Ginni Filaments Ltd Management Discussions.

The Management of the Company is pleased to present its Report on Industry scenario Including Companys performance during the financial year 2018-19.

1. Industry Structure and Developments

The Indian textile Industry is one of the largest in the world with a large raw material base and manufacturing strength across the value chain. The uniqueness of the industry lies in its strength both in the hand-woven sector as well as in the capital intensive mill sector. However, now Central Govt, is giving big boost to garment industry in both knitted as well as woven segments. This will increase maximum employment with minimum investment.

The Indian textile Industry had inherent linkage with agriculture, culture and traditions of the country making for its versatile spread of products appropriate for both domestic and the export markets. The textile industry contributes to 4% of Indias GDP and to 15% of the countrys export earnings. With over 45 million people employed directly, the textile industry is one of the largest sources of employment generation in the country.

In keeping with goal of making Indias development inclusive and participative, the Governments central focus has been on increasing textile manufacturing by building the best-in-class manufacturing infrastructure, upgradation of technology fostering innovation, enhancing skills and traditional strengths in the textile sector.

2. Opportunities and Threats

The Indian Textile industry is supported by rich resources of raw materials availability in India. It is one of the largest producers of cotton in the world and is well placed in manufacturing of fibres like polyester, silk, viscose etc. It is rich in availability of highly trained manpower and has a huge advantage due to lower wage rates. Because of low labor rates the manufacturing cost in textile automatically comes down. India is highly competitive in spinning sector and has presence in almost all processes of the value chain. Indian garment industry is very diverse in size, manufacturing facility, type of apparel produced, quantity and quality of output, cost, and requirement for fabric etc. It comprises suppliers of ready-made garments for both, domestic or Exports markets. In view of trade war between US & China will also provides a good opportunity to India in textile products.

However, low cotton production, higher contamination in cotton, higher power cost is creating tough competition with countries like Bangladesh, Sri Lanka, Vietnam etc.

The expanding demand in technical textiles has also provided a big opportunity to Indian textile sector, continuous upgradation in technical textiles has provided very cost effective textile products with appropriate usages in various segments like hygiene, automobiles etc. Increase in rate of duty by U.S on imports of non woven products from China will give opportunity to improve Indias export.

3. Segment-wise or product-wise performance

The overall business of the Company is divided into two categories: one is traditional textile business which include yarn, knitted fabric and knitted garment business and second is technical textile business which include nonwoven fabric and its converted products like wet and dry wipes. Company is now venturing into cosmetic manufacturing activities also.

Traditional textile business is struggling due to imbalances in the state government subsidies and disparity in raw material & sale price due to competition from duty free countries like Bangladesh, Vietnam etc. However, technical textile business is improving in terms of volume but is also under pressure on margins.

4. Risks and Concerns

The textiles industry is one of the oldest industries in the world and India is one of the global pioneers in this industry. The Indian textile industry occupies a significant place in many economies across the globe. The followings may be considered as a risk and concerns for the Indian textile industry:

1. High Competition and low profit margins.

2. Labour advantage gradually diminishing.

3. Low demand in International Market.

4. Increase in Power Cost.

5. Competition from low cost countries.

5. Internal Control System and their adequacy

The Company has proper and adequate internal control systems in place for all its business activities to ensure compliance with policies, procedures, applicable Acts and Rules and best practices in the industry. All transactions are properly documented, authorized, recorded and reported correctly. The Company has well defined Management Reports on key performance indicators. The systems are reviewed continuously and its improvement and effectiveness is enhanced based on the reports from various fields.

The Audit Committee reviews the adequacy of Internal Control Systems. The Companys Internal Control Systems are supplemented by Internal Audit covering all financial and operating functions

6. Outlook

The world economy faces considerable uncertainty and weak international sentiments, in the aftermath of major economic development due to trade war between USA and China. The challenges have further increased with the frequent change in the demand pattern of the customers. The cash crunch in market has caused business cycles to extend in domestic market.

However, taking into account the eagerness shown by both USA and China to soon reach an agreement over the trade tariffs, the outlook set for the next financial year suggest that the growth is set to recover.

It is also expected that the new defining and sustainable levels of trade for different world economies would be established.

Although it seems that India has been placed in dis-advantageous position but in the long run, India is expected to reap benefits due to diversion of some portion of USA-Chinese business towards it.

7. Financial performance with respect to operational performance.

The same is referred to Audited Financial Statement which is forming part of the Annual Report of 2018-19.

8. Human Resources / Industrial Relations

The Company believes that all commercial activities should be infused with compassionate action to make the work place better and harmonious. Our focus has always been on creating an encouraging and engaging environment for our employees. Our employee partnership ethos reflects the Companys long-standing business principles and drives the companys overall performance. While we have continued to equip employees with the necessary skills and attitude to deliver on their current job responsibilities, the prime focus has been to identify, assess, groom and build leadership potential for future.

The company has a comprehensive HR policy to address the various needs and aspiration of our people. Many of our activities are focussed on multi-skill training, performance improvement, time management, cross-functional team coordination, etc.

We also have a robust grievance redressal mechanism in place for our people. We make sure we give a patient hearing to the issues faced by the employees and follow strict protocols for their resolution.

9. Details of Significant Changes in Key Financial Ratios Key Financial Ratios

Ratios 2019 2018 Change
Debtors Turnover 8.25 8.03 2.74%
Inventory Turnover 5.13 4.34 18.20%
Interest Coverage Ratio 0.90 1.07 -15.89%
Current Ratio 0.97 0.93 4.30%
Debt Equity Ratio 2.25 2.20 2.27%
Operating Profit Maroin % -0.96% -0.40% -140.00%
Net Profit Margin % -0.43% 0.31% -238.71%
Return on Net Worth % -1.94% 1.22% -259.02%

Note:- Operating profit Margin, Net profit Margin and Return on Net worth are lower mainly due to rise in raw material prices and lower demand in international market particularly in China.

10. Cautionary Note

Statement in this management Discussion and Analysis Report, Describing the Companys objectives, estimates and expectations may constitute Forward Looking statement within the meaning of applicable laws or regulations. Actual results might differ materially from those either expressed or implied

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES

1. A brief outline of the companys CSR policy, including overview of projects or programs proposed to be undertaken

and a reference to the web-link to the CSR policy and project or programs.

The Corporate Social Responsibility (CSR) Policy of the company was approved by the Board of Directors and the web-link of the same is as under:

Web-link:

http://ginnifilaments.com/wp-content/uploads/2015/09/CSR-Policy.pdf The Composition of the CSR Committee

Dr. H.P. Bhattacharya - Chairman (Independent Director)
Shri J. K. Bhagat- Member (Independent Director)
Shri Shishir Jaipuria- Member (Chairman & Managing Director)
Shri Suresh Singhvi- Member (Director-Finance & CFO)

3. Average net profit of the company for the last three financial years.

Average Net Profit of the company made during the three immediately preceding financial years: 7 1475.38 lacs

4. Prescribed CSR Expenditure (two per cent of the amount as in item 3 above).

The Company is required to spend 7 29.51 lacs towards CSR activities for the Financial Year 2018-19.

5. Details of CSR spent during the financial year :

(a) Total amount to be spent for the financial year:

The Company is required to spent 7 29.51 lacs during the Financial Year 2018-19.

(b) Amount unspent, if any: Nil

(c) Manner in which the amount spent during the financial year is detailed below:

(1) (2) (3) (4) (5) (6) (7) (8)
S. No. CSR project or activity identified Sector in which the project is covered Project or programs (1) Local area or other (2) Specify the State and district where projects or Programs was undertaken Amount outlay (budget) project or programs wise Amount spent on the project or programs Subheads: (1) Direct expenditure on project or programs (2) Overheads: Cumulative expenditure up to the reporting period Amount spent Direct or through implementing agency*
1

(a).

Expenditure towards purchase of Desk, Chairs and other furniture of School at Vasundhara, Ghaziabad (U.P.) for the period of 2017-18. Promoting

Education

Vasundhara, Ghaziabad (U.P.) 7 32.11 lacs 7 32.11 lacs 761.62 lacs 761.62 lacs
(b). Expenditure towards Steel work, flooring, earth work of New School Building at Ansal Sushant, Gold City, Lucknow for the period of 2018-19. Promoting

Education

Ansal Sushant, Gold City, Lucknow (U.P.) 7 29.51 lacs 7 29.51 lacs
TOTAL 7 61.62 lacs 7 61.62 lacs 7 61.62 lacs 7 61.62 lacs

* Give details of implementing agency: Seth Anandram Jaipuria Education Society

6. In case the company has failed to spend the two per cent of the average net profit of the last three financial years or any part thereof, the company shall provide the reasons for not spending the amount in its Board report: Not Applicable

7. A responsibility statement of the CSR Committee that the implementation and monitoring of CSR Policy, is in compliance with CSR objectives and Policy of the company:

We hereby confirm that the implementation and monitoring of CSR policy is in compliance with CSR objectives and the CSR Policy of the company.

Sd /- Sd /-
Shishir Jaipuria Dr. H. P. Bhattacharya
Chairman & Managing Director Chairman CSR Committee