ECONOMIC AND INDUSTRY OVERVIEW
GLOBAL ECONOMY
In 2018, the global economy began its journey on a firm footing with estimated global
economic growth of 3.6% (Source: world Economic outlook by IMF). During the second half of
2018, this rate of development gradually declined, owing to impending US-China trade
dispute and some slowdown across developed markets.
Emerging and developing markets of Asia maintained their steady progress at 6.4% during
2018. However, its important to note that India’s economy expanded at 7.1% in 2018
vis-a vis 6.7% in 2017, whereas China growth deteriorated from 6.9% in 2017 to 6.6% in
2018 (Source: world Economic outlook by IMF). Sub-Saharan Africa’s economy also
sustained a steady rise of 3% during the year.
INDIAN ECONOMY
India continues to be one of the fastest growing major economies in the world and is
expected to be among the world’s top three economic powers in the next 10-15 years.
The Indian economy is expected to improve and close the year 2019 with a GDP growth of
7.3% (Source: IMF) Sustained real GDP growth of over 6% since FY 91 has led to a
fundamental transformation of India’s economy. Today, India is the world’s
seventh largest economy in real terms, backed by strong demand, positive consumption
pattern and rising disposable income. In PPP terms, the economy is expected to be among
the top five global economies by 2020.
GLOBAL TEXTILE AND APPAREL INDUSTRY
The global textile and apparel industry is continuously evolving. Over the years, it
has witnessed multiple shifts in consumption and production patterns, including shifts in
geographical manufacturing hubs, as the industry is driven by the availability of cheap
labour.
The textile and apparel trade is predicted to grow at a CAGR of 3.7% during the period
2018-28. During this period, the increase in apparel trade is expected to be at a CAGR of
4.5% and textiles at a CAGR of 2.5%.
Even though apparel industry is dominated by developed markets of EU and the US, the
emerging markets led by countries such as India, China, Russia and Brazil are becoming
consumption markets. Simultaneously, India and China have strong textile manufacturing
base, and thus are emerging as both sourcing and consumption nations. Currently, China
holds the largest share in textile and apparel global trade. It has vertically integrated
supply chain from production of fiberto weaving of fabric and garmenting. The sector also
has the capability to manufacture all categories of products and a conducive ecosystem to
provide complete service offering to brands and retailers. However, the increasing labour
and energy cost have mitigated the international competitive advantage of China to some
extent. The global apparel manufacturers are finding Bangladesh, Vietnam and India as
competitive markets over China.
INDIAN TEXTILE INDUSTRY
India’s textile industry is among the oldest industries in the country dating back
several centuries. It is one of the largest contributors to the economy accounting for
approx. 4% of the GDP. It is the second largest contributor towards employment generation,
after agriculture, contributing 10% to the country’s manufacturing, owing to its
labour-intensive nature. The industry is characterized by its robust vertical integration
in almost all the sub- sectors.
The textiles and apparel industry constitutes approx. 14% of the total exports of the
country. India is the second largest producer and exporter of textiles after China and
fourth largest producers and exporters of apparels after China, Bangladesh and Vietnam.
The mitigation of the repercussions of currency fluctuation remain a challenge for the
industry. Exports have been a core feature of India’s textile sector. Indian textiles
and apparels exports were estimated at $39 billion and is expected to grow at a CAGR of
7.5% over the next decade to reach $76 billion by 2028. The fundamental strength of India
textile industry is its strong production base with a wide range of fibres and yarns that
include natural fibres like cotton, jute, silk and wool; and synthetic and manmade fibres
such as polyester, viscose, nylon and acrylic.
INDIAN APPAREL INDUSTRY
The Indian apparel industry was worth an estimated $54 billion in 2018 and projected to
reach approx.$118 billion in 2028 growing at CAGR of approx..8% over 2018-2028 period.
The country’s apparel market is majorly driven by menswear, which holds major
share in apparel business, accounting for 43% of the total market. Women’s wear
contributes almost 36%, while kids wear constitutes 21% of the apparel market. The sector
is one of the fastest growing market globally, supported by a robust demand growth.
The major challenge in the Indian apparel industry are increasing competition,
sustained discounting that is expected to moderate margins and product obsolesces due to
ever-evolving fashion trends.
BUSINESS OVERVIEW
The Company manufactures woven labels, fabric printed labels, elastic & non-elastic
tapes (also known as garment trims). These products form a part of garment packaging
products and are used for apparels and made-ups such as terry towels and home furnishings.
With the help of innovative and extensive technology and integrated manpower resources,
the Company has acquired an edge over its competitors. The Company has the ability to
process multiple deliveries daily and offer real-time information along with quick
turnaround of samples and perfect color matching which has helped to provide a range of
innovative products. The Company processes more than 125 to 150 orders a day for customers
in and around India and produce more than 50,000 different items.
FINANCIAL AND OPERATIONAL PERFORMANCE
(Rs In ‘000)
| Particulars |
Year ended 31.03.2019 |
Year ended 31.03.2018 |
| Income for the year |
4,30,508.36 |
4,10,105.71 |
| Profit before Interest, Depreciation and Tax |
55,008.55 |
74,001.72 |
| Finance Charges |
2,801.86 |
4,113.13 |
| Depreciation |
38,571.49 |
44,553.76 |
| Provisions for Taxation/ Deferred Tax |
3,272.33 |
9,267.61 |
| Prior Period Items / Extra Ordinary Items |
- |
- |
| Net Profit/(Loss) for the Current Year |
10,362.87 |
16,067.22 |
The Financial Performance of our Company has been affected by the slowdown in the
retail markets and the margins have been under pressure due to the liquidity crunch in the
unorganized sector, who are affected during this fiscal because of higher compliance cost,
eroding market share and limited ability to pass on the increase in raw material prices.
We are in the process of restructuring the customer & product portfolio with a
single objective of growing the business. We believe this will enable us to achieve our
long-term objectives.
GROWTH ENABLERS
Growing urbanization, a higher disposable income of the India households and a
favourable demographic coupled with an aspiration based purchasing pattern are key drivers
for the industry and is likely to benefit the Company.
With the growing mobile and internet penetration, e-commerce shopping is expected to
act as a key enabler in consistent sales volume growth for the industry.
The Company has a strong focus on digital platforms, strong social media connect with
consumers and increasing presence in the e-commerce space through our website
www.easyonlinelabels.in.
While your Company is attuned to judicious capital allocation strategies and
sustainable growth, Arrow Textiles continues to work towards cost efficiencies and provide
its customer the best experience.
RISKS AND CONCERNS
Risk is an inherent part of any business. There are various types of risks that
threaten the existence of a company like Strategic Risk, Business Risk, Finance Risk,
Environment Risk, Personnel Risk, Operational Risk, Reputation Risk, Regulatory Risk,
Technology Risk, Political Risk, etc. Your company aims at enhancing and maximizing
shareholders value by achieving appropriate trade-off between risk & returns.
INTERNAL CONTROL SYSTEM AND ADEQUACY
The Company is committed to maintaining adequate internal control systems as a part of
efficient corporate governance. The system ensures that all transactions are authorised,
recorded and reported correctly to safeguard assets and protect them from any loss due to
unauthorized use or disposition. The operating managers make sure that all operations
within their area are compliant and safeguarded against all risks whereas on the other,
auditors carry out random audits to detect flaws in the system, which makes it effective
and efficient. Internal audit reports are prepared to create awareness and to take
corrective actions on the respective units or areas, which need rectification. These
reports are then reviewed by the management team and the Audit Committee for follow-up
action.
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The man and machine combination is balanced optimally, as the Company believes that
Human Resource is one of the most vital resources and a key pillar in providing the
Organization a competitive edge in current business environment.
A motivated and efficient workforce can help it attain its target in a realistic
manner. Taking
Company provides extensive training to its employees in order to develop their skill
sets and keep them motivated. The Company appreciates the productive co-operation extended
by its employees in the efforts of the management to carry the Company to greater heights.
As on 31st March, 2019, the Company had employee strength of 303 on its
payroll.
CAUTIONARY STATEMENT
The statements made above may be construed as forward looking statements within the
meaning of the applicable laws and regulations. Actual performance of the Company may vary
substantially depending upon the business structure and model from time to time. Important
external and internal factors may force a downtrend in the operations of the Company.
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