Standard Industries Ltd Management Discussions.

TEXTILE TRADING DIVISION & OUTLOOK

For the Financial Year under review viz., April, 2017 to March, 2018, the Company has achieved a Textile Trading turnover of 999.42 lakhs in comparison with

717.19 lakhs for the previous Financial Year.

During the Financial Year, in spite of unfavourable circumstances, such as, after effect of demonetization, implementation of GST on Textile Goods, etc., the Company has achieved a higher turnover of more than 39% compared to the previous year.

In the past, Textile fabric was not subject to any tax such as VAT/Sales Tax, etc. The Industry was burdened by GST of 5% for the majority of textile fabrics. Inspite of this adverse situation, the Company has achieved better turnover.

In addition to our regular product range such as PV Suiting, Uniform Suiting and Shirting, 100% Cotton Poplin, Lawn, Dhoti, we have added combo packing in case of ready to stich segment. All these products have added to our sales growth.

REAL ESTATE DIVISION & OUTLOOK

The Standard Mills Company Limited was incorporated in India in the year 1892 under the Indian Companies Act, 1882. In line with the diverse nature of its business, it had changed its name from The Standard Mills Company Limited to Standard Industries Limited, (‘the Company) in October 1989. The Company also has a Real Estate Division which comprises of assets which are in excess of business needs, which the Company would liquidate based on market conditions. The Company has entered into an Agreement to assign TDR dated 18th May, 2017, to transfer and assign Development Rights Certificate ("DRC") to be issued by MCGM for TDR on surrender of Reserved Land bearing C.S.No. 211 of Parel Sewree Division admeasuring about 5,413.92 sq. mtrs. (less encroached area of approximately 1000 sq. mtrs.) or such area as may be ascertained by MCGM on actual measurement at site, at or for the consideration of 41.50 Crores subject to the terms and conditions therein mentioned. This transfer, assignment and consideration will depend on grant of quantum of DRC and on the other terms and conditions specified in the aforesaid Agreement.

INDUSTRY OVERVIEW

The Textile Industry is facing tough times due to adverse market scenario in domestic markets. More than 70% of the textile industry is controlled by the decentralized sector.

Implementation of GST, general inflationary trends, after effects of demonetization & introduction of E Way Bill have adversely affected the Industry. Industry observers say that the property markets have reached stagnation points and that transactions have come to a practical standstill.

Strengths:

During the year under review, turnover of Textile Trading has increased compared to last year. Our main strength is our Brand name and this has given us growth in our turnover. We have introduced uniform fabric range which is well accepted in the market. We have also introduced "Ready to Stich" Combo Packs which have given a positive thrust towards our growth. We believe there is a general tendency to shift from unbranded fabrics to branded ones and the Company is surely deriving benefits of the same. Our focus remains on value added products and new product development to cater to the niche segment of the market. The Company has its presence in Navi Mumbai area since 5 decades which is fast developing. There is rapid urbanization and the Company enjoys historical low cost of land. Real estate division of Company comprises of assets which are in excess of business needs, which the Company would liquidate based on market conditions.

Weakness:

As textile trade is opening up, more imported fabric from China and other developing countries like, Bangladesh, Sri Lanka, etc., is a threat to the domestic market. The Company is more into Blended Fabric Business (Poly viscose and Poly cotton) and as petroleum products is one of its ingredients, increase in petrol prices are likely to affect synthetic yarn prices which may result in higher costing. Our market is also adversely affected by higher rate of inflation which has resulted in increased costing and narrowing the profit margin. Although the effect of demonitisation is fading out, the overall business has been affected due to this. The implementation of GST and introduction of E Way Bill has further dampened the Industry. The property market has taken a severe hit when demonetization was announced on 8th November, 2016. MIDC is the lessor of the leasehold land held by the Company in Navi Mumbai. MIDC has stringent policies with regard to development of land, huge transfer charges and premium for the same.

OPPORTUNITIES & CHALLENGES

Due to the introduction of GST and E Way Bill, lots of decentralized trade will not be able to sustain the competition and the Company expects to benefit in the long run. Further the Company hugely benefits from the Companys Brand name. By introducing more value added fabric and new product line, the Companys performance in textile trading will be enhanced.

The Company firmly believes that the demand for property, in a country like India should remain robust in the medium to long term. However liquidity problems due to demonetization have caused delays in execution of Property transactions.

1. SEGMENT-WISE PERFORMANCE

Segment-wise performance together with discussion on financial performance with reference to the operational performance has been dealt with in the Directors Report which should be treated as forming part of the Management Discussion and Analysis.

2. INTERNAL CONTROL SYSTEMS & ADEQUACIES

The Company has proper and adequate system of internal control to ensure that all assets are safeguarded and protected against loss from unauthorized use on disposition and transactions are authorized, recorded and reported correctly. Internal control systems are supplemented by Internal Audit Reviews, coupled with guidelines and procedures updated from time to time by the Management.

Internal control systems are established to ensure that the financial and other records are reliable for preparing financial statements.

Internal Audit System is engaged in evaluation of internal control systems. Internal audit findings and recommendations are reviewed by the Management and Audit Committee of the Board of Directors.

3. HUMAN RESOURCES

As on 31st March, 2018, the employees strength (on permanent roll) of the Company was 12.