Global economic prospects continue to be uncertain and the latest developments in the
financial economies, have added to this uncertainty. Elevated inflation and financial
tightening, which have weakened the growth process, are thus expected to weigh on economic
activity for at least three years since the armed conflict broke out between Russia and
Ukraine in February 2022. The slowing of global growth, accompanied by pressures from
deglobalisation and supply chain disruptions, has also moderated global trade.
In this highly uncertain global environment, the Indian economy is exhibiting signs of
a gradual strengthening of the growth momentum, drawing from macroeconomic fundamentals.
BOMBAY REALTY
Industry Structure and Developments
The real estate market has witnessed high growth in recent times Inspite of some
challenges of inflation & high interest costs, the sector continues to grow due to
rising demand for residential properties, along with the growing infrastructural
development that provides enhanced connectivity via roads, railways & air. While there
is some slowdown in the affordable segment, the upper end of the market continue to grow
with sales picking up across the city. Owing to the rising standards of living and growing
necessity for larger homes that can supplement hybrid work culture, there is a demand for
large homes with better- amenities. Increased transparency via RERA is also providing
additional comfort to buyers. The positive trend for residential real estate will continue
this year.
Opportunities and Threats
The real estate market in India continues to do well. The key opportunities are in well
designed homes in good locations. One of the changing trends is to give homes which are
well sized basis the changing demands of families post covid. both of our land parcels are
well located to take advantage of the positive trends in residential real estate.
There have been a significant amount trend is going to continue into the new financial
year also. This may create a situation of surplus supply in the residential market which
could put pressures on the pricing. Further, the recent increasing trends in Covid
numbers, global financial instability, layoffs in the technology space could also dampen
the spirit of the market and have a direct impact on demand and pricing.
Outlook
Your Company is well placed in this micro-market as it enjoys the benefits of two large
contiguous land parcels with clear titles, giving it a significant advantage over other
location of these two sites, well connected with the commercial hub of Central Mumbai and
with the improvements in infrastructure developments such as the Worli Sewri Link Road
(1.5 kms from the site) value to the sites. especially in the advanced
Risks and Concerns
The recent emerging Covid trends continues to be a risk for the industry this year.
Apart from that, rising inflation coupled with high interest costs is putting a stress on
the margins and further also reduces disposable income in the hand of buyers. The rise in
property prices in Mumbai and also Metro development across the city is creating new micro
markets and also pushing many people into buying homes in the suburbs and the neighbouring
cities of Navi Mumbai and Thane hence making an impact on the overall demand in the main
Island City.
HOME & YOU
Industry Structure and Developments
The home textiles market in India is growing due to the growing . affluence levels of
Indian consumers who are becoming more and more demanding. The growth in the Indian home
textiles is supported by increasing population, rising income levels, increase in
organized retail, and growth of end-use sectors like housing, hospitality, healthcare.
Increasing efforts in quality improvement, innovations through R&D programs, and other
preferential value-added features have helped Indias home textile products become more
popular in the global market.
Opportunities & Threats
Our brand is the identity of Home Textile in India. Bombay Dyeing is a household name
for every Indian from urban to the rural population. It sees enormous opportunity in
product and design innovations to address the changing preferences of young vibrant India.
High cotton prices this has become a subject of concern to the domestic textile industry.
The government has removed a 5% basic customs duty on cotton imports which will help to
stabilise cotton prices. Shortage in supply with increased prices of cotton would be
threat for continuity of supply.
While the industry continues to be influenced by wild swings in of new project launches
and the commodity prices, it is also facing major challenges in the form of hike in fuel
price, increasing wages and raw material costs. Key threats for the brand continue to be
the constant inflow of cheaper alternatives from the unorganized sector as well as inflow
of low priced material from neighbouring countries.
Outlook
The Company is currently operating with a lean cost business model. Retail Division has
taken necessary steps to reduce the credit risk and increased the distribution. The Indian
economy is heading towards a steady recovery, which we could see during the festive season
of FY real estate players. The strategic 2023-24.
Consumers are already back to shopping with a renewed positivity. We are looking at the
new fiscal year with positivity around markets and consumer predilections. The demand for
categories like Bedlinen, Bathlinen and TOB will continue to see the good growth in the
coming year.
Risks and Concerns
The price of cotton has risen too much now, which is a major concern the textile
industry. However with the abolition of import duty, prices should cool down.
POLYESTER BUSINESS
Industry Structure and Developments
Your Company is one of the seven producers of Polyester Staple Fibre (PSF) in the
country with a market share of about 12%. While the market leader is fully vertically
integrated, the other producers, including the Company are stand-alone Polyester
manufacturers. New capacities added during last in the country and increased competition
for the Company. PSF industry saw a domestic sales volume growth 10% during the year. The
overall polyester industrys capacity utilization remained around 80%. The Companys
utilisation remained comparatively higher at 92%. Impact on demand due to geopolitical
events and inflation/recession in western countries posed a major challenge to
increase/maintain the sales volume and capacity utilization for the industry.
In the backdrop of volatile crude oil prices the prices of petrochemicals PTA and MEG,
the raw materials for your Company remain volatile. Domestic availability of raw materials
remained tight and industry had to depend on imports to sustain optimum operating rates.
Higher energy prices impacted margins due to increased conversion costs. Recycled
polyester has been gaining market share due to price differential. However, a wide range
of fibre produced by your Company is of superior quality and has wider usage compared to
such recycled fibre. Therefore,despite competition from such cheaper fibre,your Company is
able to maintain the market share and higher capacity utilisation rate.
Opportunities and threats
The opportunity for PSF is driven by its durability, versatility of end usage and lower
prices as compared to cotton and other fibres,natural or man-made. Polyester is used in
apparels, sportswear, home furnishing, automotive, geo-textiles and industrial textiles.
India has an enormous market potential, with per capita consumption of allfibresbeing less
than 50% of global per capita consumption. The Government of push to substantially
increase the size of the textile industry output with focus on man-made fibres, will pave
the way for larger polyester fibre consumption due to limited availability and
substantially high prices of cotton, benefitting the polyester industry at large. China
continues to have a dominant influence on polyester, fibre intermediaries and downstream
textile industries. Any significant the Chinese polyester chain could impact your
Companys business dynamics.
Outlook
Polyester business performance has shown resilience during the current year despite the
impact of volatility in petrochemicals and crude oil prices. While the margins were under
pressure in Q2 & Q3 of the year, the volumes and margins substantially improved in Q4
of the year. With increasing demand from nonwoven and technical textiles, Companys
increased focus on specialty product, exports and partial shift of demand out of China
should continue to help improvement in both volumes and profitability. Relatively tight
supply situation in cotton should help to improve PSF demand in FY 2023-24.
Risks and Concerns
Prices of raw materials as well as energy costs, the two major input costs for the PSF
division are significantly dependent on crude oil price. Changes in oil prices could lead
to impact on margins and profitability. With the main input yearshaveresulted costs
based in substantialsurpluscapacity US$, fluctuations in the Indian
Rupee/US$ exchange rate could impact the business and margin. Supply and price of cotton
crop in India and globally could have an impact on the demand of PSF. Increased
competition due to surplus capacity in the country has resulted in pressure on margins due
to price undercutting in the market.
SEGMENT-WISE PERFORMANCE
Segment-wise performance together with a discussion on operational and financial
performance has been covered in the Directors Report which should be treated as forming
part of this Management Discussion and Analysis Report.
INTERNAL CONTROLS
The Company has an Internal Control System, commensurate with the size, scale and
complexity of its operations.
M/s. PKF Sridhar Santhanam LLP, Chartered Accountants, were the Internal Auditors of
the Company for FY 2022-23. The reports and findings of the internal auditors and the
internal control system are periodically reviewed by the Audit Committee. To maintain its
objectivity and independence, the Internal Audit function reports to the Chairman of the
Audit Committee of the Board.
The Internal Auditors monitor and evaluate the efficacy and adequacy of internal
control systems in the Company, its compliance with operating systems, accounting
procedures and policies at all locations of the Company. Based on the internal audit
report, process owners undertake corrective action in the respective areas and thereby
strengthen the controls. Significant audit observations and are presented to the Audit
Committee of the Board.
HUMAN RESOURCES
At Bombay Dyeing, employees are its prime assets and a vital key to its developments in
success. The company is committed to creating a professional culture to nurture and enable
people to grow in their careers alongside Companys success. The company constantly
strives to strengthen its manpower in alignment with the business needs and continue to
engage them through various initiatives in the realm of learning & development
opportunities, reward & recognition, employee engagement activities and career growth.
KEY FINANCIAL RATIOS
The Company has identified the following ratios as key financial ratios:
Sr. No. |
Particulars |
2022-23 |
2021-22 |
Explanation for Significant Change |
1 |
Debtors Turnover Ratio (times) |
9.52 |
4.22 |
Ratio has improved as there is more than 31.8% Increase in Revenue over
previous year and substantial reduction in receivables due to higher collection. |
2 |
Inventory Turnover Ratio (times) |
1.84 |
1.04 |
Ratio has improved as there is more than 31.8 % Increase in Revenue over
previous year and substantial reduction in invlentory levels. |
3 |
Interest Coverage Ratio (times) |
0.07 |
(0.02) |
Improvement on account of lower EBIT in previous year due to exceptional
item referred in Note 38. |
4 |
Current Ratio (times) |
1.03 |
1.44 |
Ratio has come down due to write down of Inventory & lower Bank
Balance in Current year. |
| 5 |
Debt Equity Ratio (times)* |
* |
* |
|
6 |
Operating Profit Margin (%) |
1.29 |
11.13 |
Operating profit margin of current year is lower than previous year due
to litigation cost on settlement cases shown as operating expenses in current year but
shown under exceptional items in previous year. |
7 |
Net Profit Margin (%) |
(19.32) |
(23.01) |
Net profit margin of current year is better than previous year due to
Higher Sales. |
| 8 |
Return on Net Worth (%)* |
* |
* |
|
Cautionary Statement
Statements in this Management Discussion and Analysis describing the Companys
objectives, projections, estimates, expectations or predictions may be
‘forward-looking statements within the meaning of applicable securities laws and
regulations. Actual results could differ materially from those expressed or implied.
Important factors that could make a difference to the Companys operations include raw
material availability and prices, cyclical demand and pricing in the Companys principal
markets, changes in Government regulation, tax regimes, economic developments within India
and the countries in which the Company conducts business and other incidental factors.
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