Bhalchandram Clothing Ltd Management Discussions.

Industry Structure and Development

The Textile Industry in India accounts for 10% of the manufacturing production leading to 2% of the GDP of the Country which is one of the significant contributors to the Indian economy. Textiles sector is one of the largest contributors to Indias exports with approximately 15 percent of total exports. During the year 2018-19, the Cotton Textile Industry has been under stress because of market trends. After witnessing challenges during the year 2018-2019 and given unfavorable economic conditions, the Indian textile industry has seen a considerable stress .

With domestic and global economic conditions gradually improving along with the focused efforts made by Ministry of Textiles, Indian textiles and garments sector is set for growth, buoyed by revival in domestic consumption and export demand.

Bhalchandram Clothing Limited is mainly engaged in the export trading of cotton yarn in all coarser and fine counts, where the Company has good presence and leadership.

Opportunities and Threats

The future of Indian Cotton Textile Industry is highly depending on availability of raw material at a competitive price. With the introduction of Hybrids and BT Cotton, the cotton production in India is increasing every year. The government is making efforts to supply proper quality seeds at a reasonable price to the growers and it is expected that the supply of quality cotton will be comfortable.

In the past, the Textile Industry did not develop in an organized manner and the policy favored fragmentation resulting in organized players suffering heavily because of the distorted fiscal structure. Fortunately, in the last few years, the Government has now provided level playing field to all the sectors of textile industry and therefore, large investments are coming in the textile industry. Government had given good incentives under Technology Upgradation Fund Scheme and also benefits to the processing sector, which will give boost to the textile industry.

Outlook

The long term objective of the Company is to become strong player in the cotton textiles export market with strong emphasis on product and market development, value added yarns, customer services and Technology Up gradation. Your Company is also continuously improving its operational efficiency, and cost control which alone can improve the bottom line in future in highly competitive environment. Further, your Company is hopeful to get advantage of the overall good times likely to come for the Indian Cotton Textile Industry and will do all out efforts to secure the bigger share of the increasing market in future.

A stable outlook on cotton and synthetic textiles would result from favorable policy environment, improvements in demand-supply position, continued stability in input costs and consequent improvement in margins/liquidity. It is unlikely that the sectors outlook will turn positive until fundamental issues such as power shortage, lack of technology and modern machinery and demand slowdown are resolved. However, foreign direct investment in retail is an opportunity that would unleash demand in the long run and offset any slowdown in exports.

By encashing the rich experience gained by the Company in the Cotton Textile sector, the company has plans to increase its efforts of marketing. The emphasis will also be on more exports of value added items such as dyed yarns, specialty yarns and grey and dyed fabrics.

Risks and Concern

Our business shall dependent on the availability/supply and cost of raw materials which we source from domestic suppliers. Any significant increase in the prices of these raw materials or decrease in the availability of the raw materials, could adversely affect our results of operations.

Our business is subject to regulation by several authorities, which could have an adverse effect on our business and our results of operations.

We are heavily dependent on our Promoters and the loss of their guidance and services may adversely affect our business or results of operations.

Change in Government of Indias Economic Liberalization policies may hinder prices of our equity shares

Change in Tax laws in India (i.e. central tax, service tax and income tax) may increase tax liabilities of the company inversely affecting PAT

Slowdown in the Indian economy may inverse effect in our profit

Any Natural calamities, terrorist attack on India may hinder our profit

Change in economic regulations and laws may also effect the company adversely

Internal Control Systems and their adequacy

The Company has a proper adequate internal control system to ensure that all the assets are safe guarded and protected against the loss from unauthorized used or disposition and that transactions are authorized, recorded and reported correctly.

The internal control is supplemented by, extensive internal audit periodical review by the management and documented policies, guidelines and procedures. The internal control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of assets.

Financial and Operational Performance

During the year under review your Company has reported a total income from operation of Rs 1.67 Lakhs when compared to previous years proceeds of Rs 85.53 Lakhs.

Liquidity and Capital Resources

Particulars 2018-2019 2017-2018
( in Rupees) ( in Rupees)
Cash and Cash Equivalents
Beginning of the year 191,551 741,418
End of the year 150,804 191,551
Net Cash provided (used) by -
Operating activities 559,248 15,330,133
Investment activities (599,996) (15,880,000)
Financial activities - -

The net cash inflow from the operating activities during the year under review has been Rs.5.59 Lakhs as compared to inflow of Rs. 153.30 Lakhs in previous year. The outflow from investment activity stands at Rs. 6.00 Lakhs as compared to outflow of Rs. 158.8 Lakhs in previous year. There is no Cashflow from financial activities for the year under review.

Material Developments in Human Resources

The Company continues to lay emphasis on developing and facilitating optimum human performance. Performance management was the key word for the Company this year. Recruitment process has been strengthened to ensure higher competence levels. There were two permanent employees on the roll of the Company as on 31st March, 2019.

For and on behalf of the Board of Directors

Sd/- Sd/-
Ujwal R. Lahoti Umesh R. Lahoti
(Managing Director) (Director)
(DIN 00360785) (DIN 00361216)

Place: Mumbai

Date: 19th August, 2019