Shree Manufacturing Company Ltd Management Discussions.

The key areas of management discussion and analysis are given below;

INDUSTRY STRUCTURE AND DEVELOPMENTS

India s textiles sector is one of the oldest industries in Indian economy dating back several centuries. The textile industry in India plays a vital role in the overall economy. India s textiles industry contributed seven per cent of the industry output (in value terms) of India in 2017-18. It contributed two per cent to the GDP of India and employs more than 45 million people in 2017-18.

The Indian textile industry has the capacity to produce a wide variety of products suitable to different market segments, both within India and across the world.

OUTLOOK

India Ratings has maintained a stable outlook for the textile sector for 2019-20 following strong domestic demand, waning impact of the disruptions due to GST and demonetization and rising exports aided by a weak rupee. Textile companies are likely to improve cash-flow from operations in FY- 2020, as their working capital would stabilize as challenges related to demonetization and the GST subsides. The sector is likely to continue deleveraging gradually in FY-2020 in view of strong annual growth generation and some moderation in the debt level. Liquidity of the majority of players in the sector is likely to remain adequate, along with an improvement in operational cash generation, backed by steady raw material costs and strong demand from end-user segments.

OPPORTUNITIES & THREATS

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. High economic growth has resulted in higher disposable income. This has led to rise in demand for products creating a huge domestic market.

The threat of low-cost manufacturing and imports from international markets still exist in India, however with higher quality and better customer service, the Indian textile industry will weather this storm of low-cost imports.

RISKS & CONCERNS

The primary risk for the company is with the unorganized low cost sector. Secondly, import of fabrics has always been a serious concern for the company. Further, with the advancement in technology, the company may be required to make additional capital expenditure for upgrading the manufacturing facilities.

INTERNAL CONTROL SYSTEM AND ADEQUACY

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The company has suitable internal control systems which are safeguarding the company s assets and promoting efficiency. The internal control systems are commensurate with the size and the nature of company s business and are regularly reviewed and updated by incorporating changes in regulatory provisions.

HUMAN RESOURCES

The company continues to lay emphasis in nurturing and strengthening the overall development of human resources and has always been recognizing manpower as vital tool in the company s growth.

FINANCIAL PERFORMANCE

The financial performance of the company for the year under review is discussed in detail in the directors report.

CEO AND CFO CERTIFICATION

We hereby certify that:

a) We have reviewed the financial statements and cash flow statement for the year ended 31st March, 2019 and to the best of our knowledge and belief :

i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

ii) these statements together present a true and fair view of the Company s affairs and are in compliance with existing Accounting Standards, applicable laws and regulations.

b) They are, to the best of our knowledge and belief; no transactions entered into by the Company during the year ended 31st March, 2019 are fraudulent, illegal or violative of the Company s code of conduct.

c) We accept responsibility for establishing and maintaining internal controls for financial reporting and we have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting. Deficiencies in the design or operation of such internal controls, if any, of which we are aware have been disclosed to the auditors and the Audit Committee and steps have been taken to rectify these deficiencies.

d) We have indicated to the Auditors and the Audit Committee that there are no:

i) significant changes in internal control over financial reporting during the year under reference;

ii) significant changes in accounting policies during the year requiring disclosure in the notes to the financial statements; and

iii) instances during the year of significant fraud with involvement therein, if any, of the management or any employee having a significant role in the Company s internal control system over financial reporting.

For and on behalf of the Board

Vishal Dedhia

Whole Time Director & CFO

DIN: 00728370

Place: Mumbai

Date: 06th June, 2019