Krishana Fabrics Ltd Management Discussions.

MACRO ECONOMIC ENVIRONMENT

In light of the encouraging performance of the economy in the financial year 2015-16, marked by pickup in economic growth, lower inflation, manageable current account deficit, high foreign exchange reserves, buoyant tax revenues, increasing foreign direct investment flows along with the government’s push to reforms in crucial areas including banking, infrastructure, power, taxation, etc., the near term prospects for the economy look bright. A strengthening of growth in India has been projected by multi-lateral institutions. However, the risk that still remains is the subdued global growth; slowdown and rebalancing in China’s economy; increased volatility in financial markets; and, gradual tightening in the monetary policy in the United States. Keeping these conditions in view, the rate of nominal growth of the economy is expected to be around 11 per cent in 2016-17.

REVIEW OF OPERATIONS

Gross revenue from operations remained at Rs. 223.45 lac in comparison to last years’ figure ofRs. 1053.55 lac. During the year, the net loss from operations widened and the same was stood at Rs. (16.23) lac in comparison to last years’ Net Loss of Rs. (0.18) lac.

BUSINESS SEGMENT

The Company is into the business of trading / investment activities in Shares & Securities and carrying treasury operations by way of providing funding solutions to its clients; during the year; in accordance with the Accounting Standard 17 notified by Companies (Accounting Standards) Rules 2006.

OPPORTUNITIES

During 2015 – 16, the primary securities market seems to have come out of its lull. Both the total number of issues and the resources mobilized from the primary securities market have gone up. IPOs and public debt issues have contributed to this performance more than rights issues. During March 2016, twenty companies accessed the primary market and mobilised Rs.9,429 Crore compared to Rs.6,113 Crore mobilised through nine issues in February 2016. There were 15 public issues and two rights issues during the month. Among the public issues, IPOs garnered Rs.1,236 Crore.

During 2015-16, 108 companies have accessed the capital market and raised Rs.58,167 Crore compared to Rs.19,203 Crore raised through 88 issues during 2014-15. There were 95 public issues which raised Rs.48,928 Crore and 13 rights issues which raised Rs.9,239 Crore during 2015–2016. Among the public issues, there were 74 IPOs and 21 public debt issues.

The Indian stock market rallied smartly in March 2016, to wriggle off the somber note with which 2016 had started off. During March 2016, the benchmark indices, S&P BSE Sensex and Nifty 50 rose by 10.2 percent and 10.8 percent respectively to close at 25,341.9 and 7,738.4 respectively on March 31, 2016. Sensex and Nifty touched their respective intraday highs of 25,479.6 and 7,777.6 on March 31, 2016. Similarly, both Sensex and Nifty touched their intraday lows of 23,133.2 and 7,035.1 respectively on March 01, 2016.

THREATS & CONCERNS

The International Monetary Fund cut its U.K. growth forecast and warned of "severe" damage to the world economy if Britain leaves the European Union. The IMF lowered its 2016 U.K. economic forecast to 1.9 percent from 2.2 percent. It kept its 2017 forecast at 2.2 percent.

IMF said that a potential U.K. exit as one of the key international risks and a vote to quit the bloc would pose major challenges and could do severe regional and global damage by disrupting established trading relationships. United Kingdom is poised to vote on June 23 with regard to referendum on whether to stay in European Union or not.

IMF in its World Economic Outlook said that " the negotiations on post-exit arrangements would likely be protracted, resulting in an extended period of heightened uncertainty that could weigh heavily on confidence and investment, all the while increasing financial-market volatility. Leaving would likely disrupt and reduce mutual trade and financial flows."

Vote Leave, a campaign group pushing for Brexit (Britain Exit), said in a statement that the IMF had been wrong with its forecasting in the past and that "the real risk to the U.K. economy is staying attached to the failing euro zone."

HUMAN RESOURCES

The Company recognizes that its success is deeply embedded in the success of its human capital. During 2015-16, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives.

CORPORATE SUSTAINABILITY AND SOCIAL RESPONSIBILITY

The provision of the Section 135 and Schedule VII of the Companies Act, 2013 as well as the provisions of the Companies (Corporate Social Responsibility Policy) Rules, 2014 effective from April 1, 2014 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal Guidelines. The Compliance Department of the Company is continued to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Company’s Board of Directors and the Company’s Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

The Company has complied with all requirements of regulatory authorities. No penalties/strictures were imposed on the Company by BSE, CSE or SEBI or any statutory authority on any matter related to capital market during the last three years.

Chennai, May 30, 2016 By order of the Board
For KRISHANA FABRICS LIMITED
Registered Office : ANITHA MAHESH
18/19, 1st Floor, Erulappan Street (DIN : 03573740)
Sowcarpet, Chennai-600 079 Chairman