MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The company could not come out of its bad phase of financial crisis. Due to cumulative impact of all negative internal factors like Lack of required working capital funds, lack of uninterrupted power, increased power cost, high transaction cost, high labor cost and decline in growth of international Textile market were major hindrance to overcome with the brsent crisis. In all these adverse conditions, Textile operations kept on carrying from plot No. 207-208, sector-58, Faridabad. In line with brvious years, this year also the company could not raise its head in real estate segment as no significant cash flows could be generated from the IT park project in collaboration with RPS Infrastructure Limited. Being surrounded and affected by all round negativity, the Management of your company has still not surrendered and keep on fighting to pull your company out of the brsent worst scenario.

As you are aware that in real estate segment the collaborator M/s RPS fails to adhere with the commitments of cash flows as envisaged at the time of collaboration. The Collaborator M/s RPS Infrastructure has also not acted in the spirit of collaboration agreement. In this way the interest of your company was defeated by the collaborator by acting against the spirit of collaboration. Management of your company has raised this issue before the different courts of law to safeguard the interest of your company.

INDUSTRY STRUCTURE AND DEVELOPMENT OUTLOOK

India is one of the world's largest producers of textiles and garments. Abundant availability of raw materials such as cotton, man-made fibers, wool, silk and jute as well as skilled workforce have made the country a sourcing hub. It is the world's second largest producer of textiles and garments. The Indian textiles industry accounts for about 24 per cent of the world's spindle capacity and 8% of global rotor capacity. Indian Textiles Industry has an overwhelming brsence in the economic life of the country.

The textile industry has made a major contribution to the national economy in terms of direct and indirect employment generation and net foreign exchange earnings. The sector contributes about 14 per cent to industrial production, 4% to the gross domestic product (GDP), and a major contributor to the country's foreign exchange inflows. It provides direct employment to over 45 million people. The textiles sector is the second largest provider of employment after agriculture. Thus, the growth and all round development of the industry has a direct bearing on the growth of India's economy. India has overtaken Italy, Germany and Bangladesh to emerge as the world's second largest textile exporter, as per recent data released by 'UN Comrade'. India's share in Global Textiles is increasing year to year. The Indian textiles industry is set for strong growth, buoyed by strong domestic consumption as well as export demand.

ROAD AHEAD FOR THE TEXTILE INDUSTRY

Globally, India has the 2nd largest textile manufacturing capacity; the Indian textiles industry accounts for about 24 per cent of the world's spindle capacity and 8% of global rotor capacity. It is now the 2nd largest textile exporter in the world. The size of the Indian textiles and apparel industry is expected to reach USD 223 billion by 2021. We are 7th largest apparel exporter in the world with a share of 3.7% of the total apparel trade. The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand. The total Indian textile & apparel market size, was estimated to be USD 108 billion in 2013, of which domestic consumption was USD 68 million and exports constituted USD 40 billion. The sector is projected to grow over the next 10 years at a CAGR of 9-10%, to reach nearly USD 200 billion by 2020.

BUSINESS MODEL OUTLOOK AND REVIEW

The management of your company has been continuously trying to pull the company out of this unwanted crisis position and taken various possible steps in this direction like putting application before BIFR, fighting against consortium Member banks Notice under SARFASAI Act in DRT, filling suits against Real Estate Collaborator RPS to extract cash flow out of this real estate transaction. But till date, there is no improvement in the situation.

Company's application in BIFR and AAIFR has already been rejected. Now the only hope remained with the management of your company is to bring the real estate project collaborator RPS on the settlement table and pull out cash flows from it.

Further in the Textile Segment, the operations are continuously going on but there are no sufficient means to exploit the available opportunities lying.

But the Management of your company has not lost the last hopes and still trying to come out of this vicious circle.

OPPORTUNITIES AND THREATS (SWOT ANALYSIS)

In the mid-long term, the Indian textile industry is expected to grow very strongly with growth being balanced from both domestic consumption as well as exports demand. In the near-term, domestic demand is expected to grow strongly with the revival of the overall economy and improvement in purchasing power of Indian consumers. On the exports front, there are both opportunities and threats. Opportunities include the weak currency and decreasing cost competitiveness of China that are likely to give positive impetus to the Indian exports. At the same time, factors like structural impediments to industrial growth, volatile foreign exchange rates and increase in cotton and yarn prices are likely to negatively affect growth and profitability for the textile exports.

The management of your company is trying to explore these opportunities but the internal financial crisis threat has pulled the legs of the management. Further the Management of your company is making utmost efforts to resolve the issues/disputes with RPS and realize revenue from IT project so that the liabilities can be reduced and interest burden may be relaxed on the operational results.