Your Directors have pleasure in presenting the management discussion and analysis
report for the year ended on March 31st, 2023.
1. GLOBAL ECONOMIC OUTLOOK
The Russia-Ukraine war impacted the pace of the global market recovery from the
COVID-19 pandemic. The war has led to economic sanctions on multiple countries, a surge in
commodity prices and supply chain disruptions, causing inflation across goods and services
affecting many markets across the globe. However, the global textile market grew from
$573.22 billion in 2022 to $610.91 billion in 2023 at a compound annual growth rate (CAGR)
of 6.6%. Growth of E-commerce - Increasing demand for online shopping is expected to drive
the textile manufacturing market. The Textile market is expected to grow to $755.38
billion in 2027 at a CAGR of 5.5% (Source-Business Research Company).
2. INDUSTRY STRUCTURE, DEVELOPMENT AND INDIAN ECONOMY:
India has become fifth largest economy with USD 3.7 trillion economy is expected to
become the third largest economy by 2031. There are forecasts of Indias GDP growth rate
in FY 2023, ranging from 7.00% (the Prime Ministers advisory council) to 7.4 % (IMF) and
5.9% (Goldman Sachs). In addition, GDP growth in FY 2023-24 is predicted to be between
6.00% and 6.2%, and between 6.2% and 6.5% in FY 2024-25. According to the central bank,
inflation will be approximately 5.1% to 5.2% in 2023. With the geopolitical scenario
expected to improve in the near future, businesses and investors will likely focus on the
economys fundamentals and chances for growth.
A positive business environment, robust industrial output have provided a strong
momentum for the growth of Indias economy, with an estimated GDP growth of 6.2% for FY
2023-24.
Various indicators, including enhanced Goods and Services Tax (GST) receipts, increased
acceptance of transactions based on Unified Payments Interface (UPI), positive growth in
Index of Industrial Production (IIP) and rising private spending, all point to a promising
economic rebound. While several macroeconomic parameters indicate sustained growth,
geopolitical tensions such as the Russia–Ukraine conflict have resulted in a spike in
inflation rates, driven by higher oil prices, increased input costs, and supply chain
disruptions. The Reserve Bank of Indias (RBIs) Monetary Policy Committee (MPC) has
maintained an accommodative stance to promote economic growth while keeping inflation
under control. Despite a variety of challenges such as climate-related concerns, new
Covid-19 variants, persistent unemployment and healthcare infrastructure issues, Indias
strong economic fundamentals have provided the essential cushion to keep up the growth
momentum.
Indian textile industry
The textile industry in India is a vast and dynamic sector, playing a significant role
in the countrys economy. With a rich history of textiles that dates back millennia, India
continues to be a major producer and exporter of fabrics, clothing, and home textiles. At
present, India holds a 4% stake in the worldwide trade of textiles and apparel. It is
predicted that Indias textile and apparel sector will expand at a rate of 10% per annum
from 2019-20 to 2025-26, taking the industrys value to US$ 190 billion. The industry
employs millions of people, from farmers and spinners to weavers and tailors, and is
considered a key driver of economic growth and development. In recent years, the textile
industry in India has undergone significant modernization, with investment in new
technology and infrastructure. This has allowed Indian textile companies to improve their
competitiveness on a global scale and increase their exports to markets around the world.
The new budget for 2023-24 contains a sizeable increase in grants for the textile
industry, with a total allocation of Rs. 4,389.34 crore. These and other features of the
budget show the governments priorities for the textile industry. The total allocation for
the sector is an impressive 22.6% higher than the previous years budget and shows the
governments commitment to aiding the growth of the sector. All in all, this financial
support should create a favourable environment for the continued success of Indias
textile industry.
The Indian textile industry operates in both organized high scale and fragmented low
scale structure. At one end of the spectrum, the traditional handspun located mostly in
rural areas operates and on the other is the largely urban-based capital – intensive
sector. The Indian textile and apparel industry contributes about 7% to industry output in
value terms and approximately 4% to the countrys GDP. Further, the industry contributes
14% to the manufacturing and 13% to the export earnings of the country. The industry is
the second largest employer after agriculture, employing over 45 million people directly
and over 65 million people indirectly. The industry accounts for nearly 15 percent of
total exports. Currently, India is the third largest exporter of textiles and apparels
with about 4.6% market share. India is behind only China and the European Union. China
accounts for 35.15% global share, while Vietnam holds 4.11% and Bangladesh enjoys 4.07%
global textile share leading the Textile and Apparel exports as major manufacturing
activities are concentrated in these regions.
3. REVIEW & FUTURE OUTLOOK OF THE COMPANY
The Companys operational performance has bounce back during FY 2022-23 after getting
affected during the previous year primarily on account of adverse circumstances caused by
the pandemic. The Company is continuously trying to accomplish the desired results. Steps
have been taken for cost diminution and manufacturing quality products by various
installed machineries of the Company. Various aspects of working conditions of workers,
health related issues, minimizing risk of accidents at work place etc. are being taken
care of by the Company. The Company will achieve more turnovers by various marketing
strategies, offering more quality products, launching new products etc. in coming years
followed by increase in profit margin by way of various cost cutting techniques and
optimum utilization of various resources of the Company. Moreover the company has started
exporting the goods and is working towards expansion of export business.
4. OPPORTUNITIES & THREATS:
Business scenario is undergoing a major change during recent times and company is
better equipped to use it to its advantage. The Government is committed to encourage the
healthy growth of Capital Market for development of the Economy. While the government
seems committed to reforms to address the challenges, political compromises and high
populist spending in an election year will mean that tough decisions are more likely to be
deferred. However, steps by RBI to stabilize the exchange rate by reducing liquidity
support to the banking system will create a challenging environment for investments.
Uncertainties posed by the current business environment are likely to be crucial for the
business operations. Liquidity management and financial soundness of business partners
will be of high importance. A constant vigiland higher validations will need to be put in
place for better risk management.
5. SEGMENT-WISE PERFORMANCE:
The Companys main business activity is textile and its related activities which fall
under single reportable segment i.e. ‘Textiles. The Company has majorly focused on
quality and production.
6. OUTLOOK:
The Company continues to explore the possibilities of expansion and will make the
necessary investments when attractive opportunities arise.
7. RISK &CONCERNS:
The Company is exposed to specific risks that are particular to its business, including
interest rate volatility, economic cycle, market risk and credit risk. The management
continuously assesses the risks and monitors thebusiness and risk management policies to
minimize the risk. Current global and domestic headwinds need to be closely monitored for
its impact on the business operations. Liquidity management and financial soundness of
business partners will also be of high importance. Company continues to keep constant
vigil for better risk management.
Mitigation – Shree Bhavya Fabrics has demonstrated extending its regional reach
and diversifying its product offering, the Company. Over the past few decades, the Company
has created a strong relationship with local customers, from whom it continues to enjoy
unwavering support. The Company always strives to reduce political or regulatory risks by
utilising adequate legal consultations and maintaining proper documentation.
8. INTERNAL CONTROL SYSTEMS & THEIR ADEQUEACY:
Internal Control comprises of the plan of organization and all the coordinate methods
and measures adopted within a business to safeguard its assets; check the accuracy and
reliability of its accounting data and completeness of accounting records; promote
operational efficiency; to encourage adherence to the prescribed managerial policies, to
assist in achieving the orderly and efficient conduct of business; prevention and
detection of fraud and errors and timely preparation of financial statements. Our Internal
Control System is fully equipped with necessary checks and balances ensuring that the
transactions are adequately authorized and reported correctly. The Directors have
appointed M/s. Kamal M. Shah & Co, Chartered Accountants as the Internal Auditors of
the Company for the Financial Year 2023-24. The Internal Auditor conducts regular Audits
of various departments and Units to ensure that necessary controls are in place. The Audit
Committee while reviewing the system and the Internal Audit Report, call for comments of
Auditors on internal control systems and discuss any related issues with the Auditors and
the Management of the company before submission to the Board. The Independent Directors
also satisfy themselves on the integrity of financial information and ensure that
financial controls including Signature controls. Budget Controls, Data control and systems
of risk management are in place. The systems and procedures are documented by way of
Manual.
9. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONALPERFORMANCE:
During the year, the Company has recorded a turnover of Rs. 19,480.03 Lacs as compared
to Rs. Rs. 15,830.70 Lacs in the previous year. The Company has made Net Profit of Rs.
153.83 Lacs as against Rs. 49.54 Lacs of the previous year after providing depreciation,
tax, etc.
10. HUMAN RESOURCE DEVELOPMENT:
Company considers its Human Resources as a very important asset and a key in achieving
operational performance. Company continues to provide them with a safe and comfortable
working environment. During the difficult pandemic times, the company has taken numerous
precautions to protect its staff and workers. The company regularly complies with all
stipulated environmental and safety norms.
The Company continues to run an in-house training program held at regular intervals and
aimed at updating their knowledge about issues.
A structured and digitalised performance management system was created, with a focus on
performance-based remuneration tied to both Company and individual performance, with equal
weightage to both. Structured Compliance Management, Learning & Development with the
objective of enhancing peoples competency via continuous learning, and structured cadre
development for succession planning have been additional areas of concentration. Safety,
welfare, and development of employees remain the Companys top priorities.
11. CAUTIONERY STATEMENT:
Statements in the Boards Report and the management discussion and analysis containing
the objectives, expectations or predictions of the company may be forward-looking within
the meaning of securities laws and regulations. Actual results may differ materially from
those expressed in the statement. The operations of the Company could be influenced by
various factors such as domestic and global demand and supply conditions affecting sales
volumes and selling prices of finished goods, input availability and cost, government
regulations, tax laws, economic developments within the country and other factors such as
litigation and industrial relations.
PLACE: AHMEDABAD |
For and on behalf of the Board of Directors |
DATE: 10.08.2023 |
of SHREE BHAVYA FABRICS LIMITED |
|
SD/- |
|
[PURUSHOTTAM R. AGARWAL] |
|
Chairman & Managing Director |
|
DIN: 00396869 |
+91-9892691696
