Flora Textiles Ltd Management Discussions

ANNEXURE III

1. Industry Outlook:

Power cut position in Tamil Nadu resulted in lower production resulting in low recovery for your company. Rising interest rates, persistent inflation, spiraling fuel prices, frequency in the fluctuation of raw material prices continues to be the areas of concern. Nevertheless your company is taking all necessary steps to ensure that the financial performance for the year 2013-2014 is improved.

2. Opportunities:

The 12^th five year plan promises high growth for industry segments like power generation, petro-chemicals and infrastructure building industries which is expected to generate good potential for the industry.

3. Challenges:

i) Improvement in international scenario to cause demand momentum.

ii) Availability of good quality cotton Yarn at reasonable prices unaffected by any influence of cotton yarn exports.

iii) High power cut in the state of Tamilnadu virtually resulting huge production loss.

iv) Abnormal increase in the rate on interest by the lending banks.

v) Appreciation of quality of cotton fabric manufactured and remunerative prices for the same.

vi) Disproportionate increase in weaving capacity and manufacturing of cotton fabric without focus to market demand.

vii) Government policies.

4. Company Outlook:

A The Company as per BIFRs modified scheme approval has fulfilled its export obligation and JDGFT, Coimbatore had issued letter to this effect. The Company is now submitted letters to Customs and Bank so that all bank guarantees executed be cancelled and Margin money kept as deposits are returned . The Company will have more funds to buy rawmaterials now.

5. Internal control, systems and adequacy:

The company periodically reviews the adequency and effectiveness of control systems like business process, financi4al reporting and compliance with applicable laws.

6. Human Resources Development.

Employer- Employee relations continued to remain cordial during the year.

7. Safety and Environment:

The company ensures high safety and environmental standards in all its operation at all the units. Safety needs are continuously monitored and preventive actions are imitated through departmental safety committees consisting of plant staff and workmen.

8. Cautionary statement.

Certain statement in this report on Management Discussion may be forwarded looking statements and which have been issued as required by applicable securities laws and regulations. There are several factors which would be beyond the control of Management and as such, may affect the actual results could be different from that envisaged.