Golden Carpets Ltd Management Discussions.

(Pursuant to Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015)

Industry Structure and Development:

This carpet industry in India took birth in the 16th century during the Mughal Dynasty. They introduced Persian and Turkish weavers in the country for the production of carpets for their palaces. On the downfall of this dynasty, the practice of carpet weaving shook badly. However, it picked up the momentum in the form of independent units during post-British period. Now the industry is flourishing in the states of Rajasthan, Kashmir, Punjab, Uttar Pradesh, Telangana, Andhra Pradesh, and Himachal Pradesh.

Today, India is the worlds largest producer and exporter of handmade carpets in terms of value and volume. Around 75–85 per cent of carpets manufactured in India are exported. Indian carpets are known worldwide for their excellent design, fascinating colours and quality.

India contributes approximately 40 per cent of the worldwide export of handmade carpets. Exports of handmade carpets from India stood at US$ 1,427.00 million in 2017-18. Indian handmade carpets are exported to many countries all over the world, US being the largest importer (US$ 731.84 million) followed by Germany (US$ 140.58 million), UK (US$ 78.52 million), Australia (US$ 56.25 million) and UAE (US$ 51.15 million). During April-October 2018, exports of handmade carpets from India stood at Rs 5,892.06 crore (US$ 853.55 million).

The Indian carpet industry is very vibrant and has considerable potential for growth. However, lesser innovation techniques, outdated technology, labor law issues and lack of infrastructural facilities are major barriers that make this industry less competent as compared to other carpet supplying countries.

Opportunities and Threats: l Opportunities

Increased consumer expenditure on interiors of houses, hotels and offices and luxury vehicles as well as cars is expected to contribute significantly to the growth in the demand for carpets. Development of innovative designed light weight carpets and floorings is expected to open opportunities for the growth of the market in the near future.

Threats

Alternative flooring materials such as Ceramics, marble, granite and other innovative and decorative flooring materials are replacing carpets as they are easy on maintenance and is a major threat for the carpet industry. Further due to increase in raw material prices the Indian manufacturers are not able to compete with other carpet producing countries and this has had an impact on the exports of the carpets from India.

Segment Wise Performance:

As the Company is dealing in only one product, the same is not applicable.

Outlook:

Given the capacity and the current available technology, the company will continue to perform on existing lines and will continue to strive to improve the performance going forward.

Risk and concerns:

The Company derives revenue from domestic market as well as overseas market. Any change of taste in consumers of both adversely affects the demand of the products and indirectly revenue and growth of the Company.

Non-availability of raw materials, lack of manpower, technologies up-gradation in the peer group and non-availability of timely working capital needs affects a lot in this business. Further fluctuation in rupee value affects the business of overseas market.

Company is taking appropriate steps in order to tackle the aforementioned risks by adopting in time suitable strategies, so as to positively modify the risk profile of the Company by eliminating key risk factors and minimizing the risk areas.

Internal Control Systems and their Adequacy:

The company has a proper and adequate system of internal controls commensurate with its size to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.

The company is maintaining various manuals which contain various controls and checklists that are to be carried out before execution of any activity. Internal checks are exercised so that the various procedures are laid at the time of delegation of authorities and other procedures are strictly followed.

Material Development in Human Resources/Industrial Relations:

The Company recognizes the importance and contribution made by its employees to the growth and development of the Company. The Company has cordial relations with employees and staff.

Cautionary Statement:

Statements in the Management and Discussion Analysis which seek to describe the Companys objective, projections, estimates, expectations or predictions may be considered to be forward looking statements within the meaning of the applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include Indian demand and supply conditions, availability of working capital, raw material prices, changes in government regulations, tax regime, economic developments within India and globally.