Cravatex Ltd Management Discussions

(a) Industry Structure and Development

The Textile industry catering to export of Garments severely suffered due to demand side effects especially the muted demand from USA and Europe mainly on account of cascading impact of Eurosian and Middle east disturbances. With the continuing of ongoing disruptions, the trading activity is expected to take some time to revive.

(b) Opportunity and Threats

The domestic economic scenario has shown substantial recovery post Covid 19 pandemic phase. Efforts are made to explore the right kind of opportunity within the available resources.

Emerging new age technologies, especially the artificial intelligence, influencing the consumer preference and habits is a challenge. It demands equally capable expertise to anticipate and overcome the challenge. The company is confident to deal with the situation at the appropriate time.

(c) Segment wise/product wise Performance and outlook

As a result of the improved domestic economic environment despite the international disruptions, the outlook is stable. The annual report covers the companys performance for the year.

(d) Risks and concerns

The spill over effect of disrupting situation in the Eurasia and Middle east countries is a perceived risk. Both supply and demand side disruptions is a matter of concern. The company is however watching the situation for possible impact on its revenues in the medium term.

(e) Internal control system and their adequacy

Over the years the companys internal control system has been adequately enhanced to match the requirement and adequacy. The internal audit conducted by an independent firm of Chartered Accountants evaluating the functioning and quality of internal controls ensures compliance.

(f) Discussion on financial performance with respect to operational performance

The revenue from trading of textiles during the year was dropped vis a vis the previous year due to the adverse impact of international demand for garments. Income from lease improved on account of annual increase as contracted with lessees. Other income was impacted due to lower Dividend from overseas subsidiary.

(g) Material developments in Human Resources/Industrial Relations front, including number of people employed

There is no material development in Human Resource/industrial Relations front during the year. The overall industrial relationship has been satisfactory. The company has 8 employees on its rolls as at 31^st March, 2024.

The details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios and change in return on net worth along with detailed explanations therefor are as follows:

* Debtors are reckoned on average basis.

** Inventory is reckoned on average basis.

1. Debtors turn over ratio: During the year, the trading activity was lower than the previous year. Although the receivables were realized within the scheduled time, the average receivables appeared higher and hence the ratio appears lower than the previous year.

2. Inventory turn over ratio: Since there is no inventory holding as on the date of the balance sheet the ratio is not applicable.

3. Interest coverage ratio: Being a debt free company the interest coverage ratio is not applicable.

4. Debt Equity ratio: Being a debt free company the ratio is not applicable.

5. Current Ratio: The ratio has improved on account of increase in current assets, mainly the investments in MF.

6. Operating profit margin: The ratio has improved due to the increase in gross margin on trading.

7. Net profit margin: The variation is on account of posting of profit as against the loss reported in the previous year due to one time impact on sale of domestic subsidiary.

8. Return on net worth: The ratio has turned positive due to profits in the current year vis a vis loss in the previous year.