Kalpa Commercial Ltd Management Discussions.

IMPACT OF TEXTILE AND FABRICS BUSINESS IN INDIAN ECONOMY

Indias textiles sector is one of the oldest industries in Indian economy dating back several centuries. Even today, textiles sector is one of the largest contributors to Indias exports with approximately 11 per cent of total exports which amounts to USD 40 Billion (Approximately) visa-vis 5.4% of growth from previous year, as we all knows India is a labour intensive country and the textiles industry is also labour intensive and is one of the largest employers in India with employment generation of around 40 million and around 60 million employees indirectly with the same industry. The textile industry has two broad segments. First, the un-organised 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.

This Sector contributes about 14% to industrial production, 4% to gross domestic product and 27% to countries foreign exchange inflow The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted foreign direct investment (FDI) worth Rs 6,710.94crore (US$ 1.11 billion) during April 2000 to February 2014.

OUTLOOK

The outlook for the industry and consequently for your company for the coming year is very positive. The company is expected improvement in consolidate margin as EBIDTA margin for Brands & Retail Business. The business prospect of the company can be judged with its financials under review period vis-a-vis previous year comparison of the same is highlighted below in tabular form:

Tabular representation:

(Amt. in Lakhs except EPS)

Part i culars 2016-2017 2015-2016
Profit and loss before tax 15.42 16.78
Profit and loss after tax 10.65 11.60
EPS 0.10 0.11

With reference to above tabular representation the management of the company is assured that company has much potential and can grow as per the scenario of current market situation.

EFFICIENT INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Adequate internal controls have been laid down by the Company to safeguard and protect its assets as well as to improve the overall productivity of its operations. All the transactions are properly authorized, recorded and reported to the management. The Company is following all the applicable Accounting Standards for properly maintaining the books of accounts and reporting financial statements. The detailed process of review not only ensures reliability of control systems and legal compliances with applicable legislation, defined policies and processes but also reviews efficiency of systems and ensures safeguarding of tangible and intangible assets.

RISK AND CONCERN

The Company is exposed to different types of risks such as credit risk, market risk (including liquidity risk, interest rate risk, operational risk and legal risk. The Company monitors credit and market risks, as well as portfolio and operational risk through the oversight of senior management personnel in each of its business segments. Legal risk is subject to the review of

the Companys legal department and external advisers. The Company is exposed to specific risks in connection with the management of investments and the environment within which it operates. The Company aims to understand measure and monitor the various risks to which it is exposed and to ensure that it adheres, as far as reasonably and practically possible, to the policies and procedures established.

HUMAN RESOURCES

The company is taking various initiatives to increase human resources for better productivity. To save on costs, the company is appointing non-experienced staff and taking initiatives for internal training and development of skills. This will help in enhancing their emotional and intellectual engagement with the company.

FORWARD LOOKING STATEMENT

Statements in this report on Management Discussion and Analysis, describing the companys objectives, projections, expectations or predictions may be forward looking, considering the applicable laws and regulations. These statements are based on certain assumptions and expectation of future events. Actual results could, however, differ materially from those expressed or implied. Domestic consumption, price trends, change in government regulations and tax structure can make a difference in companys performance in future. The company assumes no responsibility in respect of the forward looking statements herein, which may undergo changes in future on the basis of subsequent developments, information or events.

CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Actual results might differ substantially or materially from those expressed or implied. Important developments that could affect the companys operations include a downtrend in the real estate sector, significant changes in political and economic environment in India or key financial markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs.