Binny Mills Ltd Management Discussions

(Pursuant to regulation 34(2) (e) and Schedule V of the Listing Regulations) This report is part of the Directors Report

Indian Economy Overview:

The Indian economy over the course of the time, has showcased a robust and resilient growth story driven by perseverance, ingenuity, and vision. In the face of unprecedented challenges such as the COVID-19 pandemic and geopolitical conflicts, the Indian economy has demonstrated a remarkable ability to bounce back and convert challenges into opportunities while striving to achieve strong, sustainable, balanced, and inclusive growth. India has emerged as the fastest-growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships.

Indian economy remained resilient with a robust 7.6% growth rate of GDP in FY 2023-24 over and above 7% growth rate in FY 2022-23. India has been a key growth engine for the world, contributing 16% to the global growth in 2023. The strong economic growth in the first quarter of the Financial Year (FY) 23-24 helped India to overcome the United Kingdom to become the fifth-largest economy.

According to the PHD Chamber of Commerce and Industry (PHDCCI), Indias economy is poised to grow between 8 to 8.3% in the current fiscal year emphasizing the countrys robust growth fundamentals, projecting an average GDP growth rate of 6.7% over the next 23 years.

The double-digit growth rate of the Construction sector (10.7%), followed by a good growth rate of the Manufacturing sector (8.5%) has boosted the GDP growth in FY 2023-24. Private consumption in the first half of FY 2023-24 was the highest since FY 15 and this led to a boost to production activity resulting in enhanced capacity utilisation across sectors.

The Central Governments fiscal deficit shrank from 6.4% of GDP in FY 2022 to an estimated 5.8% in FY 2023. Revenue performance exceeded expectations and pushed the deficit lower than the budget target of 5.9% of GDP in FY 2023.

The growth in gross value added (GVA) in the agriculture and allied sector in 2023-24 stood at 0.7 % as against 4.7 % a year earlier as food grains production declined due to the deficient and uneven southwest monsoon rainfall. The declaration of 2023 as the international year of millets by the United Nations (UN) provided a renewed thrust to diversification of crops from rice and wheat towards nutritional, environmentally sustainable,and traditional crops across the country.

Personal income tax collections are estimated to have grown by 23.% in FY 2023, highlighting surging incomes for salaried professionals. This was also a sign of a successful government effort to widen the tax base by keeping tax exemption limits stable and using digital tools to prevent tax leakage.

The services sector, with a share of over 63 % in GVA, remained the mainstay of aggregate supply, with growth of 7.9 % in 2023-24. Construction activity accelerated to register double digit growth, benefitting from rising demand in the housing sector and the governments thrust on infrastructure. The sustained ebullience in bank credit growth propelled financial services, while there was a slowdown in IT services during 2023-24 on subdued global demand.

Textile Industry Structure and developments:

The textile and apparel industry in India is one of the oldest industries and it is spread across the country. The export of textiles around the globe plays a major role in the Indian economy. India is the only country that produces all 5 types of silk, i.e., Mulberry, Tropical Tasar, Oak Tasar, Eri, and Munga.India currently owns more than 1400 large textile companies and around 1.5 million small and medium enterprises (SMEs) operating in the sector.The decentralised power looms/ hosiery and knitting sector form the largest component of the textiles sector. The close linkage of textiles industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles makes it unique in comparison to other industries in the country. Indias textiles industry has a capacity to produce a wide variety of products suitable for different market segments, both within India and across the world.

Indias textile and apparel exports (including handicrafts) stood at US$ 28.72 billion in FY 23-24 The Indian textiles and apparel industry contributed 2.3% to the GDP, 12% to export earnings, 13% to industrial production and held 4% of the global trade in textiles and apparel in 2023. The textile industry in India is predicted to double its contribution to the GDP, rising from 2.3% to approximately 5% by the end of this decade.

Government Initiatives:

In order to attract private equity and employ more people, the government introduced various schemes such as the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS) and Mega Integrated Textile Region and Apparel (MITRA) Park scheme

The Government has also launched the Production Linked Incentive (PLI) Scheme with an approved outlay of INR 10,683 Cr to promote the production of MMF Apparel, MMF Fabrics and Products of Technical Textiles in the country to enable the Textiles Industry to achieve size and scale and to become competitive. A total of 12 companies have proposed to set up projects under the said Scheme in Madhya Pradesh, 7 companies in Uttar Pradesh, and 4 companies in Rajasthan.

Opportunities

Demand For Natural Fibers: In an increasingly eco-conscious world, the textile industry is witnessing a rising appetite for natural fibers. These fibers, including cotton, silk, linen, wool, jute and cashmere are at the core of the Indian textiles industry, which is poised to grow from its current valuation of $138 billion to a projected $195 billion by 2025. Notably, these natural fibers are celebrated for their eco-friendly attributes, characterised by a unique blend of light weight durability. China, India and the United States are at the forefront of this trend, promoting natural fibers to sustain the growth of the global textile industry. As the demand for sustainable fashion continues to rise, natural fibers are expected to remain at the forefront of the industry.

Threats observed:

Imports from China and Bangladesh:

The main source of Indias imports of knitted or crocheted fabric is China, which accounted for majority of the total value, followed by Vietnam, Taiwan, Malaysia and Bangladesh. Polyester-based knitted fabrics hold the major share of imports, which is more than 60% of the total knitted fabrics imports. These fabrics are used for T-shirts, track suits, sportswear and activewear.

The Free Trade Agreement (FTA) signed between India and Bangladesh is derailing Indias textile exports as well as its share in the home market. Fabrics imported from Bangladesh are exempted from customs duty due to which the imports from Bangladesh are increasing every month, which is upsetting the Indian manufacturers.

Warehouse Industry - Structure and developments:

A warehouse is an essential component of corporate infrastructure and one of the primary player in the global supply chain.Indias warehousing sector has seen a tremendous change over the decades from being unorganized godown structures to getting recognized as a prominent asset class.Geopolitical factors and global trade dynamics have influenced the trajectory of the warehouse market, presenting both challenges and opportunities for stakeholders. By embracing technological advancements, adopting sustainable practices, and tapping into emerging markets, the warehouse industry can navigate the complexities of the evolving landscape and thrive in 2024 and beyond.

Factors Driving the Warehouse Market:

The continued expansion of e-commerce platforms is anticipated to increase the demand for warehouse space, particularly in urban areas. The rise of third-party logistics (3PL) providers is also expected to contribute to market growth, as companies increasingly outsource their logistics operations to specialized firms. Furthermore, sectors like food and pharmaceuticals are driving the need for specialized storage facilities, including cold storage warehouses, to meet stringent regulatory requirements and ensure product quality and safety.

Government initiatives such as the National Logistics Policy and the implementation of Goods and Services Tax (GST) have bolstered the warehousing sector by streamlining tax structures and improving logistics infrastructure.

Threats observed:

Despite the promising outlook, the warehouse market in India faces several challenges. Land acquisition remains a significant hurdle due to regulatory complexities and high real estate prices, particularly in prime locations near major cities. Moreover, inadequate infrastructure and transportation bottlenecks pose logistical challenges, impacting the efficiency of warehouse operations.

Labour shortages and skill gaps in warehouse management are also pressing concerns, highlighting the need for workforce development and training programs to enhance the capabilities of warehouse personnel. Addressing these challenges will be crucial for sustaining the momentum of growth in the warehouse market.

Risks and concerns:

The company is engaged in the trading business. Hence, the risks associated with stiff competition in retail textile business are the major risk for the Company. But, the company has built up a reputation among the buyers and has created a brand image for its products. Hence, it is confident of mitigating the effects of the risks.

Internal control systems and their adequacy:

The Company has proper and adequate internal control systems commensurate with its size and nature of operations, to provide reasonable assurance that all assets are safeguarded, transactions are authorised, recorded and reported properly and that all applicable statutes and corporate policies are duly complied with.

Human Resources Development and Industrial Relations:

The Company attaches considerable importance to Human Resource Development and harmonious industrial relations. There are senior and experienced professionals managing the operations of its divisions. The company takes all efforts to train its employees to make them a skilled employee. The overall industrial relations, during the year, were cordial.

Environmental protection:

The Environmental Policy of your company is maintaining clean and green environment and ecofriendly atmosphere. Your company has been complying with applicable environmental regulations and preventing pollution in all operations. Your company continues to strive for energy saving and conservation of natural reserves.

Risk Management:

Risk Management is an ongoing process. The Constitution of the Risk Management Committee is not applicable to the company. However, with regard to the exposure of risk in conducting the business, the Company is exposed mainly to Credit Risk and Cash Management Risk in its business operations. The Company has taken over a few business divisions of erstwhile Binny Ltd along with the respective business division employees. Their expertise in dealing with suppliers and customers has helped to mitigate the Credit Risk. The sales collections at the showrooms of the Company are mainly in the form of cash. This exposes our Company to cash management risk. In order to mitigate the same, the Company ensures efficient and secured collection at its showrooms. The cash collections are deposited in the Companys bank account the next day. The Company has also adopted stringent checks and internal controls at its showrooms. At the Head Office of the Company, each days collections are monitored and reconciled on a daily basis. Such procedures and internal controls has helped to mitigate Cash Management Risk.

Segment wise and Product wise performance

The details are given in the Para ‘Operations in the Directors Report

Outlook:

The details of outlook are given in the Para ‘Outlook and Opportunities in the Directors Report.

Discussion on financial performance with respect to operational performance:

The details are given in the Para ‘Operations in the Directors Report.

Details of any change in the Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:

There is no return on Net Worth.

Cautionary Statement:

This report contains forward looking statements that involve risks and uncertainties including, but not limited to, risks inherent in the Companys growth strategy, dependence on certain businesses, dependence on availability of qualified and trained manpower, economic conditions, government policies and other factors. Actual results, performance or achievements could differ materially from those expressed or implied in such forward looking statements. This report should be read in conjunction with the financial statements included herein and the notes thereto.

	For and on behalf of the Board
	Sd/-
	V.R. Venkataachalam
	Chairman & Director
	[DIN: 00037524]
	Registered Office:
	No.4, (Old No.10) Karpagambal Nagar,
Date : 16th July, 2024	Mylapore, Chennai 600 004.
Place : Chennai	CIN: L17120TN2007PLC065807