Vanasthali Textile Industries Ltd Management Discussions

INDUSTRY STRUCTURE & DEVELOPMENTS

The textile Industry has emerged as a major contributor to the manufacturing sector of Indian economy. The year 2014-2015 was not a good year for the textile and particularly for your company due to financial constraints.

The textile industry as a whole is going through a challenge due to the recession In major markets, rising raw material prices and unfavorable economic environment across the world and in region we are not therefore hopeful in the current year as well. The revival that started in the year has picked up the momentum continuously but due to global meltdown, the textile industry suffered drastically. The global market demand for towels product has increased and it is likely to continue in the coming financial years. Further the company will now be putting up intensive and aggressive marketing approach by extending customer base both domestic as well as international market

GOVERNMENT INITIATIVES

The textile industry in India is on a comeback track aided by favorable Government policies.

1. Textile parks are being established to enhance manufacturing capacity and increase the industry’ shares in market

2. With the removal of quantitative restrictions from 2005 onwards incentives for increasing capacity and up gradation has been taken, Indias share of global textile industry is expected to grow significantly accompanied by attractive value addition products & higher volumes.

3. The dismantling of the quota regime has had mixed results for the textile sector as protection has been withdrawn and competition has intensified and in such a scenario, the industry trend is likely to move to enhanced economies of scale, production integration and efficiencies, cost reduction, shrinking delivery schedules and aggressive marketing.

OPPORTUNITIES, THREATS, RISKS, & CONCERNS

Elimination of export quotas coupled with removal of quantitative restrictions has provided an opportunity to the textile sector to export freely to the U.S, European Union and other countries. High hidden infrastructure costs like indirect taxes, poor roads, erratic power & water supply. Low economies of scale compared to neighbouring countries, historic government policies that continue to impede global competitiveness remain a cause of concern.

The strong client base, quality product, good track record in terms of client servicing and on time delivery is a key strength of the company.

OUTLOOK

The textile industry is a self reliant industry from the production of raw material to the delivery of final products with considerable value additions at each stage of processing.

The demand for textile products has picked up with global economy pulling out of recession. This has led us believe that the industry will continue to show better performance in the coming years

As before, your company will continue its towards products and market development, better consumer services and technology up gradation, cost reduction and improve efficiency.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Commensurate with the size and nature of business, the company adequate system of internal control procedures. Detailed procedural manuals are in place to ensure that all assets are safeguarded, protected against loss and all transactions are authorized, recorded and reported correctly. The internal control systems of the company are monitored and evaluated by external and their internal Audit report is periodically placed and review by the Audit committees of the board of Directors.

The introduction of comprehensive Risk Management System and internal Control Mechanism has been set under the requirement of clause 49 as a condition for continued listing on stock exchange. CEO/CFO certification on the effectiveness of control is surely a step further towards a system compliant organization. The entire financial and business cycle has been mapped to improve the systems and controls.

HUMAN RESOURSE DEVELOPMENT / INDUTRIAL RELATIONS

Beyond the balance sheet lies Company’s biggest asset - Human Resources. The human resource asset of the company comprise of people of diverse educational and technical backgrounds. The company has a strong process to evaluate recruit employees from all over India. The company considers training and development of its employees as crucial, to enable to develop their skills and to meet its dynamic business needs. The company has inbuilt systems to ensure that employees are continuously updated with the needs of the changing technology. The industrial relations have continued to remain cordial during the year.

CAUTIONARY STATEMENT

As stated in the beginning, this report to the shareholders is in compliance with the Corporate Governance Standard incorporated in the listing agreement with the stock exchange and as such cannot be construed as holding out for any forecast, projections, expectations invitations, offers , etc. with the meaning of applicable securities laws and regulations. This report basically seeks to furnish information, as laid down within the different heading provided under the sub head management discussions and analysis to meet the listing agreement requirements.

The foregoing discussion and analysis sets out the management perception of the industry/company’s operational environments, in the coming months, which by their nature are uncertain and may undergo substantial changes in view of events taking place later. Thus the company should and need not be responsible, if, which is not unlikely, the future turns to be something quite different, even materially. Subject to this management disclaimer, this discussion and analysis should be pursued.

EROSION OF NET WORTH - REFERENCE TO BOARD FOR INDUSTRIAL AND FINANCIAL RECONSTRUCTION IBIFRI.

On account of losses incurred during the year under review and also with carried forward losses of past years, the entire net worth of the company has got eroded at the end of the financial year which ended on 31^st March, 2011 mentioned in the previous annual report, In the Board of directors meeting held on 24^th August 2011 the directors formed an opinion to refer the company to BIFR and on 26-09-2011 the company made a reference u/s 15(1) of sick industrial companies( Spl. Provisions act, 1985). The net worth eroded to Rs. 2098.37 Lakhs against 1981.25 Lakhs and nil free Reserves.

Therefore, company was required under the provisions of sick industrial companies (Special Provisions) act, 1985(SICA) to make a reference to the board for industrial & financial reconstruction (BIFR) and accordingly the reference was registered with board as case No.55/2011.

For and behalf of the Board	(Nikhil Poddar)
Vanasthali Textiles Industries Limited	Managing Director
Place: New Jersey	DIN No. 01886021
Date: 09/11/2015