cil nova petrochemicals ltd share price Management discussions

(Management Discussion and Analysis is part of Directors Report for the Year Ended 31^st March, 2023)

- INDUSTRIAL STRUCTURE , DEVELOPMENT AND OVERVIEW :

The Company is in business of manufacturing of Partially Oriented Yarn (POY), Micro-Filament Yarn, Draw Twisted Yarn (DTY), Texturised Yarns and Fully Drawn Yarns (FDY). However Competition in the industry is continuously increasing but overall Performance of the Company is satisfactory.

Despite global volatility, the Indian economy grew by 6.8% in 2022 – making it the fifth largest economy globally in terms of nominal GDP (US dollars). This growth has been supported by:

(1) reduction in Covid-19 cases leading to opening up of the economy;

(2) expansion of manufacturing footprint by both global and Indian firms, aided by Government policies (eg Production Linked Incentive (PLI) Scheme, PM Gati Shakti, corporate tax cuts);

(3) capex recovery; and

(4) cyclical upturn in many sectors (eg Banking, Auto). Indias digital infrastructure has strengthened in the last few years and the widespread adoption of real-time digital payments is estimated to have unlocked 0.56% of GDP.

However, we saw interest rate hikes done were by the Reserve Bank of India to control inflation. The Indian rupee weakness against the US dollar also added to the inflationary pressures.

- FINANCIAL PERFORMACE:

The total revenue from continued operations during the year under review was Rs. 0.00 Lakhs as against Rs. 0.00 Lakhs in the previous year. Profit/Loss after tax stood at Rs. (146.96) Lakhs as against previous year profit/loss Rs. (153.86) Lakh. The total revenue from discontinued operations during the year under review was Rs. 10182.72 Lakhs as against Rs. 29615.60 Lakhs in the previous year. Profit/Loss after tax stood at Rs. (446.19) Lakhs as against previous year profit/loss Rs. 937.44 Lakh. The Management of the Company is taking efforts for the progress of the Company. The performance of the Company is gradually improving with transient time. The improvement is evident from the financial statement of the Company.

- SIGNIFICANT RATIO ANALYSIS

Sr. No. Particulars	2022-23	2021-22	Reasons
1 Current Ratio	3.83	1.35	Ratio has improved as due to the realisation of Current assets & payment of current liabilities on discontinuation of operation.
2 Debt Service Coverage Ratio	(1.40)	7.26	Due the losses made by the company, the ratio has decreased.
3 Inventory turnover Ratio	5.76	9.21	Due to the discontinued operations, the turnover & inventory both is reduced.
4 Trade Receivables turnover Ratio	5.90	9.09	Due to the discontinued operations, the turnover & trade receivable both has reduced.
5 Net Capital turnover Ratio	13.44	16.92
6 Net Profit Ratio	(0.06)	0.03	Due to loss, the Net profit ratio has reduced.
7 Debt - Equity Ratio	0.00	0.29	Ratio has improved due payment of working capital loans.

- OPPORTUNITY:

Initiative of "Make in India" has received overwhelming support from Government and as textile sector is in the loop of Make in India concept overall there will be increase in consumptions of your companys products and there may be increase in demand of the same and which will lead to growth of the company.

India has become a dream market for most marketers across many product segments. In textiles and apparel specifically, domestic consumption has grown at over 13 per cent per annum over the last five years and crossed the $60 billion level, fuelled by the demographic advantages of Indias population, increasing urbanization, growing disposable income and higher marked penetration of organized retail. Indias export of textiles and apparel has also grown at over 11 per cent in the last five years and currently stands at $40 billion – a success but a long way from where Chinas industry stands today (just 10 per cent), and nowhere near its potential.

According to the WTO, India is the third-largest textile manufacturing industry and holds an export value of more than USD 30 billion. India is responsible for more than 6% of the total textile production, globally, and it is valued at approximately USD 150 billion.

As of today, it is estimated anywhere between 20 million and 60 million people are employed in the textile industry worldwide. Employment in the garment industry is particularly important in developing economies such as India, Pakistan, and Vietnam. The industry accounts for approximately 2% of global Gross Domestic Product and accounts for an even greater portion of GDP for the worlds leading producers and exporters of textiles and garments

- THREATS:

There is continuous increase in Competition in Textile Sector, many companies are entering in textile segment due to high demand and so, in order to survive in the market company have not increased is profit margins as estimated by the management however company has managed to survive the same by taking appropriate actions.

- OUTLOOK:

Global textile industry is estimated to exhibit a CAGR of 4.3% from 2020 to 2027 owing to the increased demand for apparels, especially in developing countries such as China, India, Mexico, and Bangladesh. Asia Pacific region (APAC) will be the growth driver, which will contribute around 44% to the industry, followed by US, the EU and Latin America. To keep up the pace of a growing industry, it is necessary to adopt sustainable measures to cut operating costs and increase the economies of scale.

- RISK AND CONCERN:

The risk management function is integral to the company and its objectives includes ensuring that critical risk are identified continuously, monitored and managed effectively in order to protect the companys business.

However, the changes in the tax laws, Government policies and regulatory requirement might affect the companys business. Uncontrolled variation in price of input materials could impact the companys profitability to the extent that the same are not absorbed by the market through price increase and / or could have a negative impact on the demand in the market. The management has already taken initiatives in advance for mitigating the above mentioned risk and concerns/challenges. The company has taken major initiatives like focus on cost reduction through inventory management techniques, manufacturing process without compromising quality of products and retains talented employees etc.

- INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

With an aim to monitor and control day-to-day operations at CNPCL, the Company has set up internal control systems for regular tracking and reporting for that the Company has appointed and independent firm of Chartered Accountant for the same with such powers and responsibilities that are required to ensure the adequacy of the internal Control System. These systems also monitor compliance to various rules and regulations, and adherence to policy requirements and submit their report to Audit Committee and Board on Quarterly and Yearly Basis.

- INITIATIVES BY THE COMPANY:

The Company has taken the following initiatives:

• Concentration on reduction of costs by undertaking specific exercise in different fields and started to have in house paper tube plant.

• Focusing on modernization of manufacturing process to improvise quality and reduction of costs.

The Company is quite confident that the overall productivity, profitability would improve in a sustainable manner, as a result of this strategy.

- HUMAN RESOURCE:

Your Company firmly believes that employees are the most valuable assets and key players of business success and sustained growth. Various employee benefits, recreational and team building efforts are made to enhance employee skills, motivation as also to foster team spirit. Industrial relations were cordial throughout the year. The Company has 389 employees as on year ended 31^st March, 2023.

- CAUTIONARY STATEMENT

Statements in Management Discussions and Analysis Report describing the Companys objectives, estimates and expectations may be "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those either expressed or implied.

	By Order of the Board
	For, CIL Nova Petrochemicals Limited
	Sd/-
	Jyotiprasad Chiripal
Place: Ahmedabad	Chairman
Date: 14th August, 2023	DIN: 00155695