alps industries ltd share price Management discussions

I. TEXTILES INDUSTRY STRUCTURE AND DEVELOPMENT

The Indian textile sector is set to benefit from the government s priorities outlined in the budget 2023. The budget indicates the government s commitment to enhancing the textile sector s competitiveness, employment opportunities, and exports. The government has set aside substantial funds for the textile industry, including allocation of funds for the production-linked incentive (PLI) scheme for textiles, the Indian Technical Textiles Mission, and for the National Technical Textiles Mission. These measures are expected to boost the sector s production and exports, as well as create more employment opportunities for people in the country. In addition, the government has announced several other initiatives to support the textile sector, including establishing mega textile parks, providing infrastructure development support, increasing support for the Handloom sector, and supporting the growth of the jute sector. The textile sector is a significant contributor to India s economy, and the government s focus on it in the 2023-24 budgets is expected to have a positive impact on the sector s growth and development. The government s commitment to the textile sector s development is also in line with its goal of making India a global manufacturing hub and boosting its exports.

COTTON

Cotton is one of the most important cash crops and accounts for around 25% of the total global fibre production. In the raw material consumption basket of the Indian textile industry, the proportion of cotton is around 60%. The consumption of cotton is approximately300 lakh bales (170 kg each) per year. India occupies first position in the world in cotton acreage with around 133lakh hectares under cotton cultivation which is around 41% of the world area of 320.54 lakh hectares as per three report of ministry of Textiles. The budget for the procurement of cotton by Cotton Corporation under Price Support Scheme has been reduced to Rs 1 lakh from Rs 782 crore in 2022-23. The Market Intervention Scheme and Price Support Scheme received Rs 1 lakh, as opposed to Rs 1,500 crore in the previous budget.

YARN A SIGNIFICANT SEGMENT

The recession in the textile industry since the past five-six years, higher electricity rates, rising cotton prices and no increase in yarn rates, high-interest rates on bank loans in addition to the trade war between USA and China have adversely affected the yarn business, Of the 150 spinning mills in the state, nearly 45 mills are closed, 70 are active and another 30 mills are in the process of construction as on closing of previous financial year. The textile sector has been allocated 4,389.34 crore for the textile sector for financial year which, as per proposed plans of the Ministry, will be offered for incremental production in man-made fibre items and technical textiles products. The PLI scheme is to promote domestic manufacturing, for both sales within the country and exports, by providing financial incentives on incremental turnover for five years. While the rates of incentive to be offered to the textiles sector linked to incremental production are set to be one of the highest amongst the existing sectors, some in the industry are of the view that it would be of limited advantage if most units get excluded.

MACRO LEVEL OPPORTUNITIES AND THREATS

The Company has a robust Enterprise Risk Management framework which enables it to take certain risks to remain competitive and achieve higher growth and at the same time mitigate other risks to maintain sustainable results. Under the framework, the Company has laid down a Risk Management Plan which defines the process for identification of risks, its assessment, mitigation measures, monitoring and reporting. While the Company, through its employees and Executive Management, continuously assess the identified Risks, the Risk Management Committee reviews the identified Risks and its mitigation measures annually. The Company has identified 17 Risks - 5 Strategic Risks, 10 Operational Risks & 2 Regulatory Risks. Key Strategic Risks include demand destruction, changing customer preference and supply chain disruption due to pandemic, reputational risk, succession planning & business continuity planning. Key Operating Risks include customers credit risk, fluctuating forex rates and raw material prices, cyber security risk, IT system breakdown, concentration of business with certain customers and sustainability. Regulatory Risks include changes in bilateral/ multilateral trade agreements, international trade disputes and regulatory compliances. Our approach to performance management is a holistic one wherein, while holding people accountable, we look at continuous development and create opportunities for them to excel in new and/ or larger roles. Performance dialogues create opportunities.

A. GOVERNMENT POLICIES-TEXTILE SECTOR

In the wake of the ongoing pandemic, all nations have suffered at large across all industries. Textile Industry too has been no exception to the brunt faced due to the impact of the coronavirus. While most economies are still struggling to get up, India surprisingly has sprung back with the ferociousness of a panther from the third quarter onward. Despite the country coming to a standstill for months and finances and supply chains being adversely affected, Indian textile industry too is gradually scaling back to its pre-covid glory. While credit for this does go to our robust organizations, the various initiatives and steps taken by the Government of India to facilitate this positive movement in the textile industry cannot be ignored. The support provided by the government with its ongoing schemes and the launch of new measures have provided the strong framework that domestic textile manufacturers were seeking to setup their products on. Atmanirbhar Bharat, one of the most important lessons learnt this year has definitely been the need to be self reliant. As part of the "Atmanirbharat Bharat" program,

"Make in India" slogan has been launched to reboot and revamp the economy post the first impact of the pandemic. As per data, India has jumped up 79 positions on the ease of doing business ranking after the launch of various schemes under "Make in India" campaign. The new proposed law regarding indirect taxes will result in Fibre-neutrality effect on the Indian textiles sector. The new proposed law regarding indirect taxes will result in Fibre-neutrality effect on the Indian textiles sector, according to the Ministry of Textiles.

II. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE

In terms of the Ind AS, there is only one reportable segment i.e., Textile Segment. Hence the segment wise reporting is no applicable.

III. OUTLOOK AT LARGE

The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players. Manufacturing activity and trade growth continued to be low key. The year was marked by geopolitical tensions and trade-war rhetoric mainly between the US and China & Russia and Ukraine. This clearly reflected in reduced confidence on the future of the global trading system and international cooperation, and impacted investment decisions, and global trade. Several economies signaled and adopted an accommodating monetary policy which cushioned the impact of global tensions on financial market sentiment and activity.

However, Outlook for global economic growth started on a weak note in 2023, and Looking forward, the market is projected to reach US$ 344.1 billion by 2027, exhibiting a CAGR of 14.8% during 2022-2027.

IV. RISKS AND CONCERNS

Raw Material Price Risk: Cotton are the major raw materials used by the Company for textile. Volatility in prices impacts the overall cost of production, and thus, the profitability.

Currency Risk: As the Company deals in the international market, it is exposed to currency volatility, which impacts the overall revenue of the Company.

Geographical Risk

Concentration in a particular territory leads to a depleting market presence of the Company. Policy Risk

Implementation of any policy which is not in favour of the Company hampers the operations of the Company.

Competition Risk

There are many emerging countries, where production costs are relatively lower than that of India. This poses a potential threat to the Company.

COVID- 19

The fast spread of the COVID-19 virus has affected the globe posing enormous health, economic, environmental, and social challenges to its population. This pandemic can be accounted for of the most extreme challenges that mankind has faced in the modern time. The outbreak has disrupted the majority of the global supply chains across South and Southeast Asia. The economic depression is visible across the globe but emerging nations are suffering the deepest impact. The industry on it s part would have to ensure a pandemic resilient manufacturing environment with functional exchange of peoptudle and goods. The government put and operated large number of vaccination centers to curb the impact of this deadly virus. Once larger parts of the population are immunized against COVID-19 and restrictions start to be lifted, companies expect a gradual improvement in economic conditions which will translate into output growth. Meanwhile, goods producers expect output to increase over the coming 12 months.

Mitigation Strategy

? Strong relationship with vendors and proximity to the raw material sources ensures easy availability. The Company also plans to save land costs and inventory management keeping in view the historical cycle of input prices. From time to time, the Company hedges raw-material against order book. ? Currency risks are managed by constant monitoring exposures and limiting the same in view of applicable margins under the relevant Market engagements. Also, some portion of the foreign currency is hedged to mitigate any adverse movements in currency fluctuations. ? The Government of India has come up with various incentives such as rebate on state levies, duty drawback, and ATUFS, among others. The Company has leveraged on these initiatives to stay ahead in the market. ? The Company benefits out of economies of scale, cutting-edge technology, and loyal partnerships to offer competitive rates to its clients across the globe.

V. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

High accuracy in recording and providing reliable financial & operational support is ensured through stringent procedures. The Company s internal team and Audit Committee monitor business operations and any deviations are promptly brought to the notice of the Management board. These findings provide input for risk identification and assessment, post which prompt risk mitigation strategies are deployed towards a seamless growth of the Company. Internal audit process verifies whether all systems and processes are commensurate with the business size and structure. Adequate internal control systems safeguard the assets of the company with timely identification and intervention to assuage risks. The internal audit report is discussed with the senior management and members of Audit Committee to keep a check on the existing systems and take corrective action to further enhance the control measures. Regular internal audits and checks are carried out to ensure the robustness of the system. The Management also reviews from time to time the internal control systems and procedures to ensure their proper application. The emphasis on internal controls prevails across functions and processes, covering the entire gamut of various activities.

VI. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During current Financial Year under review your company has recorded the total revenue of Rs. 2022.64 Lakh as compared to previous financial year of Rs. 30631.56 Lakh. Despite decrease in total revenue it earned a negative EBIDTA 556.74 Lakh (previous year negative EBIDTA of Rs. 1254.62 Lakh) and a negative PAT of Rs. 6043.36 Lakh (previous year negative PAT Rs. 8471.82 Lakh) after recognizing the provision of Depreciation and Interest in term of INDAS.

VII. MATERIAL DEVELOPMENTS ON HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The company has been consistently maintaining harmonious & cordial relations with the employees at all the locations. The Company continues to lay emphasis on building and sustaining culture of larger family, caring & supporting each other. During the year, with consistent review and efforts for optimization of available manpower resources, no. of employees was 7 as compare to 1334 last year. However due to downfall in the manufacturing facilities and non availability of operative assets, company could not continue with the employee strength in current year and also in coming year.

VIII. MEDIUM-TERM AND LONG-TERM STRATEGY

In terms of SEBI/HO/CFD/CMD/CIR/P/2018/79 May 10, 2018 the disclosure of Medium and Long-term strategy of the company, for the next financial year ending on March 31, 2024 is within the limits set by its competitive position. However the company is struggling to maintain the same level of its business as all the operative assets have been taken over by the lenders under the provisions of SARFAESI.

IX. STATUTORY COMPLIANCE

The Executive Director makes a declaration at each Board Meeting regarding the compliance with the provisions of various statutes, after obtaining confirmation from all the units of the company. The Company Secretary ensures compliance accordance to SEBI regulations and provisions of the Listing Regulations.

X. DETAILS OF SIGNIFICANT CHANGES

As required the details of changes of 25% or more as compared to the immediately previous financial year in key financial ratios along with detailed reasons therefore are as under:

S. No.	Particulars	Current Year 31.03.2023	Previous Year 31.03.2022	Reasons of change.
1.	Current ratio (in times)	0.01	0.13	The current assets were reduced due to reduce business & payments of current liabilities during the current year hence the change in Current Ratio.
2.	Debt-Equity ratio (in times)	(0.99)	(1.00)	Explanation not required.
3.	Debt service coverage ratio (in times)	(0.01)	(0.03)	The Company could not serve the Interest as well as Principal Debts due to negative cash earnings during the year hence reduction in Debt Service Coverage Ratio.
4.	Return on equity ratio (in %)	7.81%	12.63%	The net equity of the company is negative and due to reduction in business during the year the company incurred losses.
5.	Inventory turnover ratio (in times)	-	20.57	Explanation Not Require
6.	Trade receivables turnover ratio (in times)	1.13	9.52	Turnover of the current year has reduced substantially hence change in ratio.
7.	Trade payable turnover ratio (in times)	1.27	7.59	Purchase of the current year has reduced substantially hence change in ratio.
8.	Net capital turnover ratio (in times)	(0.06)	(1.09)	The net sales of current year has reduced substantially as compared to capital employed. hence change in ratio.
9.	Net profit ratio (in %)	(336.89%)	(28.01%)	The net sales of current year has reduced substantially while the finance cost is continued at same level resulting into net loss hence change in ratio.
10.	Return on capital employed (in %)	139.54%	(1497.01%)	Due to loss during the year, no interest on borrowings could be served which increased the capital employed hence change in ratio
11.	Return on investment (in %)	-	-	Explanation not required

XI. CAUTIONARY STATEMENT

The Management Discussion and Analysis Report containing your Company s objectives, projections, estimates and expectation may constitute certain statements, which are forward looking within the meaning of applicable laws and regulations. The statements in this Management Discussion and Analysis Report could differ materially from those expressed or implied. Important factors that could make a difference to the Company s operation include raw material availability and prices, cyclical demand and pricing in the Company s principal markets, changes in the Governmental regulations, tax regimes, forex markets, economic developments within India and the countries with which the Company conducts business and other incidental factors. It is much more unpredictable due to COVID VIRUS, the challenge are to guard against any community spread and move to flattening the curve, as quickly as possible to get normalize the market trends. The Management has made these statements based on its current expectations and projections about 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. The management cannot guarantee that these forward-looking statements will be realized, although it believes that it has been prudent in making these assumptions.