SFL International Ltd Management Discussions.

A. Industry Structure and Developments

Indian Textile Industry is the largest employer in the manufacturing sector. Next to agriculture, it provides direct employment to over 35 million workers and also another 50 million workers in the allied sector. It has over 57 million spindles and around 8.70 lac rotors together with looms in different parts of the country. It is blessed with large acreage of Cotton cultivation to produce on an average of over 350 lacs of bales of Cotton every year. Besides, it has adequate raw material base for man made fibres like PSF, VSF, Acrylic. With such strong base, the Indian textile industry had played and is playing a significant role in the growth and development of Indian economy.

B. Opportunities and Threats

India has emerged as one of the fastest growing economies in recent times. Global growth prospects also look positive. Main driving forces for the growth of the Indian economy are:-i. Increased Government spending on Infrastructure ii. Pick up for Private Placement iii. Expectation of good monsoon and iv. Expected surge in consumer spending will help the textile sector in a big way. The implementation of the Goods and Service Tax Bill will end interstate barriers to trade and help free movement of goods. It will be a win-win for all stake holders. Though the demonetisation of currency in November 16, had affected the textile trade initially as this segment was largely dependent on cash, yet over a period of time, this could be overcome. Further, the move had benefitted in mobilising surplus money in the banking sector. Today banking sector is flush with funds and is offering loans at relatively lower rates. There has been a drastic reduction in the lending rates by the Banks. This would benefit the textile sector too.

Textile industry needs to explore new avenues like Technical textiles which has great potential for future growth. There is a big gap between demand and supply in this segment and that Indian Textile Industry need to bridge the gap.

C. Outlook

The Indian Textile industry has a bright future. Textile Policy needs to recognise this and to prioritise segments which have potential and need focus.

There is a need to promote the growth of textile industry in sectors like Technical Textiles - where there is a great potential to expand and develop. Government need to announce policy decisions for its growth and development.

Textile exports to be made competitive in the face of protectionism etc. displayed by Developed economies. This has to be addressed on a war footing. This should receive the immediate attention.

D. Risks and Concerns

Textile Industry is always subject to facing crisis in a cyclical way. Timely action is needed to overcome this situation by taking corrective and proactive steps, then and there.

E. Human Resource/Industrial Relations

Human Resources Development, in all its aspects like training in safety and social values is under constant focus of the management. Relations between the management & the employees at all levels remained healthy & cordial throughout the year. The management and the employees are dedicated to achieve the corporate objectives and the targets set before the Company.

F. Internal Control Systems and their adequacy

The Company has an adequate Internal Control System commensurate with its size and operations. Management has overall responsibility for the Companys Internal Control System to safeguard the assets and to ensure reliability of financial records. Audit Committee reviews all financial statements and ensures adequacy of internal control systems.

G. Company Performance

The Companys overall performance was not good during the Financial Year 2016-17. The Company did not earn any income during the FY 2016-17.

H. Cautionery Statement

Statement in the Management Discussion and Analysis Report, describing the Companys objectives, opportunities and expectations may constitute ‘Forward Looking Statements within the meaning of applicable laws and regulations. The actual result may vary materially from those expressed or implied in the statement. Several factors make a significant difference to the Company operation including the government regulation, taxation and economic scenario affecting demand and supply condition and other such factors over the Company does not have any control.