Arex Industries Ltd Management Discussions

Overview

The Company is engaged in manufacturing of all types of woven and printed labels, which promotes brand image of the customers. The Companys product is largely used by the garment manufacturers within India and abroad.

Industry Structure

The Indian textile industry is a cornerstone of the Indian economy and a significant contributor to its industrial output, exports and employment. The Government of India has continued its proactive support for the sector through various initiatives. The Production Linked Incentive (PLI) scheme, the establishment of PM Mega Integrated Textile Region and Apparel (PM MITRA) parks, and the National Technical Textiles Mission are expected to provide a significant impetus to the industrys growth, encouraging investment in modern infrastructure and technology.

Globally, the textile industry is witnessing a paradigm shift towards sustainability and digitalization. The “China Plus One” sourcing strategy continues to present opportunities for Indian textile manufacturers as global brands seek to diversity their supply bases. The garment label manufacturing segment, in which the Company operates, is a critical ancillary to the apparel industry. Labels are no longer just a branding and information tool, they are evolving into a key component of a garments identity, with increasing demand for innovative and sustainable solutions. The growth of this segment is intrinsically linked to the performance of the apparel industry.

Opportunities, Threats, Risk and Concern

The domestic apparel market is on a growth trajectory, fueled by a rising middle class, increasing disposable incomes and the rapid expansion of e- commerce and organised retail. The proliferation of new-age, direct-to-consumer (D2C) brands and the growing brand consciousness among consumers have amplified the importance of high-quality, aesthetically pleasing labels that effectively communicate a brands identity. The FTA strengthens Indias position against Bangladesh and Vietnam.

Indias export competitiveness remains low trailing China, Vietnam and Bangladesh due to high production costs, lower labour efficiency, fragmented supply chains and weak vertical integration. Complex regulations and trade barriers, including burdensome export procedures and limited FTAs, disadvantage India against competitors like Vietnam in major markets. Labour issues like increasing minimum wages, high attrition and migrant worker challenges cause workforce instability, with shortages in textile hubs and underutilised surplus in other states. Fast fashion and rising textile waste pose growing concerns, with India recycling market still small despite expected growth amid global waste projections for 2030. The garment label industry is highly fragmented, with the presence of numerous organised and unorganised players. This leads to intense price competition, impacting the profit margins.

Outlook

The Company continues its belief to continuous upgradation of its technology for efficient and better productivity. The Company has spent amount of about Rs. 71.98 lacs for spare parts and upgradation of its machineries. The demand has been stable in comparison to the previous year and thus the revenue from operations of the Company has been marginally increased by approx.0.25% in comparison to the previous year. The Companys operation at the two units, i.e. at Chhatral and Anjar have been satisfactory in line with the affected demand for apparels. The Company believes in providing quality products and its such belief leads towards its products being well accepted in domestic and overseas markets.

Segment-wise

The Company has single segment of manufacturing garment labels.

Internal Control Systems

The Company has implemented adequate and effective control systems with proper checks and balances to safe guard the assets and to prevent frauds. The Audit Committee meets at regular intervals and actively reviews the internal control systems. The Company also takes suitable actions whenever necessary.

Review of Financial Performance

The Revenue from Operations of the Company has marginally increased in comparison to the previous year. The Revenue from Operations of the Company stands increase by 0.25% in comparison to the previous year. The Company has earned a profit of Rs. 263.41/- lacs as against a profit of Rs. 254.33 lacs in the previous year. Your Directors do not recommend dividend for the current year.

Human Resources / Industrial Relations

The relations between the employees and the management remained cordial throughout the year.

Significant Change

The changes in various ratios have been provided in the notes to the Financial Statements.

Cautionary Statement

Statements in this report on Managements Discussion and Analysis describing the Companys objectives, projections, estimates, plans, exceptions or predictions may be forward looking. These statements are based on certain assumptions and exceptions of future events. Actual results could however differ materially from those expressed or implied. The Company assumes no responsibility in respect of forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.