Jet Knitwears Ltd Management Discussions.

Pursuant to Regulation 34 and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report are as follows:

INDUSTRY STRUCTURE AND DEVELOPMENTS

India’s textiles sector is one of the oldest industries in Indian economy dating back several centuries. The close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles make the Indian textiles sector unique in comparison to the industries of other countries. The textile industry is also labor intensive and is one of the largest employers.

The Indian textile industry has the capacity to produce a wide variety of products suitable to different market segments, both within India and across the world. Even today, textiles sector is one of the largest contributors to India’s exports with approximately 15% of total exports.

The textile and apparel sector contributes 14 per cent to industrial production, 4 per cent to Indias gross domestic product (GDP) and constitutes 15 per cent of the countrys export earnings. Total textile and apparel exports stood at US$ 16.81 billion during April-September 2016, contributing 14 per cent to India’s exports worth US$ 132 billion.India’s share in global trade of textiles and apparels is 5 per cent. (Source: IEBF)

The Indian textiles industry is extremely varied, with the hand-spun and hand woven textiles sectors at one end of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The textile industry has two broad segments. First, the unorganized sector consists of handloom, handicrafts and sericulture, which are operated on a small scale and through traditional tools and methods. The second is the organised sector consisting of spinning, apparel and garments segment which apply modern machinery and techniques such as economies of scale. The decentralized power looms/ hosiery and knitting sector form the largest component of the textiles sector.

Market Size

The Indian textiles industry, currently estimated at around US$ 120 billion, is expected to reach US$ 230 billion by 2020.

The sector provides employment to nearly 51 million people directly and 68 million people indirectly.

The Innerwear Category

Innerwear is one of the high growth categories in the apparel market and promises growth and innovation. The increase in income levels, along with higher discretionary spending, growing fashion orientation of consumers, and product innovations by the innerwear market have turned innerwear from a traditionally utilitarian item to an essential fashion requirement.

The size of the Indian Innerwear market is INR 15,870 crore (USD 2.9 billion); the category is also growing at an impressive CAGR of 12%.

The women’s innerwear market, which is driven by value-added innerwear products, contributes around 60% to the market. The growth of the innerwear category is primarily centered in urban India. The trend towards western outfits, combined with the demand for occasion- and outfit-based innerwear, is acting as a boost for the market.

The demand for innerwear with higher functionality and greater comfort is rising fast. The market for innerwear product variations like seamless intimates, plus size inner wear, body shape enhancers, etc. is burgeoning in the metros and mini metros.

Market Trends

Currently, the Indian innerwear market is worth Rs. 19,960 crore (2014) and is estimated to grow at 13% to reach Rs. 68,270 crore by 2024. The innerwear market has traditionally been largely unorganised, although in the past few years, the organised innerwear segment has shown promising growth in both men’s and women’s categories.

Developments

The global as well as domestic innerwear market is experiencing moderate growth in the apparel segment as nowadays individuals are more inclined towards branded items, most of which are usually priced on the higher end. People from all backgrounds and income group want to avail a comfortable and lasting inner wear that can be fashionable as well as skin-friendly. Indian Innerwear Market Among the core apparel categories, innerwear appears to be a potential growth category across all segments.

With rising incomes, higher discretionary spending, greater number of working women and growing fashion consciousness, the innerwear segment is expected to continue to progress.

OPPORTUNITIES AND THREATS

Simply put, the future of the apparel market, and the innerwear category, looks promising. At the same time, fashion retailers have to face some daunting challenges prior to tapping the extant opportunities.

Rising real estate costs, increasing power tariffs, and supply chain inefficiencies are some of the issues that have to be tackled with utmost prudence.

Our Strength

We believe in creating value for our customers it in terms of quality or pricing. Quality is of primary importance and our focus is on improving the quality of our products so that the products we offer are Skin Friendly and Anti-bacterial which helps in developing and maintaining long term sustainable relationships with our customers, enhancing our brand value and further increase in the business.

The Company has a range of products such as Innerwears, Socks, T-shirts, Lowers and Thermals which are available in superior cotton fabrics and vibrant styles enabling it to cater to the demands of the consumers of our products in various markets.

Our promoters have vast experience in the innerwear and textile industry and have always believed in maintaining the best quality in our processes and products. Along with qualified promoters, our company has a team of employees and workers who assist the top management, having knowledge of core aspects of innerwear industry and marketing. We believe that our experience, knowledge and human resources will enable us to drive the business in a successful and profitable manner.

We are having a wide range of retailer network of more than 5,000 retailers who are served being directly by our sales depots in the different parts of North India. We have been marketing our products through strong brands "JET" and "LYCOT". "JET" is 30 years old whereas "LYCOT" is 10 years old.

THREATS

Our company face competition from various domestic and international players. The Industry in which we operate is unorganized, competitive and highly fragmented in India. We have over a decade of experience in innerwear and textile industry. Our manufacturing operations are critical to our business and any shutdown of our manufacturing facilities may have an adverse effect on our business, results of operations and financial condition.

We believe that the principal factors and threats affecting competition in our business include consumer relationships, reputation, the abilities of employees, market focus and the relative quality and price. We believe that our Company will not only maintain but further enhance its position in the industry. We believe that our ability to compete effectively is primarily dependent on ensuring consistent quality products with on time delivery at competitive prices.

SEGMENT WISE AND PRODUCT WISE PERFORMANCE

The company operates in single segment only hence segment wise reporting is not applicable to the company.

Product wise Performance

We believe in creating value for our customers it in terms of quality or pricing. Quality is of primary importance and our focus is on improving the quality of our products so that the products we offer are Skin Friendly and Anti-bacterial which helps in developing and maintaining long term sustainable relationships with our customers, enhancing our brand value and further increase in the business.Our Company believes in providing those products to our consumers that are Skin Friendly and Anti-Bacterial.

Our Company markets its products through various brands like "Lycot Australia", "Jet", "Jet Eco", "Fresh- Long", "Boski" and "Take- off". Various product manufactured by our Company are Vest, Underwear (including Boxers, Briefs & Trunks), Brassiere, Panties, Socks, T-shirts, Thermals, Lowers, etc. Our Company caters to everyday range of comfortable Innerwear, Socks, T-shirts and Thermals which are available in superior cotton fabrics, vibrant styles and are ideally suited for men and women. The product wise sales as on during the current financial year and previous financial year is as under

S.NO PRODUCT WISE DETAILS 2016-2017 2015-2016
1. Cotton Vest 130.04 121.09
2. Underwear 175.08 166.88
3. Lycot 118.40 113.39
4. Winter 56.04 46.94
5. Ladies Garments 66.19 62.90
6. Socks and Handkerchiefs 10.42 11.04
Total 556.17 522.24

OUTLOOK

We believe in transparency and commitment in our work with our customers and dealers. The company works for customer satisfaction by creating value for the money for the customers, continuous improvement in the production process and works on the philosophy of enhancing the consumer base by entering new geographies to establish long-term relationships.

We intend to cater to the increasing demand of our existing consumers and also to increase our existing customer base by enhancing the distribution reach of our products in different parts of the country. Our Company operates from Kanpur with having dealers/vendors in North India. Enhancing our presence in additional region will enable us to reach out to a larger population. Further, our Company believes in maintain long term relationship with our customers by adding value through innovations, quality assurance and timely delivery of our products which will ultimately enhance our sales.

Our long standing tradition of excellence coupled with diligent service and unwavering commitment towards our customers has earned us their trust in such a way that we command a market share of 45% - 50% in the markets where we have a presence. It has been a long and motivating journey towards this pinnacle of success and no efforts are being spared to further strengthen the accomplishments of the company.

RISK AND CONCERNS

Risk Management is an integral part of the company’s activity the company has a structured Risk Management Policy. The top and the senior management of the company continuously monitor and review the business risk in the operations, Sales and marketing , procurement, regulatory affairs , finance ,information technology and human resources and take timely measures to minimize the impact.

Our business is subjected to various risks and uncertainties, our results of operations and financial conditions are affected by numerous factors including the following.

• Changes, if any, in the regulations / regulatory framework / economic policies in

India and / or in foreign countries, which affect national & international finance.

• Company’s results of operations and financial performance.

• Performance of Company’s competitors.

• Trained manpower.

• Significant developments in India’s economic and fiscal policies.

• Significant developments in India’s environmental regulations.

• Evolving customer needs and market trends.

• Orders from significant customers.

• Volatility in the Indian and global capital market.

In order to minimize the uncertainties and various risk which may arise in near future and to combat with the adverse situations that may affect the business operations, a systematic risk identification and mitigation framework is in place and suitable action plans is drawn up to mitigate the same, the Company has virtually no control over external risks such as a general down turn in the economy, new regulations, government policies and interest rates.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has appointed internal auditor to check and have and effective internal control and risk mitigation system which are assessed and strengthened with the standard operating procedures. The Company has adequate systems of Internal Controls commensurate with its size and operations to ensure orderly and efficient conduct of business. These controls ensure safeguarding of assets, reduction and detection of fraud and error, adequacy and completeness of the accounting records and timely preparation of reliable financial information. However, as and when company achieves further growth and higher level of operations, company will review the internal control system to match with the changed requirement. The Audit Committee and the Board of Directors review the adequacy and effectiveness of the internal control system and suggest improvement to strengthen the same The company has strong management information system, being an integral part of control mechanism.

DISCUSION ON THE FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Jet Knitwears Limited total revenue in FY 2017 was 4326.97 Lakhs (FY 2016; 3854.93), a revenue growth of 12.24% (FY 2016 :3.29). The Net Profit after tax was 78.60 Lakhs (FY 2017) as compared to previous year Net Profit of 41.03 Lakhs(FY 2016), which has registered a hike of 37.57 Lakhs and registered a landmark growth of 90% during the year under review. During the year under review the financial performance of the company was satisfactory. The Financial Statement is in confirmation with the provisions of the Companies Act 2013 and applicable accounting standard recommended by ICAI. The financial statement reflects the genuine desire for the transparency and best judgment for the estimates made on prudent and reasonable bases to correctly reflect the true and fair affairs of the company.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS FRONT (including number of people employed)

Human resource plays an essential role in developing a companys strategy as well as handling the employee centered activities of an organization. We have 47 full time employees as on March 31, 2017 including the Directors and KMP’s on pay roll basis. Our man power is prudent mix of the experienced and youth which gives us the dual advantage of stability and growth. Our work processes and skilled resources together with our strong management team have enabled us to successfully implement our growth plans. During the year, the Company, as part of on-going exercise in skill up gradation, deputed different classes of its employees to programs and seminars which would help them to add to their knowledge and skills. In order to increase the linear relationship between performance and reward, increments / incentives and different target oriented schemes based on performance are being provided for encouraging the marketing personnel in order to raise the sale and demand. The company continues to maintain positive work environment and constructive relationship with its employees with a continuing focus on productivity and efficiency. The Company continued to identify and implement initiatives which enhance productivity and efficiency.

DISCLOSURE OF ACCOUNTING TREATMENT

There was no deviation in following the treatments prescribed in any of Accounting Standards (AS) in the preparation of the financial statements of your Company.

CAUTIONARY STATEMENT

Certain statements made in the Management Discussion and Analysis Report describing the Company’s objectives, projections, estimates, predictions and expectations may be forward looking statements, within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Significant factors that make differences to Company’s operations include competition, change in Government policies and regulations, tax regimes and economic development within India. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statement, on the basis of any subsequent development, information or events or otherwise.

For and on behalf of Board of directors
JET KNITWEARS LIMITED
Balram Kumar Narula Rakesh Kumar Narula
Date: 26.08.2017 Manging Director Whole Time Director
Place: Kanpur DIN: 00274566 DIN: 00274483