Pashupati Cotspin Ltd Management Discussions.

INDUSTRY STRUCTURE & DEVELOPMENT

The textile industry occupies a unique place in India. One of the earliest to come into existence in India, it accounts for 14% of the total Industrial production, contributes to nearly 30% of the total exports and is the second largest employment generator after agriculture. Textile Industry is providing one of the most basic needs of people and the holds importance; maintaining sustained growth for improving quality of life. It has a unique position as a self-reliant industry, from the production of raw materials to the delivery of finished products, with substantial value-addition at each stage of processing; it is a major contribution to the countrys economy. Its vast potential for creation of employment opportunities in the agricultural, industrial, organised and decentralised sectors & rural and urban areas, particularly for women and the disadvantaged is noteworthy.

The Company is engaged in the business of processing of Kapas (raw cotton) by way of Ginning of cotton, spinning of cotton yarn and delineating Process. The products manufactured at our Company include Cotton bales, Cotton yarn and Black Cotton seeds (Delineate Seeds). By setting up of the Ginning and Spinning unit our Company has entered into a forward integration of the Textile industry by manufacturing of cotton yarn to cope up with the changes in the fashion consciousness, development in the cotton textile sector and synchronizing with the initiatives provided by the Central and the state Government.

SWOT ANALYSIS

Strengths

Well Established manufacturing facility

Experienced Promoter & Management Team

Strategic location of the manufacturing facility

Weaknesses

Seasonal availability of raw Cotton.

Dependence on suppliers for products availability

Opportunities

Large growth potential.

Increasing demand of the product in international market and domestic market

Government incentive for the growth of theTextile sector

Threats

Market Competition

Frequent changes in market trends

COMPETITION

The customer base for the cotton yarn manufactured by us includes local fabric producers and corporate buyers. The market for cotton yarn is highly competitive and fragmented, and we face competition from various local as well as well established manufacturers. Moreover, as we seek to diversify into new geographical areas globally, we may face competition from existing players that have presence in respective markets. In order to counter the competition, our focus would be to provide products that would be of the superior quality, competitive pricing and timely available as per the requirements of our customer.

The textile industry in India will face intensified competition in both their export and domestic markets. However, the migration of textile capacity will be influenced by objective competitive factors and will be hampered by the presence of distorting domestic measures and weak domestic infrastructure in several developing and least developed countries.

There are six major challenges for the Indian textile industry. To remain competitive an industry will need to deal with these challenges.

Goods and Service Tax

Increase Labor Wages and Workers Salary

Access to Latest Technology

Environmental Challenges

Lack of Institutional Support

To deal with extensive industrial competition, the textile industry in India needs focus on the following matters:

Identify a need in the industry and satisfy it with a product or service

Improve on existing products or services

Focus on the needs of customers

Do not underestimate competitors

Good Marketing Strategies

Good Industry working culture

MARKETING STRATEGY

We intend to focus on the following marketing strategies for yarn:

1. Direct sales to hosiery units.

2. Direct sales to textile mills (including power loom sector).

3. Exports to various countries.

4. Sales through brokers / business house.

GENERAL ECONOMIC AND BUSINESS CONDITIONS

As a Company with its complete operations in India, we are affected by general economic conditions in the country and in particular economic factors that affect Textile Industry in India.

Indias gross domestic product, or GDP, has been and will continue to be of importance in determining our operating results and future growth.

FACTORS AFFECTING OUR FUTURE RESULTS OF OPERATIONS:-

Our results of operations could potentially be affected by the following factors amongst others:

1. Disruption in our cotton textile business.

2. Failure to comply with regulations prescribed by authorities of the jurisdictions in which we operate;

3. Inability to successfully obtain registrations in a timely manner or at all;

4. General economic and business conditions in the markets in which we operate and in the local, regional and national economies;

>5. Our ability to effectively manage a variety of business, legal, regulatory, economic, social and political risks associated with our operations;

6. Disruption in supply of Raw Materials at our manufacturing facilities;

7. Recession in the market;

8. Changes in laws and regulations relating to the industries in which we operate;

9. Occurrence of Environmental Problems & Uninsured Losses;

10. Our ability to successfully implement our growth strategy and expansion plans; 11. Our ability to meet our capital expenditure requirements;

12. Our ability to attract, retain and manage qualified personnel;

13. Failure to adapt to the changing technology in our industry of operation may adversely affect our business and financial condition;

14. The timely completion of the Companys orders;

15. Changes in political and social conditions in India or in countries that we may enter, the monetary and interest rate policies of India and other countries, inflation, deflation, unanticipated turbulence in interest rates, equity prices or other rates or prices;

16. Occurrence of natural disasters or calamities affecting the areas in which we have operations;

17. Conflicts of interest with affiliated companies, the promoter group and other related parties;

18. The performance of the financial markets in India and globally;

19. Any adverse outcome in the legal proceedings in which we are involved;

20. Our ability to expand our geographical area of operation;

21. Concentration of ownership among our Promoters

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has an adequate internal control system commensurate with its size and the nature of its business in order to achieve efficiency in operation and optimum utilization of resources. These controls ensure safeguarding of assets, reduction and detection of fraud and error, adequacy and completeness of the accounting records and timely preparation of reliable financial information.

FINANCIAL AND OPERATIONAL PERFORMANCE

(Standalone) (Amount inlakh.)

Particulars for the year ended March 31,2019 For the Period from July 03, 2017 To March 31, 2018
Net revenue from Operations (Sales) 53782.78 33442.28
Profit Before Depreciation and Tax 2739.87 1512.44
Less: Depreciation 1280.95 834.74
Profit Before Extra ordinary Items and Tax 1458.92 677.70
Extra Ordinary Items 369.72 -
Profit Before Tax 1089.19 677.70
Tax Expense
-Current Tax 234.78 138.52
Less: MAT Credit Receivable (76.98) 138.52
-Deferred Tax (14.78) (741.33)
Profit After Tax (946.18) (63.63)
EPS (Basic) 9.20 (0.69)
EPS (Diluted) 9.20 (0.69)

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The industrial relations remained cordial throughout the year. The employees of the Company have extended a very productive cooperation in the efforts of the management to carry the Company to greater heights. Continuous training down the line is a normal feature in the Company to upgrade the skills and knowledge of the employees and workmen of the Company.

CAUTIONARY STATEMENT

Statement in this report describing the Companys objectives, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Actual results may differ materially from those expressed in the statement. Important factors that could influence the companys operations include economic conditions affecting demand / supply and price condition in the domestic markets in which the company operates, changes in the government regulations, tax laws and other statutes and other incidental factors.

For and on behalf of the Board of Directors
Date: 19/08/2019 Saurin Jagdish Bhai Parikh
Place: Ahmedabad Chairman & Managing Director
(DIN: 02136530)