(Pursuant to regulation 34(2) (e) and Schedule V of the Listing Regulations)
This report is part of the Directors Report
Indian Economy overview:
The Indian economy has positively faced all the critical situations well ahead of other
emerging market economies with a strong macroeconomics fundamentals and internal
policies.The Government visualized India to be a technology driven and knowledge based
economy on the financial sector in the upcoming years. As visualized, the growth rate of
technology in India is tremendous. The Indias economic growth during the year has been
principally led by private consumption and capital formation which helped to generate
employment.
The Reserve Bank of India, allowed the settlement of international trade in India
Rupees during the year 2022. Eighteen countries have agreed to settle the trade in India
Rupees by opening Special Rupee Vostro Account (SRVA) in bank. This settlement will
enhance the value of Indian rupee in international market by reducing the usage of dollars
and other currency.
The improvement in the financial stability of Public Sector Banks has enabled them to
increase credit supply, leading to rapid credit growth for the Micro, Small, and Medium
Enterprises (MSME) sector.
The Economic Survey said that Indias economic recovery from the pandemic is complete
and the economy is expected to grow in the range of 6% to 6.8% in the coming financial
year 2023-24.The Indian economy GDP decreased to 7.2% during the year 2022-23 when
compared to 9.1% in 2021-22. This is due to aggressive rate hikes by the Reserve Bank of
India in order to control the high inflation levels in the country. In addition to these
factors, the slowdown in exports and consumer demand has also contributed in the decrease
of GDP.
Indias GDP dropped to 13.5% in the first quarter of financial year (FY) 2022-23, when
compared to 20.1% in the first quarter of the previous financial year (PFY) 2021-22.
Further in the second quarter, the economy further reduced to 6.3% when compared to 8.4%
in the second quarter of the PFY 2021-22. During the third quarter of FY 22-23 there was a
further decrease to 4.4% in the growth rate when compared to 11.2% in the third quarter of
PFY 21-22. Indias economy grew to 6.1% in the fourth quarter of FY 2022-23, pushing up
the annual growth rate to 7.2% for the FY 2022-23.
The contribution of agriculture sector and other allied sectors towards the growth of
Gross value added (GVA) during the FY 2022-23 is 3.3% and during the PFY 2021-22 is
3.5%.The share of agriculture in GDP in the FY 2022-23 is 18.3% and 19% in PFY 2021-22.
Indian pharmaceutical exports achieved a healthy growth of 22% during the FY 2022-23
which is higher than the corresponding pre-pandemic period of FY 2020. The performance of
pharma exports during the year has been robust, sustaining growth despite the global trade
disruptions and drop in demand for COVID-19 related treatments.
Indias Merchandise imports and exports showed a growth of 54.71% and 43.18% during the
FY 2022-23 as compared with FY 2021-22. Indias trade deficit widened to 87.5% in FY
2021-22.
Indian Army is the third-largest military force. India exported military hardware worth
Rupees 159.2 billion in the FY 2022-23 and it is the highest military export made when
compared to the previous years.
The services sector witnessed a swift increase in the FY 2022-23, at 8.4% compared to a
contraction of 7.8% in the PFY The improvement was driven by growth in the Trade, Hotel,
Transport, Storage, Communication and Services related to broadcasting sub-sector.
The credit growth to the Micro, Small, and Medium Enterprises (MSME) sector has been
extraordinarily high, over 30.6%, on average during the year, supported by the extended
Emergency Credit Linked Guarantee Scheme (ECLGS).
Recovery from the Pandemic:
COVID-19 has impacted the worldwide economic growth. Many countries struggled for a
period of three years and now are in the recovery stage. During the period many nations
voluntarily helped the economically backward country for their recovery by providing
medicines, vaccines, hospital equipments etc.
Almost ninety percent of the countries has uplifted the lockdown, quarantines, social
distancing, travel bans and other emergency measures. The Countries during the year
observed a significant rise in the economic growth, business operation, international
business, Stock markets trade etc.
During the pandemic, India was witnessed as the second most country affected with
Corona virus after the United States of America (USA), the Government introduced many
policies, programs, vaccination drive, help center, online services to the people for
their recovery. The Government provided free treatment and vaccine to the people affected
and also provided monetary reliefs to the family of the diseased person. Most of the
educational institution went online during the period by providing them online classes.
The Government has given extension and exemption to the companies for their regulatory
compliance during the period. The digitalization boomed in the economy sector and most of
the business transactions were made online. All these factors helped and boosted India to
recover from the COVID-19.
This made ease of complying the provision and doing business for the companies.
Vaccination helped most of the Countries and even India to recover. This was complemented
by digital infrastructure through Co-WIN for mass vaccination and E-Sanjeevani for
telemedicine. Around 220 crore people got vaccinated in India. Some of the schemes
introduced by the Government during COVID-19 for the people are PM CARES for Children,
Pradhan Mantri Garib Kalyan Yojana etc.
The Economic Survey said that Indias economic recovery from the pandemic is complete
and the economy is expected to grow from the current financial year. Post pandemic, India
is being seen as the "New Manufacturing Hub" as there are geopolitical tensions
in Chinas trade policy. Companies like Apple, Samsung and Google are shifting towards
India, for their products manufacturing.
Impact of Russia - Ukraine War on Indian Economy:
The war between Russia and Ukraine is been for a long time. Many countries including
European nations was severally affected due to this war, as Russia is the second largest
exporter of crude oil to the countries. The Russia-Ukraine conflict has further affected
the supply chain resulting in price escalations of steel, cement, finishing materials,
imported chemicals, and fuel, there by increasing the overall construction cost and
resulting in a rise in housing prices.
Indias close economic ties with both countries have been disrupted, leading to higher
trading costs and reduced investment opportunities. Even the cost of consumer commodities
have gone up.
India had shown a neutral stand for Russia and maintained a good International business
relation which resulted India from getting discounted oil, fertilizer, and other
commodities from Russia. As many country imposed restricted economic transaction on
Russia, India took the opportunity to fill the vacuum created in stocks of wheat, maize,
millet etc. India has sold 1.4 million tonnes of wheat in April 2022 to South Asia,
Southeast Asia, the Middle East, Europe, and North Africa.
Impact of Sri Lankan Economic Crisis on Indian Economy:
Sri Lanka is currently facing an unpredicted crisis due to economic mismanagement.
Other factor which contribute to the crisis are pandemic and expenditure of public funds.
India is having trade practices in the sector of real estate, petroleum, refining
manufacturing etc. These have been affected and will continue to get affected adversely if
the crisis continues. The Indian export to Sri Lanka has deteriorated drastically.
Indias international trade through water transport, faced a severe consequences due
this crisis.
The Colombo port has become the most concerning part of the Indian economy. The Colombo
port deals with more than 30% of Indias container traffic along with 60% of
transshipment. A disturbance in the services of Colombo port would certainly be harmful to
the Indian economy. As of now, thousands of vessels sent from India to Sri Lanka are
remaining undeclared at the port, along with several trans shipments. The major reason
behind this disturbance is the transfer of the containers between the terminals has not
been possible due to the ongoing commotion across Sri Lanka. To address this issue, there
is a build-up of cargo meant for Sri Lanka at Indian ports. But its quite evident that
this will result in augmented cost and overcrowding problems at Indian ports. According to
the reports, India has already started building a transshipment hub of its own in Kerala
to deal with this crisis.
In Sri Lanka, India has some huge investments across industries such as real estate,
tourism, hotel, telecommunication, manufacturing, banking, financial services, petroleum
refining etc. These investments are affected due to the ongoing crisis in Sri Lanka and
they might have to witness much worse situations in the coming days if the crisis still
continues.
With regard to Sri Lanka, more than 10% of Sri Lankas Gross Domestic Product (GDP) was
contributed by the Tourism Industry which was widely affected during the pandemic. Further
this crisis have affect the nation a lot leading to scarcity of basic needs and due to the
market shut down, inflation has gone up. Many nations are helping Sri Lanka for its
economy revival. The G7 (Group of Seven) countries have decided to help Sri Lanka with
their debt repayments.
However amidst all this, a positive news is that many foreign buyers are contacting
India for supply of tea. Sri Lanka is known for their Tea in the world market and is one
of the largest supplier. But currently due to crisis, the world market are turning to
India for tea import from Assam and Kolkata. Due to this the price of tea leaves have seen
a sharp rise. This increased the sales and demand in the international market of tea in
India.
Further in Sri Lanka its apparel sector is suffering as well. According to a recent
report issued by US International Trade Administration, the apparel export industry which
accounted a major share in the countrys total exports, is foreseeing a heavy downfall.
Meanwhile, the apparel orders from the various countries are now being sent to India.
Textile Industry Structure and developments:
The textile and apparel industry in India is one of the oldest industry and it is
spread across the country. Export of textile around the globe plays a major role in Indian
economy. The Indian textile industry is the third largest textile & clothing exporter
in the world. However a notable decrease has been seen in the textile industry. According
to a survey taken where the results of the survey was announced at the budget session in
January 2023, the textile industry in India made a private investment of Rs. 10,000 Crore
during the first half of 2022-23. However the investment was reduced to Rs. 7,000 Crore in
the second half. The textile industry was not able to perform due to high demand. The
textiles sector growth remained negative during April to November 2022. The sector
witnessed negative growth of 0.4 per cent in April 2022, 3.1 per cent in June, 9 per cent
in July, 12.5 per cent in August, 13 per cent in September, 18.7 per cent in October and 9
per cent in November 2022. Despite all this, the industry was able to see some growth
during some months of the fiscal year. On the whole, the graph was erratic with very high
and lows.
Ministry of Textiles has been allocated Rs 4,389.34 Crores for FY 2023-24. Textile
industry in India has employed more than 4.5 crore people including a large number of
women and the rural population.The new innovation in the textile industry is Digital
textile technologies which have a good demand in the international market. India is
currently the 5th largest producer of technical textiles in the world.
Government Initiatives:
The Government has taken a lot of initiates to boost the export growth, attract
investment and increase production in textile sector. The Production-Linked Incentive
(PLI) scheme for textiles will promote production of high value Man Made Fibre (MMF),
Garments and Technical Textiles in the country. Whereas, Pradhan Mantri Mega Integrated
Textile Region and Apparel (PM MITRA) Park are being planned to be established across
seven states of the Country. This will lead to reduction of logistic costs due to
cluster-based approach of manufacturing and production of quality products with
appropriate testing facilities.The Government provides adequate and timely financial
assistance to the powerloom weavers to meet their credit requirements, for investment
needs and for the working capital, in a flexible and cost effective manner. The Government
waived customs duty on cotton imports from 14th April 2022 until 30th
September 2022, to benefit the textile industry and lower prices for consumers. Government
is implementing various policy initiatives and schemes to increase investment/expansion of
textile industry including modernization of weaving and processing sector such as Amended
Technology Upgradation Fund Scheme (A-TUFS), National Handloom Development Programme
(NHDP), Integrated Processing Development Scheme (IPDS), Scheme for Integrated Textiles
Parks (SITP), Samarth-Scheme for Capacity Building in Textiles Sector, etc.
Threats observed:
In the past three years, the Pandemic and Russia-Ukraine war has severely impacted on
the global industries and altered market dynamics. Some of the threats observed in the
Indian Textile Industry are increase in electric charge per unit, high power tariff, power
shutdown, lack of raw materials and limited access to modern technology. The textile
industry core operations runs with the power supply. As the Russia-Ukraine was is ongoing
the price of all the commodities including the electric supply are increased to a higher
rate. This increase has created a demand of electricity in the market.
India is in the blooming stage to the digitalization and modern technologies. The new
innovation like carbon printing, go green initiatives requires modern technologies. Many
of the textile industry are not in position to access or to afford for the modern
technologies.
The handloom industry, was affected with insufficient capital requirements for raw
materials, equipment and their lacked a formal management structures to tackle the
pressure of uncertainty.
Warehouse Industry - Structure and developments:
A warehouse is an essential component of corporate infrastructure and one of the
primary player in the global supply chain. Indias warehousing sector has seen a
tremendous change over the decades from being unorganized godown structures to getting
recognized as a prominent asset class. Since the outbreak of COVID-19, the usage of
warehousing facilities by e-commerce platforms has risen sharply Warehouse investment
recorded a second greatest percentage of institutional real estate investment in the year
2022, accounting to 31% respectively.
Government initiatives:
The Governments warehousing policy focuses on creating exclusive warehousing zones
through public- private partnerships in order to reduce transportation and logistics costs
and accelerate growth. The government will invest Rs. 7.5 lakh crore in infrastructure,
logistics development, and multi-modal connectivity in FY 2023. The Government has
encouraged the warehouses to be designed and integrated with technologies such as the
Internet, robotics, and artificial intelligence (AI). The Government has allowed the
foreign companies to make a direct investment in warehousing sector by allowing 100%
foreign direct investment in logistics parks and warehouses.
Threats observed:
As real-estate and construction costs are rising, it has become important for warehouse
operators to maximize utilization of each available square feet of space and also to build
more economical structures. As India is emerging as a manufacturing hub in the
international market, it is required to accommodate the manufactured goods in the
warehouse. The number of warehouse in India is compatible less, when compared to the
production process. Lack of storage place and easy access to warehouse can lead to delay
in manufacture of the products.
Risks and concerns:
The company is engaged in trading business. Hence, the risks associated with the stiff
competition in retail textile business are the major risk for the Company. But, the
company has built up reputation among the buyers and has created a brand image for its
products. Hence, it is confident of mitigating the effects of the risks.
Internal control systems and their adequacy:
The Company has proper and adequate internal control systems commensurate with its size
and nature of operations, to provide reasonable assurance that all assets are safeguarded,
transactions are authorised, recorded and reported properly and that all applicable
statutes and corporate policies are duly complied with.
Human Resources Development and Industrial Relations:
The Company attaches considerable importance to Human Resource Development and
harmonious industrial relations. There are senior and experienced professionals managing
the operations of its divisions. The company takes all efforts to train its employees to
make them a skilled employee. The overall industrial relations, during the year, were
cordial.
Environmental protection:
The Environmental Policy of your company is maintaining clean and green environment and
ecofriendly atmosphere. Your company has been complying with applicable environmental
regulations and preventing pollution in all operations. Your company continues to strive
for energy saving and conservation of natural reserves.
Risk Management:
Risk Management is an ongoing process. Constitution of the Risk Management Committee is
not applicable to the company. However with regard to the exposure of risk in conducting
the business, the Company is exposed mainly to Credit Risk and Cash Management Risk in its
business operations. The Company has taken over few business divisions of erstwhile Binny
Ltd along with the respective business division employees. Their expertise in dealing with
suppliers and customers has helped to mitigate the Credit Risk. The sales collections at
the showrooms of the Company are mainly in the form of cash. This exposes our Company to
cash management risk. In order to mitigate the same, the Company ensures efficient and
secured collection at its showrooms. The cash collections are deposited in the Companys
bank account the next day. The Company has also adopted stringent checks and internal
controls at its showrooms. At the Head Office of the Company, each days collections are
monitored and reconciled on a daily basis. Such procedures and internal controls has
helped to mitigate Cash Management Risk.
Segment wise and Product wise performance:
The details are given in the Para Operations in the Directors Report Outlook:
The details of outlook are given in the Para Outlook and Opportunities in the
Directors Report. Discussion on financial performance with respect to operational
performance:
The details are given in the Para Operations in the Directors Report.
Details of any change in the Net Worth as compared to the immediately previous
financial year along with a detailed explanation thereof:
There is no return on Net Worth.
Cautionary Statement:
This report contains forward looking statements that involve risks and uncertainties
including, but not limited to, risks inherent in the Companys growth strategy, dependence
on certain businesses, dependence on availability of qualified and trained manpower,
economic conditions, government policies and other factors. Actual results, performance or
achievements could differ materially from those expressed or implied in such forward
looking statements. This report should be read in conjunction with the financial
statements included herein and the notes thereto.
|
For and on behalf of the Board |
|
V.R. Venkataachalam Chairman & Director |
|
[DIN: 00037524] |
|
Registered Office: |
|
No.4, (Old No.10) Karpagambal Nagar, |
| Date : 11th August, 2023 |
Mylapore, Chennai 600 004. |
| Place : Chennai |
CIN: L17120TN2007PLC065807 |
+91-9892691696
