Raj Rayon Industries Ltd Management Discussions.

Forward-Looking Statements

This report contains forward-looking statements, which may be identified by their use of words like ‘plans, ‘expects, ‘will, ‘anticipates, ‘believes, ‘intends, ‘projects, ‘estimates or other words of similar meaning. All statements that address expectations or projections about the future, including but not limited to statements about the Companys strategy for growth, product development, market position, expenditures, and financial results, are forward-looking statements, based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Companys actual results, performance or achievements, could thus differ materially from those projected in any such forward- looking statements. The Company assumes no responsibility to publicly amend, modify or revise any forward-looking statements, on the basis of any subsequent developments, information or events.

Overview General:

Your Company enjoys a Star Export House status by the Director General of Foreign Trade and has certification of ISO 9001:2008 by Bureau Veritas (UKAS) and Bureau Veritas (NABCB). Your Company exports its product to countries in South America, Europe, Middle East, Africa, Far East, South East Asia etc.

Financial:

During the year the Company has registered:

Net Sales and other income of Rs. 7,668.21 Lakhs as compared to Rs. 27,610.44 Lakhs of previous year. Loss for the year was (Rs.(5264.87) Lakhs Loss as compared to (Rs.6628.82) Lakhs Loss of previous year. The Company incurred Cash losses of Rs. 1,856.97 Lakhs as compared to Cash losses of Rs. 1,573.44 Lakhs of previous year. The Company incurred a Net Loss of Rs. (5264.87) Lakhs & EPS of (Rs. 1.52) as compared to Net Loss of Rs. (6628.82) Lakhs & EPS of (1.91) of previous year. Export of the Company during the year was NIL

Industry outlook:

Indian Textile Industry Overview

India is the second largest manufacturer of textile and apparel in the world after China. Make in India campaign was launched to attract manufacturers and FDI. Technology Mission for Technical Textile has been continued. Under Union Budget 2015-16, government of India has allocated around USD584.49 million for Textile Industry. The major focus of this Budget is to attract the manufacturers, technology upgradation Integrated textiles parks, etc. Measures were also announced to be taken to foster faster clearance of import and export. Textile plays a major role in the Indian economy

It contributes 14 per cent to industrial production and 4 per cent to GDP With over 45 million people, the industry is one of the largest source of employment generation in the country The industry accounts for nearly 13 per cent of total exports The size of Indias textile market in 2014 was USD99.0 billion which is expected to touch USD226 billion market by 2023 at a CAGR of 8.7 per cent between 2009-23E.

Opportunities:

• Buoyant domestic economy leading to higher market growth.

• Growth of organized retail would increase the consumption of apparel.

• 100% FDI allowed in textile sector through the automated route.

• Export demand expected to pick up with global economic recovery leading to increased opportunities in export market.

• Demand of Man-made Fibers (MMF) is likely to improve, primarily driven by increased substitution of cotton by MMF.

Threats:

• Volatility of input costs

• Shortage of raw material in domestic market

• Cost increase in crude oil based raw materials due to weak rupee.

• High fluctuation in INR/USD rates has adversely impacted companys cost structure as the company was rely on imports of its main input raw material viz. PTA

Internal Controls:

• RRILs well defined organisation structure, policy guidelines, predefined authority levels and an extensive system of internal controls, ensure optimal utilisation and protection of resources, IT security, accurate reporting of financial transactions and compliance with applicable laws and regulations.

• RRIL has adequate system of internal control in place to ensure that assets are safeguarded against loss from unauthorised use or disposition, and that transactions are authorised, recorded, and reported correctly.

• RRILs internal audit function is empowered to examine the adequacy, relevance and effectiveness of control systems, compliance with laws, regulations and policies, plans and statutory requirements.

• RRIL has an exhaustive budgetary control system. Actual performance is reviewed with reference to the budget by the management on an ongoing basis.

• RRILs Audit Committee of the Board reviews the findings and recommendations of the internal auditor.

The system is improved and modified continuously to meet changes in business conditions, statutory and accounting requirements.

Research & Development:

The Company always strives to be innovative and cost competitive, aided by its fully equipped R & D facilities. Besides producing POY of Denier range fine to coarse, the Companys array of products includes yarn of various cross sections namely Round, Trilobal and Octalobal, as also Full Dull, Semi Dull, Bright Yarns, Cationic Yarn, Doped Dyed Yarn, Fire Retardant and Anti Microbial yarns.

Quality Management:

RRIL continues to take quality improvement measures to enhance quality of various polyester yarns and polyester chips. The Companys ISO certification in respect of its products and processes stands upgraded to ISO 9001:2008 by Bureau Veritas (UKAS) and Bureau Veritas (NABCB).

Environment and Safety:

Being conscious of the need for environmentally clean and safe operations, the Company conducts its operations ensuring safety of all concerned, compliance of statutory and industrial requirements for environment protection and conservation of natural resources to the extent possible.

Human Resources and Industrial Relations:

The Company recognises that Human Resources are its most valuable assets that provide competitive edge to stay ahead. The Companys focus is on developing the most superior work force so that the Company and individual employees can accomplish their work goals in service to customers.

The Companys strategy for development of Human Resources is through providing a motivating work environment, recruiting the best talents, providing challenging goals and by creating a culture for learning and growth. Industrial relations remained cordial in all the plants.