Aananda Lakshmi Spinning Mills Ltd Management Discussions

FORMING PART OF

THE ANNUAL REPORT

1. INDUSTRY STRUCTURE OVERVIEW AND DEVELOPMENT

The Company is in the business of trading of any textile related products or represent for sales, any other manufacturing facilities of textile related products at its factory at Bhongir, Yadadri , Telangana and the Company is in the business of Real Estate, Land Plotting and selling as well.

Textile

The textile market in India has seen remarkable growth and a surge in creative innovation. As per reports, the Indian textile industry reached a noteworthy achievement by setting a record for its July 2023 exports, totaling an impressive 127.6 million kilogrammes of spun yarn. This marked an astonishing 108.4% increase from the same month in the previous year and a 56.7% rise from June 2023. This growth is expected to continue in the coming years, driven by increasing consumer demand for natural as well as manmade fabrics, both domestically and internationally.

Real Estate

In India, the real estate sector is the second-highest employment generator, after the agriculture sector. It was also expected that this sector will incur more non-resident Indian (NRI) investment, both in the short term and the long term. Bengaluru was expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun. Indias real estate sector is expected to expand to US$ 5.8 trillion by 2047, contributing 15.5% to the GDP from an existing share of 7.3%.

2. GOVERNMENT INITIATIVES

Real Estate

In the 2024-25 interim Budget, Finance Minister Nirmala Sitharaman announced a boost for Indias affordable housing sector by adding 2 crores more houses to the flagship scheme PMAY-U. In the Union Budget 2023-24, the Finance Ministry announced a commitment of Rs. 79,000 crore (US$ 9.64 billion) for PM Awas Ybjana, which represents a 66% increase compared to last year. Government created an Affordable Housing Fund (AHF) in the National Housing Bank (NHB) with an initial corpus of Rs. 10,000 crore (US$ 1.43 billion) using priority sector lending short fall of banks/financial institutions for micro financing of the HFCs. As of December 31, 2022, India had formally approved 425 SEZs, and as of January 2023, 270 SEZs are operational. Most special economic zones (SEZs) are in the IT/ BPM sector.

Textile

The PM MITRA scheme is a government initiative dedicated to establishing Mega Integrated Textile Regions and Apparel Parks across India. Its core focus is to drive investment, encourage innovation, and catalyze growth within the textile and apparel industry. The Production-Linked Incentive (PLI) Scheme, a strategic government initiative, aims to support domestic manufacturing and shorten imports across various sectors, focusing on the textile industry. Its primary mechanism involves incentivizing companies based on cumulative sales of domestically manufactured goods. The Samarth initiative, led by the Ministry of Textiles, Government of India, is a key skill development program for the textile sector. It serves as a flagship initiative aimed at enhancing industry skills. Created in 2020, the National Technical Textiles Mission (NTTM) unfolds over four years, focusing on improving technical education, promoting research and innovation, promoting market growth, and simplifying objectives.

3. OPPORTUNITIES AND THREATS

Opportunities:

Textile

E-commerce expansion and meteoric rise of the retail sector are contributing to the growth of the industry. There is a growing demand for environmentally friendly and sustainable textiles and garments as consumers are increasingly concerned about the environmental impact of textiles and are demanding more sustainable options. Comprehensive Economic Partnership Agreements (CEPAs) and Free Trade Agreements (FTAs) with various countries are poised to boost exports of Indian textiles and open up new markets for the sector. The trade diversification policy presents an opportunity for the Indian textile and apparel industry, as global companies are seeking to diversify their production and sourcing activities away from China. India is well-positioned to capitalize on this trend, capture a considerable share of this global shift and establish itself as a global manufacturing hub.

Real Estate

The Indian real estate market presents a unique opportunity for strategic development. Driven by rapid urbanization and rising income levels, metropolitan landscapes are undergoing significant transformations. This has led to a surge in demand for high quality housing and a superior lifestyle. There is an immense growth potential in this segment and one can cash in with limited or virtually no risk. Stringent laws including easing of mortgage enforcement in case of defaults will ultimately lead to an increase in the flow of capital to this sector hence creating further investment opportunities.

Threats:

Fluctuations in raw material prices and the high cost of energy and transportation pose significant challenges for the industry players, as increasing prices exert pressure on margins. The textile industry in India is highly capitalintensive, which impacts its competitiveness in the global market. Increasing competition from textile manufacturing hubs in countries, like Bangladesh, Vietnam, Indonesia and China will pose a threat to Indias textile and apparel exports. Furthermore, the industry faces stiff competition from international retailers and fashion brands. Rising labour costs, the shortage of skilled labour and overreliance on labour-intensive technologies may impact the operations.

Real Estate

Market instability and uncertainty may create a slight flutter in this industry. The Current economic outlook, though not dire, seems bleak and can hamper the industry growth. Soaring numbers of corruption allegation cases across various State Governments and government officials shows India in poor light and can create a cascading effect in attracting further investments. Continuous change in policies will tend to affect investment as well. Moreover, restrictive laws governing Foreign Direct Investment into real estate make it difficult for foreign investors to look at India.

4. RISKS AND CONCERNS:

Textile

The Company has identified key risks such as Technology obsolescence, Market/Industry Risks, Logistics Risks, Political environmental risks, Disaster risks, Financial Risks, Labour Shortage and Foreign Exchange Rate 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.

Real Estate

The declining inventory and stable absorption are positive signs but challenges remain. Streamlining approvals is essential to attract investment and expedite project completion. Effective cost management is crucial to combat price volatility caused by global economic uncertainty. Close monitoring is required to maintain the supply and demand of raw materials and other commodities.

5. OUTLOOK:

Your company believes that the completion in the emerging markets will be met by developing production system based on cost efficiency, high productivity and maintaining stringent quality parameters, etc. Availability of quality raw material at competitive prices, uninterrupted quality power supply and labour are the three critical inputs for an industry. The company will give utmost priority to maintain the above issues.

2024 is set to witness a consistent upsurge in demand for commercial real estate and office spaces in India. With a focus on innovation, expansion, and enhanced occupier experiences, the market is poised for steady growth and evolution in the year ahead.

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 31.03.2024 the Company has 8 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. 20.94 lakhs in the previous financial year and it is increased to Rs. 209.54 lakhs during the financial year 2023-2024.

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.