Gini Silk Mills Ltd Management Discussions.

I. Industry Structure And Developments

The Indian Textiles industry is extremely varied, with the hand-spun and hand-woven Textiles sectors at one end of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The close linkage of the Textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of Textiles make the Indian Textiles sector unique in comparison to the industries of other countries, it has the capacity to produce a wide variety of products suitable to different market segments.

India has a very powerful and impressive cotton yarn and fabric business sector that will now be looking at what it can achieve in the non-cotton and cotton/man-made blends and 100-percent man-made textiles. The sector appears to have the confidence and capability to shift its focus towards Indias growing man-made textile industry.

II. Opportunities and Challenges

The Textiles industry is labour intensive and is one of the largest employers. The future for the Indian Textile industry looks encouraging in the long term, backed by both strong domestic consumption as well as export demand.

Competing with other progressing countries, striking a balance between demand and supply considering Environmental and international labour laws are the major challenges.

Being the largest employer in India coupled with strong industry linkages with the rural economy augurs Indian textile industry as one of the most significant sectors with an incremental growth potential. Rural economy has seen a spurt in income levels the last few years and this is the right time to juxtapose their synergies to promote the industry growth. Being one of the key focus sectors under the Governments "Make in India campaign is a testimony to the huge growth potential the industry holds, both in terms of infrastructure development and skill improvement. Globally, favourable trade policy reforms would also allow the industry to expand its trade partners, improve its export competitiveness and contribute substantially to the nations income.

However, the growth prospects are constrained by many challenges including rising input costs (wages, power and interest cost), restrictive labour laws. Such issues need to be addressed to result in unlocking maximum industry growth potential.

iii. Segment-Wise or product-Wise performance

In textiles, our product is very well accepted by our customers & we are in the process of increasing our customer portfolio.

iv Outlook

Your Companys future growth will be driven by volume growth across the entire business unit. In the immediate future your Company will focus on its core strengths product segments. Its focus on building marketing & distribution foot-prints shall continue with renewed vigor during the coming year. On the whole, your Company is optimistic for the outlook of growth in the short to medium term in terms of total revenues/ turnover and operating margins considering overall expected positive trend in textiles industry.

v Risk and Concerns

A key factor in determining a companys capacity to create sustainable value is the risk that the company is willing to take and its ability to manage them effectively. The Companys Risk Management processes focuses on ensuring that risks are identified on a timely basis and addressed.

Foreseeing the concerns, the Company manages to identify, evaluate, and monitor non-business risks.

Vi Internal Control Systems and their Adequacy

The existing internal controls are adequate and commensurate with the nature, size, complexity of the Business and its Processes. During the year the Company has laid down the framework for ensuring adequate internal controls and to ensure its effectiveness, necessary steps were taken by the Company.

VII. Discussion on financial performance with respect to Operational Performance

During the year under review, your company has registered a turnover of Rs.3911.61 Lakhs as compared to 4075.39 Lakhs in the previous year.

The sales revenue from Processing of Fabric is 1889.72 Lakhs as compared to previous year ?2371.40 Lakhs.

Viii. Material developments in human resources/ industrial relations front, including number of people employed

Your Company has cordial relations with its employees. The company commends the commitment, dedication and competence shown by its employees in all aspects of business. With the growing requirements of the company, Company has taken necessary initiatives to ensure not only the retention of the employees but also their growth and development.

The people of any industry serve as propeller for upliftment of the industry and thus indirectly contribute the National Product and through this to the exchequer of India. The management has always remained conscious of these inter-related factors and maintained a favorable climate during the year to suit the growth and excellence in the Company. The management has always strived to maintain cordial relationship between the staff, workers and management. This attitude created an atmosphere where each and every staff and worker started feeling a sense of ONENESS.