Mangalam Ventures Ltd Management Discussions

MANGALAM VENTURES LIMITED (FORMERLY SONIA TEXTILES LIMITED) ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS Details as required under Management Discussion and Analysis Report are appended as hereunder:- TEXTILE INDUSTRY - STRUCTURE AND DEVELOPMENTS: The world economy has been passing under pressure. Financial turmoil in Europe has affected other countries. As a result, and despite a strengthening of activity in USA and Japan, world trade has slowed down. Under this scenario, the forecast for global economic growth has been revised downward to about 2.5% in 2012. Indian economy also slowed down in 2011-12 mainly due to weak industrial growth. Inflation remained a major concern constraining RBI to pursue tight monetary policy. OPPORTUNITIES AND THREATS: India has abundant supply of raw material and labour to cater to the enormous opportunities in the domestic and export market. In anticipation of Government efforts in boosting the textile . industry through various initiatives and investments, the industry is expected to continue to grow. On the other hand, sharp increase in input cost, increased labour costs, low productivity, continued weakness in developed geographies, prospect of higher domestic inflation,fiscal tightening, and interest rates are some of the challenges facing the textile industry at large. SEGMENTWISE PERFORMANCE: The Company operates in single business segment i.e. Knitted Garments in terms of Accounting Standard 17 issued by the Institute of Chartered Accountants of India. Your Company has been able to maintain the export turn over almost at the level of previous year, during the year under report inspite of financial turmoil in Europe and lower growth in worldwide economy. OUTLOOK: The industry has a lot to look ahead in the coming years in terms of market growth and adoption of newer technologies and areas of application. With the softening of cotton/cotton yarn prices and Government initiatives and investments, we are confident about the bright future of textile industry in long term. INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY: Your Company has well defined internal control system. The Companys internal control system includes organizational design, written policies and procedures, barriers to protect assets and all personnel. It is designed to discourage occurrences of errors or irregularities and to identify, within a reasonable time frame, errors or irregularities that may occur. It provides for safeguarding of assets, proper recording of transactions, and the efficient and effective accomplishment of the units goals and objectives including compliance with state and federal rules and regulations. MANAGEMENT PERCEPTION OF RISK AND CONCERN: The management as a long-term strategy is moving from simple to more technical garment to mitigate competition from other suppliers. We also focus more on outsourcing of fabric purchase rather than making it in- house. Our cash management is also very sound which is helping us to keep the interest cost at the bare minimum. We are making all efforts to cope with the challenges through continuous cost reduction, process improvements, imparting training to the workforce on the continued basis and improved customer services to mitigate the growing cost pressure. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES, INDUSTRIAL RELATIONS: Your Company continues to maximize the return on the actual operating practices, physical investment from organizations human capital and minimize financial risk. The role of Human Resource Management is being increasingly affected and re-shaped by the growing diversity of the workforce, global and domestic compensation, and complex legal and ethical issues. Relations with the work force remained cordial through-out the year.