AANANDA LAKSHMI SPINNING MILLS LIMITED
MANAGEMENT DISCUSSION ANALYSIS FORMING PART OF THE ANNUAL REPORT
1. INDUSTRY STRUCTURE OVERVIEW AND DEVELOPMENT Textile
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. The textiles and apparel
industry in India is the 2nd largest employer in the country providing direct employment
to 45 Mn people and 100 Mn people in allied industries. India stands as the 3rd largest
exporter of Textiles & Apparel in the world. The production of textiles as measured by
the Index of Industrial Production (IIP) for textile has seen a consistent decline since
March 2022. The index value, which was 118.5 in March 2022, has fallen to 102.3 in October
2022.
Real Estate
The Real Estate Industry In India is estimated at USD 265.18 billion in 2023, and is
expected to reach USD 828.75 billion by 2028, growing at a CAGR of 25.60% during the
forecast period (2023-2028). Real estate sector in India is expected to reach US$ 1
trillion in market size by 2030, up from US$ 200 billion in 2021 and contribute 13% to the
countrys GDP by 2025. Retail, hospitality, and commercial real estate are also growing
significantly, providing the much-needed infrastructure for Indias growing needs. The
growth of this sector is well complemented by the growth in the corporate environment and
the demand for office space as well as urban and semi-urban accommodation. The
construction industry ranks third among the 14 major sectors in terms of direct, indirect,
and induced effects in all sectors of the economy.
2. GOVERNMENT INITIATIVES Real Estate
The high demand for affordable housing dominates the housing market. The current
shortage of housing in urban areas is estimated to be 10 million units by India Brand
Equity Foundation. An additional 25 million units of affordable housing are required by
2030 to meet the growth in the countrys urban population. The real estate industry has
benefited from the push for policy that has resulted in legislation like the Real Estate
Regulatory Authority (RERA), the introduction of Real Estate Investment Trusts (REITs),
and housing initiatives like PMAY (Pradhan-Mantri Awas Yojana) and SWAMIH (Special Window
for Completion of Construction of Affordable and Mid-Income Housing Projects). In 2022,
the total number of completed houses in urban areas of India under the Pradhan Mantri Awas
Yojana (PMAY, The Prime Ministers Housing Plan) reached 6.5 million. The Government has
allowed FDI of up to 100% for townships and settlements development projects. In the Union
Budget 2023-24, a commitment of Rs. 79,000 crore (US$ 9.64 billion) for PM Awas Yojana has
been announced, which represents a 66% increase compared to the last year.
Textile
The Indian government has come up with several export promotion policies for the
textiles sector. It has also allowed 100% FDI in the sector under the automatic route.
Government has launched the Production Linked Incentive (PLI) Scheme with an approved
outlay of INR 10,683 crore to promote production of MMF Apparel, MMF Fabrics and Products
of Technical Textiles in the country to enable Textiles Industry to achieve size and scale
and to become competitive. Achievements. Government has notified uniform goods and
services tax rate at 12% on man-made fabrics (MMF), MMF yarns and apparel, which came into
effect from January 1, 2022In order to attract private equity and employee more people,
the government introduced various schemes such as the Scheme for Integrated Textile Parks
(SITP), Technology Upgradation Fund Scheme (TUFS) and Mega Integrated Textile Region and
Apparel (MITRA) Park scheme.
3. OPPORTUNITIES AND THREATS Opportunities: Textile
China plus one policy, Economic collapse /volatility in Sri Lanka, Myanmar, Bangladesh,
and Pakistan has played out in favour of India as the world has started looking at India
as reliable partner for their requirement. Rising demand for low cost, sustainable and
eco-friendly products. This presents an opportunity for textile manufacturers to develop
new products that are made from renewable materials and produced using sustainable
manufacturing processes. Cost can be reduced by blending with cheaper man-made fibre.
Emergence of new Markets: FTA with Australia, Comprehensive Economic Partnership Agreement
(CEPA) with UAE and expected favourable trade agreements with UK / Europe present an
opportunity for textile manufacturers to expand into new markets and diversify their
customer base.
Real Estate
The affordable housing segment is a significant opportunity in the Indian real estate
sector. The governments focus on providing "Housing for All" by 2022 has
created a huge demand for affordable housing. Developers who focus on this segment can
benefit from government incentives and tax breaks. With the growth of e-commerce, there is
an increasing demand for warehouses and logistics parks. Co-living and co-working spaces
are gaining popularity in India, especially in urban areas. Developers who focus on this
segment can cater to the growing demand for flexible and affordable living and working
spaces. Real Estate Investment Trusts (REITs) have been introduced in India to provide
investors with an opportunity to invest in the Indian real estate market. Developers can
benefit from REITs by monetizing their assets and attracting long-term investors.
Threats: Textile
The biggest threat to cotton products is competition from other low-cost man-made
fibres. Consumers are shifting their focus to low-cost products which has led to intense
competition and pricing pressure in the global textile industry. There is a high cost to
comply with environmental, social and labour regulations which can be costly and time -
consuming. Further the textile industry is highly sensitive to global economic conditions
and can be significantly impacted by global demand and pricing.
Real Estate
The real estate market has been struggling with all the primary factors like High
dependency on the physical workforce, the surge in the cost of construction materials,
Unavailability of land, Insufficiency of funds, Inflation and interest rates.
4. RISKS AND CONCERNS: Textile
The Company has identified key risks such as Market risks, Regulatory risks, Human
resource risks, Commodity price risks. Key Risks include fluctuation in raw materials
prices, increased global and local competition, sales channel disruption. Retaining the
existing talent pool and attracting new talent. Regulatory Risks include changes in
taxation regime, government policies with respect to textiles, pollution control,
Industrial Relation issues & regulatory compliances. Preference is shifting from
Cotton fibres to manmade fibres i.e. synthetic, polyester etc. which are available at
lower prices. This is putting pressure on margin. Power and Fuel are also major
manufacturing costs while producing textiles. Any increase in these costs has a negative
impact on the profits of the company. Cotton/power and fuel costs are of concern
Real Estate
Risks that may impact a real estate industry are market fluctuations, changes in
interest rates, legal and regulatory changes,, political risk and natural disasters.
5. OUTLOOK:
Indias outlook is positive for the upcoming financial year, the global outlook,
especially the advanced economy are weighed down on account of a combination of a unique
set of challenges expected to impart a few downside risks. This would have an impact on
the export market for textile industry. However, the inclusive and higher expected
domestic consumption would compensate for the reduced exports. The manufacturers, who will
be able to address these challenges, while also differentiating themselves through
innovation and quality, are likely to be successful in times to come.
The commercial real estate market in India is expected to reach new heights in 2023 and
beyond, with some interesting trends likely to shape the future of the segment. This
market is now amongst the most favoured when it comes to seeing some really positive
growth both in rentals and commercial real estate.
6. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an adequate and effective internal control system commensurate with the
size and complexity of the organization. The Company has undertaken a comprehensive review
of all internal control systems to take care of the needs of the expanding size of the
Company and believes that these systems provide, among other things, a reasonable
assurance that transactions are executed with management authorization. It also ensures
that they are recorded in all material respect to permit preparation of financial
statements in conformity with established accounting principles along with the assets of
the Company being adequately safeguarded against significant misuse or loss. The company
has also upgraded the IT support systems. A system of internal audit to meet the statutory
requirement as well as to ensure proper implementation of management and accounting
controls is in place. The Audit Committee periodically reviews the adequacy of the
internal audit functions.
7. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT,
INCLUDING NUMBER OF PEOPLE EMPLOYED:
The aim is to create an inclusive working environment that attracts and retains the
best people, enhances their flexibility, capability and motivation and encourages them to
be involved in the growth of the Company. We believe in sophisticated equipment and
skilled employee resources, together with strong management and design capabilities. As on
31.03.2023 the Company has 2 employees on rolls of the company.
8. ACCOUNTING TREATMENT
In the preparation of the financial statements the Company has followed the Indian
Accounting Standards (IND AS) specified under Section 133 of the Act, read with relevant
rules made there under. The Significant Accounting policies which are consistently applied
have been set out in the notes to the financial statements.
9. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
In view of change in operations the companys revenue from operations was Rs. 477.57
lakhs in the previous financial year and it is decreased to Rs. 20.94 lakhs during the
financial year 2022-2023.
10. HEALTH, SAFETY AND SECURITY MEASURES:
The Company continues to accord the highest priority to health and safety of its
employees and communities it operates in. The Company has been fully committed to comply
with all applicable laws and regulations and maintains the highest standard of
Occupational Health and Safety and ensures safer plants by conducting safety audits, risk
assessments and periodic safety awareness campaigns and training to employees. We believe
in good health of our employees. Modern occupational health and medical services are
accessible to all employees through well-equipped occupational health centers at all
manufacturing units. Further, the Company had taken all precautionary and safety measures
for its employees during pandemic and continue to ensure all preventive and protective
safeguards for all employees against such threats at its plant and sites.
CAUTIONARY STATEMENT
1. Readers are advised to kindly note that the above discussion contains statements
about risks, concerns, opportunities, etc., which are valid only at the time of making the
statements. These statements are based on certain assumptions and expectation of future
events. Actual results could, however, differ materially from those expressed or implied.
A variety of factors known / unknown, expected or otherwise may influence the financial
results. These statements are not expected to be updated or revised to take care of any
changes in the underlying presumptions.
2. Readers may therefore appreciate the context in which these statements are made
before making use of the same. The company assumes no responsibility in respect of the
forward-looking statements herein, which may undergo changes in future based on subsequent
developments, information or events.
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