Visagar Polytex Ltd Management Discussions.

Disclaimer

Statements made in the Management Discussion and Analysis and relating to companys objectives, projections, outlook, expectations, estimates, etc., may constitute forward looking statements within the meaning of applicable securities, laws and regulations. These statements are based on certain assumptions, which cannot be guaranteed by the Company. Several factors, over which the Company may not have any direct control, could make a significant difference to the companys operations. As such, actual results may differ materially from such projections, whether expressed or implied, since it would be beyond Companys ability to successfully implement our growth strategy. The Company undertakes no obligation or responsibility to update forward looking statements and to publicly amend, modify or revise to reflect events or circumstances after the date thereof on the basis of any subsequent development, information or events.

The management of Visagar Polytex Limited presents below its analysis on the performance of your Company during the year under review, i.e. accounting year end 31st March, 2018.

Economic Overview with specific reference to Textile Industry

India is the second largest textile manufacturer in the world. The Indian textile industry is a global leader thanks to the economic liberalization. Though it used to come under unorganized sector few years back, the scenario has changed and a large part of the industry is now in the organized sector. Increased penetration of organised retail, favourable demographics and rising income levels to drive textile demand are contributing to the sectors growth. The Indian textile industry is one the largest and oldest sectors in the country and among the most important in the economy in terms of output, investment and employment. Contributing a hefty 14% to the countrys Industrial production and 4% to the countrys Gross Domestic Product (GDP) the segment also accounts for 13% of Indias export earnings thus being the second largest provider of employment after agriculture in the country. The textile industry employs about 40 million workers and 60 million indirectly. Textile and apparel exports from India is estimated US$ 65 billion and is expected to increase to US$ 82 billion by 2021 fuelled by favourable trade policies in future and superior quality from technological absorption. The domestic textile and apparel industry in India is estimated to reach US$ 141 billion by 2021.

Overview of the Sector & Business

The domestic market for apparel and lifestyle products, currently estimated at $85 billion, is expected to reach $160 billion by 2025. While mens apparel currently dominates the space, it is the womens apparel category that is set to grow at a faster rate and will equal the mens wear segment this year. "The fashion and lifestyle segment is witnessing a paradigm shift with womens apparel expected to match mens apparel at par in terms of 37% market share each in 2016. Keeping this trend in mind, the organised retailers need to pay more attention to women consumers as India is one of the few countries where the share of mens apparel is higher than that of womens and that is changing. The current Indian ethnic wear market is highly unorganized with a few branded players operating primarily in metropolitan cities. The Saree, Salwar Suit and Lehenga market occupy a major chunk of women apparel sales in the country.

Your Company is into textile manufacturing, trading, wholesaling and retailing activities comprising of a number of independent as well as interdependent verticals viz. Ethnic wear (Saree/ Lehanga) wholesale, Ethnic wear (Saree/ Lehanga/ Suits) Manufacturing, Garment Manufacturing, Retailing (own/franchise) and Contract-based manufacturing. Your Company has a retail chain retailing designer sarees under its flagship brand Vividha, in addition to its comprehensive manufacturing and sales facilities at Surat& Gurgaon.

Manufacturing Focus

During the year under review, your Company has concentrated on its core manufacturing activities for value addition to fabrics & apparels, training of staff for special purpose embroideries, expanding client outreach by marketing efforts, adopting industry standard practices and putting Quality systems in place.

Financial Overview

Your Company has seen an increasein turnover during the year under review which accounted for Rs. 8226.96 Lakhs as compared to Rs. 8115.18 Lakhs in FY 2016-17. The Net Profit has also increased from Rs. 135.76 Lakhs in FY 2016-17 to Rs. 140.92 Lakhs in FY 2017-18. Your Company is very much optimistic about the coming year. Since the Company is trying to reduce cost and expand its business, your Directors are hopeful that the results will be more encouraging.

Factors that may affect the results of operations

Several factors may affect our result of operations that may make it difficult to predict the future financial results. Such factors are:

• Movement in Price of Fabric

• Operating cost & Efficiency

• Product and Market Mix

• Exchange Rates

• Government policies, rules and regulations affecting textile industries

• Availability of Government Benefits & Subsidies

• Ability to organise funds for projects

• Availability of skilled human forces

• Competition

• Break down of machinery or plant

• Disrupted power supply from state electricity board

• Strike by labourers

• Development / Innovation / Emergence of any substitute for our products

• Natural Calamities & Disasters and other unforeseen/ unavoidable circumstances

Development, Expansion & Future Outlook

Your Company will continue to invest wherever it seems an opportunity to get healthy sustainable results. Our performance largely depends on the Textile market. Your Company is concentrating at further streamlining its current business activities which will allow for greater operational efficiency in future. Providing quality products at a great value has always been our endeavour. Your Company will take this endeavour a notch upwards by enhancing its business activities. Your Company is in process to continuously upgrade its state-of-art manufacturing unit at Gothan, Surat to produce designer, value added Garments, Apparels, Embroidery Sarees, Lehengas& Suits using latest technology and employing resources in best possible manner. The Embroidery market is huge and dominated by small unorganized players in view of lower entry barriers, offering a corporate player immense opportunity for innovation and improvisation. The Management is optimistic that your Company will soon be one of the key embroidery manufacturers in the Apparel segment. Our clients include stockists, wholesalers, semi-wholesalers, exporters, retailers and end-users of textile products. We would like to explore the overseas market in the near-term. Your Companys aim is to build up knowledge, capital and human resources to specialize in designing, manufacturing value

added Apparels facilitating constant revival of products in innovative ways that will enable success for us.

During the year under review, the Company has started sampling and sales division at Gurgaon, Haryana towards its apparels business and adopted best practices, optimised efficiency at its Surat manufacturing unit. Through skills training of staff, adoption of systems & practices, the Company will enjoy increased margins, complete product control, client satisfaction and become key player in this segment.

The Company has also focussed on new R&D areas such as Suits and Garments and aims to make a mark in the ethnic wear segment through its R&D capabilities.

Future plans and Outlook

• Intensifying focus on R&D and production

• Leveraging resources to deliver innovative and successful product portfolio

• To bring in efficiency through consistent and continuous improvement process throughout all the levels in the Organisation

• To develop a Customer Centric approach

• To develop a Strong Marketing Network and establishing solid client base in the country and overseas

Technology Absorption

Efforts made towards technology Absorption

Your Company tries to stay abreast with latest technology in the market. Your Company has a mix of latest machinery with various value addition capabilities, all under single setup. During the year, there was no import of machinery by the Company.

Benefits Derived

Having machinery with different capabilities help your Company provide umbrella solution to its clients as they do not need to go anywhere else for any kind of value addition requirements. This helps retain clients and is beneficial in the long term.

Details of technology imported in last three years

The Company has imported and consequently installed 22 multi-head embroidery machinery via High Seas Sale Agreement made in the FY 2015-16 amounting to Rs. 409.17 Lacs.

By Order of the Board of Directors For Visagar Polytex Limited
Sd/-
(Tilokchand Kothari)
Managing Director
Place: Mumbai (DIN: 00413627)
Date: August 13, 2018