INDUSTRY STRUCTURE AND DEVELOPMENT:
There was no significant improvement in the Textile Industry and the recession continued during the year under review. Textile Industry in general and Garment Exporters in particular were facing serious challenges because of Worldwide recessionary trends and low unit value realization from overseas market. Power position has not also improved that much as far as the Industries consumption is concerned. The frequent fluctuation in the raw material costs and the economic slow down have hurt the textiles and garment sector, with the profitability of listed companies tumbling 33 % in the first three quarters of the financial year 2014-15 despite an initial pick -up in Exports due to Rupee depreciation. .Hence the company could not achieve the expected level of performance.
The company has effected sales turnover of Rs 43.16 crores as against Rs 45.93 crores last year in respect of yarn and Rs 23.04 crores as against Rs 19.22 crores last year in respect of Readymade Garments.
OPERATION OF UNITS:
The workers of the Weaving & Processing Unit situated at Perundurai had gone for strike with effect from 24-1-2012 demanding the wage revision on the higher side and the unit is not working since then. The job work given to the Ring Spinning units (Unit 4 & Unit 9) was withdrawn and the said units were also not in operation since 24.01.2012. This has affected the volume of sales considerably during the year under review resulting in poor performance of the company. Only the two Open End Spinning Units in the State of Tamilnadu and one Open End Spinning Units in the State of Maharashtra and the Readymade Garments unit were in operation during the year under review.
OPPORTUNITIES AND THREATS
There is uneasiness that following the release of Chinas Cotton Policy, there will be pressure from Chinese buyers on Indian Spinners to further reduce price. Chinese buyers have lowered yarn buying rates following the strengthening of the Indian Rupee against U.S Dollars. China has reduced its cotton yarn import volumes from India which has put Indian Yarn exports under pressure. Due to less demand of fabric, the orders for yarn from the weavers were very low. Further bigger textile units were not able to compete the price in the market with the smaller units since they are offering very low price in the market. Though it may be affordable for them to offer low price in view of their overheads being low, bigger units cannot afford to sell for that price which has affected the off-take very badly.
The encouraging news for the Industries that Ministry of Power, Coal and Renewable Energy has assured that India will be power surplus in the year 2019 and this target would be achieved by a combination of measures such as putting up additional power generation capacity and adoption of stringent Energy conservation procedures. The World Bank has also recommended that Power Distribution Utilities in the Country must be freed from Government interference and their Management must be professionalized and the reforms in the Electricity Distribution Sector should be given top priority.
Labour scenario also continues to be on the discomfort side.. There are many units which are being run on partial capacity for want of adequate skilled labour. The Government is considering a proposal to amend the Minimum Wages Act, 1948 and the case is going on in the labour Tribunal. Once the Minimum Wages Act is revised, then the labour cost will be substantially increased which shall affect the profitability of the company. The money market which was very liquid and easy in the past is witnessing continuous increase in the interest rates and the company being a heavy borrower, the interest charges have become one of the major elements.
FINANCIAL PERFORMANCE AND ANALYSIS
|PARTICULARS||2014-2015||2013-2014||Change Increase (+) Decrease(-)||%|
|Net Profit / Loss Before Tax||-45,92,95,648||-54,72,57,064||8,79,61,416||16.07|
During the year under review, the Company has incurred loss amounting to Rs 49.93 crores.
SEGMENTWISE OR PRODUCTWISE PERFORMANCE
The Company continues to deal with in Yarn, Cloth and Garments. In so far as the yarn is concerned the position is fully explained, it is to be further added that during the year under review, due to under utilization of the Capacity, the overall performance of the company is not satisfactory
The companys Garment Division has registered sales of Rs. 23.04 crores as against Rs.19.22 crores previous year. As stated earlier, there was a hit in the Apparel market during the year under review. In fact, even branded Readymade Garments are being sold in street corners and at the time of festivals, garments are being sold by weight rather than in numbers. This shows the amount of pressure and competitions that the company is facing in marketing its branded quality material. In spite of the fact stated above, the company was able to increase its sales slightly during the year under review.
The energy generated out of the two wind mills are captively consumed. These two winds mills were sold by the bankers in the e-aution.
With the recession likely to continue and in the backdrop of Global Economic and financial condition, the outlook for the Industry in general is not that much promising atleast in short term. Unless all the favorable factors like availability of raw material at an affordable cost, availability of skilled labour at a reasonable cost, financial assistance at a lower rate of interest and above all, the improved power position come into existence, the question of survival of the industry will be a question mark..
In view of the heavy financial constraints, the Company could not repay the Term Loan and the Interest as well. The Companys Account has been classified as NPA ( Non-performing Asset) and the Bankers have issued Notice under Section 13(2) of the SARFAESI Act on 4-12-2012 and an amended Notice on 4-4-2013. They have a filed the case in the Debt Recovery Tribunal (DRT) and the matter is sub-judice.
RISK AND CONCERNS
The risks that the Industry is facing and as a part of the Industry, the company is facing are identical. As has been stated they are a) non-availability of raw material at an affordable price b) non-availability of skilled labour c) high interest cost d) un-remunerative prices of yarn resulting in distress sales by many mills e) accumulating stock of yarn across the Country and above all f) un-scheduled and frequent power tripping .
The concern is regarding in what manner and when the situation could be got over and in what form and when any support will be forthcoming from the Government. The sooner any one or more of these areas improve, that would be a big relief for the Industry.
Not only your company but also the whole industry is facing these problems with the added problem in case of our company with regard to finance due to loan burden. While in so far as setting right the financial situation, it can be achieved only by disposing the units as stated last year or infusion of funds by strategic investors.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY.
In order to ensure proper implementation of the Corporate Debt Restructuring Scheme, the Lenders have appointed concurrent Auditors who are at present available always and no transaction goes through without their prior approval.
The Company has appointed an Internal Auditor also, in addition to the concurrent Auditors appointed by the Lenders and he audits the adequacy and the effectiveness of the internal controls prescribed by the Management and wherever necessary suggests improvements.
The Audit Committee of the Board of Directors periodically review the financial positions, audit plans, internal audit reports adequacy of internal controls and risk management.
The industry as a whole as well as the Company is not able to get adequate hands. We are trying to get personnel from outside, give them training and retain them. Various incentives comparable to units in the region being offered to retain capable hands. Efforts are being taken to make a culture of competency, self- motivation and total involvement as corner stone of all work force related activities.
Industrial relations continue to be harmonious in all the Units.
Statements describing Companys projections, estimates, expectations etc may be forward looking statements in the context of applicable Securities, Laws and Regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand / supply and price conditions in the domestic market and changes in the Government Regulations, Tax Laws and other Statutes and other incidental factors.
|By Order of the Board|
|For GANGOTRI TEXTILES LIMITED|
|MANOJ KUMAR TIBREWAL|