ECONOMIC OVERVIEW & OUTLOOK GLOBAL ECONOMY:
The global economy faced numerous headwinds such as the food and energy
crises in Europe, rising inflation, tight financial conditions, and rising commodity
prices during FY23. The conflict between Russia and Ukraine has exacerbated the problem,
as has the resurgence of COVID-19 in China. Muted consumer demand and rising prices are
affecting 2023 growth prospects. Policy paths in major economies may diverge, leading to
US dollar appreciation and cross-border tensions. Energy and food price shocks may also
increase inflationary pressures.
The proper calibration of monetary policy, the outcome of the war in
Ukraine, and the likelihood of additional supply-side shocks due to the pandemic, however,
will have a significant impact on how the world economy grows.
While the Western world becomes the epicentre of global tensions,
emerging and developing economies are expected to outpace them by growing at 3.9% in 2023
and 4.2% in 2024. Emerging Asian economies led by China and India are bound to grow by
5.3% in 2023 and 5.1% in 2024 respectively.
The IMF has projected the global GDP to grow by 2.8% in 2023 before
rising slowly and settling at 3.0% five years out - the lowest medium- term forecast in
decades. The anaemic outlook is partially due to the relatively slower decline of global
inflation which is set to fall from 8.7% in 2022 to 7.0% in 2023 on the back of lower
commodity prices. Advanced economies are expected to see an especially pronounced growth
slowdown, from 2.7% in 2022 to 1.3% in 2023
INDIAN ECONOMY:
India has emerged as the shining beacon in a grim global scenario by
growing at 6.8% in 2022. The IMF has estimated Indias growth at 5.9% in FY23 and 6.3% in
FY24, well above other economies of significant scale causing many to state that this
could well be Indias decade. The Reserve Bank of India (RBI) has tried to cushion the
economy from rising prices and maintain liquidity. Still navigating inflation and
preserving financial stability while boosting growth drivers will continue to be a
tightrope walk. The central government has played a major role in boosting the growth of
the economy as it continued with its capital expenditure push in the Union Budget 2023-24.
In FY 2023-24, capex is budgeted at 10 lakh crore, which will constitute 3.3% of GDP. As
per the RBI, such level of capex spending can take Indias real GDP growth close to 7% in
FY24. Despite the challenging global environment, the Indian economy with its strong
fundamentals and massive demographic strengths seems en route to outpace other large
economies.
Government initiatives, including the PM Gati Shakti - National Master
Plan, the National Monetisation Plan (NMP) and the Production- Linked Incentive (PLI), are
expected to foster economic growth, going forward. The Reserve Bank of India (RBI) has
also exercised prudent and proactive measures to ensure financial stability and address
liquidity constraints.
Private consumption in FY23 is projected to have clocked a growth rate
of 7.7%. The surge in private consumption has also fuelled production activities, leading
to higher capacity utilisation across various sectors.
TEXTILE INDUSTRY GLOBAL TEXTILE INDUSTRY:
Global trade, supply chain digitalisation, and the growth of e-commerce
are among the key forces determining the markets growth. However, it is important to note
that recent shifts in the market dynamics have affected certain countries, particularly
China. As the worlds leading textile exporter, China has experienced a decline in trade
due to heightened concerns about cotton sourcing, with customers becoming more cautious.
This shift in sentiment has prompted a reduced reliance on China, following the US embargo
on Xinjiang cotton. Consequently, it has created a favourable environment for other
nations such as India, Bangladesh, and Vietnam to capitalise on the situation by ramping
up their production and expanding exports in the textiles and apparels sector.
The global textile market grew from $573.22 billion in 2022 to $610.91
billion in 2023, at a CAGR of 6.6%, and is projected to reach $755.38 billion in 2027 at a
CAGR of 5.5%.
INDIAN TEXTILE INDUSTRY:
As per the International Textile Manufacturers Federation (ITMF), the
Textile sector has seen weakening demand since June 2022 due to persistent global
inflation and lingering possibilities of a recession. Inflation has affected consumers and
manufacturers alike with manufacturers and suppliers having to pay much more along all
stages of their supply chains, from the cost of freight to wage increases for their
workers. This has put textile manufacturers in a difficult situation.
The textile sector is one of the largest employers in the nation,
employing an estimated 45 million people directly, including a significant percentage of
women and rural residents. The value chain of the textile industry is complex and extends
from fibre through ready-to-wear clothing. With a sizeable raw material base and
manufacturing strength across its value chain, it is also one of the largest in the world.
Looking at the potential of the industry, the Indian government has
launched various programmes to support domestic textile producers. Under the broad
objectives of several government policy programmes, including Skill India and Make in
India, the government is encouraging investment in this area, which will generate more
employment, enterprises, and chances for skill development. The government has launched
various schemes such as Scheme for Capacity Building in Textile Sector (SAMARTH), Amended
Technology Up- gradation Fund Scheme (ATUFS), Production Linked Incentive (PLI) Scheme, PM
Mega Integrated Textile Region and Apparel (PM MITRA), Integrated Processing Development
Scheme (IPDS) to increase capacity, investments and job opportunities in the industry.
Traditional sectors like handloom and small-scale power loom units are
the biggest source of employment for millions of rural and semi- urban artisans and
weavers. It provides direct and indirect employment and a source of livelihood to millions
of Indians, including a large number of rural women and youth. Make in India, Skill India,
Women Empowerment, and Rural Youth Employment are all significant government programs that
the sector is aligned with perfectly. The governments focus has been on increasing
textile manufacturing by building best-in-class manufacturing infrastructure, upgrading
technology, fostering innovation, and enhancing skills and traditional strengths in the
sector for making Indias development inclusive and participative.
BUSINESS OVERVIEW
The Company continues to sustain its overall performance in the
Financial Year 2022-23 driven by the average performance in the business. The Traditional
Textile Units performance is continue plunged to some extent as compared to the previous
year due to a significant increase in the cost of raw materials, cost of coal power-fuel
and logistics. The Technical Textile divison has performed well and increase in revenue,
as well as profit has been observed in this division of the Company. Your Directors have
been making efforts on all fronts viz. production, marketing, finance and cost control,
etc. and these efforts have been yielding good results. The outlook for the Companys
products appears to be good and the Company is confident of achieving improved operational
performance.
Your Company reported at Standalone level, the total income of the
Company is 20554.65 Lakhs as against 17414.17 Lakhs in the previous year. The Profit
before Tax amounted to 731.32 Lakhs as against 719.17 Lakhs in the previous year. The
net profit after tax amounted to 582.40 Lakhs as against 542.22 Lakhs in the previous
year.
The Consolidated Revenue from Operations amounted to 27313.89 Lakhs as
against 20215.37 Lakhs in the previous year. The Consolidated Net Profit before Tax
amounted to 1081.85 Lakhs as against 979.81 Lakhs in the previous year. The Consolidated
Net Profit after Tax amounted to 844.33 Lakhs as against 728.81 Lakhs in the previous
year.
Your Company has continued to put in all possible efforts to boost
exports, during the year under review achieved Export sales.
INDUSTRY STRUCTURE AND DEVELOPMENT:
Your Company operates mainly in two broad areas: Traditional Textiles
Division and Polymer Based Technical Textile Division. The Traditional Textile Division is
having two separate units for trading and Processing.
In the Textile division, the Company operates in two separate units
i.e. "Mahalaxmi Global (A Trading Unit), and "Mahalaxmi Fabric Mills" (A
Fabric Processing Unit). Mahalaxmi Global mainly operates in shirting and high-value
fabrics. Mahalaxmi Fabric Mills a processing unit is engaged in dyeing, bleaching,
printing, and processing various types of fabrics and at the end of the chain, its fabric
range goes into high-quality Apparel and Home Textiles, catering to Domestic as well as
Global Market. The Company has end-to-end complete facility from warping, sizing, weaving,
dyeing, bleaching, printing, processing, and finishing of various types of fabrics such as
cotton, polyester, Bottom-weight, and other blends.
Polymer Based Technical Textile & Rubber Division at MRT
manufactures Offset Rubber Printing Blankets and a range of Technical Coated Fabrics. This
division also includes Maheeka Textech" (A Weaving Unit). This division is
manufacturing Offset Rubber Printing Blankets used in Sheet Fed, Web, Metal Deco,
Packaging, and Security Printing Applications. Maheeka Textech is a high-tech weaving unit
that includes warping and sizing. This unit has automatic rapier looms and air jet looms
for the weaving of various types of fabrics. Maheeka Textech also has a facility for
manufacturing specialty fabrics used for Technical Textiles.
The Company manufactures various types of Technical Coated Fabrics. The
fabric would be coated with Acrylics, PU, PVC Rubber, and other different polymers. The
said Technical Coated Fabric would be used for various applications such as Tarpaulins,
Awnings, Covers, Defense applications, Healthcare, Medical Substrates, Transport,
Automotive, Aeronautic & Space, Architectural Membranes, Flexible Membranes for Civil
Structures, Blinds, Protective Clothing, Home Furnishing, Geo Textiles, Industrial
Fabrics, Sports, Environmental Pollution control, etc. The Company also manufactures
Textile based Digital Print Media which are substrates for use in digital banners &
signage printing. The product range would include Back-lite, Front-lite, Hoardings, and
Banners.
For a long time, MRT has been exporting its products to many countries,
The Company operates across multiple products and businesses in diverse markets and
environments. The Company is having a domestic market, as well as exports to various
countries across the globe. The Company has a well-equipped laboratory, quality assurance
team, and equipment to produce and offer its premium product line, with speciality
character and performance, to match all kinds of National or International norms and
standards. The Company regularly participates in Domestic and International exhibitions
enabling it to keep abreast with the latest global trends.
STRENGTH AND WEAKNESS:
Nevertheless, the Indian Textile Industry has always remained one of
the major industries of the glooming Indian Economy. Be it Charkha Moment by Gandhiji or
Vocal for Local by our current Prime Minister, everything has helped to rise Indian
Textile Industry. It is so essential that the three basic needs of the human being
"Roti, Kapda Aur Makaan (Bread, Cloth, and Home)" also emphasize the need for
Kapda (Clothing) and in turn the significance of Textile. This industry holds a
significant position in India by providing the most basic need of Indians. Starting from
the procurement of raw materials to the final production stage of the actual textile, the
Indian Textile industry works on an independent basis.
In addition to the availability of a large labor force with required
skills at a comparatively cheap rate, the Indian Textile Industry has a great advantage in
that India is the third largest cotton-producing country in the World. The Indian Textile
industry is autonomous and self-governing. Cheap labour and strong entrepreneurial skills
have always been the backbone of the Indian Apparel and Textile Industry.
The Ministry of Textiles under the Government of India has taken some
significant steps to promote the Textile Industry and Technical Textile Industries in the
Country. Technology Up-gradation Fund Scheme aims at making available funds to the
domestic textile industry for technology up-gradation and setting up of new units. This
scheme aims to generate annual growth in volume terms in cloth production and in value
terms in exports by increasing domestic value addition and technology depth and enhancing
global competitiveness. The Indian Government and State Government have come up with
several export promotion policies for the Textile and Technical Textile sector.
However, one of the biggest weaknesses of the Textile industry is its
old machines, the spinning, and processing sector lacks modernization and there is a need
of introducing new technology also India has a relatively less number of the shuttle-less
loom. This is resulting in higher production costs where the Indian Manufacturing Sector
is having a tough fight with the cheap imported fabrics.
Obsolescence of technology, risk in the industrial environment from the
competition, and changing customer needs may affect Companys business too.
OPPORTUNITIES AND THREATS:
Being a labour-intensive sector, the shortage of skilled workforce may
impact the operations and there will be a struggle to complete orders and the situation in
Ukraine, the threat of inflationary pressures, increasing power and fuel costs, high
freight costs, Intense competition in the global market, especially from the textile and
garment industries in Bangladesh and China, Subdued demand for textile and apparel exports
as consumer confidence is low in the key markets , Compliance issues with the
environmental norms and regulations and supply chain challenges continue to be issues of
concern.
However, Favourable government initiatives such as the National
Technical Textiles Mission (NTTM), 100% FDI in the sector, SAMARTH- Scheme for Capacity
Building in the Textile Sector, etc. for the development of the textile industry,
Extension of the scheme for Rebate of State and Central Taxes and Levies (RoSCTL) till
March 31, 2024, for the export of apparel, garments and made-ups with the same rates would
benefit textile companies. The growth of the technical textile market will create
lucrative opportunities and China plus one diversification policy will benefit Indian
manufacturers. As global retailers are looking for an alternate supply base, India has
greater appeal as an attractive option for manufacturing and exports of textiles and
apparels.
The Technical Textile division brings new opportunities as the industry
is having better margins, automation, and lesser competition from micro levels of
industries. With the globally increasing focus on sustainability and environment-friendly
options for plastic, many products are changing from only plastic made to either a mix or
pure fabric with different coatings. This may create huge demands in the coming years in
both domestic as well as export markets.
Current global and domestic headwinds need to be closely monitored for
their impact on business operations. Liquidity Management and the Financial soundness of
business partners will also be of high importance. The Company continues to keep a
constant vigil for better risk management.
The market trust enjoyed by your Company, our wide range of products,
supply capability, and our differentiated solution strategy would hopefully enable us to
sail through the probable headwinds and continue the growth journey.
The future for the Indian Textile and Technical 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 rapid
growth in the past decade with the entry of several international players into the Indian
market. The rise of e-commerce and the emerging retail industry and malls provide huge
opportunities for apparel and home textiles. The free trade environment is a good
opportunity for the Indian Textile industry to increase its Share in the global market.
Volatility in the foreign currencies could impact the export earnings
of the Company. However, as of now, a major part of the revenues is derived from the
domestic market with no significant imports of inputs. The Company follows prudent
financial measures that are subjected to periodic reviews to hedge its revenues in foreign
currency.
While the Global Textile and Technical textile Industry is advancing
technologically, the local Textile Industry still relied on the import of second-hand
textile machinery. Moreover, huge tariff barriers are faced by the Industry on account of
preferential tariff arrangements.
SEGMENTAL REVIEW AND ANALYSIS:
Our division of Technical Textile has performed well and increase in
revenue, as well as profit, has been observed in this division of the Company. The Company
is also expecting to have an increasing trend in the Technical Textile business
considering the multiple uses and acceptance of our products by our clients.
The Traditional Textile Units performance is continue plunged to some
extent as compared to the previous year due to a significant increase in the cost of raw
materials and cost of coal, power-fuel, logistics. However, We are expecting better growth
in upcoming years.
OUTLOOK:
Financial Year 2022-23 has remained a roller coaster ride for
businesses across industries barring a few exceptions. Your Company had also evident the
same. Global demand was affected by Russia-Ukraine conflict and global recession. Despite
near-term uncertainties, we remain optimistic about the medium term and intend to continue
investing in our growth engines. We are glad to inform that our Rubber/ Technical textile
business has performed well. The government is pushing the textile industry by launching
PLI Scheme in the segment, which will increase growth of this sector as a whole, as the
government is targeting to have USD 100 Billion in export by 2030.
Demand in Textiles segment will vary by market. While domestic markets
are expected to improve, US volumes may see modest growth or remain flat. Demand from
Europe and UK is expected to remain muted. Things will change for better in case India is
able to sign any free trade agreement with any of the key geographies.
We are also very positive about the growth of traditional textiles in
coming years considering the normalcy returning to the businesses in the textile industry
from the start of the FY 22-23. In the mid-long term, the Technical Textile and Indian
Textile Industry are expected to grow very strongly with growth being balanced by both
domestic consumption as well as export demand. In the near-term, domestic demand would
depend on the revival of macroeconomic factors. On the exports front, there are both
positive and negative factors.
The volatility in foreign currency and price in the International
market impacted the cost of production. Due to situation arose in Russia- Ukraine and
globl recession, the threat of inflationary pressures, high freight cost, and supply chain
challenges continue to be issue of concern. Barring unforeseen circumstances, the Company
is confident of achieving better results in the current year.
KEY RISKS & CONCERNS
The Textile industry is always subject to facing crisis in a cyclical
way. Timely action is needed to overcome this situation by taking corrective and proactive
steps, then and there.
The Textile business, like other businesses, is susceptible to various
risks. The primary risk factor is raw material prices, mainly cotton and the biggest
component of cost. Cotton prices are increasing regularly as are other input costs
including power, fuel and logistics. Since cotton is an agricultural produce, it suffers
from climatic and seasonal volatility. Whereas such volatility in case of a product higher
in the textile value chain is generally passed through an increase in value added products
in the basket provides insulation against such volatilities.
The Company monitors price fluctuations and follows inventory
management and responsive procurement policy to ensure timely procurement of raw materials
at competitive prices. It also engages in contracts with clients and tries to pass on
variations in the prices of raw materials to them to protect margins.
The ongoing Russia-Ukraine war has adversely impacted the global supply
chain network. Since majority of the Companys business is exports-oriented and it depends
on the supply chain for exporting final products, any kind of disruptions in the supply
chain, ever-rising container shipping cost, availability and delays pose severe challenges
for the business. Further, inadequate and inefficient logistics in India lead to delays
and high costs of logistics.
The geopolitical turmoil, global economic slowdown, high inflation and
the threat of a looming recession in key markets like the US and Europe have led to a
slowdown in the domestic as well as export market. Demand compression would reduce the
Companys business.
The Company is susceptible to disasters and crises such as pandemics,
cyclones, earthquakes, geopolitical instability, fire hazards, etc. which may cause
operational disruption, shutdown or production cuts, project delays, supply chain hurdles,
and increased construction costs. Compliance issues with the environmental norms and
regulations and supply chain challenges continue to be issues of concern.
INTERNAL CONTROL SYSTEM:
The Company has an adequate system of internal control implemented by
the Management towards achieving efficiency in operations, optimum utilization of
resources and effective monitoring thereof and compliance with applicable laws. The
internal control is supplemented by an extensive programme of Internal Audits.
The Internal Audit programme is finalized in consultation with the
Internal Auditors and the Audit Committee of the Board. The Audit Committee is briefed on
the findings by the Internal Auditors, every quarter, along with the remedial actions that
have been recommended or have been taken by the Management to plug systemic weaknesses.
The audit committee of the Board meets periodically to review various aspects of the
performance of the Company and also review the adequacy and effectiveness of the internal
control system and suggests improvement for strengthening then from time to time.
The Company maintains an efficient internal control system commensurate
with the size, nature and complexity of its business. The internal control system is
responsible for addressing the evolving risks in the business, reliability of financial
information, timely reporting of operational and financial transactions, safeguarding of
assets and stringent adherence to the applicable laws and regulations. The internal
auditors of the Company are responsible for regular monitoring and review of these
controls. The Audit Committee periodically reviews the audit reports and ensures
correction of any variance, as may be required. Key observations are communicated to the
management who undertakes prompt corrective actions.
FINANCIAL AND OPERATIONAL PERFORMANCE:
The financial performance during the year under review has marginal
growth in terms of sales and profit earned by the Company. Please refer to brief
description of the Companys financial highlights during the year and State of Companys
Affair in the Board of Directors Report.
During FY 2022-23 , the market remained exposed to intermittent bouts
of volatility due to domestic developments as well as uncertainty surrounding the
evolution of global financial markets which impacted the market sentiments and liquidity
conditions significantly.
| Particulars |
FY 2022-23 |
FY 2021-22 |
% change |
| Debtor Turnover (Times) |
5.87 |
5.67 |
3.45 |
| Inventory Turnover (Times) |
10.86 |
11.91 |
-8.80 |
| Interest Coverage Ratio (Times) |
2.76 |
1.55 |
78.06 |
| Current Ratio (Times) |
1.33 |
1.37 |
-3.10 |
| Debt Equity Ratio (Times) |
1.27 |
1.34 |
-5.81 |
| Operating Profit Margin (%) |
5.76 |
6.27 |
-8.15 |
| Net Profit Margin (%) |
2.91 |
3.20 |
-8.88 |
During the current Financial Year there has been marginally decrease in
Operating Profit and Net Profit Margin mainly due to volatility in market globally of the
Rubber/Technical Textile Segment in which your Company operates.
The Net Worth of the Company stood at 8302.02 Lakhs as on March 31,
2023. Return on Net worth for the year 2022-23 stands at 7.20 % as against 7.21 % for
2021-22.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT:
Your Company continues to have cordial and harmonious relations with
its employees at all levels during the period under review. The Company also puts emphasis
on formal training and development programmes to operators and workers, as a core activity
and provides continuous training, both internally and externally, for the upgradation of
employee skills. The operations of the Company across functions have been strengthened
through the induction of appropriately qualified and experienced manpower.
Management identifies the potential of each employee and endeavors by
providing them right opportunity to grow. Management of your Company strongly focuses on
the performance of the managers. The Board acknowledges its thanks to all the works floor
personnel and other employees for making significant contribution to your Company.
The Company considers its employees as the most important asset and
integral to its competitive position. It has a well designed HR policy that promotes a
conducive work environment, inclusive growth, equal opportunities and competitiveness and
aligns employees goals with the organisations growth vision. Its human resource division
plays a crucial role to build a strong and talented workforce. It provides opportunities
for professional and personal development and implements comprehensive employee engagement
and development programmes to enhance the productivity and skills of its employees
Our positive approach to competency, development and retention allows
attracting, retaining and built the best team. The Company attaches priority to human
resource development, with focus on regular up-gradation of the knowledge and skills of
our employees and equipping them with the necessary expertise to meet the challenges of
change and growth successfully. Industrial Relations were cordial and satisfactory.
RESEARCH & DEVELOPMENT:
Increased globalization has made the sale of products and retaining of
customers highly competitive. To overcome a significant volatility in the market, the need
of the hour is high customer satisfaction and value for money from the product. Keeping
the above objective as paramount, the research and development activities were focused
into attending major customer complaints/suggestions in order to improve customer
satisfaction. Your Directors are pleased to inform that the above efforts have lead to
considerable reduction of customer complaints. Your Company has successfully launched
products of better quality with new aesthetic look as per customer requirements. Further
your Company also plans to make new investments for upgrading and modernizing their R
& D facilities.
ISO 9001:2015 CERTIFICATION:
We wish to inform you that your Company has obtained the ISO 9001:2015
Certification for Technical Textile & Rubber Division, Accredited by TUV South Asia
Private Limited, covering all major criteria Development and Manufacturing of Rubber and
Technical Textile Products. Throughout our corporate career, your Company has been
quality-focused and technology-driven. From our inception, these were the factors that
enabled us to manufactures quality products through in-house R&D, and successfully
market them around the world.
CAUTIONARY STATEMENT:
Comments in this Management Discussion and Analysis outlining the
Companys strategies and objectives are believed by the Management to be true and to the
best of its knowledge but at the time of preparation actual results may differ materially
from those expressed or implied and hence the Company and the Management shall not be held
responsible for any loss which may arise as a result of any action taken on the basis of
information contained herein.
Important factors that could influence the Companys operations include
global and domestic supply and demand conditions affecting selling prices of finished
goods, input availability and prices, changes in government regulations, tax laws,
economic developments within the country and outside the country and other factors such as
litigation and industrial relations.
|
FOR, MAHALAXMI RUBTECH LIMITED |
|
Sd/- |
|
SHRI JEETMAL B. PAREKH |
| DATE:- 08th AUGUST, 2023 |
CHAIRMAN |
| PLACE:- AHMEDABAD |
(DIN: 00512415) |
+91-9892691696
