Hytone Texstyles Ltd Management Discussions.

HYTONE TEXSTYLES LIMITED ANNUAL REPORT 2008-2009 MANAGEMENT DISCUSSION AND ANALYSIS a) Industrial Structure and Developments The textile industry continues to be dominated by the unorganised sectors like power looms and handlooms. The organised composite mill sector in the macro cities has to compete with these unorganised sectors, as well as the organised mills in town other than the macro cities including Mumbai, is facing serious difficulties due to cost escalation mainly in wages, municipal taxes, etc. and water supply charges. Barring metro cities textile industry is still encouraging. The Government recognises the potential of textile industry and is taking a number of steps to improve the competitiveness of this industry in the global market. b) Opportunities and Threats Indian textile industry has to compete with determined players like China, Pakistan, Indonesia and Thailand who have all the resources, huge capacities and low costs. The Indian textile industry has to battle against and overcome poor infrastructure, shortage of power and soaring global oil prices. The absence of integrated production facilities is a bottleneck for our industry, which leads to lengthening of lead times, which adds to the total cost of production. c) Segment wise or Product wise Performance The Company is presently working on job work basis. D) Out Look Due to appreciating rupee against dollar and recession in USA and Europe, exports of textiles and garments are facing major profitability concerns. Government has initiated steps to help industry to overcome these issues, but steps are insufficient because industry needs more support to overcome problems. E) Risks and Concerns Today, the worlds focus is on India as the economy is improving. We have to face operational challenges in global trade. To improve our share in the world market our country has to face onslaught from economies with better infrastructure and logistics. Chinas scale, infrastructure and cost competency give it an edge over other Countries. The emergence of various foreign brands in India also poses a global challenge for the textile industry in India. F) Internal Control System and its adequacy The Company has adequate control procedures commensurate with the size of the Company. h) Human Resources Management The Company has excellent Human Resources with variety of skill sets appropriate to its business requirement. Industrial relations have been cordial.