Hind Syntex Ltd Management Discussions

1. Overall Review

The Indian economy grew at 7.6% in 2015-16 as compared to 7.4% in 2014-15 and is projected to grow at over 8% to 10% in 2016-17. The remarkable thing about 2015-16 growth performance is that it continues to be as strong as it is given the weakness of exports (because of declining world markets) and private investment. At the same time, the improvement in growth has been uneven, powered only by private consumption and public investment. For sustainable and rapid medium term growth, private sector investment and exports need to revive. The real economy is showing signs of recovery.

2. Textile Sector Review & Outlook

The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand. Abundant availability of raw materials such as cotton, wool, silk and jute and a skilled workforce has made India a sourcing hub. With the growth of cities and nations, improvement in technology came into place and there was a substantial development in the international trade. The size of Indian textile and apparel market stood at US $140 billion in 2013, which is about 7.5% of the country’s GDP (US $1.9 trillion). India is the 2nd largest textile and apparel industry after China, although there is big gap between India and China.

The Indian textile industry has enjoyed parity between international and domestic cotton prices and this advantage needs to be sustained for further development of the cotton textile value chain. Indias growing population has been a key driver of textile consumption growth in the country. The increase in young population complemented with an increasing female workforce has resulted in changing of tastes, preferences and fashion.

3. Company Performance Review and Outlook

During the year 2015-16, the Company’s operating margins were under pressure, owever, it has continued with its long term business strategy of investing in modernization of facilities, expansion of capacities of production, increasing emphasis on Product Development and expanding distribution systems.

Our Company has made focused effort in improving product quality, lowering operating costs and improving operating efficiencies. The Company has also taken major steps in strengthening its senior management, with a greater emphasis on performance and accountability.

4. Company’s Financial Performance &Analysis

During the year under review, the Company has achieved a turnover of Rs. 40.43 crores and earned a net profit of Rs. 14.24 Lacs.

5. Opportunity & Threats

It is expected that Synthetic Blended yarn industry will perform better due to growth in domestic and export market and also likely to withstand with the global competition due to economic measures taken by Government of India.

6. Risk & Concern

The textile business, like other businesses, is susceptible to various risks. The primary risk factor is raw material prices, mainly cotton, which is the largest component of cost. Since cotton is an agriculture produce, it suffers from climatic volatility in the major cotton producing countries. This in turn creates uncertainties for textile manufacturers.

Another important issue is the availability, quality and price of power. The availability of good quality power at reasonable prices is critical for sustainability of the industry. However, the cost of power has been continuously increasing, adding to input cost pressure in the industry. The non -availability of skilled manpower along with high labour cost prevailing in the country is growing concern area for textile industry.

We are making all efforts to cope up with the challenges through continuous cost reduction, process improvements, diversification of products, rationalization of costs, training the workforce on the continued basis, improving efficiencies and creating a strong customer oriented approach.

7. Internal Control System &theiradequacy

The Company has adequate internal audit system commensurate with its size and nature of operations. The Audit Committee of the Board of Directors approves the internal audit scope every year and quarterly presentation to the audit committees are made by internal auditors as well as statutory auditors of the Company. The Management consistently reviews the internal control systems and procedures to ensure efficient conduct of the business conforming to the ethics and code of conduct of the Company. An Independent firm of Chartered Accountant carry out internal audit across all the important functions of the business.

8. Human Resources Development/lndustrial Relations

The Company continues to lay emphasis on building and sustaining an excellent organizational climate based on human performance. Performance management is the key word for the company. The management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The Company has always recognized talent and has judiciously followed the principle of rewarding performance. The industrial relations remained cordial thought the year. The Company conducts continuous training and development programmes for employees of all classes at all major locations of the operations.

9. Cautionary Statement

Statements in the Management Discussion and Analysis and Directors Report describing the Company’s strengths, strategies, projections and estimates, are forward-looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors.