MANAGEMENT DISCUSSION AND ANALYSIS REPORT
A. Overview of the Global Economy:
The global economy is gradually recovering from the impact of pandemic and at the same
time facing new challenges emerging from Russias invasion of Ukraine. Tightening of
monetary policy by most Central Banks is expected to have a positive impact. Despite
monetary tightening, inflation is persistent in many key economies and it is anticipated
that global inflation will fall from 8.7% last year to 7% this year and settle at around
5% in the year 2024.
B. Overview of the Indian Economy:
The Indian Economy continues to show resilience amid Global Uncertainties. Despite
significant challenges in the global environment, India was one of the fastest growing
economies in the world. Indias overall growth remains robust and is estimated to be 6.9%
for the financial year 2022-23. Growth was driven by strong investment activity augmented
by the governments capex push and buoyant private consumption.
Structural reforms like the National Infrastructure Pipeline and National Monetization
Plan by the Government is expected to further boost infrastructure development. It is
paving the path for further development and continues to encourage projects across
sectors, including reforms for improving labour laws. V-shaped economic recovery is due to
mega vaccination drive, robust recovery in the services sector and growth in consumption
and investment. This is being demonstrated in high frequency indicators such as power
demand, rail freight, GST collection etc. Almost all emerging economies are reeling under
external shocks, but Indias underlying economic fundamentals are strong and despite the
short-term headwinds, the impact on the long-term outlook is expected to be marginal.
Inflation remained high, averaging around 6.7% in FY 2022-23 but the current-account
deficit narrowed in Q3 on the back of strong growth in service exports and easing global
commodity prices. Dwelling on the outlook for FY2023-24, the Economic Survey 202223 issued
by Ministry of Finance projects that, Indias recovery from the pandemic was relatively
quick, and growth in the upcoming year will be supported by solid domestic demand and a
pickup in capital investment. It further affirms that aided by healthy financials,
incipient signs of a new private sector capital formation cycle are visible and more
importantly, compensating for the private sectors caution in capital expenditure, the
government raised capital expenditure substantially.
Explaining the economic outlook factoring global rudiments, the slow down in global
growth and economic output coupled with increased uncertainty is likely to dampen global
trade growth. Strong domestic demand amidst high commodity prices will raise Indias total
import bill and contribute to unfavourable developments in the current account balance.
These may be exacerbated by plateauing export growth on account of slackening global
demand. Should the current account deficit widen further, the currency may come under
depreciation pressure. Also, entrenched inflation may prolong the tightening cycle, and
therefore, borrowing costs may stay ‘higher for longer. In such a scenario, global
economy may be characterised by low growth in FY24. However, the scenario of subdued
global growth presents two silver linings - oil prices will stay low, and Indias CAD will
be better than currently projected. The overall external situation is expected to remain
manageable for India.
C. Indian Textile Industry:
India is the worlds second-largest producer of textiles and garments. It is also the
sixth- largest exporter of textiles spanning apparel, home and technical products. The
Indian textile and apparel industry is expected to grow at 10% CAGR from 2019-20 to reach
US$ 190 billion by 2025-26. India has a 4% share of the global trade in textiles and
apparel. The textiles and apparel industry contribute 2.3% to the countrys GDP, 13% to
industrial production and 12% to exports. The textile industry has around 45 million of
workers employed in the textiles sector, including 3.5 million handloom workers. Indias
textile and apparel exports (including handicrafts) stood at US$ 44.4 billion in FY22, a
41% increase YoY. Total textile exports are expected to reach US$ 65 billion by FY26.
The Textile and Apparel market is poised to grow, led by boost in demand and the
government support in form of attractive schemes such as Production Linked Incentive
(PLI), Mega Investment Textile Parks (MITRA) will further drive the way for the US$ 250
billion target. Another step taken by the Ministry of Textiles towards positioning India
as a global leader in technical textiles manufacturing is the invitation of Research
proposals for Funding for Design, Development and Manufacturing of Machinery, Tools,
Equipment, and Testing Instruments under NTTM. In FY 2022-23, exports of readymade
garments cotton including accessories stood at US$ 7.68 billion till January 2023. It is
expected to surpass US$ 30 billion by 2027, with an estimated 4.6-4.9% share globally.
D. Outlook:
During the reporting period, our export of yarn to the domestic trading market
witnessed positive growth. We experienced an increase in sales volume, leading to a rise
in revenue from this segment. The steady demand for quality yarn products in the domestic
market contributed to our success.
E. Industry structure and development:
India is the worlds second-largest producer of textiles and garments. It is also the
fifth- largest exporter of textiles spanning apparel, home and technical products. The
textiles and apparel industry contribute 2.3% to the countrys GDP, 13% to industrial
production and 12% to exports. The sector employs around 40 Million workers. The size of
Indias textile
market stood at US$ 223 Billion in 2021, growing at a CAGR of 10.23% over 2016. Indian
textile players have undertaken various initiatives to boost textile sales viz. investment
to expand production capacity, using technology to optimize the value chain, leveraging
strategic partnerships and strengthen sustainable textiles business. Textile industry has
been steadily recovering post pandemic amid increased raw material prices and container
shortages.
Under Union Budget 2022-23, the total allocation for the textile sector was 12,382
Crore. Moreover, 10,683 Crore Production-linked Incentive scheme is expected to be a major
boost for the textile manufacturers. The scheme proposes to incentivise MMF (man-made
fibre) apparel and MMF fabrics.
F. Opportunities and Threats:
Opportunities:
• Favourable government initiatives such as the National Technical Textiles
Mission (NTTM), 100% FDI in the sector, SAMARTH- Scheme for Capacity Building in the
Textile Sector, etc. for the development of the textile industry.
• Extension of the scheme for Rebate of State and Central Taxes and Levies
(RoSCTL) till March 31, 2024, for the export of apparel, garments and made-ups with the
same rates would benefit textile companies.
• ‘China plus one diversification policy will benefit Indian manufacturers.
As global retailers are looking for an alternate supply base, India has greater appeal as
an attractive option for manufacturing and exports of textiles and apparels.
• The growth of the technical textile market will create lucrative opportunities.
• The rapid growth of the retail sector and E-commerce will boost the growth of
the textile and apparel industry.
• Rising disposable income will stimulate domestic demand.
• The growing popularity of ‘fast fashion products will contribute to the
growth of the textile and apparel industry.
Threats:
• Market Competition: The domestic trading market for yarn is highly competitive,
with several players vying for market share. We continuously monitor competitor activities
and adjust our strategies to maintain a competitive edge.
• Raw Material Costs: Fluctuations in raw material prices can impact our
profitability. We actively manage our procurement process and explore alternative
suppliers to mitigate the risk of sudden price increases.
• Regulatory Changes: Changes in trade policies, tariffs, or regulations related
to the yarn industry can affect our export operations. We closely monitor such
developments and adapt our business practices accordingly.
• Economic Factors: Economic conditions, both domestically and internationally,
can impact the demand for yarn products. We assess economic trends and adjust our
production and pricing strategies to optimize performance.
G. Segment-wise or Product-wise performance:
The Company is operating in only one segment i.e. trading in textile. Therefore there
is no requirement of Segment wise reporting.
H. Future Outlook:
Looking ahead, we remain optimistic about the prospects of our export of yarn to the
domestic trading market. We will focus on the following strategies to sustain growth and
capitalize on emerging opportunities:
• Demand for textiles
• Raw material availability and prices
• Technological advancements
• Sustainability and eco-friendly practices
• Global trade and geopolitical factors
• Online Expansion
• Premiumisation and access to global brands
• Further Growth of Private Brands
• Focus on analytics
I. Risks and concerns:
Management recognizes the following principal risks that may influence decisions made
by investors given their significant impact on business conditions as stated in the
securities report, and among matters pertaining to accounting status, consolidated
companies financial status and business performance, as well as cash flows. Our risk
management system addresses the increasingly complex risks that we face in our day-to-day
operations. The risk management system conducts risk analysis of economic and social
changes and implements preventive measures that are best suit for the Company.
J. Internal control systems and their adequacy:
The company has implemented proper system for safeguarding the operations/business of
the company, through which the assets are verified and frauds, errors are reduced and
accounts, information connected to it are maintained such, so as to timely completion of
the statements.
The Company has adequate systems of Internal Controls commensurate with its size and
operations to ensure orderly and efficient conduct of business. These controls ensure
safeguarding of assets, reduction and detection of fraud and error, adequacy and
completeness of the accounting records and timely preparation of reliable financial
information. The company has internal audit and verification at regular intervals.
The requirement of having internal auditor compulsory by statue in case of listed and
other classes of companies as prescribed shall further strengthen the internal control
measures of company.
H. Discussion on financial performance with respect to operational performance:
The financial performance of the Company for the Financial Year 2022-23 is described in
the Directors Report of the Company.
I. Material developments in Human Resources / Industrial Relations front including
number of people employed:
The cordial employer - employee relationship also continued during the year under the
review. The Company has continued to give special attention to human resources.
J. Caution Statement:
Statements made in the Management Discussion and Analysis describing the various parts
may be "forward looking statement" within the meaning of applicable securities
laws and regulations. The actual results may differ from those expectations depending upon
the economic conditions, changes in Govt. Regulations and amendments in tax laws and other
internal and external factors.
| Registered Office: |
|
By the Order of the Board of |
| Godown No-1, 234/1+234/2, FP-69/3, |
|
7NR Retail Limited |
| Sadashiv Kanto, B/h Bajaj Process, |
|
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| Narol Chokdi, Narol, Ahmedabad, |
|
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| Gujarat - 382 405. |
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|
Sd/- |
Sd/- |
|
Avantinath Raval |
Tarachand Agrawal |
| Place: Ahmedabad |
Director |
Managing Director |
| Date: 5th September, 2023 |
DIN: 07686783 |
DIN: 00465635 |
+91-9892691696
