Donear Industries Ltd Management Discussions.

(a) Industrial Structure and developments:

The Indian Economy is on a steady growth trajectory. If some estimates are to be believed, the Indian Economy is said to be at a much sweeter spot when compared to the rest of the world. In the IMF Estimates of GDP growth among big economies all over the world, India, for the first time ever, tops the chart. And the road ahead looks good for India as an emerging Economy.

According to the UNIDOs (United Nations Industrial Development Organization) industrial statistics 2016, India has climbed up three positions to become the sixth largest industrial country in the world during 2015, up from ninth position in the previous year.

Riding on strong macroeconomic fundamentals, favourable business sentiments and downward trend in interest rates, the Confederation of Indian Industry (CII) expects the Indian economy to grow at around 8% in 2016-17. Even the Reserve Bank of India has forecast a GDP growth of 7.6% for 2016-17.

The CSO data has also projected a growth of 7.6% for 2015-16, (Chart 2) despite growth deceleration to 7.3% in the quarter ended December 2015.

The textile industry plays a vital role through its contribution to industry output and employment generation and the export earnings of the country. Globally, India is the 2nd largest producer of textiles and garments with the leading position occupied by China. It is likely to overtake China in terms of size by 2022-23. Unlike China, India has a predominantly cotton based textile industry.

The government under the dynamic leadership of the Honble Prime Minister of India, has endeavoured to make the textile sector more vibrant through several initiatives. The central focus of these initiatives has been on increasing textile manufacturing by building the best in class manufacturing, infrastructure, up gradation of technology, fostering innovation and enhancing skill in the textile sector.

(b) Opportunities and Threats:

The future for the Indian textile industry looks promising buoyed by strong domestic consumption. The Government has introduced the Amended Technology Upgradation Fund Scheme (ATUFS) to give a further boost for technology investment in the textile industry. The ATUFS targets employment generation exports conversion of existing looms to better-quality technology looms and improved quality of processing industry. The ATUFS is expected to act as a catalyst to the Governments ‘Make in India campaign for the textile sector. Approval has also been given for 24 new textile parks which will further create employment opportunities and investments. The long awaited National Textile policy to be announced shortly will further accelerate growth in this sector.

However there are several challenges ahead for the Textile industry for enhancing its competitive strength and global positioning in terms of inflexible labour laws poor infrastructure competition from low cost neighbouring countries which will have to be addressed to sustain the growth momentum of the industry.

(c) Segment wise or Product wise performance:

The Company has two reportable primary business segment viz., Manufacturing and Dealing in Textiles and Rental Property. The same has been reported in the notes to the accounts.

(d) Discussion on Financial performance with respect to operational performance:

The company reported a turnover of 51,728.76 Lacs during the year 2015-16 against a turnover of 51,633.07 Lacs in the previous year. There was a growth of 0.19% in the revenues of the Company as compared to previous year. The Company clocked in a PBT of 935.08 Lacs during the year 2015-16 resulting in a growth of 73.42% as compared to previous year.

(e) Human Resource Management:

The Company has employee friendly HR policies and attracts the best talent in the Industry. The attrition rates are quite low. The Companys policy of providing on the job training has been instrumental in developing a good work force for the Company.

Corporate Governance Report:

A detailed report on Corporate Governance Report forms part of this Report. Auditors Certificate on compliance with Corporate Governance requirements by the Company is attached also forms part of this report.

Directors Responsibility Statement:

In terms of section 134 (3) (c) of the Companies Act, 2013 your Directors state that:

1. In preparation of annual accounts for the year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;

2. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and profit for the year ended on that date;

3. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. They have prepared the annual accounts ongoing concern basis;

5. They have laid down proper internal financial controls to be followed by the Company and they were adequate and operating effectively and

6. They have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

Extract of Annual Return :

Extract of the Annual Return in Form No. MGT-9 as required under section 92 of the Companies Act, 2013 is annexed herewith as Annexure - A to this Report.

Deposits:

During the financial year under report the Company has not accepted deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

Particulars of Loans, Guarantees and Investments:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Directors:

Mr. Rajendra Agarwal retires by rotation at the ensuing Annual General Meeting in terms of Section 152 of the Companies Act, 2013. The Act provided that Independent Directors are not subject to retirement by rotation.

During the year under report, Mrs. Neena Agarwal resigned as Director of the Company w.e.f. 14th November, 2015 on personal grounds.

The Board of Directors has appointed Mr. Anup Kumar Singh (DIN 07343361) as Director on 19th November, 2015.

Familiarization Programme for Directors:

At the time of appointment a Director, a formal letter of appointment is given to him/her. The Director is also explained in detail the role, function, duties and responsibilities expected from him/her and also compliance required from him/her under the Companies Act, 2013, Listing Agreement with stock exchanges. Further the Chairman and Managing Director also will have one to one discussion with the newly appointed Director to familiarize with the Companys operation.

Performance of Board Evaluation:

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out annual performance evaluation of its mown performance, the Directors individually, as well as the evaluation of the working of its committees. A structured questionnaire is prepared after taking into consideration inputs received from the directors covering various aspects of the Boards functioning.

The evaluation was done on various parameters like vision and strategy, Board participation disclosure of interest, review of risk management policies, leadership skills, good governance, marketing and corporate communications etc.

Risk Management:

The Company has adopted a Risk Management Policy for the Company including identification therein the elements of risk, if any, which in the opinion of the Board may threaten the existence of the Company. After identifying the risk and assessing the level of impact, controls are put in place to mitigate the risk by the concerned executives who are responsible to control the exposure of the risk and balance the impact of risk on a continuous basis.

Independent Directors Meeting:

During the year under review a meeting of Independent Directors was held on 4th March, 2016.

Related Party Transactions:

All related party transactions that were entered into during the financial year were in the Ordinary course of business and were on an arms length basis. There are no material significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other related parties which may have potential conflict with the interest of the Company at large.

All related party transactions for the year are placed before the Audit Committee as well as before the Board for approval. The transactions entered into with related parties are reviewed on a quarterly basis by the Audit Committee.

The Policy on Related Party Transactions as approved by the Audit Committee and Board is uploaded on the Companys website at the link http:// www.donear.com/donear2006/downloads/RelatedPartvTransactionsPolicv.pdf

The details of the transactions with Related Parties to be provided in Form AOC-2 are annexed herewith as Annexure B.

Members can refer Note No. 30 to the financial statements which set out related party disclosures.

Auditors:

M/s. M.L.Bhuwania& Co. are appointed as Statutory Auditors to hold office from the conclusion of 28th Annual General Meeting to the conclusion of 31st Annual General Meeting (Subject to ratification of the appointment by the members at every Annual General Meeting). A proposal for ratification of the appointment of Statutory Auditors for the financial year 2016-17 is placed before the members at the ensuing Annual General Meeting. The Auditors have given their eligibility certificate in terms of Section 139 of the Companies Act, 2013.

Whistle Blower Policy:

Company has a Whistle Blower Policy to report genuine concerns or grievances. The same is explained in the Corporate Governance Report No person has been denied access to Audit Committee.

Corporate Social Responsibility:

As a part of its initiative under the ‘Corporate Social Responsibility (CSR) drive, the Company has undertaken project in the area of rural development, Promoting health care, education etc.. These projects are in accordance with Schedule VII of the Companies Act, 2013 and the Companys CSR Policy. The report on CSR activities as required under Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexure - C forming part of this report.

Secretarial Audit:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made there under the Company has appointed Mr. Yogesh Sharma, a Company Secretary in Practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as Annexure D.