committee and has delegated the monitoring and reviewing of the Risk Management Plan to the Committee. The terms of reference of the Risk Management Committee include review of Risk Management Policy, approval of Risk Management Plan, implementing, monitoring and reviewing the Risk Management Plan.

The Company maintains Risk Register listing all the risks likely to affect the achievement of the business goals set by the Company. Significant risks are identified using a scoring methodology. The process of Risk Management includes Risk Identification and Categorization, Risk Description and Risk Mitigation. The Risk Owners are accountable to the Risk Management Committee for identification, assessment, aggregation, reporting and monitoring of the risks related to their respective areas / functions.

The key implementation areas for Risk Mitigation are as follows:

For Finance function: Treasury operations and fund transfers
For Computer systems and Data maintenance Data Security
For purchase and sales functions Credit Administration