Indian Acrylics Ltd Management Discussions

Management Discussion and Analysis Report for the year under review was stipulated under Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, is presented as under. a) Acrylic Fibre Industry - Global and Indian Perspective

Your Company is producing and selling Acrylic Fibre & Acrylic Yarn and cater to Textile Industry. Indias textiles sector is one of the oldest and most diverse industries in the country, with roots stretching back centuries. It spans from traditional hand- spun and handwoven clusters to sophisticated capital-intensive mills, supported by a robust base of fibres and yarns ranging from cotton, jute, silk, and wool to polyester, viscose, and acrylic.

The Indian textile industry is the worlds second-largest textile and clothing manufacturer. Contributing roughly $179 billion to the economy, it accounts for 2.3% of the GDP and is the nations second-largest employment generator, directly supporting over 45 million workers and is also a major source of foreign exchange earnings.

The textile industry is an important part of the Make in India initiative as it has a huge potential for growth and job creation. The government has taken several steps to promote the sector, including providing financial assistance and subsidies, setting up special economic zones, and simplifying regulations.

It is critical for Indias development as it generates vast amounts of revenue and provides employment to millions of people. The sector holds great potential for further growth and can play a significant role in achieving the governments development goals.

As per the market estimates, overall demand in India of Acrylic fibre has increased this year also appox. 5% over previous year. Textile Industry in the year has been hit badly by continuous dumping by foreign suppliers.

The import of Acrylic Fibre into India have increased during the year and local Industry has faced challenge of sale and margins due to increased imports. The surplus capacity in China, Thailand and Peru due to their lower sales prompted them to push their surplus materials into Indian Market this year.

The export of Acrylic fibre from India has increased this year. Company exported 4060 MT of acrylic fibre and 1592 MT of Acrylic yarns as against export of 1918 MT fibre and 1400 MT yarn during last year. The overall exports from India has increased during this year.

Production & Sales of Acrylic Yarn have gone down during the year as huge imports of knitted goods and hair yarn have landed this year at undervalued prices affecting local producers in India adversely. This material is coming at undervalued rates and substituting demand of domestic industry of Acrylic yarn. The erosion of demand and margins is being suffered across yarn spinning & knitted goods industry also.

Antidumping duty recommended by DGTR (Commerce & Industry) after detailed investigation against Thailand, China & France but Ministry of Finance has not issued antidumping duty notification to implement these recommendations causing huge dumping continuing in India.

Indian GDP growing strongly and domestic demand likely to increase in the range of 3-5% in the current year. The focus of the Company is to increase sale of fibre as well as yarn in export markets of African region and South American markets and service domestic customers with vast range of products mix. The recently started trade war by USA and increase tariff may cause temporary trade disruptions and increased risk of dumping from foreign suppliers.

Your Company has a well-designed Internal Audit programme and dedicated team for independent review of all systems, procedures and financial controls of the Company to bring in the best industry practices, compliance with internal systems & procedures and statuary laws. The Companys overall internal control system is adequate given size and nature of operations. All important issues are regularly presented to the Audit committee of the Company. Senior management of your Company places emphasis on taking proper actions on the significant issues, findings and recommendations of internal audit, and systems are strengthened appropriately.

Internal Financial Controls: The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

The Risk Management Committee ensures compliance of all the fiscal, industrial, labour and environments laws by using adequate internal control measures and through regular monitoring by the respective departmental heads in the company. The following table gives the key risks faced by the Company, and the steps taken to mitigate the same:

As such, the Company is monitoring and taking steps to mitigate the risks, if any, which may threaten the existence of the Company. Cautionary Statement:

Statements in this report on Management Discussion and Analysis describing the Companys Objectives, projections, estimates, expectations or predictions may be "forward looking" within the meaning of applicable Securities laws and regulations. Actual results could differ materially from those expressed or implied.