MANAGEMENT DISCUSSION AND ANALYSIS REPORT
OPERATIONS
For the financial year 2022-23, the Company recorded a net turnover of Rs.9,548.73
lakhs as against Rs.9,721.95 lakhs for the financial year 2021-22. The Net Profit Before
Tax stood at Rs.-3.36 lakhs as against Rs.679.11 lakhs over last year and Profit After Tax
stood at Rs.-7.18 lakhs for the year as against Rs.571.18 lakhs in the last year.
SEGMENT-WISE RESULTS
The Company is engaged in the business of manufacturing garments. Therefore, there is
no separate reportable segment.
MANAGEMENT DISCUSSION AND ANALYSIS
To avoid duplication between the Directors Report and the Management Discussion and
Analysis, we present below a composite summary of performance and functions of the
Company.
OVERALL INDUSTRY
The Indian Textile Industry has been a key contributor to the countrys economy in the
last three years, with 7% of the manufacturing production and 2.3% of the GDP attributed
to the sector. According to the Indian Brand Equity Foundation (IBEF), the Textile and
Apparel Industry accounts for 13% of the countrys industrial production. It is the
second-largest source of employment after agriculture, providing jobs to approximately 45
million people. It is the only industry that has generated huge employment for both
skilled and unskilled labour.
India is well integrated in the value-chain of the Textile Industry from fibre to
fashion.
Cotton production in India is projected to reach 7.2 million tonnes (~43 million bales
of 170 kg each) by 2030, driven by increasing demand from consumers.
GOVERNMENT INITIATIVES
The Indian government has come up with a number of export promotion policies for the
textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under
the automatic route.
Initiatives taken by Government of India are:
• In June 2022, Minister of Textiles, Commerce and Industry, Consumer Affairs
& Food and Public Distribution, Mr. Piyush Goyal, stated that the Indian government
wants to establish 75 textile hubs in the country.
• As per the preliminary project report for the park, the State government of
Karnataka has earmarked 1,550 acres of land in Firozabad, Nadisinnur, and Kiranagi
villages in Kalaburagi district. The total cost of the infrastructure development of the
park was estimated to Rs.1,834 crore.
• Scheme for Capacity Building in Textile Sector (SAMARTH)-To address the skilled
manpower requirement across textile sector, the scheme was formulated, under the broad
policy guidelines of "Skill India" initiative and in alignment with the
framework adopted for skilling programme by Ministry of Skill Development and
Entrepreneurship. The scheme is approved for implementation till March, 2024.
• Amended Technology Up-gradation Fund Scheme (ATUFS): In order to promote ease of
doing business in the country to achieve the vision of generating employment and promoting
exports through "Make in India with "Zero effect and Zero defect" in
manufacturing, ATUFS was launched in January 2016 to provide credit linked Capital
Investment Subsidy (CIS) to units for purchase of benchmarked machinery in different
segment of Textile Sectors (excluding spinning). This scheme is effective up to March,
2022.
• National Technical Textile Mission: Creation of National Technical Textiles
Mission for a period of 4 years (2020-21 to 2023-24) was approved with an outlay of 1480
crore for developing usage of technical textiles in various flagship missions, programmes
of the country including strategic sectors.
• Production Linked Incentive (PLI) Scheme-The PLI Scheme for Textiles to promote
production of MMF apparel, MMF Fabrics and Products of Technical Textiles in the country
to create 60-70 global players, attract fresh investment of Rs.19,000 crore approximately
and generate almost 7.5 lakh new employment opportunities.
• PM-MITRA: To attract investment for Make In India initiative and to boost
employment generation through setting up of 7 (Seven) PM Mega Integrated Textile Region
and Apparel (PM MITRA) Parks in Greenfield/Brownfield sites with world class
infrastructure including plug and play facility with an outlay of Rs.4445 crore for a
period of seven years upto 202728.
• Scheme for Integrated Textile Parks (SITP): The scheme provides support for
creation of world-class infrastructure facilities for setting up of textile units.
• Integrated Processing Development Scheme (IPDS): In order to facilitate the
textile industry to meet the required environmental standards and to support new Common
Effluent Treatment Plants (CETP)/ upgradation of CEPTs in existing processing clusters as
well as new processing parks specially in the Coastal Zones.
OVERALL REVIEW
Indian Textile industry can be divided into several segments, some of which can be
listed as below:
- Cotton Textiles
- Silk Textiles
- Woolen Textiles
- Readymade Textiles
- Jute and Coir
STRENGTH
- India has rich resources of raw materials for the textile industry. It is one of the
largest producers of cotton in the world and also rich in resources of fibres like
polyester, silk, viscose etc.
- India is riched in highly trained manpower. The country has a huge advantage due to
lower labour rates. Because of low labour rates, the manufacturing cost in textile
manufacturing automatically comes down to very reasonable levels.
- India is highly competitive in spinning sector and has presence in almost all
processes of the value chain.
OPPORTUNITY
- Low per-capita domestic consumption of textile indicating significant potential
growth.
- The Domestic market is extremely sensitive to fashion fads and this has resulted in
the development of a responsive garment industry, catering to paying and aspirational
customers.
- According to the Confederation of Indian Industry (CII), the Indian textile industry
is expected to hit US$ 250 billion production by FY25, rising at 12% CAGR between
FY22-FY25. Exports are projected to reach US$ 185 billion by FY25, doubling Indias share
of global textile trade to 10%.
- The industry growth will create jobs and generate value, attracting US$ 180 billion
in investments.
PERFORMANCE OF THE TEXTILE INDUSTRY
- Indias textile and garment exports have been growing at a steady pace, making it one
of the leading textile exporters in the world. The industry exports a wide range of
products, including cotton textiles, yarn, fabrics, and readymade garments. The United
States, the United Arab Emirates, and the United Kingdom are the largest export
destinations for Indian textiles.
- The Indian government has taken several steps to support the textile industrys
growth and development. The government has implemented several schemes and initiatives,
such as the Technology Upgradation Fund Scheme (TUFS), which provides financial assistance
to textile units for the modernization and upgradation of technology. Additionally, the
government has introduced schemes to promote the use of natural fibers such as cotton,
silk, and wool, which has helped boost the demand for Indian textiles. The impact of the
global and domestic economic slowdown is directly affect the performance of the industry.
INITIATIVES
Capacity building:
In order to steer your company into an aggressive growth path, the Company is looking
into enter the mass segment, which had not been fully explored by the Company till date.
To meet the expected demand from the mass segment, the company is building new capacity at
our Erode Plant with an annual production capacity of 25 lakhs nos., which is 30% of the
Companys total capacity.
Upskilling of Employees:
Of all the factors of production, work force comes first. Upskilling and Reskilling the
the work force in tune with the latest technological developments, not only motivates the
employees but also increase the productivity and upgrades product standards. Your company,
assisted with the Government of India Initiative on Upskilling and Resiklling
"Samarth" schemes, set up and tied up with training centres to equip our work
force with modern techniques.
New Product Categories and Styles:
Your company has identified the twin routes of deeper & category-leading
brand-building & scale-up of production routes to high sales volumes & to be the
engines of growth.
Brand LOVABLE
> SECRECY L-1123 collection of Lovable comprised of Premium & Classic
products- Secrecy bra that provides optimized breathing facility Light padding for
augmenting shape and size Smart fabric designed with perm wedging technology, Specially
designed fabric that feels like a silk.
> LE-239 - Anesthetically designed lace enhance the style quotient, engineer
for a perfect shape, Full coverage padded bra, Superior soft cotton fabric that feels like
a second skin
Brand DAISY DEE
> YASHIKA (DD-47) Innovative cushion cups gives you soft pad effect. Full
coverage with no seams, no stitches & no Creases in the cups, Superior soft fabric
that feels like a second skin, Styled to give perfect fit and added comfort.
> SANA (DD-39) Hidden side shaper panels for firmness and uplifted look
Quick dry fabric for quick absorbent Breathable fabric with additional properties of
stretch and enhanced body cooling, Quick dry keeps you fresh throughout the day
> ZOYA (DD-11) Double layered seamless cups provide smooth finish to your
sensuous curves, Crafted from soft cotton fabric that allows the skin to breathe, Moulded
and full coverage cups, Styled to give perfect fit and added comfort.
> Claire - Comfortable for yoga, sports & everyday activities, Ultra
soft and Durable under band, Wire free for all day comfort, Unique dual tone sports bra to
give a perfect fit and added comfort
Please visit lovableindia.in for https://lovableindia.in/ for details about our
products.
ENVIROMENT, HEALTH AND SAFETY
Your Company places utmost importance on ensuring safety of its employees, visitors to
our premises and the communities we operate in.
Your Directors are committed to strict compliance of not just statutory requirements
but even more stern internal policies and best practices related to environment, health
and safety in all our units. In the year under review, your Company has further
strengthened its commitment to workplace compliance by increasing the strength of the
workplace Compliance Department to enhance monitoring and control in all these areas.
Environment: Your Company is an environment friendly organization as it is a
non-polluting and non-effluent generating manufacturing set-up.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Companys internal control systems are commensurate with the nature of its business
and the size and complexity of operations. These systems are routinely tested and
certified by Statutory as well as Internal Auditor and cover all offices, factories and
key business areas. Periodical reports and significant audit observations and follow up
actions thereon are reported to the Audit Committee.
The Audit Committee is headed by an Independent Director and this ensures independence
of function and transparency of the process of supervision and oversight. The Audit
Committee reviews adequacy and effectiveness of the Companys internal control environment
and monitors the implementation of audit recommendations, including those relating to
strengthening of the Companys risk management policies and systems.
The Company conducts its business with integrity and high standard of ethical behaviour
and in compliance with the laws and regulations that govern its business.
SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS COMPARED TO PREVIOUS YEAR
| Sr No. |
Particulars |
Year 2022-23 |
Year 2021-22 |
Explanation for change |
| 1 |
Debtors Turnover |
4.61 |
4.24 |
Lower sales and increase in sales realization period |
| 2 |
Inventory Turnover |
1.79 |
2.34 |
Lower sales |
| 3 |
Interest Coverage Ratio |
0.93 |
22.25 |
Lower Earnings |
| 4 |
Current Ratio |
3.61 |
4.34 |
Better credits terms from suppliers |
| 5 |
Debt Equity Ratio |
0.02 |
0.01 |
Marginal change |
| 6 |
Operating Profit Margin (%) |
0.49% |
7.31% |
Lower margin |
| 7 |
Net Profit Margin (%) |
-0.08% |
5.88% |
Loss incurred in the current year |
| 8 |
Return on Net worth |
-0.04% |
3.36% |
Loss incurred in the current year |
OPPORTUNITIES AND THREATS
Opportunities:
For the apparel industry in general and our market in particular:
• Textile industry to reach $250 billion business size by 2025
• The domestic apparel & textile industry in India contributed to 2.3% to the
countrys GDP, 7% of industry output in value terms
• India has a share of 5% of the global trade in textiles and apparel.
• The export of cotton Textiles was $ 17.2 Bn with 39% share registering a growth
of 54% and 67% during 2021-22 over FY 2020-21 and FY 2019-20, respectively.
• Increasing urban women population and women corporate workforce
• Increasing brand consciousness and spending on kids
• Higher disposable income
• Increasing online retail.
• Company need to concentrate on new global product.
• Low per-capita domestic consumption of textile indicating significant potential
growth.
Threats:
Many major international apparel brands have commenced operations in India realizing
that Indian markets are likely to emerge as one of the largest market in the world in the
next few decades. Competitive intensity is expected to sustain high.
The domestic apparel & textile industry in India contributes approx. 2% to the
countrys GDP, 7% of industry output in value terms. The share of textile, apparel and
handicrafts in Indias total exports was 11.4% in 2020-21. India stands as the 3rd largest
exporter of Textiles & Apparel in the world.
RISKS AND CONCERNS
The Company has robust risk management procedures to identify and evaluate risks on an
ongoing basis. The identified risks are integrated into the business plan and a detailed
action plan to mitigate the identified business risk and concerns is put in place.
The key risks and concern identified by the company and its mitigation plans are:
Availability and Rising Cost of Labour:
The industry is growing at a fast pace, in a highly labour intensive sector and demand
for experienced and trained manpower is outstripping supply. The ability to retain
existing talent and attract new talent assumes crucial importance. The Company has created
long term plans with the objective of motivating employees to create a sense of
"belonging" and a feel good environment. The Company has set up robust
training centers at various units where newcomers to the labour force receive structured
training.
Increase in input and brand-building costs:
The availability of raw materials at reasonable rates is one of the main concerns of
the company. However the company is confident that increases in raw material cost, if and
when they occur, can be passed on to consumers because of the strong pricing power of its
brands. The company is also aggressively taking steps to monitor and improve productivity,
which will mitigate the impact of material cost increases to some extent. The Company is
also conscious that in the Media environment of exploding media vehicles and fragmented
audiences, the challenges for achieving Brand Reach and delivering effective communication
are rising disproportionately. The Company is taking steps to plan and execute media
campaigns with higher efficiency and continue to achieve brand salience.
HUMAN RESOURCES
Your Company fully values the Human capital; it deploys and credits its success to
them. It has been the consistent endeavor of the Company to create a congenial and
challenging working atmosphere wherein every employee can develop his own strength and
deliver to his full potential.
During the year under review, industrial relations in the factory were cordial and
pro-active and all employees and the Union supported productivity and process improvement
measures undertaken at all the functions of the Company. Their unstinted co-operation has
enabled the unit to achieve continuous growth, both quantitatively and qualitatively. Your
Company continued to maintain excellent industrial relations with all its employees and
independent job work firms. Adequate safety and welfare measures are in place and your
Company will continue to improve the same on ongoing basis.
As of 31st March, 2023, the Company had 1272 employees on its roll.
FUTURE OUTLOOK
The future for the Indian textile industry looks promising, buoyed by both strong
domestic consumption as well as export demand. With consumerism and disposable income on
the rise, the retail sector has experienced a rapid growth in the past decade with the
entry of several international players like Marks & Spencer, Guess and Next into the
Indian market.
High economic growth has resulted in higher disposable income. This has led to rise in
demand for products creating a huge domestic market.
The global economic climate continues to be volatile, uncertainand prone to
geo-political risks. Weak consumer sentiment and low commodity prices are expected to
affect global growth adversely.
Your Company has achieved a significant growth and has been constantly following
emerging market trends and has accordingly from time to time revamped its marketing
strategies and product portfolios. The Company is trying to come up with some new products
and ranges of inner wears according to changing consumer needs and demand.
Your Company has taken a step to evolve in the super-premium segment of innerwear.
CAUTIONARY STATEMENT
Statements in the management discussion and analysis describing the Companys
objectives, projections, estimates and expectations may be considered as "forward
looking statements" within the meaning of applicable securities laws and regulations.
Actual results could differ materially from those expressed or implied. The factors that
might influence the operations of the Company are economic conditions, government
regulations and natural calamities over which the Company has no control.
The Company assumes no responsibility in respect of the forward-looking statements
herein which may undergo changes in future on the basis of subsequent developments,
information or events.
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