Nandani Creation Ltd Management Discussions.

The Management of "M/s Nandani Creation Limited" is presenting the Management Discussion and Analysis Report covering the Operations and financial performance of the Company for the year 2016-17. The Company is engaged in manufacturing and trading of women apparels like kurtis, sarees, ethnic tops, plazzo, Patiala salwar suits, dupattas, quilted jackets, dress materials, etc. We are popularly known and Identified in apparel market by our brand name "Jaipurkurti.com". Our brand is best known for its ethnic wear, kurtis and traditional designs having wide range of colours, patterns and sizes. We distribute our products by following e-retail model and have developed a sustainable business model over the period.

Founded by Anuj Mundhra and Vandna Mundhra, our promoters have adequate experience in the line of business and looks after strategic as well as day to day business operations. Our Company started its commercial production in the F.Y. 2012-13 with an Annual Turnover of Rs. 59.20 Lakhs; thereby growing manifold in past five years and recently recorded an Annual Turnover of Rs. 1885.09 Lakhs for the F.Y. 2016-17. Brand Development and customer loyalty are one of the key factors of success in our industry. Our Brand has been well received uptil now and we shall, continue to endeavour to build brand equity by supplying qualitative products at competitive prices. Our Company is also registered as SSI-Micro Unit with DIC, Jaipur.

Our registered office and manufacturing unit is situated at G-13, Kartarpura Industrial Area, Near 22-Godam, Jaipur-302006, Rajasthan. We have our own production house with a team of experts in the department. In the last F.Y. we have invested in Desi Fusion India Private Limited and made it a wholly-owned subsidiary Company. Our subsidiary Company is engaged in the business of dyeing and printing of grey fabric. We procure the finished goods of subsidiary Company as our raw materials and further process into apparel as per on-going trends suggested by designer team. This gives us advantage of an integrated manufacturing process.

The products such as kurtis and kurtas are processed at our current manufacturing unit. Due to the diversified product range, we follow the asset-light model and job work the remaining products to the third-party manufacturers. For facilitating ease in distribution, we also have branch offices located at Flyderabad and Gurgaon.

For e-retailing our products, we have developed our own website www.iaipurkurti.com and also have tie-ups with major e-commerce players Myntra, Flipkart, Amazon, etc. E-retailing has enabled us to reach wide number of consumers at reduced costs, enhanced our brand visibility and made us a known name in the market.

With the passion of our promoters, dedication of our team, development of our brand, customer loyalty, growing trend in e-commerce and continued government support we aim to expand our operations on PAN India basis and become a popular brand among the masses.

SIGNIFICANT FACTORS AFFECTING OUR RESULTS OF OPERATIONS:

Our Business is subjected to various risks and uncertainties, our result of operations and financial conditions are affected by numerous factors including the following:

• Supply and availability of raw material;

• Competition and price cutting from existing and new entrants;

• Development of brand image;

• E-commerce growth;

• Technological changes;

• Changes in governmental policies;

• Economic and Demographic conditions;

• Macro-economic factors;

DISCUSSION ON RESULT OF OPERATION:

The following discussion on results of operations should be read in conjuction with the audited financial results of our Company for the F.Y. ended March 31, 2017, 2016 and 2015.

OVERVIEW OF REVENUES & EXPENDITURE Revenues from Operations:

Our principal component of revenue from operations is from sale of women apparels such as kurtis, dress material, Patiala Salwar, sarees and plazzo, etc.

OTHER INCOMES:

Our Other Income consists mainly of discount received on purchases.

Till March 31,

Income 2017 2016 2015
Revenue from Operations 1,885.09 1,418.64 480.12
As a % of Total Revenue 99.54% 99.97% 99.51%
Other Income 8.63 0.44 2.37
As a % of Total Revenue 0.46% 0.03% 0.49%
Total Revenue 1893.72 1,419.08 482.49

STRENGTHS WEAKNESSES OPPORTUNITIES AND THREATS:

STRENGTHS

Your Company has experienced management team with our promoters having more than a decade experience in textile Industry and our Company believes that quality of apparel decides its future and attempts to supply qualitative products at competitive prices and have an integrated business process for manufacturing some of our product range and volume of kurtis, dresses, etc. as our wholly owned subsidiary supplies around 30% of our raw material. We have comprehensive portfolio of product offerings covering kurtis, sarees, ethnic tops, palazzo, Patiala salwar suits, dupattas, quilted jackets, dress materials, etc.

WEAKNESSES:

We depend on certain third party service providers including online distribution portals and payment gateways and an inability to ensure availability of such services at competitive cost may have an adverse effect on our business and our industry is labour intensive and our business operations may be materially adversely affected by strikes, work stoppages or increased wage demand by our employees or those of our suppliers;

OPPORTUNITIES:

The Indian Textile Industry is set for strong growth buoyed by both strong domestic consumptions as well as export demand. The Sector is expected to be reached to USD 226 billion by FY 2023. For the textile Industry, the proposed hike in FDI limit in multi-brand retail will bring in more players, thereby providing more options to consumers.

The Government of India is taking initiatives to attract foreign investments in the textile sector through promotional visits to countries such as Japan, Germany, Italy and France. According to the new Draft of the National Textile Policy, the government is planning to attract foreign Investments thereby creating employment opportunities to 35 million people.

THREATS:

Paucity of domestic producers of shuttle-less looms and spindles greatly affects the industry with the waiting time per order being as much as 2 to 3 years. Obsolete machinery leads to low efficiency and poor quality products. Lack of Investment and research in the area of textile machinery is forcing imports to complete with other textile producing countries.

Stiff competition from mechanised mills, changing consumer preferences and the pursuit of less demanding means of livelihood have threatened the vibrancy of the handloom industry.

Labour related issues such as threat to safety and health of workers, poor working environment, and exploitation of children, strict labour laws and skills gap pose a major challenge to the Industry.

India has differential tax treatments for cotton and man-made fibres, thus creating needless distortions within the Industry. While tax duty on natural fibres like cotton, wool and flax is nil, manmade fibre, filament and yarn attract duty as high as 12.5%.

EXPENDITURE

Our total expenditure primarily consists of Cost of Materials Consumed, purchase of stock in trade, Employee Benefit Expenses, Finance Costs, Depreciation and Other Expenses.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has a well-established and comprehensive internal control system. Documents, policies and authorization guidelines comply with the level of responsibility and standard operating procedures specific to the respective businesses. Observation made in internal audit reports on business processes, systems, procedures and internal control and implementation status of recommended remedial measures by Internal Auditors are regularly presented to and reviewed by the Audit Committee of the Board. The system of internal control is being improved to ensure that all assets are safe and protected against loss from unauthorized use or disposition, and that all transactions are authorized, recorded and reported correctly. The Company regularly conducts internal check, using external and internal resources to monitor the effectiveness of internal control in the organization. It strictly adheres to corporate policy with respect to financial reporting and budgeting functions. The Audit Committee of the Board of Directors deals with significant control issues and instructs further areas to be covered.

RISK AND CONCERNS:

INTERNAL RISK FACTORS:

• Our Company is yet to achieve scalable operations and has limited operating history and brand recognition, which may make it difficult for investors to evaluate our future prospects based on past results;

• Our distribution model is majorly based on e-retail and we do not have any customer facing retail outlets;

• The Company may lose its revenue due to the ongoing policy of "Turn back Cash-On-Delivery Orders" trending in the e-retail market;

• Our future growth may be restricted by our limited manufacturing capacity;

• Our Industry is labour intensive and our business operations may be materially adversely affected by strikes, work stoppages or increased wage demands by our employees or those of our suppliers, etc.

BUSINESS RELATED AND OTHERS

• There are restrictions on daily/weekly/monthly/annual movements in the price of the Equity shares which may adversely affect a shareholders ability to sell, or the price at which it can sell, Equity Shares at a particular point in time;

• Sale of Equity Shares by our Promoters or other significant shareholder(s) may adversely affect the trading price of the Equity Shares.

• Foreign Investors are subject to foreign investment restrictions under Indian Law that limits our ability to attract foreign investors, which may adversely impact the market price of the Equity Shares, etc.

HUMAN RESOURCE:

We believe that our employees are key contributors to our business success. We focuses on attracting and retaining the best possible talent. Our Company looks for specific skill-sets, interests and background that would be an asset for our business.

As on 31st March, 2017 we have 45 employees at our manufacturing facility and registered office, who look after our business operations, factory management, administrative, secretarial, legal, marketing and accounting functions in accordance with their respective designated goals. Apart from these we also employ casual labours or temporary labour on need basis. Our manpower is a prudent mix of the experienced and youth which gives us the dual advantage of stability and growth. Our work progress and skilled/semi-skilled/unskilled resources together with our strong management team have enabled us to successfully implement our growth plans.

ENVIRONMENT. CORPORATE SUSTAINABILITY AND SOCIAL RESPONSIBILITY:

Being a responsible corporate citizen, your Company strongly follows to giving back to the society. CSR initiatives help elevate the quality of life of the people by promoting healthcare, education and employment opportunities. Your Company will take numerous initiatives to develop local community around its manufacturing facilities and aims to continue its efforts to build on its tradition of social responsibility to empower communities.

FORWARD LOOKING STATEMENT:

The success of our business depends substantially on our ability to implement our business strategies effectively. Our Companys brand viz. "Jaipurkurti.com" is well known in their respective product categories. All our brands are well received by our customers. Further we have also launched our new and ravishing Brand "Desi Fusion" in the month of April, 2017 which shall expand our affordable clothing segment. Our qualitative and customer demand satisfying products helps us to achieve brand recall among our consumers which strengthens our brand equity.

CAUTIONARY STATEMENT

This Statement contains forward-looking statements about the business, financial performance, skills and prospects of the Company. Statements about the plans, intentions, expectations, beliefs, estimates, predictions or similar expressions for future are forward-looking statements. Forward-looking statements should be viewed in the context of many risk issues and events that could cause the actual performance to be different from that contemplated in the Directors Report and Management Discussions and Analysis Report, technological obsolescence and domestic, economic and political conditions. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors. The Company disclaims any duty to update the information given in the aforesaid reports.

Declaration affirming Compliance with Code of Conduct

I hereby confirm and declare that all the Board Members and Senior Management Personnel have individually affirmed compliance with the Code of Conduct adopted by the Company for the Financial

Year ended 31st March, 2016.

PLACE: JAIPUR Sd/-
DATED: 25.8.2017 ANUJ MUNDHRA
(Chairman & Managing Director)
DIN:05202504