In terms of Regulation 34(2) read with Paragraph B of Schedule V of
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management
Discussion and Analysis Report is attached hereto forms part of this Report.
GENERAL ECONOMIC STATE:
Russias conflict with Ukraine continues to overshadow the world
economy. Despite recent signs of improvement, recovery over the next two years is expected
to be moderate. The outlook remains fragile and downside risks predominate. High
uncertainty generated by the war could take a heavy toll on activity. Trade tensions are
high and could worsen. Concerns about financial vulnerabilities have risen, including in
financial institutions, housing markets and low-income countries. While headline inflation
has started declining, it remains elevated and could persist longer.
Global growth slowed in 2022 to 3.2%, more than 1 percentage point
weaker than expected at the end of 2021, mainly weighed down by Russias conflict with
Ukraine and the associated cost-of-living crisis in many countries. This is the weakest
growth profile since 2001 except for the global financial crisis and the acute phase of
the Covid-19 pandemic. Growth is projected to remain at below-trend rates in 2023 and
2024.
A key factor in the improvement in activity and sentiment in early 2023
was the recent decline in energy and food prices. While levels are still relatively high
compared to pre-war, this is boosting purchasing power for most firms and households and
is helping to lower headline inflation. The earlier-than-expected re-opening in China is
also expected to have a positive impact on global activity, reducing supply chain
pressures and giving boost to international tourism. Headline inflation has also begun to
decline mainly due to the easing of energy and food prices. The decline in energy prices
partly reflects the impact of warm winter in Europe, which helped to preserve gas storage
levels, as wells lower energy consumption in many countries.
Goods price inflation has started declining in most countries, due to
the gradual return of normal demand for goods post-pandemic and the easing of global
supply chain bottlenecks. Core inflation (excluding food and energy) continues to be
driven by strong service price increases and cost pressures from tight labour markets.
Policymakers should focus on restoring price stability and alleviating
cost-of-living pressures. Multilateral cooperation remains necessary to fast-track the
green energy transition and prevent fragmentation. Also decades of procrastination have
transformed what could have been a smooth transition to a more carbon-neutral society into
what will likely be a more challenging one. By the end of the decade, the global economy
needs to emit 25 percent less greenhouse gases than in 2022 to have a fighting chance to
reach the goals set in Paris in 2015 and avert catastrophic climate disruptions.
OPERATING SEGMENTS IN THE COMPANY:
The Company operates through four (4) broad segments. They are -
1. Manufacturing Hand Gloves of various materials and diverse qualities
for industrial safety modules for both export and domestic markets;
2. Manufacturing of both industrial safety garments and readymade
garments in bulk for both export as well as for domestic markets;
3. Power generation by operation of wind mills to supply on commercial
base; and
4. Procurement, part processing and supply of non-conventional
industrial safety gears in domestic market and in export.
CHALLENGES:
The economy of India has transitioned from a mixed planned economy to
mixed middle-income developing social market economy with notable state participation in
strategic sectors. It is the worlds fifth-largest economy by nominal GDP and the
third-largest by purchasing power parity (PPP).
On December 6, 2022, the World Bank revised its GDP growth outlook for
India for 2022-23 from 6.5% to 6.9%, on the back of the economys strong performance in
Q2. The World Bank went on say that the nation was "well placed" to steer
through any potential global headwinds in 2023. The Indian Economy has proven to be
remarkably resilient in the face of deteriorating global situation due to the strong
macroeconomic fundamentals that place it well ahead of other emerging market economies.
There was no dearth of headwinds throughout the year, which impacted Indias path to
economic recovery. The year began with the threat of Omicron variant of the coronavirus.
Fortunately, the threat subsided fairly quickly, without impacting the economic in any
significant way. The only problem was that this headwind was replaced by Russias conflict
with Ukraine in mid-February 2022, leading to further disruptions in the global supply
chain. The next development to impact the economy was the decision of several major
central banks, especially the US Federal Reserve, to reverse their loose monetary policy
stance. The ripple effect of the policy-tightening measures was felt worldwide. The RBI
wasnt too far behind in tightening its stance either, with the first interest rate hike
being announced in May, 2022. Further, the Indian Rupee depreciated in 2022 by almost 11%.
However, when compared to the EURO, GBP and YEN, the RUPEE still gained strength. Because
of global issues, the US Dollar might get even stronger. But, if Indias growth is strong,
then the rupee may remain steady. India has free trade agreements with several nations,
including ASEAN, SAFTA, South Korea, Japan, Australia, UAE, and several others which are
in effect or under negotiating stage.
On July 11th, 2022, the Reserve Bank of India announced a big decision
by allowing trade settlements between India and other countries in Indian Rupee (INR).
This measure is aimed at facilitating the growth of global trade with emphasis on export
from India and to support the interests of the global trading community in Indian Rupees.
In April, 2023, India has surpassed China to become the most populous
country in the world. Needless to say, population anxieties have seeped into many Indians
identifying various economic issues as their top concerns in terms of change of
population. Now, India needs to advance on four broad fronts urbanization, infrastructure,
adding skills and broadening its labour force, and boosting manufacturing to fully cash on
its demographic dividend and reshape the global economy in the process.
Challenges facing the Company vis-a-vis the Country:
? Indias export may have touched an all-time high of USD 422 billion
in 2021-22 but recession in key western markets and geo-political crisis due to the
Russia-Ukraine war are expected to impact the growth of the countrys outbound shipments
in 2023.
? All the global trade-promoting factors like political stability,
movement of goods, adequate availability of containers and shipping lines, demand, stable
currency and smooth banking systems are in disarray.
? Adding to the woes, COVID cases have again started rising in
countries like China, Japan, South Korea and the US.
? The bigger problem for India occurred due to the widening trade
deficit (difference between imports and exports), which had implications on the value of
rupee and current account deficit. Due to the ballooning of the deficit and repeated hike
of interest rates by the US Fed, value of the Indian Currency started depreciating and
touched an all-time low of 83 to US Dollar in October, 2022.
? In the immediate short-term, yes, currency depreciation does help
boost exports of services and some goods which do not rely on high cost of raw materials
import. However, as India moves away from being a services driven export economy to
exporting goods, the incremental impact of depreciation of rupee on exports will diminish
relatively over a period of time. Little volatility in currency is good for exporters but
huge volatility is risky and adds to the hedging costs as well.
? Effective utilisation of recently finalised free trade agreements
with the UAE and Australia would help exports grow in the coming months. New agreements
with the UK and Canada are also expected in the first half of 2023 to provide further push
to exports.
RISKS AND CONCERNS:
Risk is integral to any business and Acknit is no exception. The major
areas of risks as envisaged by the company are as under:
? Ability to attract, hire, train and retain skilled employees
? Timely availability of raw materials (imported as well as locally
sourced)
? Inadequate infrastructures like congested ports, lack of
connectivity, etc.
? High cost of finance and high collaterals
? Our continued understanding and prediction of consumers changing
needs and preferences and timely customising of our offerings.
? Currency value and interest fluctuations
? Any breach of our cyber security measures
The Board of Directors revises the Companys business risks and
formulates strategies to mitigate those risks. The Senior Management team, led by the
Managing Director, is responsible for proactively managing risks with appropriate
mitigation measures and ensuring their implementation thereof.
INTERNAL CONTROL SYSTEMS AND ADEQUACY:
We have put in place internal control systems and a structured internal
audit process vested with the task of safeguarding the assets of the organization and
ensuring reliability and accuracy of the accounting and other operational data. The
Internal Auditor reports to the Audit Committee of the Board of Directors. The Audit
Committee and the Senior Management Team are regularly apprised of the internal audit
findings and regular updates are provided of the action taken on the internal audit
reports. The Audit Committee reviews the quarterly, half-yearly and the annual financial
statements of the Company. A detailed note on the functioning of the Audit Committee and
of the other committees of the Board forms part of the section on corporate governance in
the Annual Report.
FINANCIAL PERFORMANCE:
The Company could achieve a turnover of Rs.23,846.87 Lakhs and total
comprehensive income of Rs.912.33 Lakhs during the year under review.
Segment-wise performance:
(Rs in Lakhs)
PARTICULARS |
2022-23 |
2021-22 |
| Manufacturing of hand gloves: |
|
|
| Segment Revenue |
14,710.19 |
13,868.03 |
| Segment Results |
1,410.71 |
1,172.18 |
| Manufacturing of garments: |
|
|
| Segment Revenue |
8091.14 |
7,128.61 |
| Segment Results |
456.22 |
429.74 |
| Power Generation - through windmill: |
|
|
| Segment Revenue |
38.91 |
38.02 |
| Segment Results |
(7.73) |
(7.90) |
| Others: |
|
|
| Segment Revenue |
1,006.63 |
530.53 |
| Segment Results |
8.76 |
39.07 |
HUMAN RESOURCE:
Employees are the most important asset of the Company. The HR Policy of
the Company aims to create a congenial, transparent and inclusive work environment for the
overall growth and development of its talented workforce. Skill development and induction
of fresh talents are key elements of your Companys human resource improvement activity.
Industrial relations remain cordial throughout the year under review. The Company believes
that employees well-being will be a crucial component in employees performance and
retention and has a far reaching impact on the Companys growth journey in future with the
motive to keep them engaged for the long term.
CAUTIONARY STATEMENT:
The statements in the "Management Discussion and Analysis
Report" describe the Companys objectives, projections, expectations, estimates or
forecasts which may be "forward-looking statements" within the meaning of the
applicable laws and regulations. Actual results may differ substantially or materially
from those expressed or implied therein due to risks and uncertainties. Important factors
that could influence the Companys operations, inter alia, include global and domestic
demand and supply conditions affecting selling prices of finished goods, input
availability and prices, changes in government regulations, tax laws, economic, political
developments within the country and other factors such as litigations and industrial
relations.
|
For ACKNIT INDUSTRIES LIMITED |
|
Sd/- |
|
Shri Krishan Saraf |
Place: Kolkata |
Managing Director |
Date: 17th May, 2023 |
DIN: 00128999 |
+91-9892691696
