Mohite Industries Ltd Management Discussions.

The management of Mohite Industries Limited presents the analysis of business performance of the Company for the year 2019-20 and its outlook for the future. This outlook is based on assessment of the current business environment. It may vary due to future economic and other depending upon the economic and climatic conditions, government policies, taxation and other laws and other incidental factors.

COVID-19 Update

At present, the global economic environment is highly unpredictable as the duration and the impact of unprecedented COVID -19 pandemic is difficult to ascertain. After the COVID-19 outbreak in mid-March 2020 in India, our operations were disrupted and factory have been closed since 22nd March, 2020 on declaration of the nationwide lockdown ,still due to labour problem company has not resumed its operations. Your Company is attempting to overcome the difficulties arising in restoring its operations and scheduling to resume its operations on 21st September 2020.

1. INDUSTRY STRUCTURE & DEVELOPMENTS

The Company enters the Financial Year 2020-21 with high degree of uncertainty During the year under report, the prices of yarn were on the higher side in the domestic market compared to the last financial year

As the company is producing special quality yarn i.e. Compact and Slub yarn, it could fetch a good price for these quality of yarn during the year under report

2. OPPORTUNITIES AND THREATS

On the backdrop of badly affected industrial health due to Covid epidemic, the management see no opportunity to further stand in the market or improve the productivity. On the contrary, if the current situation does not improve right away the management will be forced to close the operation temporarily. However, if the situation goes in favour & looking to the drop down in the cotton price, there is an opportunity for the management to come back on the feet.

3. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

Segment-wise performance is given in Note No. 1(II) (13) to financial statements.

4. MANAGEMENT PERCEPTION OF RISKS & CONCERNS

Taking into Account the drastic situation arose due to Covid 19 pandemic, the market is worsen very much, Hence the management has foreseen a huge risk in restarting and continuing the mill operation.

5. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company remain committed to improve the effectiveness of internal control systems for business processes with regard to its operations, financial reporting and compliance within the applicable laws and regulations. The Company has a proper system of internal controls to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly. For the Financial Year 2019-20, your Company has got its internal financial controls over financial reporting evaluated from the Internal Auditors of the Company and the report has reaffirmed the effectiveness of such internal controls.

6. HUMAN RESOURCES DEVELOPMENT & INDUSTRIAL RELATIONS :

The Company would like to place on record, sincere appreciation for the contribution and support of all its employees towards the performance of the Company. Your Company is happy to have a management team comprising of professionals and experienced one.. There have been no material developments in Human Resources during the Financial Year 2019-20. The Company continues to remain focused and sensitive to the role of human resources in optimizing results in all its areas of working and its industrial relations also continue to be cordial.

7. FINANCIAL ANALYSIS AND REVIEW OF OPERATIONS :

a) Production of our Company of 100% cotton yarn was 4077.52 MT during the year 2019-20 as against production of 4696.44 MT during the year 2018-19. Sale of Cotton Yarn & Fabric was Rs 8337.89 Lakhs during the year 2019-20 as compared to sales of Rs 9846.66 Lakhs during the year 2018-19. Sale of Cotton Waste was Rs 108.96 Lakhs during the year 2019-20 as compared to sale of Rs 83.87 Lakhs during the year 2018-19.

b) Job Work of 100 % cotton yarn was 19.33 MT during the year 2019-20 as against Job Work of 110.61 MT during the year 2018-19. Job Work Income was Rs 104.73 Lakhs in the year 2019-20 as compared to Job Work Income of Rs 18.65 Lakhs in the year 2018-19.

c) Generation of Hydro P)wer was 2,40,00,230 Kwh units during the year 2019-20 and transmitted to Textile Division (Intersegment) 37,68,071 Kwh as against generation of 1,70,49,104 Kwh units during the year 2018-19. Banking Unit is 3,47,710 Kwh and Balance Units Sale to MSEDCL during the 2019-20 is 1,94,68,108 Kwh Units as against units sale of 70,74,499 Kwh Units for the year 2018-19.

d) Production of Yarn during the year 2019-20 was decreased by 13.18 % and Sales of Yarn and Fabric during the year 2019-20 were decreased by 15.32 % as compared to previous year.

e) The Direct Export & Merchant Export of Yarn was Rs 83.27 Lakhs during the year 2019-20 as compared to Direct Export & Merchant Export of Yarn and Fabric of Rs 1372.94 Lakhs during the year 2018-19.

f) RAW MATERIAL

Total raw material (Cotton + Yarn + Waste) cost for the year 2019-20 was 5663.50 Lakhs compared to 6870.70 Lakhs for the previous year. Cost of material consumed to sales ratio (Cotton + Yarn + Waste) for the period ended 31.03.20 is 57.65% as compared to 69.19 % for the previous year.

g) POWER AND FUEL

The cost of power was Rs 1402.09 Lakhs for the year 2019-20 as compared to Rs 1090.52 Lakhs for the year 2018-19.Cost of power is 25.65 per kg of the production for the year 2019-20 as compared to power cost of 22.69 per kg of production for the previous year.

h) SALARY AND WAGES (EMPLOYEES BENEFIT COSTS)

The salary and wages & other employee benefits cost was Rs 1070.74 Lakhs for the year 2019-20 as compared to Rs 1097.32 Lakhs for the year 2018-19. The Company has taken step to fully provide for the gratuity liability.

i) INTEREST AND FINANCE COST

The interest & finance cost was Rs 837.35 Lakhs for the year 2019-20 compared to Rs 1048.56 Lakhs for the year 2018-19.

j) PROFITABILITY

The Company earned Profit before Depreciation, Interest and Tax of Rs 1577.65 Lakhs in the current year as against Rs 1977.88 Lakhs in the previous year. The Company earned Profit before Depreciation and Tax of Rs 740.30 Lakhs in the current year as compared to Rs 929.32 Lakhs in the previous year.

The Company earned Profit before Tax (after interest and depreciation) of Rs 151.66 Lakhs and Profit after Tax of Rs 155.63 Lakhs for the current financial year under review as against Rs 201.82 Lakhs and Rs 406.90 Lakhs respectively, for the previous financial year.

k) RESOURCE MOBILISATION

The Gross Fixed Assets (excluding capital work in progress) as at 31st March, 2020 were 19365.70 Lakhs as compared to Rs 18693.29 Lakhs in the previous year. During the year, the Company had purchased fixed assets amounting to Rs 482.03 Lakhs.

There were no debtors outstanding for more than six months in the year under review. (Previous Year Nil). Inventory level as on 31st March, 2020 was Rs 4066.14 Lakhs, as against Rs 4114.31 Lakhs in the previous year.

l) DETAILS OF SIGNIFICANT CHANGES AS COMPARED TO PREVIOUS YEAR IN KEY FINANCIAL RATIOS ALONG WITH DETAILED EXPLANATION

Ratio 2019-20 2018-19 Variation
Debtors Turnover 41.92% 35.63% 6.29%
Inventory Turnover 41% 34.40% 6.6%
Interest Coverage Ratio 1.18 1.19 0.01
Current Ratio 3.51 2.95 0.56
Debt Equity Ratio 0.87 0.92 0.05
Operating Profit Margin (%) 33.45% 30.29% 3.16%
Net Profit Margin (%) 1.57% 1.83% 0.26%

On behalf of the Board MOHITE INDUSTRIES LIMITED

Place -, Kolhapur Vadgaon Date -15th September, 2020 SHIVAJ MOHITE MANAGING DIRECTOR DIN 00425441 MONIKA MOHITE JOINT MANAGING DIRECTOR DIN 00425614