Management Discussion & Analysis Report pursuant to Regulation 34(3) and 53(f).
FORWARD LOOKING STATEMENT
TheManagementofAlkaIndiaLtd.haspreparedandisresponsibleforthefinancialstatementstha
tappear in this report. These statements are in conformity with accounting principles
generally accepted in India.
The statements in this Management Discussion and Analysis describing the Companys
objectives, projections, estimates and expectations may be‘forward looking
statements within them eaning of applicable laws and regulations. The Management has made
these statements based on its assessment, expectations and projections about the future
events. Wherever possible, it has tried to identify such statements by using words such as
‘anticipate, ‘estimate, ‘expect, ‘project, ‘intend,
‘plan, ‘believe and words of similar substance. Such statements, however,
involve known and unknown risks, significant changes in political and economic environment
in India or key markets abroad, tax laws, litigation, labour relations, exchange rate
fluctuations, interest and other financial costs which may cause actual results to differ
materially. The Management does not guarantee that these forward-looking statements will
be realised, although it believes that it has be imprudent in making these assumptions.
The Management undertakes no Obligations to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
1. Industry Structure and Development:
The Companys products can be classified under the Textile Products. The Company is
taking all necessary steps to maximize the profitability of the Company Textile sector in
India is one of the oldest industries, representing rich and diverse spectrum of
activities and it plays a key role in Indian economy by way of significant contribution to
GDP, manufacturing output, employment generation and export earnings. Thus textile
industry is one of the largest sources of employment generation in the country. The global
focus is shifting to India due to cost and stability factors in Textile industry. The
Governments positive steps are also expected to help this shift. The consumption of the
textile products in the domestic as well as international market is expected to increase
in the years to come.
The textile Industry, in general, had a negative impact due to the after effects of
structural transformation that took place in the form of implementation of demonetization
and GST. Further, post GST; import duty has come down sharply, thus making imports cheaper
for the domestic industry which has placed pressure on selling prices for the textile
industry as a whole. Consumers preferences to going for e-commerce / on-line sales and
reduction in export benefits have reduced margins, thus hindering the promotion of
exports.
Indian Economy
Indias economy was affected due to COVID-19 and the gross domestic product growth is
expected to be better in the F.Y. 2022-23 as compare to F.Y. 2020-21. The structural
reform of The Goods and Services Tax (GST) within a year of demonetization is expected to
provide boost to the economic growth and investments in the long run. With an improving
business ecosystem, stable macroeconomic indicators and a liberal FDI regime, foreign
capital inflow has provided impetus to the domestic economy. According to World Banks
Global Economic Prospects report, Indias GDP is expected to rise7.5% in FY 2022-23.
Indian Textile Industry
The Indian textiles industry is among the oldest in the country. It is projected to
reach USD 230 billion by 2025 from around USD 120 billion. Currently, the domestic
textiles industry contributes 10% to the manufacturing output of the country, generates
about 4% to its GDP and employs more than 45 million people. Importantly, the sector
contributes 15% to the export earnings of India. Mitigating the repercussions of currency
fluctuation remains a challenge. Exports have been a core feature of Indias textile
sector. The Indian textile export market, estimated at $18 billion, is expected to growth
at a CAGR of 4% compared to the global CAGR of 3% over2016-26.
2. Opportunities and Threats:
Our product is intermediary product for user industries and the development will be
based on dependent other industries. The Company is making continuous efforts to trading
different grades of products to meet the requirement of its customers. The Company is
making efforts for exploring other avenues to increase it sales of different varieties of
Garments. Any changes in international price of its products and fluctuations in foreign
exchange will have effect on the profitability of the Company.
Chinas slow investment in textiles and shift to high tech industries will have a
positive impact on Indian exports in the coming years.
Further, USAs withdrawal from Trans-Pacific Partnership (TPP) and chances of
termination of North American Free Trade Agreement (NAFTA) between USA -Canada -Mexico for
free trade will increase their cost due to application of import duties amongst their
countries. Consequently, Indian industry should have opportunity to promote its own
exports.
The international brands like Marks & Spencer, IKEA, Zara, H & M, Walmart etc.
who have multiple sources to cover fabrics and convert into garments in Bangladesh,
Vietnam and Cambodia etc. for retailing in India at better prices will make it difficult
for Indian textile industry to compete with them apart from e-commerce / online business
and cheaper imports.
3. Segment or Product wise performance:
The Company operates in single business segment i.e. Textile comprising cotton, yarn,
fabrics etc.
4. Outlook:
The outlook for the Company appears bright on a long-term basis. The Company is hopeful
that its performance in the years to come would be encouraging, as the Company is planning
to start the trading in bullion & textile garments in national as well as
international market.
The Company has looking for investment in other sector. The focuses on cost
optimization, introduction of new markets and offering of new product development with
special fiber, other than cotton, with sustainable finishes. According to the
International Monetary Fund (IMF), the global economic activity is picking up with a
long-awaited cyclical recovery in investment, manufacturing, and trade. It has projected
economic activities to improve in both advanced economies as well as EMDE since CY 2022and
CY 2021, with global growth projections at 4.7% and 3.9%respectively.
5. Business Risk and Risk Management:
The Company is exposed to a number of risks. Some key risks have been mentioned below:
1. TheRawmaterialpricesaremarketdrivenbeinganagriculturalproductandanynaturalcalamity
such as drought/ flood will affect the profitability of the Company.
2. GST has led to reduction in import duties across the segments, leading to a serious
threat of imports from China, Indonesia, Thailand and Bangladesh. Down ward revision in
duty draw back rates has added to the woes of the Indian Textile sector. The poor global
retail sales and slowdown of business in the domestic market, are matters of concern for
the industry.
3. Adverse volatility in raw material prices can affect the performance.
4. Uncertain availability of PTA from domestic suppliers on account of their frequent
breakdowns can reduce capacity utilization at times.
5. Any change in the fashion will also have bearing on the profitability of the
Company.
6.
Riskisaninherentpartofanybusiness.Therearevarioustypesofrisksthatthreatentheexistence of a
company like Strategic Risk, Business Risk, Finance Risk, Environment Risk, Personnel
Risk, Operational Risk, Reputation Risk, Regulatory Risk, Technology Risk, Political Risk,
etc. Your company aims at enhancing and maximizing shareholders value by achieving
appropriate tradeoff between risk &returns.
6. Internal Control Systems and their adequacy:
Thecompanyhasadequatesystemsofinternalcontrolcoveringallfinancialandoperationalactivit
ies. The internal control are designed to provide reasonable assurance with regard to
maintaining proper accounting controls, protecting assets from unauthorized losses and
ensuring reliability of financial and operational information and proper compliance with
regulations. In the opinion of the Board, an internal control system adequate to the size
of the Company is in place.
Internal Control System is embedded in your Companys operating framework. Your Company
believes that managing risks helps in maximizing returns to stakeholders. Internal audit
reports are prepared to create awareness and to take corrective actions on the respective
units or areas, which need rectification. These reports are then reviewed by the
management team and the Audit Committee for follow-up action.
7. Financial Performance:
For the financial year Net Loss after tax is Rs. 13.59 lakhs against Loss of Rs. 33.09
lakhs during the previous year.
8. Human Resource / Industrial Relations:
TheCompanyisregularlyconductingseminarsandworkshopstoimprovethesafety.The Company is
deputing employees for attending seminars, for updating their skills and knowledge.
ConsistentandfairHRpoliciesensurethatindustrialrelationscontinuetobepeacefuland cordial
and results in increasing in productivity and effectiveness. The Company aims at creating
development-oriented approach for its employees by building systems, processes and
focusing on recruitment of top-quality manpower. Focus on transparent performance
appraisal and productivity linked incentive schemes have resulted in highly motivated
workforce and increased productivity. The Company appreciatestheproductiveco-
operationextendedbyitsemployeesintheeffortsofthemanagementto carry the Company to greater
heights.
+91-9892691696
