Global Economy Overview:
The global economy is gradually recovering from the impact of pandemic
and at the same time facing new challenges emerging from Russia?s invasion of
Ukraine. Tightening of monetary policy by most Central Banks is expected to have a
positive impact. Despite monetary tightening, inflation is persistent in many key
economies and it is anticipated that global inflation will fall from 8.7% last year to 7%
this year and settle at around 5% in the year 2024.
Indian economy overview:
India has emerged as the world?s fastest-growing major economy,
and it is predicted to be one of the top economic powers in the next decade, owing to its
robust democracy and strong partnerships. According to Advance estimates, the Indian
economy would expand by 9.2 percent in 2022-23 after decline in 2020-21. This indicates
that overall economic activity has surpassed pre-pandemic levels. By March 2022, India
administered a mssive vaccine doses, amongst the highest in the world. Further, the RBI
and the Indian government have taken a range of fiscal and monetary measures in the last
two years to provide support to domestic businesses, and ensure ample liquidity in the
system. The Government adopted a slew of measures to save lives and livelihoods, enhance
healthcare facilities, and accelerate vaccinations. Economic reform packages were also
announced to bring the economy back to the growth path.
Overview, Industry Structure & Developments, Outlook:
Indias textiles sector is one of the oldest industries in the Indian
economy, dating back to several centuries. The close linkage of textiles industry to
agriculture (for raw materials such as cotton) and the ancient culture and traditions of
the country in terms of textiles makes it unique in comparison to other industries in the
country. Indias textiles industry has a capacity to produce a wide variety of products
suitable for different market segments, both within India and across the world.
The Indian Economy continues to show resilience amid Global
Uncertainties. Despite significant challenges in the global environment, India was one of
the fastest growing economies in the world. India?s overall growth remains robust and
is estimated to be 6.9% for the financial year 2022-23. Growth was driven by strong
investment activity augmented by the government?s capex push and buoyant private
consumption. Inflation remained high, averaging around 6.7% in FY 2022-23 but the
current-account deficit narrowed in Q3 on the back of strong growth in service exports and
easing global commodity prices. Dwelling on the outlook for FY2023-24, the Economic Survey
202223 issued by Ministry of Finance projects that, India?s recovery from the
pandemic was relatively quick, and growth in the upcoming year will be supported by solid
domestic demand and a pickup in capital investment.
Going forward, the Indian cotton textile industry is expected to
showcase a stable growth supported by stable input prices, healthy capacity utilisation
and steady domestic demand.
The Company is a yarn manufacturing company, which manufactures high
precision and sophisticated yarns, mainly for discerning worldwide markets. The Company
enjoys a significant position in business industries of yarn. The Cotton Yarn division
uses the most modern equipment to manufacture its product assuring world-class quality to
its customer.
The Company is having a yarn division with consolidated capacity of
around 70,000 spindles. The Company produces variety of products ranging from NE 12, NE16,
NE 20, NE 24 NE 30 Carded and Combed and blended varieties of Cotton Yarn. The Spinning
mill is equipped with world-class Swiss, Japanese and German equipment. Currently, the
Company exports approx. 56% of garment products mainly in Europe, Asia and Latin American
countries etc.
Opportunities: Due to the current scenario it seems that the demand
will increase as imports of goods is reduced due to the negative sentiments. Being a
reputed manufacturer of world class quality products, and thanks to social drive
"Vocal for Local" we are optimistic of the future. Volume of business is
expected to increase as consumers are more attracted towards local good quality products
which are more reliable and come with warranty rather than using imported products. The
company has in-house R & D team and surplus funds available for investment which will
help us in exploring various opportunities in exports and other products.
Threats: The year 2023 was still a year of deep uncertainty for the
global textile industry. We observed The global economy is gradually recovering from the
impact of pandemic and at the same time facing new challenges emerging from Russia?s
invasion of Ukrainethe. There are problems related to our daily business due to the
considerable increase in the cost of raw materials and shipping. The scarcity and long
delivery times of raw materials is still present due to complicated and highly expensive
transports.
The priority of people has changed which will take a longer time for
the market to come back to the normal condition. Demand plays a very important role and
would leave a deep cut in economy and corporate financials. Due to panadamic and ongoing
war the income of people has been affected largely and there is a lot of hesitation in
buying things other than essentials and so the demand had reduced to a great extent. But
we ensure that we do not make compromise in our long term business objectives and brand
strength. The company has also taken steps to curtail the overall expenses to overcome the
situation.
Research & Development: Research and development department plays
an integral role in the development of new products. The role of R & D Team is to keep
improving on existing product, Quality Control Check, Innovation and Staying Ahead of
Trends, Developing New Products. The company keeps an eye on developing trends in India
and overseas and on what the competition is doing, also analyses and understand the
current conditions within a specific goal. The company continues to initiate appropriate,
significant and result oriented products in the market, which are innovative, Futuristic
with Modernized Technology. Each product designed is deliberately executed inhouse and
undergoes a series of rigorous checks.
Risk Management: The Company is exposed to various potential risks like
Economical Risk, Compliance Risk, Operational Risk, Environmental Risk and Financial Risk.
The key risk areas are regularly and systematically reviewed by senior management while
the Risk Management committee also reviews and provides input to mitigate the risk.
Internal Control: At the Company level, internal control objectives
relate to the reliability of financial reporting. The Company?s resources are
directed, monitored, and measured on regular intervals which help in detecting and
preventing fraud and protecting the organization?s resources, both physical and
intangible. The Company has always implemented appropriate controls to make sure that
it?s operational; Compliance and reporting objectives are achieved. The company has
detailed policies and standard operating procedure for all existing and future growing
needs. These policies and procedures play a key role in the deployment of internal
controls. They are regularly reviewed to ensure the relevancy, comprehensiveness and
compliance is embedded into the management review process. To strengthen the process,
Controls of the key processes are reviewed by the internal audit team with timely
suggestions.
Disclosure On Accounting Treatment: In the preparation of financial
statements for FY2022-23, there is no treatment of any transaction different from that
prescribed in the Accounting Standards notified by the Government of India under
Section133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules,
2014; guidelines issued by the Securities and Exchange Board of India and other accounting
principles generally accepted in India.
Financial Review
(Amount in Rs.)
| PARTICULARS |
FY 2022-23 |
FY 2021-22 |
FY 2020-21 |
22-23 YOY % |
21-22 YOY % |
| TOTAL INCOME |
6964555789 |
9113609365 |
5750673271 |
-23.58% |
58.48% |
| EBITDA |
507196261 |
816793070 |
461444444 |
-37.90% |
77.01% |
| PAT |
7966979 |
183544378 |
-61967081 |
-95.66% |
-396.20% |
| NET WORTH |
1149671372 |
1154206348 |
968492786 |
-0.39% |
19.18% |
Key Financial Ratios:
| PARTICULARS |
FY 2022-23 |
FY 2021-22 |
FY 2020-21 |
YOY % |
YOY Change % |
| OPERATING PROFIT MARGIN |
0.02 |
0.06 |
0.03 |
-66.16% |
137.00% |
| NET PROFIT MARGIN |
0.00 |
0.02 |
-0.01 |
-94.22% |
-285.33% |
| PARTICULARS |
FY 2022-23 |
FY 2021-22 |
FY 2020-21 |
YOY % |
|
| DEBT/EQUITY RATIO |
1.23 |
1.56 |
2.04 |
-20.90% |
-23.74% |
| CURRENT RATIO |
1.29 |
1.55 |
1.36 |
-16.69% |
14.06% |
| INTEREST COVERAGE RATIO |
1.07 |
2.01 |
0.72 |
-46.61% |
179.39% |
| INVENTORY TURNOVER RATIO |
6.96 |
9.98 |
6.60 |
-30.26% |
51.21% |
| DEBTORS TURNOVER RATIO |
7.40 |
9.94 |
6.21 |
-25.60% |
60.06% |
| RETURN ON NET WORTH (%) |
0.01 |
0.16 |
-0.06 |
-95.64% |
-348.81% |
Detailed explanation of ratios:
1. Net Profit Margin: Net Profit Margin has been mainly increased due
to Net profit during the year 2022-23.
2. Interest Coverage Ratio: Interest Coverage Ratio has been increased
due to increased finance cost in the year 2022-23.
3. Return on Net Worth: A high RoNW ratio of a company for maximum
profit.
Human Resources and Industrial Relations:
Employees are biggest source for any Company?s success and
expansion. Our Human Resource Team based on their strengths, potential and determination
towards work evaluates the employees. It is very important to keep the employees
encouraged to take decisions and initiatives towards the betterment of their work. The
company encourages and provides them a safe and motivating work environment. Furthermore
various training and educational seminars and events are organised with proper importance
given on health and safety issues. The Company has always followed process of Appraisal
from time on time, to recognise talents and ensure that employees remain devoted to the
organisation on a long-term.
Cautionary Statement:
The content provided for Management Discussion and Analysis Report may
vary with the anticipation made in the discussion statements. It describes the
Company?s objectives, projections and estimates progressive within the meaning of
applicable security laws and regulations. Actual results may vary from those expressed or
implied, depending upon economic conditions, Government Policies and other incidental
factors. Taxation laws, Economic Development, Cost of Raw Materials, Interest and Power
Cost are among the few extraneous variables that influence the Company?s operations.
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