Century Textiles & Industries Ltd Management Discussions.

This report covers the operations and financial performance of the Company for the year ended 31st March, 2020 and forms part of the Annual Report.


The overall profitability of the Company during the year under review, as compared to the previous year, has been adversely affected due to unfavorable market conditions prevailing for a major part of the year in all the business segments and to some extent towards the latter part of the March profitability also got impacted on account of the lockdown pursuant to Govt.s directives to prevent spread of pandemic COVID 19.

In Textiles, it was affected due to weak domestic market conditions and in Paper realizations dropped due to tough international market conditions. Working and operational parameters at all the plants of the Company were satisfactory during the year.

In Real Estate, the Company launched its first residential project at Kalyan (named Birla Vanya) in Q1 and the second project, Birla Alokya, in Bengaluru was launched in Q2. Execution of both the projects is progressing as per schedule. Due to spread of pandemic Covid 19 and imposition of subsequent lock down, though the progress of aforesaid projects will be temporarily delayed however, it will not affect the schedule for completion of the projects.

Market activation was initiated for the Companys township project Birla Navya (JV with Anant Raj) located in Gurugram. Further,we are very well poised to launch our flagship mixed use project at Worli, Mumbai, in the first half of FY 22.

As you are aware,the Board of Directors of the Company, at its meeting held on 20th May, 2018,had approved a Scheme of Arrangement ("Scheme") between the Company, UltraTech Cement Ltd. (UltraTech), Shareholders & Creditors for the demerger of its Cement Business Divisions and its merger into UltraTech. Accordingly, the Cement business was demerged as per the order of the National Company Law Tribunal, Mumbai dated 3rd July, 2019 with appointed date being fixed as 20th May, 2018 as per the aforesaid NCLTs Order and demerger was made effective from 1st October, 2019 when all formalities of demerger were completed.


a. Industry Structure and Development

i. The COVID 19 break down in the second half of March affected the numbers adversely and all markets have literally been stopped across the globe. It has led to lockdown and shrinkage in all economies world-wide very sharply. The above has put a lot of pressure on Textile industry in India which was already facing a lot of challenges due to delays in receiving the GST refunds as well as delay in receiving the

export benefits. On positive note there is surge in E-commerce and online sales.

ii. Indian textile industry is facing huge liquidity crunch and uncertainty pertaining to future orders.

b. Opportunities and Threats

i. Currently the biggest threat is COVID 19 and its impact. It is expected that overall textile business will be severely affected which would result in various job losses across the value chain.

ii. First half of FY 21 is expected to be very tough and the second half is expected to give some relief to the business and the society in general if all the countries specially India is able to control the COVID 19 Pandemic.

iii. Going ahead, there could be a positive side for textile business as USA and EU customers who will be looking for alternative for China, may move to other countries such as Vietnam, Bangladesh, India, etc. Hence it is expected that demand will increase in textile fabrics for exports, but we need to ensure that we prepare ourselves to take the advantage of the expected business which might drift away from China.

c. Segmental Review and Analysis

i. Due to weak domestic textile market through-out the year and COVID 19 break out in the second half of March, the turnover of our textile unit in Bharuch is lower by around 4% from that in the previous year. Exports have marginally increased by 6 %. Further, domestic sales to brands has almost doubled and in Over the counter (OTC)/ Ready to Stitch (RTS), we could post a growth of around 22% by changing the distribution channel and increasing promotion. The margins though were under pressure due to the liquidity crunch and weak market sentiments.

ii. For FY 21, the immediate focus shall be on the recovery of the outstanding and ensuring the earliest dispatches of the finished goods inventory to have a tighter control on the working capital and reigning in fixed costs to conserve cash.

d. Risks and Concerns

i. Overall negative impact is expected across the industry due to current COVID 19 pandemic. A shift towards online business is expected to happen due to the fear & the restrictions to maintain the social distancing. Also, there could be short time recessionary pressure due to job losses and money crunch in the market and it will take a good 6 to 8 months before we could see demand coming back in the Textile industry.

e. Outlook

i. Overall, FY 21 is expected to be a tough year for the textile industry and major focus shall be on cost cutting measures, improving productivity, reduction in wastage and efforts on taking quality to next level and deriving efficiency to make products further cost competitive. Further,the division plans to make some structural changes in organization to make it lean and agile and focus will be on giving improved services to customers to retain market share.

ii. Once we are through from the lock-down and the market reopens, the division expects to bounce back, with its new world-wide product range ensuring competitive products having anti-microbial, anti-viral features with different finishes along with growing focus on sustainability range of products.

iii. It is a testing period for all of us, but with our good brand image and network in the market, the dependency on reliable reputed players in the market, we expect to be back on track soon.




a. Industry Structure and Development

i. Global economy has witnessed a serious health epidemic challenge, and the whole world is trying to find its solution. Such a war like situation is adversely affecting almost all the industries of any country. Paper industry being one of the oldest manufacturing sectors in the world, is expected to get badly impacted due to dis-equilibrium between consumption & supply.

ii. Once gravity of this crises will soften, the industry is expected to grow in some or the other form and will catch up with domestic as well as global economy growth.

b. Opportunities and Threats

i. During the last decade, China became the focal manufacturing hub for many global business operations. However, after being seriously impacted with COVID-19, global customers mainly from US and Europe started looking at India as an alternative and reliable source of manufacturing.

ii. Such a situation though is an opportunity for the country, but at the same time there are limitations for Industries. Most of the domestic manufacturers also depend upon imported items like Pulp, Chemicals, Spares. With more and more countries following lockdown procedures as an immediate precaution

from such epidemic health hazard, there are visible logistic constraints i.e. availability of containers & vessels, increased transit time & costs and refusal of acceptance of orders by suppliers.

c. Segmental Review and Analysis

i. During the financial year under review, Paper industry, globally, faced tough situations which caused realisations to fall drastically. However, by improving operational efficiencies, Pulp & Paper Division maintained its previous year EBITDA margin of 22%.

d. Risks and Concerns

i. Indian paper industry is facing constraint for wood availability at reasonable prices. In recent years, supply of bagasse has also got adversely affected, as alternative industrial usage of bagasse is now more lucrative then the traditional way of selling it as agri residue.

ii. The recent widespread health challenge, COVID-19, will impact the global market behaviour during H1/ FY-21. If it persists, then it will also affect the market behaviour during initial period of H2/FY21.

e. Outlook

i. Medium to long-term outlook of the Indian paper industry looks strong and expected to grow in line with the countrys economy.


a. Industry Structure and Development

i. The Indian real estate industry is one of the largest generators of economic activity and is a contributor for a significant part of its GDP. The real estate sector has strong linkages with various other industries such as cement, steel, paints, etc. Pre Covid 19, the real estate sector was expected to contribute 13% of Indias GDP by 2025 and reach a market size of USD 1 trillion by 2030. In 2017 the realty sector contributed about 6-7 percent to Indias GDP.

ii. The Government has introduced several initiatives as part of its continuous endeavour to boost the sector, 25,000 Crores alternate investment fund aimed at reviving stalled housing projects and alleviate financial stress faced by developers and home buyers being notable ones among them. The Government has announced plans to invest INR 105 lac Crores in infrastructure over the next 5 years. The Government is also launching schemes to help infrastructure developers to improve their cash flow and repay debt. Home loan rates have now been linked to the Repo Rate and hence are at the lowest in a decade thus increasing affordability in the housing space.

iii. Absorption in terms of value increased by 6% across top seven cities (NCR, Bengaluru, MMR, Kolkata, Chennai, Hyderabad and Pune) with nearly 144,000 units being sold during 2019 compared to 136,000 units in 2018. There has also been a reduction in residential inventory overhang from 38 months to 32 months year-on year. Residential real estate sector registered around 49% rise in private equity (PE) inflows in 2019.

iv. The commercial leasing segment demand recorded a 40% increase in gross absorption over last year to reach 69.4 million sq ft. IT/ITeS sector continues to be the largest demand driver with a share of 42% of the leasing activity followed by co-working spaces, BFSI and other industrial occupiers. The warehousing sector also continued to benefit from government policy initiatives such as the Goods and Services Tax (GST) implementation, global trade dynamics and evolving consumption patterns. Demand for high-quality logistics facilities and increasing market maturity is expected to further drive the growth in the warehousing space.

v. The month of March saw the world being impacted by the COVID-19 pandemic and the nation going into a lockdown. The lockdown disrupted the normal business activities and created pressure on absorption and collections. We are closely monitoring the situation as the events unfold to ensure that the Company responds in a timely manner in the interest of the business. However, the pandemic will bring about many long-term changes to how we do business. This will also open a lot of new opportunities for growth of the business.

b. Opportunities and Threats

i. Increasing customer preferences for branded products and trusted brands have led to sales growth of organized players. The Company is uniquely poised to capitalize on this opportunity with the brand having a huge legacy and symbolizing trust, transparency, quality and excellence.

ii. Improvement in governance standards has paved a way for consolidation in the sector as landowners and smaller developers seek to partner with reputable developers through the joint development model, to maintain future business viability. The Company with its best in class governance standards and access to institutional funding is in a prime position to benefit from this consolidation.

iii. With the changing demographics, the real estate industry is witnessing emergence of new segments. The co-living market in India is one of the emerging segments and is expected to grow at a CAGR of 17% over the next 5 years with rise in demand and

increased interest from institutional investors.

iv. Existing funding crunch for growth capital and increased cost of borrowing due to NBFC liquidity crisis continue to be sour points for the sector. However, the efforts by the Government, such as partial credit guarantee scheme for the sector in the Union Budget 2019-20 is expected to provide liquidity to the NBFCs. The asset light investment strategy followed by the Company will protect it from the downside and the Company is also working towards creation of enough resources for growth.

v. The Covid19 pandemic caused an unprecedented shock to the global economy. The real estate sector is highly impacted by the nationwide lockdown and the effect will be felt most in the short term. The residential sales and collections dropped significantly in the last quarter of FY20 with no new launches and halted progress in construction activity amid lockdown. With the disruption in supply chain, unavailability of migrant workforce, liquidity crisis and delayed construction activity the residential bookings have fallen by 78% compared to January, 2020. There has been a 250% drop in the home loan collections in March, 2020 as compared to January, 2020 negatively affecting the developers cash flows. Commercial sector is expected to witness weak growth given the sluggish business environment. The Government continues to undertake proactive measures to fight the pandemic and its impact.

vi. The behavioural changes post covid-19 may alter consumer preferences. This provides real estate players an opportunity to innovate and revise product offerings to meet the new preferences. With Customer centricity and innovation being the primary focus of the Company, the consumer dynamics provide an opportunity to strengthen our competitive differentiation.

c. Segment Review and Analysis

i. The commercial projects in Worli, Mumbai, Birla Aurora and Birla Centurion, continue to operate at a high level of occupancy.

ii. During the year, your Company launched its first residential project at Kalyan (named Birla Vanya) in Q1. 88% of the launched inventory (in terms of area) has been already sold till date. Birla Alokya, Bengaluru was launched in Q2 and has achieved a robust sales performance with 33% of the launched inventory (in terms of area) being sold till date. The execution of both the projects is progressing as per schedule.

iii. Market activation was initiated for the Companys township project Birla Navya (JV with Anant Raj) located in Gurugram, NCR. It received tremendous esponse from the channel partners. Active discussions are on with other landowners to explore development possibilities in our focus markets of Mumbai, NCR, Bengaluru and Pune.

iv. We are very well poised to launch our flagship mixed use project at Worli, Mumbai.

d. Risks and Concerns

i. Indian GDP growth is forecasted to drop significantly in FY 21, particularly due to Covid 19 pandemic and projected to revive in FY 22. Since real estate as a sector is highly correlated to GDP performance, growth of the sector may remain muted.

ii. The sector continues to face substantial procedural delays with regards to land use, project launches and construction approvals. Delays in launching government policies may impact profitability and affect the companies operating within the sector.

e. Outlook

i. In the mid to long term, the radical changes in the regulatory policies and taxation system introduced by the government is sure to accelerate the sectors growth. The fundamentals of primary demand in

the sector continue to remain strong with increase in disposable incomes, rapid urbanization, and nuclearization of families. Market share of organized and corporate players will continue to grow. The Company is uniquely poised to capitalize on the opportunity provided by the changing real estate environment and become one of the top players in the sector in the coming years.


The Company maintains an adequate and effective Internal Control Systems commensurate with its size and complexity. It believes that these systems provide, among other things, a reasonable assurance that transactions are executed with management authorization. It also ensures that they are recorded in all material respect to permit preparation of financial statements in conformity with established accounting principles along with the assets of the Company being adequately safeguarded against significant misuse or loss. An independent Internal Audit function is an important element of Companys Internal Control System. This is supplemented through an extensive internal audit program and periodic review by the management and the Audit Committee of Board.


(Rs in Crores)




Particulars 2019-20 2018-19 2019-20 2018-19
1. Total Income 3458.63 4053.54 3467.63 4053.23
2. Earnings before finance cost, tax, depreciation and Amortization (EBITDA) 600.06 1060.93 695.22 1073.33
3. Less: Finance Cost 87.09 101.55 93.13 101.55
4. Profit before depreciation, amortization and taxation. 512.97 959.38 602.09 971.78
5. Less: Depreciation and Amortization 228.58 193.00 227.76 193.00
6. Profit before taxation 284.39 766.38 374.33 778.78
7. Less: Deferred Tax Debit/(Credit) (93.69) 266.91 (93.69) 266.91
8. Profit after tax from continuing operations 378.08 499.47 468.02 511.87
9. Add: Profit / (loss) after tax from discontinued operations (17.65) 5563.69 (17.65) 5563.69
10. Net Profit for the year 360.43 6063.16 450.37 6075.56

The Consolidated EBITDA from continuing operations for the year 2019-20 is 600.06 Crores as against 773.05 Crores (After excluding one-time income during PY 2018-19 of 287.88 Crores by way of duty and interest reversal of 127.72 Crores on fulfilling export obligation and TDR sale of 160.16 Crores).

The Standalone EBIDTA from continuing operations for the year 2019-20 is 695.22 Crores as against 785.45 Crores (After excluding one-time income during PY 2018-19 of 287.88 Crores by way of duty and interest reversal of 127.72 Crores on fulfilling export obligation and TDR sale of 160.16 Crores).

Profit from discontinued operations for the year 2018-19 includes 5593.46 Crores as demerger gain being the difference between fair value and carrying value of Cement Business Divisions of the Company which got demerged into UltraTech effective from 1st October, 2019.

In consolidated accounts interest cost has gone down from 101.55 Crores to 87.09 Crores.

For the Company as a whole, the technical performance of all the plants has been satisfactory.


Ratios F.Y. 2019-20(%) F.Y. 2018-19(%) Change(%)
1. Debtors Turnover Ratio 17.30 17.40 -0.58%
2. Inventory Turnover Ratio 1.72 3.06 -43.79%
3. Interest Coverage Ratio 3.95 8.09 -51.17%
4. Current Ratio 0.98 0.89 10.11%
5. Debt Equity Ratio 0.38 0.31 22.58%
6. Operating Profit Margin 17.20 29.33 -41.36%
7. Net Profit Margin 10.82 12.93 -16.32%
8. Return on Net Worth 9.98 14.26 -30.01%

The Company has maintained satisfactory performance ratios despite adverse market situation prevailing for a major part of the year in all the business segments of the Company.

Return on Net Worth during the year is 9.98 % as compared to 14.26% in the previous year. The reduction in return on Net worth during current year as compared to previous year is due to one-time income during last year of 287.88 Crores. Further there was sluggishness in domestic as well as international markets through-out the year and lockdown in last 10 days of the year had also contributed towards reduction in profit during the current year.


The total number of employees as on 31st March, 2020 were 4492 (7759 as on 31st March, 2019).The number of employees has reduced during the year due to demerger of cement business of the Company. The industrial relations in all units of the Company continue to be cordial. The skills, experience and passion of our people facilitate deeper customer understanding and engaging relationships and strengthen our brand value as a preferred employer. We continue to step up efforts to accelerate our value-based growth strategy and the overall development of human capital. We nurture our people by investing in their empowerment through learning and development, wellness and safety besides providing contemporary workplace facilities.


The Company continues to accord the highest priority to health and safety of its employees and communities it operates in. The Company has been fully committed to comply with all applicable laws and regulations and maintains the highest standard of Occupational Health

and Safety and ensures safer plants by conducting safety audits, risk assessments and periodic safety awareness campaigns and training to employees. We believe in good health of our employees. Modern occupational health and medical services are accessible to all employees through well-equipped occupational health centers at all manufacturing units.

Further, to prevent the spread of pandemic Covid 19, the Company has taken all precautionary measures required, such as social distancing, use of masks and sanitizers etc., at all its plant and construction sites as well as at office locations. Your Company is in full compliance of all Government directives issued in this behalf.

The Company has always considered safety as one of its key focus areas and strives to make continuous improvement on this front.


Statements in this report on Management Discussion and Analysis, describing the Companys objectives, projections, estimates, expectations or predictions may be forward looking, considering the applicable laws and regulations. These statements are based on certain assumptions and expectation of future events. Actual results could, however, differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include finished goods prices, raw materials costs and availability, global and domestic demand- supply conditions,fluctuations in exchange rates, changes in Government regulations and tax structure, economic developments within India and the countries with which the Company has business contacts. The Company assumes no responsibility in respect of the forwardlooking statements herein, which may undergo changes in future based on subsequent developments, information or events.