blue star ltd Management discussions

Our Company is engaged in the business of denim fabric manufacturing since 1995. We manufacture various types of denim fabrics including Classic, Silky, Fancy, Structured, Mercerized, Mercerized Lycra, Poly Stretch, Silky Stretch, 100% Cotton and 100% Cotton Lycra. Our manufacturing unit at Ahmedabad has a composite denim mill with installed production capacity of 18 MMPA. Our experienced marketing and designing teams ensure that our products meet the latest trends in the denim market.

The Management of the Company is pleased to present its Report on Industry scenario including Company’s performance during the financial year 2020-21.

INDIAN DENIM INDUSTRY

Denim industry is facing tough times due to the adverse market scenario in domestic markets and near shut down due to COVID-19. The Indian denim Industry continued to reel under pressure on account of the near shut down due to COVID-19. However, the market pickup to improve export performance is still to happen.

These factors resulted in a dip in the Company’s top-line, Company is facing acute financial liquidity position. Directors are making efforts to improve the situation.

SWOT

Strengths

• Expertise in denim fabric in the textile industry

• Wide price range suitable for different target markets/ customers

• Experienced team of fabric designers & development

• Portfolio of new and varied products

Weaknesses

• Availability of counterfeit and cheaper products

• Predominance of unorganised sector

• Financial crisis for working capital

Opportunities

• Increased acceptance of denim fabric in tier II and III cities and rural India

• Increasing popularity of casual attire amongst youth

Threats

• Change in fashion cycle related to denim

• Sharp competition in the domestic market as well as from low-cost countries such as Bangladesh, Sri Lanka, Vietnam, etc.

• Increase in price of raw materials, especially cotton

• Rise in the usage of non-denim fabrics

INTERNAL FINANCIAL CONTROL SYSTEM

Your Company has in place an adequate internal financial control system, commensurate with the size and complexity of its operations. Necessary checks and controls are in place to ensure that all assets are safeguarded to detect and prevent errors and frauds and that the transactions are properly verified, adequately authorized, correctly recorded and properly reported.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE.

The same is referred to Audited Financial Statement which is forming part of the Annual Report of 2020-21.

HUMAN RESOURCES

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Industrial relations with staff and workmen during the year under review continued to be cordial.

RISKS AND CONCERNS

The following may be considered as a risk and concerns for the Indian textile industry:

• Competition from low cost countries.

• High power cost.

• Labour advantage gradually diminishing.

• Low demand in International market.

• Low competitiveness in man-made fibres.

CAUTIONARY NOTE

Statements in the Director’s Report and Management Discussion and Analysis describing our Company’s objectives, projections, estimates, expectations or predictions may be "forward-looking" statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to our Company’s operations include raw material availability and prices, cyclical demand and pricing in our principal markets, changes in government regulations, tax regimes, economic developments within India and the countries in which we conduct business and other incidental factors.