MANAGEMENT DISCUSSION AND ANALYSIS REPORT
1. OVERALL REVIEW
The year 2022-23 began under the shadow of Russia-Ukraine war. Waning of pent-up demand and inflationary pressures started impacting demand from Q2 FY 2023, To control inflation, Global Central Banks started, increasing the interest rates and tightening the liquidity, in coordinated manner, RBI increased interest rates by 2,5%, Even after lifting of lockdowns and opening-up of the economy, Chinese growth remained subdued, Rising interest rates, slower growth in China and vanishing liquidity led to global slowdown and resulting in dent on exports and private capex investments, However, normalizing supply-chain, cooling down of inflation and Crude towards end of the year created hope for next financial year, As per various estimates, Indias real GDP is estimated to have grown at around 7% in 2022-23,
2. INDUSTRY STRUCTURE, DEVELOPMENT, THREATS, OPPORTUNITIES & OUTLOOK
The Company manufactures Nylon Tyre Cord Fabric (NTCF) and Nylon Filament Yarn (NFY) in the synthetic yarn segment of the textile industry,
Nylon Tyre Cord Fabric (NTCF)
NTCF is used as reinforcement material in Bias/Cross ply tyres, which are primarily used in truck, bus, two-three wheelers, and off-the-road (OTR) vehicles used for mining, forestry, farming, heavy earth moving etc,
The Indian Tyre Industry is one of the fastest-growing tyre markets globally and will continue to grow at healthy rate, The industry is driven by various factors, including the increasing demand for vehicles and government initiatives to promote the manufacturing under Make in India banner and use of electric vehicles, Governments thrust on infrastructure and modernization of agriculture are expected to lead to increased demand for Off- the-road (OTR) and farm tyres,
The Indian government has also implemented various policies and programs to support the growth of the automotive sector which aims to promote the adoption of electric and hybrid vehicles, This is expected to drive the demand for specialized tyres used in electric and hybrid vehicles, providing further opportunities for growth in the Indian tyre industry.
However, improving road infrastructure and restriction on overloading may lead to higher pace of radialisation in Medium and Heavy Commercial Vehicles (MHCV) and Light Commercial Vehicles (LCV), Impact of increasing radialisation will, however, be partially off-set by expected increase in demand for two wheeler, OTR and Farm tyres.
Nylon Filament Yarn (NFY)
The global Nylon Filament Yarn market is anticipated to rise at a stable rate,
The Nylon Filament Yarn industry in India is expected to experience moderate growth in the coming years. The demand for Nylon Filament Yarn in India is driven by various factors, including the growth of the textile industry, increasing demand for ethnic wear and rising popularity of athleisure and sportswear,
The Indian governments Make in India campaign, which aims to promote domestic manufacturing, is also expected to drive the growth of the textile industry, further boosting the demand for nylon filament yarn in the country, The Indian market for athleisure and sportswear is growing rapidly, and nylon filament yarn is commonly used in the production of high-performance fabrics used in these applications, Draw textured nylon yarn (DTY) type would be the fastest growing segment in the Nylon 6 Filament Yarn market as it possesses the properties of both natural and synthetic fiber like high durability and high retention, Draw textured nylon yarn finds its application in sports shoes, sports bags, weaving fabric for clothes, home furnishings, and many others, Synthetic polymer nylon 6 filaments are mostly used in high performance sport shoes because of its properties like abrasion and wear resistant, glossy finish, Asia-Pacific is the fastest growing region in the nylon 6 filament yarn market,
However, the Indian nylon filament yarn industry also faces challenges, including fluctuating raw material prices, increasing competition from other synthetic fibers, and environmental concerns regarding the production and disposal of synthetic fibers, China has built-up significant over capacity in Nylon Filament Yarn and the Industry faces stiff competition from dumping by China,
Overall, while the Indian nylon filament yarn industry is expected to experience moderate growth in the coming years, The industry will also need to focus on adopting sustainable and eco-friendly practices to reduce its environmental impact and meet changing consumer preferences,
In FY 2023, performance of the Company was adversely impacted by many factors, While dumping by China led to unremunerative prices, increased variable cost particularly high power and fuel prices further exerted pressure on margin, Also, steep fall in Caprolactam prices in Q2 FY 2023, resulted in losses on inventory in hand, Reduction in exports due to global slowdown and high yarn prices led to lower volume for both NTCF and NFY, These factors cumulatively impacted the Earnings before interest, depreciation, and tax (EBIDTA), EBIDTA was down by 43% to 161 Crs, in FY 2023 against 285 Crs, in FY 2022,
inflation now has started cooling off and supply chain has normalized. With inflation fear behind us, focus is expected to shift back to growth. Governments effort for Make in india and global preference for China plus one is expected to boost Indian manufacturing.
The Company has incurred significant Capex to increase NTCF capacity and is diversifying in Polyester Tyre Cord Fabric (PTCF). CAPEX is also incurred on increasing capacities of value-added products, modernizing the plant and augmenting capacities. Simultaneously, production from old and inefficient machines has been rationalized. investment is also made on renewable power production to reduce the power cost.
Once the immediate headwinds subside, based on the initiatives underway, the Company is cautiously optimistic of medium term outlook.
3. SAFETY, HEALTH, ENVIRONMENT & SUSTAINABILITY
The Company believes that Life is precious, and we should care for it. Therefore, the Company takes care of its impact on the safety of its employees, visitors, customers, vendors, those residing in proximity to our Companys operations and plants and equipments. The Company has adopted safety as a culture by adopting structured approach, through leadership involvement. People at all levels, whether employees, contractors, service providers, suppliers, or the community, have been involved to bring those changes, which shows safety as one of the top priorities. The Bharuch site is awarded with Certificate of merit - Safety Excellence under Frost & Sullivan Sustainability 4.0 award 2022. Bharuch site is also awarded with National Safety award - Certificate of Appreciation by National Safety Council and Safety Excellence by Quality Circle Forum of india (Surat Chapter). During the period under review, the Company has achieved the Zero Accident Target. The Key highlights of safety features adopted during the year are as follows:
• Encouraging reporting of near-miss, unsafe condition, unsafe action/safety observations.
• Organizing safety promotional activities as awareness sessions / workshops, circulation of leaflets, bulletins and accident case studies etc. and safety motivational activities like campaigns, contests & competition, suggestion scheme etc.
• Displaying cautionary notices & warning signs.
• Machine guarding & fencing, plant safety round & safety survey.
• Shop floor safety training, leadership workshops and National Safety week celebration.
• Risk Assessment/HAZOP (Hazard & Operability Study)/JSA (Job Safety Study).
• Fire prevention, protection & firefighting system and third- party fire safety audit.
• Regular mock drill of emergency response plan & fire drill was conducted to check adequacy of emergency management system.
• National Safety Week -2023 celebrated in which various special safety training programs conducted like Electrical safety, Mechanical safety, Boiler safety, LPG safety & BBS. in the National Safety Week, CPR & First Aid training was organized by authorized doctor to our employees. Further, firefighting & accident prevention training was also imparted to neighboring small & medium scale industries.
The Company actively pursues healthy and conducive work environment for all employees. Medical services are made accessible to all employees at both the plant sites.
Periodical health check-ups are conducted across the workforce. The Company arranges periodic preventive health check-ups for its staff and their spouses. Adequate personal protective equipment is also provided.
The Company emphasizes on cleanliness, personal hygiene and good housekeeping. Mechanized means of control are used such as dust extraction, fume exhaust system and noise absorbers. WASH Committee is constituted to monitor and review workplace sanitation, hygiene and availability of safe drinking water.
To ensure effective safety management, the Company has its fire safety system, electricity system, JSA, HiRA, and IMS surveillance system audited by external agencies during the period under review. Occupational Health and Safety Management System of the Companys Pune and Bharuch sites are certified iSO 45001:2018. MiTR (Making individuals and Team Resilient) Project provided and encouraged mental health education to all staff members at both the location.
MPOWER - An initiative by Aditya Birla Education Trust, endeavors to be the movement to affect change. Our company encourages and pursues actively towards creating awareness, advocate prevention and provide services with a professional, holistic and multidisciplinary approach.
We follow The OASIS Concept
o- open culture
it advocates that no one needs to hide their mental health issues from the fear of discrimination or losing their jobs For this we offer and organize Sensitivity Training sessions for Managers
a - awareness
it entails Mental health literacy
For this we offer Mental Health Awareness Webinars, Soft Launch Posters and Emailers
S - support
it endorses giving mental health the same weightage as physical health
For this we offer a 24x7 Helpline, - "MITR"
i - interventions
To help employees tide over difficult periods
For this we offer Counselling Cells, & Workshops
S - STRESS BUSTING INITIATIVES
With mental health professionals For this we offer Special Expert Workshops on Mindfulness
ENVIRONMENT AND SUSTAINABILTY
The Company respects, protects and makes effort to restore environment. The Environment Management System of both Bharuch & Pune site is certified with ISO 14001:2015. its structured risk management approach which encompasses identifying potential environmental risks, assessing their potential impact, mitigating them through taking timely action and continuous monitoring. During the year under review, consumption of water, fuel & resources, generation and treatment of wastewater, hazardous waste & gaseous emission was under SPCB norms. The Company is devoted to nurturing sustainable development and explores new ways of environment preservation, responsible use of non-renewable resources, rationalized energy consumption, accelerated water conservation, moderated use of finite fossil fuels and increased environment protection. The key highlights of activities for the period under review are as under:
1. Amendment for change of disposal path for pre-processing & co- processing of hazardous waste.
2. installation of rainwater harvesting recharge wells, to recharge rainwater into ground.
3. Usage of renewable source of energy like Biofuel in Boilers & Thermic Fluid Heaters for steam and heat production in line with the Companys endeavors toward energy conservation.
4. installation of Solar Power Generation System of 100 KW.
5. Provision of Waste Heat Recovery System and VAM (Vapor Absorption Machine) for resources conservation.
6. Usage of High Calorific Hazardous Waste as fuel by Coprocessors.
7. installation of Zero Liquid Discharge (ZLD) unit for treatment of process wastewater for in-house green belt development and sewage water in cooling tower makeup
8. Replacement of ODS by non ODS refrigerants.
9. Celebration of World Environment Day & Ozone Day in presence of Forest Department and State Pollution Control Board Officials.
10. Review & tracking of Pollution Prevention & Control system like stacks, ETP (Effluent Treatment Plant), STP (Sewage Treatment Plant) and ambient air by third party.
11. Assessment of third-party water Audit and Hydrogeological impact.
12. NTCF products fulfills the requirements of Annex XVII and XIV of the European Chemicals Regulation REACH (registration, evaluation, authorization and restriction of chemicals) & ECHA SVHC (European Chemical Agency - Substances of Very High Concern).
13. Nylon Textile product is OEKO - TEX S-100 Certified Product and fulfills Requirements of Annex XVII and XIV of the European Chemicals Regulation REACH & ECHA SVHC.
The Company is incurring CAPEX on ZLD plant to conserve water & the ZLD plant at Bharuch site is under commissioning and investing in 10.5 MW wind-solar hybrid Group Captive Scheme for its Bharuch Plant.
4. HUMAN RESOURCE AND INDUSTRIAL RELATIONS
The Human Resource Department (HRD) function has been in the pivotal position. The Companys employee is among the most-valued resource for its business operations.
Human Resource function is aligned and synched with the business plan of each function. The core values for the HR function are to be proactive & progressive, with the key focus being on internal customer delight.
The key initiatives in this pursuit are:
• Enriching learning & development interventions on the fronts of nurturing skills, capabilities and competencies of individuals and teams.
• implementing progressive, objective and Enthusing Performance Management System to catalyze performance outcomes of employees,
• Strengthening the wellness & wellbeing interventions, not limiting to team members but their family members also, thereby addressing to work-life balance, physically & spiritually,
• Adding value in the Mediclaim Policy and Scholarship Programmes,
• Conducive employee relations resulting in not a single-man days loss during the year,
5. INTERNAL CONTROL SYSTEM AND ITS ADEQUACY
The Company has in place adeguate internal financial control systems, commensurate with the size, scale, and complexity of its operations, internal control systems, comprising of policies and procedures, are designed to ensure adherence of the Companys policies, safeguarding of its assets, optimal utilisation of resources, prevention & detection of frauds, accuracy & completeness of accounting records, timely preparation of reliable financial information and compliances, The Audit Committee regularly reviews the internal financial controls, During the year, such controls were tested and no reportable material weakness in the operations was observed, The internal auditor also monitors and evaluates the efficacy and adeguacy of internal control systems in
the Company, The Audit Committee takes due cognizance of the observations made by the auditors and gives their suggestions for improvement, The suggestions of the Audit Committee are also considered for further strengthening of the control systems,
6. INFORMATION TECHNOLOGY
Digitalization is a key growth pillar for Century Enka, To accelerate digitalization, significant progress has been made in building a robust foundation, We are leveraging technology, to improve productivity, operational efficiency and in better decisionmaking, Several initiatives are planned or under evaluation to increase digitalization to achieve operational efficiencies, increase customer base and customer delight, The cyber security and data privacy continue to remain the Companys focus area and make necessary investments to secure its systems and information assets, it remained focused on all three aspects i,e,, People, Process and Technology, in every effort to secure the organization, Adeguate cloud-based secure internet access, identity and data protection solutions are deployed to enable secure working of employees from anywhere, The move to Cloud also strengthen business continuity in case of any disaster / major outage, Deployment of collaborative solutions allowed seamless operations with internal and external stakeholders,
The Company increased coverage of modern workplace solutions based on cloud,
7. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE I. Highlights
Net Revenue from Operations
Profit before Depreciation, Finance Cost, Exceptional items and Tax
Share in Loss of Associate (net of tax)
a. Net Revenue from Operations
Net revenue for the year was lower by 1.23%. Sales in terms of volume (MT) was lower by about 1.57%. Lower revenue for the year reflects lower volumes in both NFY and NTCF and lower realizations,
b. Profit before Depreciation, Financial Cost, Exceptional Items and Tax (PBIDT)
PBIDT is lower on account of lower margins over raw material cost,
c. Finance Cost
Finance cost is higher due to higher borrowings,
II. Key Financial Ratios (Standalone)
Explanation for change
Debtors Turnover Ratio
Lower sales and increase in sales realization period
Inventory Turnover Ratio
Interest Coverage Ratio
Lower PBIDT and higher debt in current year
Operating Profit Margin (On PBIT excl, income on investments)
Net Profit Margin
Lower operating margins earned during current year,
Debt Equity Ratio
Additional borrowing during the current year
III. Return on Net Worth
Explanation for change
Return on Net Worth
Lower profit earned in current year,
8. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company is committed to contributing towards global efforts to achieve the Sustainable Development Goals (SDGs) outlined in the United Nations 2030 Agenda for Sustainable Development. Our CSR efforts are directed at community upliftment through cluster development approaches with a focus on education, womens health care, skill development, rural infrastructure, healthcare & promotion of rural sports. We have forged longterm partnerships with various NGOs working at grass root level to ensure efficient, effective, and successful execution of CSR activities.
This year we have collaborated with 38 villages and reached out to the 47,302 people living in tribal belt and aspirational district.
1. Education and Skill Development
a. Vocational Training
The Companys objective is to impact the lives of underprivileged youth by providing them skill, employment, and livelihood, In the last few years since our inception, we have skill trained youth in both formal and informal sectors, The Company financially supported workshop machines & qualified teacher staff for vocation training institute in remote area on the Bharuch site, More than 200 students acquired vocational training education, Numerous girls started jobs in textile industry and thus, purpose for women empowerment is accomplished,
b. Poshanvahini Project
Poshanvahini project aims to a system strengthening program to build the capacity of frontline workers to deliver effective services for children, pregnant mothers, lactating mothers and adolescent girls in the community, Poshanvahini project has covered programs for children from prenatal to six years of age, catering to their needs in all domains of development i,e, health and nutrition, The project provided the employment to 50 women and strengthening the Anganwadi centers, This initiative benefited around 650 students, of whom 83 children have overcome the malnutrition concerns,
This program has been delivered through Anganwadi centers, run as part of the Integrated Child Development Services (ICDS) by the Ministry of Women and Child Development, The Company has implemented this program in partnership with the Department of Women and Child Development (WCD), District Administration in Narmada,
c. Shiksha Sathi Project
The Company has enhanced the quality of education, learning levels, scarcity of teachers and reduced the drop-out ratio in government schools for students from underprivileged backgrounds in aspirational district-Narmada. The Company sponsored 45 teachers for 36 primary schools in the tribal area to combat their scarcity. Through these initiatives, we have positively impacted the lives of 3279 students and provided employment to 45 teachers.
d. Educational Material and School Uniform
• Supported computer lab, D Laboratory, and interactive board fees for 366 students at Kalyan.
• Provided basic education aid to students like school bags notebooks, stationery kit, sketchbook, color box & etc. to 1500 student.
• Provided uniforms & shoes to 226 students.
e. School Infrastructure
• Sponsored 1519, Library Books useful for Std I to Std XII, benefitting around 3434 students, and 70 sets of table & chairs for Sr. KG & Std I, benefitting around 280 students, to a school located at Sahad, Maharashtra,
• Provided two laptops to school situated in Mahad, Maharashtra for administration purposes.
• Provided Financial Assistance for construction of residential buildings for orphan students for residence and study rooms to childrens whose Parents were committed suicide due to draught at Vidharbh & Marathwada region of Maharashtra.
• With the aim to start with the higher secondary education in a school located in tribal area the company supported for construction of lab (biology. chemistry & physics) and 3 classrooms. Also provided with furniture such as Cupboards, Chairs, Green Boards, Tables, benches and Ceiling fans.
• Provided printer, invertor & battery to an Industrial training institute situated in nearby area.
• Supported for establishing computer lab and provided furniture, light fittings, e-learning facilities etc. in industrial training institute which benefitted around 200 students.
• Facilitated renovation of Aaganwadi situated in Bamalla Gram Panchayat-Kaliyapura village.
2. Healthcare and Medical Programmes
The Company has been providing preventive and curative healthcare services to the surrounding villages. The preventive healthcare services are executed by way of health camps, health education and awareness camps etc.
a. Eye Check-up and Cataract Operation Camp
These health camps were organized with the objectives of providing free medical check-up and medication to poor villagers and reinforce National Rural Health Mission (NRHM) under the corporate social responsibility. The company Organized 5 eye check-up and cataract operation camps in Umalla, Asha, Amletha, Pratapnagar and Rajpardi villages. It covered about 35 villages of nearby area of Bharuch site.
As a result, a total 2493 patients eyes were checked, 172 patients underwent free cataract operation, distributed 889 Spectacles free of cost and free medicines distributed to 224 patients.
b. Blood Donation Camp
To wipe off the scarcity of blood and ensure availability of safe and quality blood, the Company organized blood donation camps in the premises of its Bharuch site in association with Red Cross Society, Rajpipla-Narmada Dist. wherein the Companys employees donated 67 units of blood.
c. Gynec Camp
Created awareness of general health among the women, provided general health care services and counselled them of basic healthcare and hygiene. Provide free and good quality medical service to poor population.
The company organized 3 Gyno camps in Umalla, Bammala and Tavadi villages. Wherein 112 patients were checked, and 52 women underwent an advance Pap SMEAR Test.
d. Drinking Water Facility
Provided a water chilling plant for safe and clean drinking water in Umalla village, benefiting around 10,000 people with filtered drinking water.
e. Medical Aid
• Distributed Walker, Walking Sticks, KneeCap, LS Belt, Face Mask & Skin care soap etc. for baggers to improve their health at Pune to 300 beggars for a healthy living near its Pune plant.
• Distributed Weighing Scales & Cotton Mask at Pune for a hygiene & healthy living nearby area
• Donated free medicines to homeopathic dispensary situated near its Pune site.
f. Womens hygiene (Distribution of sanitary Napkins)
Women from rural areas are not using sanitary napkins due to lack of awareness, non-availability at village level, high cost of napkins and awkwardness to buy it from male shopkeepers. To overcome all these reasons and to encourage women and girls to use sanitary pads for better menstrual hygiene the company distributed 62700 Nos sanitary napkins to 1490 beneficiaries in Bamalla, Kaliyapura, Tavadi, Shir, Raisangpura, and Vali & Dabhal Villages.
g. Nutrition support in eradication of T.B.
The National Tuberculosis Elimination Program (NTEP) is the Public Health initiative of the Government of India that organizes its anti-Tuberculosis efforts. It functions as a flagship component of the National Health Mission (NHM) and provides technical and managerial leadership for anti-tuberculosis activities in the country. As per the National Strategic Plan 2017-25, the program has a vision of achieving a “TB free India", with strategies under the broad themes of “Prevent, Detect, Treat and Build Pillars for Universal Coverage and Social Protection". The program provides, various free of cost, Quality tuberculosis diagnosis and treatment services across the country through the government health system.
The Company participated in eradication of T.B program. The Company supported providing nutrition kit to T.B patient in Jhagadia and Netrang Taluka. 714 nos nutrition kit delivered to T.B patients. During the year, 219 patients were cured, accounting for nearly 17% of all patients.
h. Renovation of Health Care Centre
Company Sponsored renovation of civil work, electric work, painting work & cleaning work in Community Health Centre (CHC), Umalla, Bharuch which extends health care facilities to around 10,000 villagers of nearby areas.
2. Rural Infrastructure
a. High Mask Tower
Provided 16 high mask light towers in 9 villages in the vicinity of its Bharuch site. More than 3735 villagers have benefited from this initiative.
b. RCC Benches
Distributed 83 RCC Benches in 22 villages around its Bharuch site, benefiting around 2000 villagers and commuters.
c. Community hall
Lack of community hall facility, no places for conducting government meetings & celebrating local events company financially supported to construct a large gathering capacity hall in rural area. The community hall will benefit around 1500 people of Shir / Tavdi villages.
d. Paver block in village
The Company financially supported the repair of damaged roads by fixing paver block in a village.
e. Toilet/ Urinal constuction in Rajpardi for public uses.
Rajpardi is a destination where about the inhabitants of 20 villages used to commute on daily basis for marketing, medical purposes and there was no facility for the public toilet and thus, women were in a very scratchy condition which may also create health issues. The Company provided financial support for construction of a public toilet at Rajpardi village. This public toilet is a facility which built for the use of the floating population such as women, girls, visitors, and student, etc. This initiative benefited especially women and 12000 villagers.
f. Levelling of appoach road
A damaged approach road of Kalyapura Village was levelled to facilitate villagers as well students who are commuting through this road. About 250 people are benifitted from thisthis initiative.
g. Construction of culver with hum pipe.
Financial support for construction of culvert with hum pipe and road in village. During the raining season, heavy rain flow destroyed culverts & roads. It broke down the connectivity between Raysingpura and Umalla village so more than 1500 people were affected. With this connectivity, about 1500 people of 5 villages will be benefitted.
h. Diesel generator for water supply
During the rainy season, there are power cut in the villages and thus, no water supply in the village. With a view to facilitating villagers, the Company provided a diesel generator to Bamalla village. This initiative benefited about 1500 people.