MANAGEMENT DISCUSSION & ANALYSIS
AN ECONOMIC OVERVIEW
Global Economy
The global economy is indicating revival and progress,yet the upswing
stays feeble, in the midst of significant drawback chances. Global growth fell to 3.0% in
2023 and is projected to remain at 3.0% in 2024. The rise in central bank policy rates to
fight inflation continues to weigh on economic activity. Global inflation fell from 8.7%
in 2022 to 6.8% in 2023 and further to 5.2% in 2024.
The financial approach needs to stay prohibitive until there are
obvious indicators those hidden inflationary tensions have solidly declined. This might
require additional interest rate expansions in economies in which high core inflation is
proving to be a persistent challenge. Global economy is showing signs of improvement and
positive development, supported by lower energy prices, improving business and consumer
sentiment, and the reopening of China. Well-calibrated policy measures are required to
unwind the impact of the recent series of negative shocks to the global economy, restore
economic stability, and strengthen prospects for strong, inclusive, and sustainable
advancements in living standards.
2023: The first quarter of 2023 saw robust growth in the global
economy, primarily due to the services industry. In advanced countries (especially in
southern European nations that rely heavily on tourism), the post-pandemic rotation of
spending back toward services is almost complete. In the first quarter, it also
accelerated in a number of emerging market and developing economies.
Indian Economy
India partakes of a Goldilocks moment as it witnesses its monetary
action speeding up in the midst of worldwide vulnerabilities.
For the entire fiscal 2022-23, Indias GDP growth was 7.2%
underscoring the countrys economic resilience amid geopolitical conflicts and global
headwinds.
Total goods exports in 2022-23 rose 6.03% to US$447.46 billion, while
the import bill surged by a steeper 16.5% to US$714 billion. The goods trade deficit rose
almost 40% to over US$266 billion in 2022-23, compared to US$190 billion in 2021-22.
Indias GDP has reached US$3.75 trillion in 2023 from around US$2 trillion in 2014,
moving from being the 10th largest to the 5th largest economy in the world. India is now
being labeled - a ‘Bright Spot in the global economy.
According to the World Bank, growth in India is expected to slow to
6.3% in FY2023/24 (April-March), with private consumption constrained by high inflation
and rising borrowing costs, and government consumption by fiscal consolidation.
India has a high development potential and its credit assets
incorporate a steady homegrown funding base for government debt coupled with a sound
external position.
GLOBAL TEXTILE INDUSTRY
(The figures are of calendar year 2022)
The global textile market size was valued at USD 1,695.13 billion in
2022 and is anticipated to grow at a compound annual growth rate (CAGR) of 7.6% in terms
of revenue between 2023 to 2030.
As per World Trade Organisation (WTO), the worlds textile
commerce grew by 14% owing to increased demand for medical face masks during the pandemic.
Despite a 1% and a 2% reduction in the value of textile trade in 2022 and 2021
respectively,recent research confirms the WTO findings that worldwide textile commerce did
increase by 14% in 2022 compared to the year before COVID.
According to the WTOs report on Global Trade Outlook and
Statistics, the apparel trade had substantial growth, growing by 9% in 2022 over the
previous year, following a growth rate of 17% in 2021.It is noteworthy that the volume of
global apparel commerce in 2022 was 16% larger than that in 2019, showing a stellar
rebound to reach pre-pandemic levels.
The Asia Pacific region dominated the market with a revenue share of
53.41% in 2022, owing to the increasing sales volume of clothing and apparel goods.
Increased penetration of organised retail, favourable demographics, rising income level,
and favourable government policies are expected to continue driving the demand for
textiles, especially in countries such as India, Bangladesh, Pakistan, and others.
There has been a rising trend in the use of smart textiles in the
market that use optical fibers, metals, and various conductive polymers to interact with
the environment. The rapidly growing consumer preference towards sustainable products is
forcing major textile companies to focus on restructuring their business and investing in
manufacturing practices that target sustainable products.
2023: High production costs and comparatively low demand present a
"perfect storm" situation for the global textile industry. At the same time,
companies expectation for the business climate in six months-time have been
improving since November 2022. It is unclear if this rising confidence about the
medium-term future is a result of the conviction that things cant get any worse or
hope for a well-founded return to normalcy in the economy.
INDIAN TEXTILE INDUSTRY
The textile industry in India is one of the largest in the world with a
large raw material base and manufacturing strength across the value chain. India has the
potential to become a global industry leader considering its demonstrated textile
production history and labour-intensive nature. However, the growth in the textile sector
was sluggish due to an unprecedented rise in cotton prices and moderation in export
demand.
Domestic sales were muted despite strong growth in the overall economy
because of high costs and cheap imported garments. As per the estimates of Clothing
Manufacturers of India, Indias apparel market expanded by 15% during FY23 but sales
growth was entirely led by price hike as volumes of products bought dropped by 3%.
In contrast, Indias exports of ready-made garments (RMG)
increased by 1.10% to US$16,191.47 million in the fiscal 2022-23, as per the data released
by the Department of Commerce under Indias ministry of commerce and industry. RMG
exports stood at US$16,014.84 million in the same period of the previous year. The exports
of cotton yarn, fabrics, made-ups, and handloom products decreased by 28.45% to
US$10,946.20 million in 2022-23 from US$15,298.02 million in the corresponding period of
the previous fiscal.
Indias import of textile yarn fabric and made-up articles grew by
26.74% to US$2,617.79 million in FY23 as opposed to US$2,065.45 million in the
corresponding period of the previous fiscal.
The inbound shipment of cotton raw and waste jumped 157.09% to
US$1,438.52 million from US$559.55 million in the last month of fiscal 2022-23. Cotton
textile and apparel exporters expect a 8-10% year-on-year growth in FY24.
The overall textile industry is expected to see a moderation in revenue
growth in FY24 because the export demand is expected to be limited due to a slowdown in
key markets, though domestic demand will continue to grow steadily. Government schemes
such as Scheme for Capacity Building in Textile Sector (SAMARTH), Scheme for Integrated
Textile Parks (SITP), and PM Mega Integrated Textile Region and Apparel (PM MITRA) have
been initiated to support Indias textile sector.
The technical textile industry is a sunrise sector and in India, it is
considered to be one of the fastest-growing segments in the textile industry. The
improvement in technology, rising demand from various industries and support from
government policies are expected to boost the market. Over the next five years, the Indian
technical textile sector is expected to reach US$50 billion from the current US$22
billion.
In the first ten months of fiscal 2022-23, Indias total exports
of technical textiles were valued at H18,872 Crore, a 1% increase from the H18,695 Crore
mark achieved during the same period in 2021-22.
Government Initiatives: The Government is focused on establishing a
well-structured skilling ecosystem to foster a skilled workforce essential for the
sectors expansion. Some of them are: l (Harmonized System of Nomenclature):
In 2019, the government of India allocated 207 HSN codes to technical textiles to monitor
the data of import and export in providing financial support and other incentives to
manufacturers. The HSN codes are being mapped to various regulations and standards l
National Technical Textiles Mission: It was approved in 2020 by the Cabinet Committee on
Economic Affairs (CCEA) with the aim to position the country as a global leader in
technical textiles and increase the use of technical textiles in the domestic market l
The Ministry of Textiles has notified two quality control orders (QCOs) for 31 technical
textiles, including geo-textiles and protective textiles, effective 7 October
Cotton
India is one of the largest cotton producers in the world. It is an
important fiber and cash crop that plays a vital role in the industrial and agricultural
economy of India. Indian cotton yarn exports hit a decadal low of 664,000 tonnes in FY23,
compared to the highest exports of 1.38 million tonnes in FY22. Cotton manufacturers
witnessed profits because there was a strong demand post- pandemic. Additionally, the
demand was driven by lower domestic cotton prices when compared with the global prices,
along with a US ban on cotton products from Chinas Xinjiang region. However, there
was a slump in demand in FY23.
According to industry experts, one of the reasons behind the decline is
the China factor. Historically, China has been the largest buyer of Indian cotton yarn but
post the US ban, Bangladesh took its place and became the largest importer of Indian
cotton yarn in FY22 and FY23. The Cotton Association of India has estimated the cotton
supply for the cotton season 2022-2023 up till September 30, 2023, to be 356.89 lakh
bales. The supply consists of the opening stock of 31.89 lakh bales at the beginning of
the cotton season on October 1, 2022, estimates for the season at 313 lakh bales, and the
imports for the season.
Yarn Export
India is the largest cotton producer in the world; the country exports
cotton as well as cotton yarn in massive quantities to countries including to China,
Bangladesh, and Vietnam. Bangladesh has emerged as Indias competitor in the global
textile market and the Indian government is working on signing Free Trade Agreements
(FTAs) with countries to keep the Indian exports competitive.
As Indian cotton prices rose in the past year, cotton yarn exports took
a major hit. Decreasing yarn exports from India should be seen as a good sign for the
country as it would make raw materials available for value-addition into textiles and
eventually into garments, thereby creating jobs and opportunities in the sector.
l As per Volzas India Export data, Cotton yarn export
shipments from India stood at 1.9M, exported by 9,505 India Exporters to 50,356 Buyers l
The top 3 exporters of Cotton yarn are India with 1,854,550 shipments followed by Vietnam
with 621,442, and Italy at the 3rd spot with 204,901 shipments l Textile exports
account for 10% of Indias merchandise exports and after agriculture, it is the
largest employment provider in the country
ABOUT THE COMPANY
Incorporated in the year 2007 under the provision of the Companies Act,
1956, under the Scheme of De-merger of ‘Strategic Investment Division of RSWM
Ltd., Bhilwara Technical Textiles Limited (BTTL) specialises in the business of trading
100% Cotton Raw White yarns, 100% Cotton Dyed yarns and 100% Cotton M?lange yarns in both
domestic and international markets.
The main objective of the Company is to carry on the business of
manufacturers, producers, dealers, importers, exporters, buyers, sellers and dealers in
and as brokers, agents, stockiest, distributors, and suppliers of all kinds of automotive
and home furnishing fabrics, made-ups, apparels, and other products, goods, articles, and
things that are made from or with cotton, nylon, silk, polyester, acrylic and other kinds
of fiber, etc.
Exports were mainly made to Belgium, Mauritius, and other countries.
Since most of these products are commodity in nature, they have thin trading margins. The
Company holds substantial stake in equity share capital of BMD Private Limited which is a
leading manufacturer of high - performance specialised automotive seating fabrics,
furnishing, flame retardant fabric & air texturised yarn. BMD Private Limited has also
forayed into Wind and Solar Power Generation which further provides the Company exposure
in the renewable energy sector. BMD Private Limited has a continuous track record of good
performance and maintains leadership for its products in the OE Segment.
FINANCIAL PERFORMANCE
During the year that ended on 31st March, 2023, your Company achieved a
revenue of H1,252.71 Lakh against H1,948.69 lakh recorded in the previous year that ended
on 31st March, 2022. Further, during the year under review, your Company recorded a net
profit of H144.82 Lakh against H148.17 Lakh in the previous year. The company is proposing
to speed up the volume of business through exports and domestic sales of different
material items, and is confident of accomplishing higher turnover and productivity.
Directors are hopeful that with continued performance by the Company during the year under
review, the Company shall be able to achieve its goals.
Significant changes i.e. change of 25% or more in the Key Financial
Ratios
In accordance with the amendments notified by SEBI in Regulation 34 the
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 on 9th May, 2018,
the details of significant changes i.e. change of 25% or more in the key financial ratios
as compared to the immediately previous financial year along with detailed explanations
are reported below:
| Key Ratios |
FY23 |
FY22 |
% Change |
Remarks |
| Stability Ratios |
|
|
|
|
| Debt Equity Ratio |
- |
- |
- |
|
| Debt Service Coverage Ratio |
- |
55.41 |
(100) |
Due to repayment of Debt |
| Interest Coverage Ratio |
- |
55.41 |
(100) |
Due to repayment of Debt |
| Liquidity Ratios |
|
|
|
|
| Current Ratio (in times) |
6.09 |
10.15 |
(40) |
Majorly due to increase in trade payable and advance from
customers |
| Debtor Turnover Ratio (days) |
23.41 |
38.83 |
(40) |
Majorly due to decrease in revenue |
| Inventory Turnover Ratio (days) |
10.10 |
16.76 |
(40) |
Majorly due to decrease in revenue |
| Profitability Ratios |
|
|
|
|
| Operating Profit Margin (%) |
16.23 |
8.96 |
81.08 |
Majorly due to better Margins on sales |
| Net Profit Margin (%) |
11.56 |
7.60 |
52.11 |
Majorly due to better margin on sales |
Disclosure of Accounting Treatment
The Company has followed the same accounting treatment as prescribed in
the relevant Indian Accounting Standards while preparing the Financial Statements.
INTERNAL CONTROL & ITS ADEQUACY
The Company maintains appropriate internal control systems, including
monitoring procedures, to ensure that all assets are safeguarded against unauthorised use
or disposition loss. Significant issues are brought to the audit committees
attention for periodical review. The Company policies, guidelines and procedures provide
adequate checks and balances to ensure all transactions are authorised, recorded and
reported correctly. The Audit Committee approves and reviews audit plans for the year
based on internal risk assessment. Audits are conducted on an ongoing basis, and
sufficient deviations are brought to the notice of the Audit Committee of the Board,
following which corrective action is recommended for implementation.
The internal audit function is further strengthened in consultation
with statutory auditors for monitoring statutory and operational issues. Adherence to
statutory compliance is a key focus area for the Companys entire leadership team.
HUMAN RESOURCE
The Companys HR management philosophy revolves around empowering
the employees to make them more productive, efficient and integral to the organisation.
The Company believes in hiring the best talents across disciplines and
nurturing their skills to help them grow professionally and personally. It provides a
suitable and growth-oriented work environment that ensures workplace safety and room for
individual growth.
It nurtures the skills and competencies of its employees to drive
shared organisational objectives. The Companys people development practices help
strengthen the capabilities of its human capital that, contribute to business growth.
The Company believes in retaining its knowledge capital by involving
them in business strategies. This initiative cements their bond with the Company and
prepares them for future leadership. As on 31st March 2023, the Company has 4employees on
its payroll.
RISK MANAGEMENT
With the global and domestic macro- and micro-economic scenarios
evolving rapidly, business risks are becoming increasingly dynamic and complex.
Cognizant of the changing business ecosystem, BTTL has developed a
robust and resilient risk management framework for identifying, analyzing and managing
business risks.
The Companys Risk Management Committee, along with the senior
leadership, monitors situations and emerging risks. It draws the blueprint of the
mitigation plans, which are then executed by the functional heads. The risk mitigation
measures are placed before the Board periodically for review and improvement.
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