ECONOMIC OVERVIEW
The outlook for the global economy took a positive turn early in the year. Inflationary
pressures began to ease, with global energy prices back at levels last seen prior to the
invasion of Ukraine. In addition, base effects from the rise in energy prices following
the invasion are now coming off, putting further downward pressure on inflation for the
rest of this year. Prices of other commodities as well as global food prices have also
eased.
However, domestic inflationary pressures remain relatively elevated in a number of
economies, in particular those with tighter labour markets, although even there inflation
probably already passed its peak around the second half of last year with headline
inflation expected to continue falling this year, and potentially reaching central banks
targets by 2024.
Nevertheless, some positive growth momentum is expected this year from the relatively
smooth reopening of the Chinese economy following the lifting of Covid-related
restrictions in December last year. The pressure on global supply chains has eased
significantly in recent months, while shipping costs have dropped too. This should help
alleviate some inflationary pressures and improve supply capacity. Global trade remains
relatively weak, although we would expect it to recover this year as trade flows normalize
with the reopening of the Chinese economy and a recovery in global growth, while we expect
geopolitical tensions to continue to exert some pressure on trade flows over the medium
term. Consumer demand is also expected to pick up this year, with excess savings money
saved during the pandemic when spending on certain services was not possible still
relatively high in China and Europe which could potentially be deployed once confidence
returns.
INDIAN ECONOMY OVERVIEW
The Indian economy is expected to grow at a healthy pace in the coming year, supported
by a number of factors like supply-side reforms and regulatory simplification, which will
make it easier for businesses to operate and invest. Strong export growth, as global
demand for Indian goods and services continues to rise, will also boost the economy.
Budgetary space to increase capital spending, which will boost infrastructure development
and job creation, is another factor that will support economic growth.
Inflation is expected to fall in the coming year, to 5% in 2023 and 4% in 2024. This is
due to a number of factors, including the governments focus on containing inflation, the
decline in global commodity prices, and the improvement in the supply chain.
The gross Goods and Services Tax (GST) collection for FY 2022-23 reached a new high of
18.10 lacs crore. This indicates a robust resurgence in the countrys economic activities.
Overall, the outlook for the Indian economy is positive. The governments reforms and
initiatives are expected to boost economic growth and create jobs. Inflation is expected
to fall, and the GST collection is expected to remain strong.
INDIAN TEXTILE AND APPAREL INDUSTRY OVERVIEW
"India, known as one of the worlds leading contributors to the global textile
industry, has emerged as a key player in the sector. With its status as the largest
exporter of cotton and the second-largest producer of fibers worldwide (after China),
Indias influence on the textile market is substantial. Over the years, the countrys
garment and textile exports have consistently grown, showcasing its steady expansion in
the industry.
The Indian textile industry has exemplified a remarkable journey from "Resilience
to Resurgence," owing in large part to the effective handling of the pandemic by
Indian authorities. The sector has showcased resilience in overcoming challenges and has
now positioned itself for a period of resurgence and renewed growth."
THE EVOLUTION & GROWTH OF INNERWEAR MARKET IN INDIA
"In recent times, the innerwear segment in India has experienced an unprecedented
surge in growth, driven by the increasing demand for stylish, sensuous, and high-quality
products. What was once considered a basic necessity has now transformed into designer
wear, focusing on both style and comfort. Particularly, the womens innerwear, or
lingerie, market in India has reached a highly promising phase, witnessing a surge in
demand for fashionable, sensuous, and premium innerwear.
The Indian lingerie industry has shed its hush-hush image and evolved into a more open
and confident segment. Women are openly expressing their preferences and seeking the most
attractive and innovative pieces with a sense of self-assurance. This shift has created an
opportunity for brands to experiment with designs, cuts, colors, and styles, allowing for
greater creativity and variety. Additionally, alongside the emphasis on innovation,
conscious brands and consumers alike have started exploring eco-friendly options within
the innerwear range.
Notably, the innerwear category has become a significant revenue generator for both
established brands and startups, including those operating in the e-commerce space. The
market has witnessed remarkable sales figures, showcasing the strong consumer interest and
the potential for further growth in the sector."
OPPORTUNITIES
The Indian innerwear market is expected to grow at a CAGR of 10.5% during the forecast
period 2022-2027. The growth of the market is attributed to a number of factors,
including:
Attractive demographics with a large youth population:
India has a large and young population, which is the primary target market for
innerwear brands. The youth are more fashion-conscious and are willing to spend on
innerwear products.
Shift in market demand from unbranded products to proven branded products:
There is a growing trend of consumers shifting from unbranded to branded innerwear
products. This is driven by a number of factors, including increasing awareness about the
benefits of branded innerwear, celebrity endorsements, and the availability of branded
products at affordable prices.
Premiumisation trends with consumers up-trading from economy to higher value premium
and luxury products:
There is a growing trend of consumers up-trading from economy to higher value premium
and luxury innerwear products. This is driven by a number of factors, including increasing
disposable incomes, changing lifestyles, and the availability of a wide range of premium
and luxury innerwear products.
Work from home and hybrid work trends driving demand for comfort wear products:
The work from home and hybrid work trends have led to an increase in the demand for
comfort wear products, including innerwear. This is because consumers are looking for
comfortable and stylish innerwear that they can wear throughout the day.
Increased awareness among women about intimate wear products:
There is a growing awareness among women about the importance of wearing comfortable
and stylish intimate wear. This is driven by a number of factors, including increasing
disposable incomes, changing lifestyles, and the availability of a wide range of intimate
wear products.
Trends in more women stepping out for work and participating in the formal workforce,
driving both- demand for women innerwear and higher discretionary/disposable incomes:
The number of women stepping out for work and participating in the formal workforce is
increasing. This is leading to an increase in the demand for women innerwear, as women are
looking for comfortable and stylish innerwear that they can wear to work. The increase in
disposable incomes of women is also contributing to the growth of the market.
Overall, the Indian innerwear market is expected to grow at a healthy pace during the
forecast period. The growth of the market is being driven by a number of factors,
including attractive demographics, increasing awareness about the benefits of branded
innerwear, premiumisation trends, work from home and hybrid work trends, and increased
awareness among women about intimate wear products.
THE FUTURE OF THE INDIAN TEXTILE INDUSTRY IN 2023 AND BEYOND
For the textiles and apparel sector, the Budget proposes allocation of 900 crore for
Amended Technology Up gradation Fund Scheme (ATUFS) for 2023-2024 as against 650 crore for
2022-2023.
USEFUL MEASURES TAKEN BY THE GOVERNMENT FOR THE INDIAN TEXTILE INDUSTRY
"The recently announced Union Budget for the fiscal year 2023-24 reflects the
governments priorities for the textiles sector in India. This budget lays the groundwork
for sustained growth in the years to come, while also maintaining fiscal prudence. The
budget focuses on three fundamental aspects, often referred to as the 3Cs: CAPEX,
Consumption, and Credit."
The Union Budget 2023 captures the spirit of employment generation and has several
provisions to promote the textile sectors growth in India. The allocation of funds and
the launch of new schemes will create a positive impact on the industry, increase
production, and boost exports.
RISK AND CONCERNS
The Company is exposed to various types of risks associated with business of the
Company, which will be internal as well as external risk. One of the key risks faced by
the Company in todays scenario is the fluctuations in the price of raw material. Any
increase in prices of raw materials could create a strain on the operating margins of the
Company. We operate in a highly competitive market with competitors who may have better
ability to spend more aggressively on advertisement and marketing and more flexibility to
respond to changing business and economic conditions.
Further, there are regional or smaller competitors who have certain advantages over us.
An increase in the amount of competition that we face could have a material adverse effect
on our market share and sales.
The Company has in place Risk Management procedure to identify and evaluate the risk on
a regular basis.
The Company has the Risk Management committee, who brain-storm on the various risks
associated with the Company. The details of risk committee have been mentioned in the
Corporate Governance report.
INTERNAL CONTROL SYSTEM AND ADEQUACY
The Company has implemented adequate procedure and internal controls which provide
reasonable assurance regarding reliability of financial reporting and preparation of
financial statement. The Company has a regular check on expenses including capital
expenditure. The Management considers and takes appropriate action on the recommendations
made by the Statutory Auditors, Internal Auditors and the Audit Committee of the Company.
In addition, the software solutions such as SAP, Distributor Management System, field
assistance and number of other robust system provides the Company to control over various
business processes, increases productivity, better inventory management, promotes quality,
reduced material cost, effective human resources management, reduced overheads boosts
profits, plan its sales, production and monitor and control the processes in case any
deviation.
HUMAN RESOURCE & INDUSTRIAL RELATIONS
As on March 31, 2023 the Company had 1010 people (340 Employees + 670 Workers) working
directly and indirectly with the Company. The industrial relations in all units of the
Company continue to be cordial. The skills, experience and passion of our people
facilitate deeper customer understanding and engaging relationships and strengthen our
brand value as a preferred employer. We continue to step up efforts to accelerate our
value-based growth strategy and the overall development of human capital. We nurture our
people by investing in their empowerment through learning and development, wellness, and
safety besides providing contemporary workplace facilities.
HIGHLIGHTS OF COMPANY FINANCIAL PERFORMANCE
(Rs In Lakhs)
Particulars |
2022-23 |
2021-22 |
| Revenue from operation |
20,063.97 |
18,297.74 |
| Profit before Interest & finance charge, Depreciation & Income
Tax |
1,435.54 |
923.17 |
| Less : Finance Cost |
911.84 |
950.30 |
| Less : Depreciation |
306.22 |
384.82 |
| Profit/(Loss) Before exceptional item and Tax |
217.48 |
(411.95) |
| Profit /(Loss) for the year (excluding OCI) |
663.68 |
(221.32) |
| Profit/(Loss) for the year (including OCI) |
648.47 |
(217.98) |
Key Financial Ratios
Particulars |
2022-23 |
2021-22 |
Change (%) |
| Return on Net Worth (%) |
4.29% |
(1.63%) |
5.92% |
| Return on Capital Employed (%) |
6.00% |
3.00% |
3% |
| Basic EPS (after exceptional items) in Rs |
0.80 |
(0.27) |
396.30% |
| Debtors Turnover |
3.16 |
3.03 |
4.29% |
| Inventory Turnover |
1.42 |
1.28 |
10.94% |
| Interest Coverage Ratio |
1.24 |
0.56 |
121.16% |
| Current Ratio |
1.58 |
1.36 |
16.18% |
| Debt Equity Ratio |
0.57 |
0.75 |
(24.00%) |
| Operating Profit Margin (%) |
6.29% |
3.66% |
2.63% |
| Net Profit Margin (%) |
3.31% |
(1.21%) |
4.52% |
|
ON BEHALF OF THE BOARD OF DIRECTORS |
|
For VIP Clothing Limited |
|
SUNIL J. PATHARE |
Place: Mumbai |
Chairman and Managing Director |
Date: May 26, 2023 |
DIN: 00192182 |
+91-9892691696
