GLOBAL TEXTILE INDUSTRY
The global textile & clothing trade was at USD 777 billion in 2020.
With companies rearranging their operations and recovering from the COVID-19 impact, the
market is expected to reach USD 1000 billion in 2025.
INDIAN TEXTILE INDUSTRY
India?s textiles sector is one of the oldest industries in the
Indian economy, dating back to several centuries. The industry is extremely varied, with
hand-spun and hand-woven textiles sectors at one end of the spectrum, with the
capital-intensive sophisticated mills sector on the other end. The decentralised power
looms/ hosiery and knitting sector forms the largest component in the textiles sector. 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. India?s textiles industry has a
capacity to produce a wide variety of products suitable for different market segments,
both within India and across the world.
Exports of textiles & clothing (RMG of all textiles, cotton
yarns/fabs/made-ups/handloom products, man-made yarns/fabs/made-ups, handicrafts excluding
handmade carpets, carpets and jute mfg. including floor coverings) stood at US$ 28 billion
for 2020. In the year 2020-21, 980 million kgs of cotton yarn was exported from India.
India is the second largest producer of fibre in the world and the major fibre produced is
cotton. 60% of Indian textile industry is cotton based. Other fibres produced in India
include man-made fibres, silk, jute and wool.
The labor-intensive nature of the textile industry makes it the second
largest employer, after agriculture, contributing 10 per cent to the country?s
manufacturing. The industry contributes 7 per cent to the nation?s total industry
output and 2.3 per cent of the GDP. It also makes up 5 per cent of the global trade in
textiles and apparel.
Many foreign textile companies have invested or working in India some
of which are Rieter, Trutzschler, Saurer, Soktas, Zambiati, Bilsar, Monti, CMT, E-land,
Nisshinbo, Marks & Spencer, Zara, Promod, Benetton and Levi?s.
Despite the slowdown due to the pandemic, sales in the online textile
and apparel industry witnessed a jump in various cities and states of India. The
post-COVID-19 era provided a big opportunity for the industry to move online. In fact,
e-retail may be the big game-changer with e-retailers expected to play a pivotal role in
the recovery of the Indian economy in 2022.
Spinning is concentrated in few states of India like Tamil Nadu,
Maharashtra, Gujarat, Punjab, Rajasthan Telangana, Andhra Pradesh, Haryana and Madhya
Pradesh. Few states are trying to expand textile manufacturing with in their states
prominent of which are Uttar Pradesh and Orissa.
The textiles sector has witnessed a spurt in investment during the last
five years. The industry (including dyed and printed) attracted Foreign Direct Investment
(FDI) worth US$ 3.93 billion from April 2000-December 2021.
Indian government has come up with several export promotion policies
for the textiles sector. It has also allowed 100% FDI in the sector under the automatic
route. The Rs. 10,683 crore (US$ 1.44 billion) PLI scheme is expected to be a major
booster for the textile manufacturers. The scheme proposes to incentivise MMF (man-made
fibre) apparel, MMF fabrics and 10 segments of technical textiles products.
Spinning Industry Overview
In 2021 with an installed capacity of about 53 million plus spindles,
India is one of the largest producers and exporter of cotton yarn in the world with a
production of 5659 million kgs (FY19-20) of all types of spun yarn.
For FY 20-21, China is the largest importer of cotton yarn (28% share)
from India, followed by Bangladesh with 23% share. The top five importers form 66% of
India?s total cotton yarn exports.
The high cotton yarn exports out of India can be attributed to the
local availability of abundant raw material and modern technology in the spinning section
of the value chain. Indian spinners over the last few decades have invested extensively in
enlarging and modernizing the industry with latest machines and equipments procured
locally as well as from outside the country. Central and State Governments has been
pitching in with various incentives to help the industry in this endeavor so that it is
able to export value added high quality products from India and simultaneously providing
employment to the lowest earning population of the country.
COMPANY OVERVIEW
DCM Nouvelle Limited is a leading manufacturer & exporter of 100%
cotton carded and combed yarns in single and two-ply forms of count range Ne 12s to 40s.
The Company has spindle capacity of 1,15,048 located at Hisar with approx
2500 MT of monthly production at present & is under expansion with
spindle capacity of 43776 for producing 100% Compact Cotton Yarn. After the expansion,
production capacity will go up to about 3400 MT/month. State-of-art spinning machineries
and Quality Assurance instruments from leading manufacturers have been installed for
production of fault free 100 % cotton yarn. With the introduction of value added products,
premium brands & sustainability certifications, the company has moved ahead in
positioning itself as supplier of quality yarn for the finest clothing. The company had
successfully engraved its name in domestic markets and have exported to more than 30
countries. The company has also installed 14.255 MWp capacity of Roof top and ground
mounted Solar Power Plants which is helping company to generate and self-consume solar
power and also reducing carbon footprints on earth. Moving on the path of Total Quality
Management (TQM), its improved processes & products aim to achieve the ultimate goal
of "CUSTOMER DELIGHT".
OPPORTUNITIES AND OUTLOOK
The outlook for the textile industry in India is quite optimistic. It
is expected that the textile industry will continue to grow at an impressive rate.
The Indian textiles industry, currently estimated at around US$ 108
billion, is expected to reach US$ 220 (220+70) billion by 2025. The industry is the second
largest employer after agriculture providing employment to over 45 million people directly
and 65 million people indirectly. The Indian textiles industry contributes approximately
2.3% to India?s GDP and 14% to overall Index of Industrial Production (IIP). The
textile sector is among the largest contributors to India?s exports, and has the
potential to reach US$ 500 billion in size according to a study of many research firms.
The inherent strengths of the textile industry have seen it through
rough days and hard times. There have been many periods of adversity, when growth charts
dipped and the future appeared bleak. But like the phoenix, the textile industry has risen
each time from the ashes.
With a tremendous growth in the economy along with Government support,
the Indian economy is expected to overtake Japan to be the 3rdlargest economy
by 2028.
RISKS & CONCERNS
Textile spinning sector globally seems to be quite unpredictable and
uncertain for various reasons including stagnant demand as against growing supply, cotton
futures, currency fluctuation, disruption in export logistic and above all increasing
competition from some countries like Vietnam, Bangladesh, and Cambodia etc. Initiatives
launched by Govt envisages inviting FDI which may give impetus to growth in textiles,
particularly the fabric and processing which will lead to balancing out the demand supply
position for the spinning sector.
Competition from other developing countries, high volatility of cotton,
yarn price and the Rupee to US$ exchange rate are the major area of concern. The Company
is trying to reduce the impact of volatility by reducing open position in respect of the
above. Labour shortage is another area which is affecting operations. This is being
mitigated by increasing worker training programs and strengthening operational efficiency.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The internal control systems have been designed to effectively and
efficiently handle the dynamic and complex nature of the business operations of the
Company. The internal control systems and environment are commensurate to the scale and
volumes of the business with adequate segregation of roles, responsibilities and
redundancies. The executives of the Company keep themselves abreast with the detailed
documentation of its policies and SOPs, which are regularly reviewed and updated by the
management. The statutory auditors of the Company critically review the internal control
environment within the ambit of the Internal Control over Financial Reporting (ICFR)
requirements to arrive at their opinion about the financial performance of the Company.
The Company also has a strong internal audit framework as approved by the Audit Committee
which ensures detailed coverage of the processes and systems needed to safeguard its
assets, prevention and detection of errors and frauds, ensure accuracy and completeness of
accounting transactions thus enabling timely preparation of reliable financial
information. The various committees of the board, including the Audit Committee,
periodically review the observations and recommendations of the internal auditors to
further improve the systems and processes.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS
Employees have always played an extremely pivotal role in all strategic
decisions taken by the Company. In a world where everything else is equal, human effort
makes all the difference. We place immense value on our workforce and consider it our
biggest, most valuable asset. At DCM Nouvelle, we have a culture of empowerment that
values and respects individual potential and helps each one achieve it to the fullest. Our
people own their jobs and not just perform them. We continuously strive to improve quality
of work-life balance for total job satisfaction and social harmony for the employees. The
total number of people on the rolls of the company is 1807. The industrial relation
continued to remain cordial during the year.
FINANCIAL AND OPERATIONAL PERFORMANCE:
The Company is operating in single segment only i.e. Textile. On a
standalone basis, the revenue for FY 2022 was Rs. 880.10 crore, higher by 58 percent over
the previous year?s revenue of Rs. 557.06 crore. The profit after tax
("PAT") attributable to shareholders for FY 2022 was Rs. 122.79 crore
registering a growth of Rs. 302.50 percent over the PAT of Rs. 30.51 crore in FY 2021.
On a consolidated basis, the revenue for FY 2022 was Rs. 880.10 crore.
The profit after tax ("PAT") attributable to shareholders and non-controlling
interests for FY 2022 was
Rs. 122.60.
The operating profit of the Company improved significantly due to good
market demand and higher realisation
Summarised Profit and Loss Account
| Particulars |
Financial Year ended March
31, 2022 |
Financial Year ended March
31, 2021 |
| Profit before Interest, |
18,286.41 |
6,544.99 |
| Depreciation and Tax |
|
|
| Less: a) Finance Cost |
(617.36) |
(841.31) |
| b) Depreciation |
(1,236.32) |
(1,602.86) |
| Profit before Tax |
16,432.73 |
4,100.82 |
| Less: a) Provision for tax |
(4,153.27) |
(1,050.02) |
| Profit after tax |
12,279.46 |
3,050.80 |
| Other Comprehensive income |
(29.31) |
2.49 |
| Total Comprehensive income |
12,250.15 |
3,053.29 |
| for the year |
|
|
| Add - Profit brought forward |
11,029.15 |
7,975.86 |
| Profit available for appropriation |
23,279.30 |
11,029.15 |
| Balance Profit carried forward |
23,279.30 |
11,029.15 |
| S. No. Particulars |
Financial Year ended March 31, 2022 |
Financial Year ended March
31, 2021 |
| 1. Sales in Quantity (MT) |
29100 |
26,662 |
| 2. Production (MT) |
29886 |
26,025 |
| 3. Sales & other Income |
91,764 |
56,908 |
| 4. Total Expenditure |
(73,478) |
(50,363) |
| 5. Profit before finance cost, Depreciation,
Amortization & Tax |
18,286 |
6,545 |
| 6. Finance Cost |
(617) |
(841) |
| 7. Depreciation |
(1236) |
(1,603) |
| 8. Profit before Tax |
16,433 |
4,101 |
Key Financial Ratios
The SEBI LODR (Listing Obligation and disclosure requirements)
(Amendment) Regulations, 2018 has mandated that Company should provide detail of
Significant Changes in Key Sector Financial ratios. We would like to inform you that in
the following key financial ratios there have been Significant Change as compared to the
last year:
| Particulars |
F Y 2021-22 |
F Y 2020-21 |
Change (%) |
Explanation |
| Current Ratio (Times) |
2.08 |
1.58 |
32 |
Better operating profits in current year. |
| Debt Equity Ratio (Times) profit in current
year. |
0.51 |
0.90 |
-43 |
Repayment of term loans and
better |
| Debt service coverage ratio (Times) |
7.39 |
1.67 |
342 |
Better operating profits in current year. |
| Return on equity ratio (Percentage) |
50.04 |
18.06 |
177 |
Better operating profits in current year. |
| Inventory turnover ratio(Times) year. |
3.15 |
2.40 |
32 |
Increase of cost of goods
sold in current |
| Trade receivable turnover ratio (Times)
compared to previous year |
10.37 |
7.52 |
38 |
Better realisation in current
year as |
| Trade payable turnover ratio (Times) year. |
62.34 |
34.27 |
82 |
Increase of cost of goods
sold in current |
| Net capital turnover ratio (Times) |
6.65 |
6.32 |
5 |
- |
| Net profit ratio (Percentage) |
13.50 |
5.42 |
149 |
Better operating profits in current year. |
| Return on capital employed (Percentage) |
55.60 |
26.84 |
107 |
Better operating profits in
current year. |
| Return on investments (Percentage) |
32.56 |
10.53 |
209 |
Better operating profits in current year. |
*The calculation for above ratios (including restatement of prior year
ratios, wherever necessary) is in accordance with formula prescribed by Guidance note on
Schedule III issued by the Institute of Chartered Accountants of India.
CAUTIONARY NOTE
Certain statements in this report describing the Company?s
objectives, projections, estimates, expectations or predictions may be forward-looking
statements within the meaning of applicable securities, laws and regulations. Although the
expectations are based on reasonable assumptions, actual results in the future could
materially differ from those expressed or implied
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