Aarvee Denims & Exports Ltd Management Discussions.



Statements in the Directors Report & Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Companys operations include raw material availability and its prices, cyclical demand and pricing in the Companys principle markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.

Overview of the Economy

During 2017, the global economy began its journey with estimated global economic growth of 3.8%. During second half of the year 2018, this rate of development had gradually declined due to US-China trade war tensions and weak economic situation in some developed countries.

The Indian economy closed fiscal year 2018-19 with a real GDP growth of 7.3%. India continues to be one of the fastest growing major economies in the world and is expected to be among the worlds top three economic powers in future.

Overview of Indian Textile Market

Indias textile industry is one of the largest contributors to the economy accounting for around 4% of GDP. The growth of textile sector is largely depends on consumer spending and multiple factors like actual and perceived economic condition, disposable income and employment. The textile industry overall, is going through tough times due to structural transformation after GST and due to the weak market position in the domestic as well as export markets. The coupled with low cotton production and increased prices, is putting pressure on prices and margins.

Review of Operations
(Rs. in Lakhs)
Particulars Year ended 31.03.2019 Year ended 31.03.2018
Revenue from Operations 75434.03 82,959.72
EBITDA 8500.12 8277.93
Profit after Tax 143.75 564.80
Earnings per Share (Rs.) 0.46 2.39


There has been a decrease in Revenue from Operations by around 10% to Rs. 75434 Lakh mainly due to slower demand and oversupply situation of the textile products in the markets.


EBIDTA had increased to Rs. 8500 Lakh from Rs. 8278 Lakh during previous financial year on account of reduction in costs - other expenses. However Profit after Tax (PAT) was down to Rs. 144 Lakh from Rs. 565 Lakh during previous financial year due to higher interest expenses on account of increase in working capital cycle.

Raw Material Consumption

Average cotton prices during the year under review were higher by almost 10% as compared to previous year. Hence Cotton consumption cost had increased to Rs. 30105 Lakh from Rs. 29594 Lakh during previous financial year despite reduction in overall production and sales during previous financial year.

Employee benefits expenses

Employee benefits expenses decreased to Rs. 5439 Lakh from 5566 Lakh during the previous year.

Finance Cost

Finance cost increased by 13% to Rs. 4930 Lakh from Rs. 4346 Lakh during the previous year mainly due to increase in average interest rate and utilization of high cost funds instead of low cost funds.

Other Expenses

Other expenses decreased by 4% to Rs. 18276 Lakh as compared to Rs. 19036 Lakh during previous year mainly due to cost cutting measures taken by the management in overall manufacturing as well as administrative expenses. Store and Spares consumption have considerable decreased to Rs. 1078 Lakh from Rs. 1830 Lakh during previous year. Other major expenses like labour cost, job work cost, packing material cost have also been considerably decreased during the year under review as compared to previous year.

Working Capital

Working capital requirement in the business went up post GST implementation garment manufacturers and in turn dealers struggled to cope up with new tax regime.

Subsidiary Company

During the year ended March 31, 2019 the subsidiary company has not started its commercial operations and therefore no Statement of Profit and Loss has been prepared for such subsidiary for the year ended March 31, 2019. On account of above, standalone and consolidated financial results of the company for year ended March 31, 2019 remains same. However, Consolidated Financial Statements of Assets and Liabilities as at March 31, 2019 of the parent company after incorporating Financial Statements of Assets and Liabilities as at March 31, 2019 of such subsidiary has been prepared.

The board of directors of the company in its meeting held on 10.08.2019 has approved the striking of its wholly owned subsidiary company named M/s. Aye Ess Spinning Mills Private Limited, Ahmedabad.


The Company has appropriate internal control systems for business processes, with regard to efficiency of operations, financial reporting, compliance with applicable laws and regulations etc. All operating parameters are monitored and controlled. Regular internal audits and checks ensure that responsibilities are executed effectively. The system is improved and modified continuously to meet with changes in business conditions, statutory and accounting requirements. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening them, from time to time.


The Company is exposed to specific risks that are particular to its business and environment within which it operates, including Foreign Exchange Risk, Interest Rate Risk, Commodity Price Risk, Risk of Product Concentration and other Business Risk. While risk is an inherent aspects of any business, the Company is conscious of the need to have an effective monitoring mechanism and has put in place appropriate measure for its mitigation including business portfolio risk, financial risk and legal risk and internal process risk.


The Company rely that the health and safety of the workers and the persons residing in the vicinity of its plants is fundamental to the business. Commitment to the identification and elimination or control of the workplace hazards for protection of all is utmost importance. The manufacturing operations are conducted to ensure sensitivity towards the environment and minimize waste by encouraging "Green" practices. The Company continued to enjoy healthy industrial relations during the year.


Business environment for Textile Industry where your company operates remained highly volatile in recent past and its adverse impact decayed performance of the company. Traditionally textile Industry has more or less remained outside the purview of indirect taxation. Implementation of GST led to a significant disruption in the highly unorganized sector which prevailed much longer than expected. In spite of lots of challenges like introduction of new tax regime, sluggish export as well as domestic market and high volatility in the prices of raw materials, the performance of the company was satisfactory. By implementing cost effective measures and aggressive marketing strategies the company will achieve further improvement in its performance and serve the stakeholders in a way ahead.

To conclude, the performance of the company during the year 2018-19 remained at satisfactory level.