Tuni Textile Mills Ltd Management Discussions.

MACRO ECONOMIC ENVIRONMENT

Indias macro fundamentals witnessed significant swings through FY 2019, with economic slowdown being more pronounced led by adverse currency movements, high commodity prices, weakening demand, farm distress and tight financial conditions aggravated by the non-banking financial crisis. Higher crude oil prices and synchronized global economic slowdown resulted in reassessment of the developed central bank monetary policy stance prompting risk-aversion and sharp capital outflows threatening Indias financial stability.

On the macro economic front, the first half of FY 2019 saw Indias growth strengthen sharply led by favourable base effect and sequential improvement witnessed after emerging from the impact of demonetisation and teething difficulties from the implementation of GST till FY 2018. The second half of FY 2019, however saw a material deceleration in growth indicators, with a clear distinction in trend visible across consumption and investment. While investment has gradually been picking up pace, private consumption related indicators have been witnessing fatigue in H2FY19.

Real GDP seems to have slowed in FY 2019 from FY 2018. As per the CSO, the second advance estimate of real GDP growth for FY 2019 stands at 7.0% as against 7.2% in FY 2018. On value added basis, real Gross Value Added (GVA) growth estimate for FY 2019 stands at 6.8% as against 6.9% in FY 2018. Industrial sector grew 7.7% in FY 2019 in comparison to 5.9% in FY 2018, while services sector grew 7.4% as against 8.1% in FY 2018. Agriculture and allied activities sector slowed to 2.7% from 5.0% earlier. The expenditure side GDP breakdown depicted that private investment has remained firm at 9.4% as against 10.4% earlier. Continuous improvement in capacity utilization bodes well for private investment. However, twin balance sheet problems of corporates and banks remain the biggest impediment to a sharp revival in private investment.

INDIAN TEXTILE INDUSTRY

Indias textiles industry is among the oldest industries in the country dating back several centuries. It is one of the largest contributors to the economy accounting for ~4% of the GDP. It is the second largest contributor towards employment generation, after agriculture, contributing 10% to the countrys manufacturing, owing to its labour-intensive nature. The industry is characterised by its robust vertical integration in almost all the sub-sectors.

The textiles and apparel industry constitutes ~14% of the total exports of the country. India is the second largest producer and exporter of textiles after China and fourth largest producer and exporter of apparel after China, Bangladesh and Vietnam.

The mitigation of the repercussions of currency fluctuation remains a challenge for the industry. Exports have been a core feature of Indias textile sector. Indian textiles and apparel exports were estimated at $39 billion and is expected to grow at a CAGR of 7.5% over the next decade to reach $76 billion by 2028. The fundamental strength of Indias textile industry is its strong production base with a wide range of fibres and yarns that include natural fibres like cotton, jute, silk and wool; and synthetic and manmade fibres such as polyester, viscose, nylon and acrylic.

HUMAN RESOURCES

The Company recognizes that its success is deeply embedded in the success of its human capital. During 2018-2019, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives.

CORPORATE SUSTAINABILITY AND SOCIAL RESPONSIBILITY

The provision of the Section 135 and Schedule VII of the Companies Act, 2013 as well as the provisions of the Companies (Corporate Social Responsibility Policy) Rules, 2014 effective from April 1,2014 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company is continued to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

The Company has complied with all requirements of regulatory authorities. No penalties/strictures were imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital market during the last three years.

By order of the Board
Mumbai, May 30, 2019 For TUNI TEXTILE MILLS LIMITED
Registered Office : Narendra Kumar Sureka
63/71, Dadiseth Agiary Lane DIN : 01963265
3rd Floor, Kalbadevi Road, Mumbai-400002. Managing Director