Your Directors are pleased to present the Management Discussion and
Analysis Report for the year ended March 31, 2023.
INTRODUCTION:
Global growth is projected to fall from an estimated 3.5% in 2022 to
3.0% in both 2023 and 2024 as per International Monetary Funds (IMF) World Economic
Outlook (WEO) July 2023. While the current forecast for 2023 is modestly higher than
predicted in the April 2023 WEO, it remains weak by historical standards. Global headline
inflation is expected to fall from 8.7% in 2022 to 6.8% in 2023 and 5.2% in 2024.
Underlying (core) inflation is projected to decline more gradually, and forecasts for
inflation in 2024 have been revised upward. The recent resolution of the US debt ceiling
standoff and, earlier this year, strong action by authorities to contain turbulence in US
and Swiss banking, reduced the immediate risks of financial sector turmoil. This moderated
adverse risks to the outlook. However, the balance of risks to global growth remains
tilted to the downside. Inflation could remain high and even rise if further shocks occur,
including those from an intensification of the war in Ukraine and extreme weather-related
events, triggering more restrictive monetary policy. Financial sector turbulence could
resume as markets adjust to further policy tightening by central banks. Sovereign debt
distress could spread to a wider group of economies. On the upside, inflation could fall
faster than expected, reducing the need for tight monetary policy, and domestic demand
could again prove more resilient. In most economies, the support for the most vulnerable.
Improvements to the supply side of the economy would facilitate fiscal consolidation and a
smoother decline of inflation toward target levels.
Indian Economy According to the IMF, growth in India is projected at
6.1% in 2023, a 0.2% point upward revision compared with the April 2023 projection,
reflecting momentum from stronger-than-expected growth in the fourth quarter of 2022 as a
result of stronger domestic investment. Although significant challenges remain in the
global environment, India is the one of the fastest growing economies in the world.
According to World Bank, Indias growth continues to be resilient despite some signs of
moderation. Growth was underpinned by strong investment activity bolstered by the
governments capex push and buoyant private consumption, particularly among higher income
earners. Inflation remained high, averaging around 6.7 percent in FY23 but the
current-account deficit narrowed in Q3 on the back of strong growth in service exports and
easing global commodity prices. Although headline inflation is elevated, it is projected
to decline to an average of 5.2 percent in FY24, amid easing global commodity prices and
some moderation in domestic demand. The Reserve Bank of Indias has withdrawn
accommodative measures to rein in inflation by hiking the policy interest rate. Indias
financial sector also remains strong, buoyed by improvements in asset quality and robust
private-sector credit growth. The central government is likely to meet its fiscal deficit
target of 5.9 percent of GDP in FY24 and combined with consolidation in state government
deficits, the general government deficit is also projected to decline. As a result, the
debt-to-GDP ratio is projected to stabilize. On the external front, the current account
deficit is projected to narrow to 2.1 percent of GDP from an estimated 3 percent in FY23
on the back of robust service exports and a narrowing merchandise trade deficit.
According to a new market research report, the "Technical
Textile Market by Material (Natural Fiber, Synthetic Polymer, Metal, Mineral, Regenerated
Fiber), by Process (Woven, Knitted, Non-woven), by Application (Mobiltech, Indutech,
Protech, Buildtech, Packtech), and Region - Global Forecast to 2025", The global
technical textile market size is projected to grow from USD 164.6 billion in 2020 to USD
222.4 billion by 2025, at a CAGR of 6.2% from 2020 to 2025. The market has grown
exponentially in the last few years, and this trend is projected to continue. The growing
awareness about the superior functionality and application of technical textiles
encourages the higher consumption of technical textiles and related products. Furthermore,
growth in the automobile, construction, healthcare, packaging, and various other sectors
has generated new opportunities for technical textiles.
The outbreak of COVID-19 has affected the demand as well as the
manufacturing in supply regions. The COVID-19 crisis has affected the chemical industry
supply chain to a major extent; thus, having a major impact on raw material procurement.
The above factors have impacted the growth of the technical textile market. However, this
pandemic resulted in a sudden increase in demand for medical apparels such as gown, mask,
and others, which positively affected the demand for technical textiles.
The non woven segment is expected to grow at the highest CAGR during
the forecast period
Based on process, the nonwoven segment is expected to be the fastest
growing during the forecast period. Additionally, advancements in weaving technology such
as 3D weaving are expected to drive the technical textile segment during the forecast
period.
The APAC region is projected to account for the largest share in the
technical textile market during the forecast period.
The APAC region region is projected to lead the technical textile
market, in terms of both value and volume from 2020 to 2025. Higher domestic demand, along
with the availability of low- cost labor, makes this region the most attractive market for
technical textile manufacturers. Hence, the market players are focusing on this region to
gain a larger share and increase their profitability. Factors such as improving global
economy, expanding working population, and rising domestic demand for hygiene products are
expected to boost the market for technical textile.
Plastic Industry According to Market research, the global plastic
market is expected to grow at the compounded annual growth rate of 4% from the period of
2023 to 2030. The role of plastics is extremely imperative in the modern industry. This is
owing to its characteristics that have gained prominence across an array of sectors
including the packaging industry, the automotive industry and the manufacturing industry.
The overall market demand is expected to grow exponentially due to the rising demand for
recycled plastics and bio plastics.
Regulations to decrease gross vehicle weight to improve fuel efficiency
and eventually reduce carbon emissions are driving plastic consumption as a substitute for
metals, including aluminium and steel, for manufacturing automotive components. The growth
of the market can also be attributed to increased foreign investment in the domestic
construction markets, as a result of easing FDI norms and requirements for better public
and industrial infrastructure. The growth of the construction industry in emerging markets
such as Brazil, China, India, and Mexico has been instrumental in fuelling the demand for
plastics. Regulations over the use of plastic products will subsequently affect market
growth rate. Government policies in response to the damage caused by single use plastic
products will dampen the industry, but this is effectively combated by the rising demand
for plastic from the packaging industry that is driving the demand for the commodity. The
industry is segmented into several types, with the primary ones being polyethylene and
polypropylene. The Indian plastic industry employs close to 4 million workers and
comprises around 30,000 processing unites across the country. The Government of India
intends to take the plastic industry from a current level of 1 3 lakh crore (US$ 37.8
billion) of economic activity to 1 10 lakh crore (US$ 126 billion) in four-five years. The
plastics market has consistently expanded in India owing to the vastly developing nature
of the country. The industry provides a backdrop for understanding the policy framework
that directs the future of the same, which is clearly geared towards enhancing the export
of plastics. Even as ESG norms become common and lucrative, the contemporary structure of
the economy is such that it will only induce the necessity of plastic into everyday use.
Packaging Industry The global packaging industry is expected to reach
US$ 1.33 trillion by 2028. Favourable Consumer trends coupled with great strides in the
industry are the primary drivers of this growth. Following consistent growth in the last
decade, the industry is expected to register a CAGR of 3.94% during 2023 to 2028. Similar
to the plastic industry, the packaging market is witnessing several trends with crucial
sections of the industry being the imperative forces of the growth. Paper packaging
products are one such niche that is benefiting the most out of the increasing trend of
online retail environmental regulations on non-biodegradable packaging solutions. Owing to
government regulations, the consumption of recycled PET as flexible packaging is replacing
traditional packaging methods. According to the Flexible Packaging Association, flexible
packaging is mainly used for food, which accounts for more than 60% of the total market.
Since it could incorporate new solutions for various packaging issues, the flexible
packaging industry is experiencing robust growth. In addition, with the rising consumption
of sweets and confectionery, several flexible plastic packaging providers are offering
packaging solutions, specifically catering to this demand, and are further driving their
sales and revenues. The India Packaging Market is expected to reach US$ 204.81 Bn by 2025,
registering a CAGR of 26.7% during the period of 2020-2025. Growth in this sector is
primarily driven by factors like growing pharmaceutical, food processing, manufacturing
industry, FMCG, healthcare sector and ancillary in the emerging economies like China,
India, Brazil, Russia and
few other East European countries. Plastic Packaging is expected to
have a significant market ^ share, with PET and HDPE being the preferred materials for
manufacturing bottles and jars. Furthermore, the shift towards sustainable plastic
products has driven innovations in the plastic packaging market for the country. This
trend is expected to be continued in the future during the forecasted period and
revolutionize the industry as a whole.
MARKET OPPORTUNITIES:
Rising demand for household products and growing consumer awareness
have made home textiles a lucrative business segment. Secondly, fashion sensitivity
towards household furnishing has increased as fast-fashion has hit not only the apparel
market but the home market as well. Home fashion has become a separate segment as consumer
consciousness towards high-quality living has increased.
To cater to the increased demand, the number of retailers entering the
home textiles market is also increasing. Moreover, the advent of E-commerce in the segment
is further making the market even more competitive, and with the increasing number of
websites, the marketplace is also experiencing growth. Fuelling the market growth,
research, and development in the home textiles segment has been immense.
OPPORTUNITIES AND THREATS:
Growing economy fuelling demand for technical textiles
India is among the fastest growing economies in the world. This has led
to higher disposable income and increased awareness among young Indian population on
functional products. Further, Indias economic growth has led to growth of various end
user industries such as Automobiles, Healthcare, etc., resulting in increasing demand for
technical textile products.
Relatively untapped domestic market
Functional products are still in nascent stage in India. However, with
growing awareness among young population about the benefits of these products, market
shall expand exponentially.
Largely untapped domestic institutional buyers for technical textiles
Institutional buyers such as railways, defence forces, hospitals, etc.,
are still heavily dependent on imports for high-value technologically intensive technical
textile products. However, in the recent past, some Indian technical textile manufacturers
have started working with such institutional buyers, but most of the market is yet to be
tapped.
Uncompetitive at global level
India is growing at a brisk pace in the field of technical textiles,
whereas China is ahead in terms of scale and technology. In terms of Innovation and
R&D, China is way ahead in comparison to India. Key Indian players need to invest in
innovation and develop high-value products to position India as global hub for technical
textile.
Ease of availability of high-technology technical textile products
through imports
Institutional buyers such as defence have traditionally opted for
import route for procurement of several technical textile products owing to ease of
availability of ready product confirming to the required standards. Import substitution
would only be possible, if the requisite infrastructure and technology adoption is
undertaken by key players in India with Government support
India is working on major initiatives, to boost its technical textile
industry. Owing to the pandemic, the demand for technical textiles in the form of PPE
suits and equipment is on rise. Government is supporting the sector through funding and
machinery sponsoring.
Top players in the sector are attaining sustainability in their
products by manufacturing textiles that use natural recyclable materials.
The future for the Indian textiles industry looks promising, buoyed by
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 like Marks & Spencer, Guess and Next
into the Indian market.
High economic growth has resulted in higher disposable income. This has
led to rise in demand for products creating a huge domestic market.
OUTLOOK:
Rising Government focus and favourable policies is leading to growth in
the textiles and clothing industry. The Ministry of Textiles is encouraging investment
through increasing focus on schemes such as Technology Up-gradation Fund Scheme (TUFS). In
Union Budget 2020-21, the Government has allocated Rs. 761.90 crore (US$ 109.01 million)
for Amended Technology Upgradation Fund Scheme (A-TUFS). The Cabinet Committee on Economic
Affairs (CCEA), Government of India has approved a new skill development scheme named
Scheme for Capacity Building in Textile Sector (SCBTS). The Government announced a
special package to boost export by US$ 31 billion, create one crore job opportunities and
attract investment worth Rs. 80,000 crore (US$ 11.93 billion) during 2018-2020. Cumulative
FDI (Foreign Direct Investment) inflow in the textiles sector stood at over US$ 3.46
billion between April, 2000 to September, 2020.
Under the production linked incentive scheme, government has approved
Rs. 10,683 crore (US$ 1.44 billion) for manmade fibre and technical textiles
manufacturing.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
Management has put in place effective Internal Control Systems to
provide reasonable assurance for:
• Safeguarding Assets and their usage.
• Maintenance of Proper Accounting Records and
• Adequacy and Reliability of the information used for carrying on
Business Operations.
|
For and on behalf of Board of Directors |
|
Candour Techtex Limited |
|
Sd/- |
|
Jayesh Ramniklal Mehta |
| Date: August 14, 2023. |
Managing Director |
| Place: Mumbai |
DIN:00193029 |
+91-9892691696
