flexituff ventures international ltd share price Management discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS REPORT</dhhead>

DISCLAIMER / CAUTIONARY STATEMENT

Statement in this Report, which describe the companys plans, projections, estimates, expectations or predictions, are based on certain assumptions and expectations of future events which may or may not happen as expected. Therefore, actual results could differ materially from those expressed/ implied and the company cannot guarantee that these will be realized. Important factor that could make a difference to the companys operations include raw material availability and prices, cyclical demand and pricing in the companys principal markets, change in the government regulations, tax regime, politico-economic conditions within India and the countries in which the company conducts business and other incidental factors.

 

INDUSTRY STRUCTURE & DEVELOPMENT

ECONOMIC REVIEW

WORLD ECONOMIC CONDITIONS

Early signs in 2023 that the world economy could achieve a soft landing with inflation coming down and growth remaining steady, have receded with stubbornly high inflation and recent financial sector turmoil.

The International Monetary Funds (IMFs) baseline forecast, assuming the recent financial sector stresses are contained, is for growth to fall to 2.8% in 2023 from 3.4% in 2022. For the next five years, it is expected to average out to 3% as it rises slowly. It is IMFs lowest medium-term forecast in decades.

Advanced economies are expected to see an especially pronounced growth slowdown to 1.3% in 2023, from 2.7%, in the previous year. In a plausible alternative scenario, with further financial sector stress, global growth is expected to decline to 2.5% in 2023 with the growth of advanced economies falling below 1%.

The anemic outlook reflects the tight policy stances needed to bring down inflation. Global headline inflation is set to fall to 7% in 2023 from 8.7% in 2022 on the back of lower commodity prices. But underlying (core) inflation is likely to decline more slowly.

The global flexible intermediate bulk container market size reached US$ 5.2 Billion in 2022. Looking forward, the analyst expects the market to reach US$ 7.1 Billion by 2028, exhibiting a CAGR of 5.33% during 2022-2028. The global flexible intermediate bulk container market size is projected to reach USD 6.4 billion by 2026, progressing at a CAGR of 5.9% over the forecast period, according to a new report by Grand View Research, Inc. Growing food and pharmaceutical industries across the world and increasing need to reduce overall weight of bulk packaging are among the key factors driving the demand for flexible intermediate bulk containers.

 

INDUSTRY OVERVIEW

The analyst monitoring the Global “FIBC (Flexible Intermediate Bulk Container) Market” was valued at 6870 million USD in 2020 and is expected to reach 9200 million USD by 2023, at a CAGR (Compound annual growth rate) of 5.0% during the forecast period. The increasing use of FIBC (Flexible Intermediate Bulk Container) in Chemical Industry, Food Industry, Pharmaceutical Industry, Others and other industries is driving the growth of the FIBC (Flexible Intermediate Bulk Container) market across the globe. The FIBC market is fragmented with the presence of several international and regional vendors who offer products for end-users in the chemical, food, and other industries. Although the high demand for FIBCs from the construction industry will offer immense growth opportunities, the high availability of substitutes will challenge the growth of the market participants.

The growth of the construction industry is one of the critical reasons expected to boost flexible intermediate bulk container market growth. Flexible intermediate bulk containers save storage space and ensure optimum utilization of trucks, which will help them gain more prominence in the construction industry. The cost savings associated with these containers will drive flexible intermediate bulk container market growth.

Peculiarly, Technical textiles as a segment is directly proportional to the stage of industrialization and economic growth of any country. Developing countries undergoing large scale industrialization fuel the demand for technical textile products. The usage may range from infrastructure, agriculture, health, defence, automobiles, aerospace, sports, protective clothing, packaging, etc., With transformation of the Indian economy post liberalization in the early 1990s, the demand and consumption of technical textiles products in India has been consistently increasing. The growth of technical textiles has also helped growth and innovation of conventional textile products, owing to significant value addition across the textile value chain. All major players in India have started developing technical textiles products as they provide better margins in comparison to conventional textiles.

As per the latest estimates of IIT Delhi, the global Technical Textiles market is expected to grow at a CAGR of 5.06% between 2020 and 2025 whereas the market in India is likely to grow at a CAGR of 8.25% during the same period. The forecast arrived at by the research team suggests that the market for technical textiles in India will grow in value from Rs. 122,943 Crores (US$ 18.89 Billion) in 2019-20 to Rs. 1,82,742 Crores (US$28.06 Billion) in 2024-25. The market size of the textile industry in India is Rs. 7,11,409 Crores while that of technical textiles is Rs. 1,22,943 Crores during 2019-20. Even as it currently contributes a relatively modest portion i.e. 17% of the total textile market in India. The size of the technical textiles market in India is a small proportion (8.7%) of the market size of technical textiles in the world in 2019-20. It is expected that by 2024-25, the value of consumption (calculated at constant foreign exchange rates) of technical textiles in India is likely to be 10.1% of global consumption of technical textiles in 2024-25.

The share of technical textiles in the total textile industry in India is expected to reach 28% by 2024-25. The segments likely to grow at the fastest rates (at rates faster than a CAGR of 10%) in the Indian market are Oekotech, Protech, Mobiltech, Geotech, Indutech, Agrotech and Buildtech. Packtech, which has been a main stay of the domestic technical textile market is expected to experience a moderated rate of growth. The extent and nature of the success of India’s National Technical Textile Mission is likely to change these forecasts depending on the response of the market to interventions made under the Mission.

Currently, share of technical textiles in Indian textile value chain is around 13 percent. With the growth potential of various related sectors, technical textiles are poised to grow at 18 percent CAGR during the period 2018-25. Technical textile industry in India is import dependent. Many products like specialty fibers /yarns, medical implants, protective textiles, webbings for seat belts, etc. are mostly imported. However, technical textiles sector has registered impressive growth in the recent years. In order to capitalize on the growth potential, technical textiles ecosystem in India needs to grow significantly with focus on research and innovation in high growth sectors such as Mobiltech, Buildtech, Indutech, Meditech, etc., to ensure sustainable growth, the sector needs to adopt global best practices and attract FDIs (100 percent FDI is allowed under automatic route) and JVs with global technical textiles companies.

 

COMPANY OVERVIEW

Flexituff Ventures International Limited (“FVIL”) is a multi-product, multi-market and multi-location enterprise. Having evolved from a leading global FIBC major to a foremost Indian Geo-synthetics solution provider, Flexituff through its niche products also serves the domain needs of retail, agro, pharma and infrastructure sectors. With three manufacturing plants across India, 2 direct subsidiaries, one based in India & another in Cyprus exports to over 60 countries, employing over 8000 global citizens, Flexituff is truly an Indian multinational company that has come of age.

FVIL is a trusted name in the manufacturing of Flexible

Intermediate Bulk Container (FIBC), geotextiles, reverse printed BOPP (Biaxial oriented polypropylene) woven bags, and NPC drippers. Economies of scale, the edge of attitude, 100% integration under one roof, global footprints for more than 25 years of being in the industry are the key pointers for excellent reputation in domestic as well as international market.

 

BUSINESS OVERVIEW

During the FY 2022-23 your Companys products had good demand in comparison to FY 2021-22. The company had incurred net losses form the financial year 2018-19 till date. The problems started with large amounts of money getting stuck in Government receivables. This led to a default in the repayment of the Bonds further leading to downgrading of credit rating of the company. Due to the above, company is facing severe working capital shortage and is having to buy the raw material at high prices on credit from the traders. Company endeavoured to evaluate various options & potential ways of improving the cash flow through injection of working capital, other long term funding, cost cutting, etc.

Looping to all the factors & the unstable conditions the Companys performance in FY 2022-23 was satisfactory.

 

PRODUCT INTRODUCTION

FIBC

Four Loop Bags

Flexituff offers a wide range of Standard Corner Loops and Cross Corner Loops FIBCs for bulk packaging from 500- 2000 Kgs.

 

Single/ Two Loop Bags

Also called as Fertilizer bags, they are one of the popular offering of Flexituff. It is manufactured in a way that the fabric of the bag is used as a ‘lifting loop’. The total production capacity of Flexituff for Single Loop Bag is close to 4 Million bags per year. What makes them unique is that they are made out of a single layer circular fabric, coated/ uncoated or with an option of PE liner as per customer’s requirements. These bags are mainly used for packaging Fertilizer, Fish feed, Seed and Cement.

Flexituff is the only Indian Company to offer Single loop bags with suspended liner made on World renowned GunterR sealing machine.

 

Builder Bags/ Tunnel Lift Bags

Builder Bags are used for high volume usage. Flexituff holds a patent for Tunnel Lift TM bags. They are made especially for the Building and Construction Industries and are used for filling sand, construction waste or aggregates..

Flexi Global-UK, Flexituff’s 100% owned subsidiary stocks and offers entire range of builder bags from its UK warehouses.

 

Specialized Bags: Type C + D

Flexituff has evolved two specialized and protective bulk bag packaging that nullify damaging accidents due to static electricity- Type C (conductive) & D (dissipative) Bags employing patented Crohmiq technology.

Flexituff is the only Indian manufacturer holding Texene, USA’s license and rights to produce type D Crohmiq fabric and bags.

 

Specialized Bags: Baffle Bags

Also called as Form Stable bags or Q bags, they maintain their square shape which allows optimum use of space during warehousing and transportation.

 

UN Bags

Flexituff UN bags are certified by IIP (Indian Institute of Packaging) that issues a UN certificate based on testing parameters as prescribed in the IMDG code. A UN FIBC is subjected to rigorous tests to make sure that each of them is safe, functional, and up to rigorous international standards. The company has been delivering such bags over a decade with full expertise and full adherence to specified norms.

 

Ventilated Bags

Flexituff’s ventilated bags are made of flat Sulzer Polypropylene Woven Fabric specifically designed to permit the required air flow through the fabric into the bag to keep them from getting either too hot, too wet and to prevent mould ingress on the crop/log itself. Ventilated bags are commonly used for packing, storage and transportation of potato, onion and firewood logs.

 

FIBC with Special Liners

At Flexituff, Liners are being manufactured and stored in a state-of-the-art Clean Room environment (ISO 14644-1 class 7). Besides Standard Tubular liner, the company provides the following Specialized Liners: Form-fit liners, Baffle Liner, Aluminum Liner, Nylon Liner, EVOH Liner, PP Liner, Liquid Liner, Valve Liner and Conductive Liner. Liners can be attached to the bag in various options like Tabbed Liner, Glued Liner or Flanged Liner.

 

BOPP WOVEN BAG

BOPP Woven Bags represent an advanced concept of bulk packaging from 5-50 Kgs that adds value to a brand’s personality. Decades of packaging experience empowers Flexituff to offer customized bags to meet the needs of different customers and applications.

Being a vertically integrated company, highest precision and quality are ensured at Flexituff, from the raw materials used to the finished product. Deep experience in manual stitching efficiencies enable the company to ramp up capacities and address customer needs of any quantity, anytime, anywhere.

 

NON Woven Retail

Non Woven Floor Covering Carpets

Non Woven Carpets are manufactured by a different process compared to Tufting and Weaving. Non Woven Carpets are made from Polypropylene fibers or Polyester fibers. The fibers are formed into a web by Needle Punching and then chemically bonded to form the carpet. Flexituff also manufactures Non-Woven Carpets with Jute Backing for higher dimensional strength.

These are available in latex backed form for direct usage.

Plain Non-Woven Carpet Non-Woven Carpet with Scrim Random Velour Non-Woven Carpet

 

Synthetic Leather Substrate

Flexituff has the best of equipment for good density, high tear strength Non woven Fabric. Polyester Needle Punched non woven Fabric is the base material of synthetic leather. It imparts good dimensional stability and has high temperature resistance (180-210?C).

 

Interlining For Apparel

Polyester Non Woven Needle Punched Fabric from 80 to 500 Gsm. It is produced in the following categories:

Needle punched polyester fabric

Needle punched with calendared

Needle punched and chemical coated for stiffness, water repellent and fire proof.

 

Non Woven Filter Fabrics

Polyester Non Woven Needle Punched Filter Cloth is produced for making Non Woven Filter Bags which are used in various industries to trap dust particles. Our polyester fabric is strong, abrasion resistance and has resistance to common acids, solvents and oxidizing agents.

 

GEOSYNTHETICS

3 World-class Manufacturing facilities in India

Over 1000 Geotexile Bag Stitching Machines

Over 240 Looms with latest technology

Customized 261,000 450,000 Bags/ Day (from raw material stage to finishing)

0.1mm to 12mm Various stitch thickness in Bags

Warehouses in Kolkata, Siliguri, Guwahati, Jorhat,

Kanpur, Delhi, Mumbai and Indore many prestigious orders for various Govt & private clients with a tight deadline offering huge advantage to the clients by deploying modern customized machines to offer solution.

Fully equipped Material Testing Laboratory in factory

Adherence to ASTM and ISO standards applicable in Geosynthetics Industry.

State-of-the-art UV Testing Machine

Specialised Stitching Services (free of cost) to the clients

ISO 9001 Quality Management Systems, CE mark, DGS&D registered & international accreditations

Completed a prestigious order for supply of Non woven Geotextile Bags for Bihar Government with a tight deadline

Latest innovative & economical geosynthetic solution- Geosynthetics Gravity Reinforced Wall (GRW)

 

SEGMENTAL REVIEW

FIBC BUSINESS

A flexible intermediate bulk container (FIBC), bulk bag, or big bag, is an industrial container made of flexible fabric that is designed for flowable products, such as sand, fertilizer, and granules of plastic. They are mainly used for the purpose of protection, storage, handling and transportation of goods in a large quantity from the manufacturing facilities to distributions hubs. FIBC are made from woven polypropylene or polypropylene fabric of different weights and strength. FIBCs are available in a wide variety and are suitable for numerous applications in the chemical, pharmaceutical, and food industries. The FIBC market is characterized by innovative offerings and customizations according to customer specifications. It is made of strong, poly propylene, flexible fabric and can hold upto 2 tons of material. They are manufactured with either one, two or four loops for efficient handling purposes. Also, there are several specialized product-types of FIBC’s such as flame-retardant, pallet-free, baffle-bags, UV resistant & conductive.

According to the various Global FIBC Market Research Reports, The flexible intermediate bulk container market is highly fragmented. The market growth is expected to change if the market structure changes due to industry consolidation or if some vendors exit the market. Analysts estimate the market to grow at a CAGR of 6.48% till 2024. During the forecast period, the market will show an accelerating growth of $1576.82 million.

Going forward, FIBC, will continue to be the major segment of the Company, it contributes approx. 76% to Company’s top line. Your Company has market share of 15%-20% of Indian exports of FIBC and that is the largest producer of FIBC in India.

 

Opportunities and Outlook

Flexituff is among the few FIBC manufacturing companies across the world who are perpetually focusing on its products quality, durability, designing and satisfying end user requirement aptly. Nearly 65% of Company’s FIBC product portfolio comprises of high-end bags for food, chemical and pharma industries and thus commands premium realisations in the export market. The Company is likely to benefit from the growth opportunities in the top three regions America, Europe and Asia Pacific. Moreover, it’s well-placed to address the growing demand in the domestic market.

 

Risks and concerns

Operating margin remains susceptible to fluctuations in the prices of key input i.e. polymer, which move in tandem with crude oil prices. Also, we are subjected to foreign currency exchange rate fluctuations which could have impact on results of operations. However, this is hedged passing the increase and decrease in the polymer price to customers.

The FIBC industry is fragmented because of low entry barrier as capital and technology requirements are limited, gestation period is small, and raw materials are easily available. This restricts substantial scale up in operations and exerts pricing pressure. Also, this industry being highly labour intensive the retention of workers has been high priority for the Company. Attrition of workers may affect the production and also involves cost and time in inducting and training of new appointees. Several other global as well as Indian economic and political factors that are beyond our control may affect the business of the Company.

 

GEOSYNTHETICS BUSINESS

Geo-synthetic are synthetic products which are used to stabilize terrain, and are polymeric products used to solve civil engineering problems. It includes products including geogrids, geotextiles, geomembranes, Geo-nets, Geo-synthetic clay liners, Geo-cells, Geo-composites, and Geo-foam. Geo-synthetic products uses durable polymers such as high-density polyethylene (HDPE), polypropylene (PP), and polyester. They are produced from petrochemical based plastics that remain unaffected by bacteria or fungi and are non-biodegradable.

Geo-synthetic help reinforce soil, distribute loads, prevent soil erosion, and control water pressure. They are used in civil construction and environmental applications such as landfills and filtrations. Geo-synthetic serve as cost-effective alternatives in civil and coastal engineering, construction industries, and environmental applications. It has applications in road construction, railway stabilization, water management, waste management, miningand soil reinforcement and erosion control.

Geo-synthetic materials perform many functions such as filtration, reinforcement, separation, drainage, protection, and barrier. These products retain their properties when exposed to harsh environmental conditions. They showcase physical properties such as strength, stiffness, and durability.

The applications of geosynthetics have increased because of their significant properties of easy accessibility, low thickness, less use of airspace, lightweight, and tremendous robustness. There is a broad range of Geo-synthetic materials in the global geosynthetics market due to the standards set by organizations such as Geo-synthetic Institute, American Society for Testing and Materials, and International Organization for Standardization.

The rise of land scarcity, growth in awareness about seismic hazards, and stringent environmental regulations are the key factors driving the growth of the global geosynthetics market worldwide.

Flexituff’s Geo-synthetics business is making its presence and receiving appreciation in the market. With its vast product portfolio consist of woven and belt non-woven geo-textiles, sand-filler geo-mattresses, GRW (Geo-Synthetics-Gravity Reinforced Walls) chains, mega bags and de-watering tubes, the Company has earned reputation in the domestic as well as international markets in a short span of time. In FY 2022-23, geosynthetics business accounted nearly 14.40% of Company’s revenues and its share is expected to go up in future.

 

Opportunities and Outlook

The global geotextiles market size is expected to reach USD 11.3 billion by 2027, according to this report registering a CAGR of 11.9% over the forecast period. Increasing adoption of geotextiles in road construction and infrastructure development activities is expected to drive the market growth over the forecast period.

In emerging countries such as India and China, there is an absence of a standardized manufacturing process, resulting in lower quality products with differentiated standards. However, increasing focus on exports to international markets by local producers is expected to compel them to adopt advanced manufacturing techniques.

One of the major factors driving the growth of the market is the increasing demand from the infrastructure sector in Asia-Pacific, mainly in China, India, and ASEAN countries.

Indian Economy is poised for great development. Geo-synthetics would be the key pillar in realizing the growth. Life extension benefits and durability featuring geosynthetics wooed Indian government to promote the segment by incentivizing their usage. The Indian government’s current focus on upgrading infrastructure and increased importance of environmental issues will be the biggest growth drivers for Indian geosynthetics market.

Flexituff is also foreseeing from the benefits from the incremental spending on infrastructure across geographies. The Company is well-equipped to capitalise on this multi-year and multi-market opportunities by having established itself as a Research and Development (R&D) oriented Company emphasizing on creating awareness of the new technology among end users.

 

Risks and Concerns

The volatile prices of raw material due to fluctuations in prices of crude oil and gas along with its availability, increased labor costs and potential labor shortages are hindering the growth of the geosynthetics market. Especially, demand for the naphtha due to its pricing has affected which is a key material as intermediate. The price-sensitive regions are restraining growth of the geosynthetics market. By and large, the government demand drives the geosynthetics market. Budgetary constraints or change in the political parties at the helm may pose a risk to the growth of the sector.

Flexituff has been increasing its presence across geographies to deal with such risks effectively and has been developing unique products at competitive costs. As a contractor, it is enabling to demonstrate the benefits of geotextiles in various government/ non-government projects, thereby creating awareness among contractors as well as governments.

 

REVERSE-PRINTED BOPP WOVEN BAGS BUSINESS

Biaxial Oriented Polypropylene (BOPP) is poly film that can be stretched in both directions, owing to which it offers premium durability. This poly film is printed & laminated onto woven polypropylene fabric and converted into a bag. Environmental hazards related to PE (polyethylene) & high cost of jute bags have spurred the adoption of polypropylene woven bags and sacks as comparatively sustainable alternative. Rapid inroads flagged by retail industry in FMCG (fast-moving consumer goods) sector has resulted in increasing retail outlets that is likely to bode well for expansion of BOPP woven bags and sacks market.

Polypropylene Woven Bags & Sacks have become popular due to their inertness towards moisture, chemical & exceptional resistance towards rotting, fungus attack as they are nontoxic, perforation for breathability, UV protection and anti-skid printing, 100% recyclability, light weight and are more advantages than conventional bags. Polypropylene Woven Bags and sacks laminated with LDPE/PP liner have wider applications. Moreover, BOPP bags perform extremely well with paper bag filling equipment. The popularity of BOPP bags is rising in the market as they are cost effective and 100% recyclable, which makes them environment friendly. BOPP bags offer high aesthetic value that adds an extra promotional feature to the products packaged in them. These bags can be stacked easily and have high tensile strength and barrier properties. BOPP bags primarily find applications in the packaging of cereal & pulses, pet food, grass seed, animal nutrition, fertilizers, etc.

Flexituff is known worldwide for its stylish and highly durable multicolored BOPP Woven bags. These special PP bags and reverse printed BOPP bags are used in packaging of agro and industrial products, pet food, retail industry and chemicals, etc. It has an installed production capacity of 100 million bags a year, from small orders to extra-large ones & represents an advanced concept of bulk packaging from 5-50 kg’s that adds value to a brand’s personality. Reverse-printed BOPP woven bags contributed close to 6.6% of revenues in FY 2022-23.

 

Opportunities and outlook

Developing consumer market & growth of middle class is fueling the domestic demand of reverse printed woven BOPP bags. Rapid inroads flagged by retail industry in FMCG (fast-moving consumer goods) sector has resulted in increasing retail outlets that is likely to bode well for expansion of polypropylene woven bags and sacks market. Flexituff is well-placed to exploit the market requirements and enhance its revenue contribution from this division.

Internationally, anti-dumping duty on Vietnam & Chinese origin of reverse printed woven BOPP bags is opening new doors for the Indian producers. Also, demand in USA for reverse printed BOPP bags is extremely good.

 

Risk and threats

Since this division of reverse-printed BOPP woven bags is also using Polypropylene as raw material, hence price fluctuations is major risk and threatening factor impacting Company’s performance as well as revenue margins.

 

INTERNAL CONTROL SYSTEMS AND ADEQUACY

The Company has an Internal Risk Management Policy and adequate Internal Control System in place. The members of the Risk Management Committee presents the risk appetite of the Company by enumerating & segregating major risks that could affect the performance of the Company, readiness of the Company to deal with the risks & suggesting a mitigation plan for those risks. The main objective of the policy is to assess & evaluate significant risk exposures & assess management’s actions to mitigate the exposures in a timely manner. The Company periodically reviews its various types of regulatory, financial, operational, environmental and other business risks.

Internal Control system is commensurate with the size, scale and complexity of its operations. There are adequate systems to ensure compliance of various statutory and regulatory requirements and review the same & take appropriate actions from time to time.

 

FINANCIAL OVERVIEW

STANDALONE

In FY 2022-23, Company’s total revenues stands at Rs. 9294.74 Million as compared to Rs. 10587.48 Million in FY 2021-22, thereby recording decrease by 13.91%.

The Company reported negative EBIDTA (Earnings before Interest, Tax, Depreciation and Amortization) in FY 2022-23 was Rs. 980.19 Million. In FY 2021-22 which reached to Rs. 222.78 Million. The Company’s net worth is to Rs. (419.13) Million in Financial Year 2022-23.

 

CONSOLIDATION

In FY 2022-23, Company’s total revenues stands at Rs. 9279.41 Million as compared to Rs. 10588.13 in FY 2021-22, thereby recording decrease by 14.10%. The Company reported decrease in EBIDTA (Earnings before Interest, Tax, Depreciation and Amortization) in FY 2022-23 is Rs. 697.55 Million. In FY 2021-22, the Company had recorded EBIDTA of Rs. 697.55 Millions.

The Company’s net worth mark a decrease to Rs. (602.79) Million in Financial Year 2022-23.

 

FINANCIAL RATIOS

As required under Regulation 34(3) of Listing Regulations read with para B.1 of Schedule V thereof, changes in financial ratios in the financial year 2022-23, as compared with those of the immediately preceding financial year are given in Note 35(14) to Standalone Financial Statements and the same may kindly be read as a part of this Report.

 

Reasons for significant changes from 2021-22 to 2022-23

In past few years, we have taken various steps to increase the productivity and manpower efficiency with the help of better planning we have been able to achieve over 90% of

OTIF (On time & in full delivery) of goods to our customers tunes together with high quality standards have resulted in high satisfaction amongst our customers.

 

HUMAN RESOURCES AND INDUSTRIAL RELATIONS

During the year under review, the Company continued with its emphasis on Human Resource Development as one of the critical areas of its operations. Executives and officers of the Company having high potential in the field of Finance, Accounts, Marketing, International Business, Production, Quality Control and Quality Assurance were regularly met at all the plant locations as well as the regional offices with a view to update their knowledge and skills and keep them abreast of the present scenario for meeting the challenges ahead.

 

DIRECTORS REPORT

To,

The Members,

 

Flexituff Ventures International Limited

The Board of Directors hereby presents its 30th Director’s Report on business & operations of your Company (‘the Company’ or ‘FVIL’) along with Audited Financial Statements (Standalone & Consolidated) for the financial year ended 31st March, 2023.

 

FINANCIAL RESULTS

The Company’s Financial Performance for the year ended 31st March, 2023 is summarized below:

 

(Rs. in Millions)

Financial Results & Appropriation	Standalone		Consolidated
Particulars	2022-23	2021-22	2022-23	2021-22
Sales & other Incomes	9294.74	10,587.48	9279.41	10,588.13
Profit/(Loss) before Tax	(1435.00)	(1,140.08)	(1648.89)	(1,058.21)
Profit/(Loss) for the year / Balance	(1045.02)	(945.67)	(1262.05)	(867.29)
available for Appropriation Other Comprehensive (Loss)/Income	.64	1.71	(6.37)	1.67
Total Other Comprehensive (Loss)/Income	(1044.38)	(943.96)	(1268.42)	(865.62)

 

STATE OF COMPANYS AFFAIRS

During the year under review, the company has achieved consolidated total revenue from operation of Rs. 9279.41 million in comparison to Rs. 10588.13 million in previous year. Your Company has loss for the year of Rs. (1262.05) million in comparison to Rs. (867.29) million in previous year.

During the year under review, the company has achieved Standalone total revenue from operation of Rs. 9294.74 million in comparison to Rs. 10587.48 million in previous year. Your Company has loss for the year of Rs. (1045.02) million in comparison to Rs. (945.67) million in previous year.

 

DIVIDEND

During the year under review, Company didn’t generate enough revenue/surplus to declare dividend, hence your Board do not propose any dividend for the Financial Year ended 31st March, 2023.

 

SHARE CAPITAL

The paid up Equity Share Capital as on 31st March, 2023 was Rs. 268.83 Million divided into 2,68,82,806 shares of Rs. 10/- each. The Company has issued preferential allotment of 20,00,000 equity shares of Rs. 10/- each on 28th March, 2023 which resulted in increase of equity share from 2,48,82,806 equity shares to 2,68,82,806 equity shares.

 

DEPOSITS

The Company has not accepted any deposits from the public, and as such, there are no outstanding deposits in terms of the Companies (Acceptance of Deposits) Rules, 2014.

 

MANAGEMENTS DISCUSSION AND ANALYSIS REPORT

Management’s Discussion and Analysis Report for the year under review forms part of the Annual Report.

 

AWARDS & CERTIFICATIONS

Company is certified for BRC Global Standard for Packaging Material (BRCGS), ISO 9001:2015 (for Quality Management System), ISO 14001:2015 (for Environmental Management System Standard), ISO 22000:2018 (for Food and Safety Management System Standard), ISO 45001:2018- (Occupational Health and safety), Certification under Jewish Dietary Law by Kosher Certification Limited, Compliance with Islamic Shariah Law and Safety Management System and certificate from Quality council of India for Workplace Assessment for Safety and Hygiene (WASH).

Company has received HSE Award 2021-22 from National Safety Council MP Chapter Bhopal. The Company has received the Country’s Highest Exporter Award for FIBC through PLEXCOUNCIL, Ministry of Commerce, for 13 years in a row.

The Company has also achieved recognition from all its foreign buyers for its delivery and services. In geo-textile sector, the Company has received appreciation for its unique products and new technologies being introduced to solve the problems of the country especially related to flood protection & water cleaning.

 

AMOUNTS TRANSFERRED TO RESERVES

During the year under review no amount was transferred to the reserves.

 

CREDIT RATING

The credit rating assigned by CARE Rating as on was “D” rating for the Long term loan and “D” for Short term Non-Fund Based Limits, which indicates “negative” outlook. Your Board opined and states that due to outstanding and defaults in repayments to certain Lenders, the credit rating of the Company got impacted. The Company is pursuing with its lenders to sign an Inter Creditor Agreement and trying to find new Lender to achieve one time settlement to correct the default which in turn leads to restoration of fair credit reliability.

 

SUBSIDIARIES / JOINT VENTURE / ASSOCIATES

The Company has 2 Direct Subsidiaries, 1 Indirect Subsidiary, 6 Joint Ventures and 5 LLPs as on 31st March, 2023. There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 (“Act”). There has been no material change in the nature of the business of the subsidiaries and Joint Ventures.

 

DIRECT SUBSIDIARIES

Flexituff Technology International Limited (Formerly known as Flexituff FIBC Limited) Flexiglobal Holdings Limited, Cyprus.

 

INDIRECT SUBSIDIARIES

Flexiglobal (UK) Limited, UK

 

JOINT VENTURE/LLP

Flexituff Javed Ahmed LLP Flexituff Hi-Tech LLP Flexituff SA Enterprise LLP Flexituff Sailendra Kalita LLP Ujjivan LUIT LLP

#Budheswar Das Flexituff International Limited JV #Sanyug Enterprises Flexituff International Limited JV #Vishnu Construction Flexituff International Limited JV #Mayur Kartick Barooah Flexituff International Limited JV

#Flexituff Shailendra Kalita JV #Flexituff Pulin Borgohain JV

 

# reckoned as subsidiary on the basis of control.

Pursuant to the provisions of Section 136 of the Companies Act, 2013 the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries are put up on the website of the Company (www.flexituff.com) and shall be made available upon request of any member of the Company interested in obtaining the same and shall also be kept for inspection on all working days, during business hours, at the Registered Office of the Company and that of the Subsidiary Companies concerned. Company has formulated a policy for determining material subsidiaries, which can be accessed at the below link: (http://flexituff.com/wp-content/uploads/2022/09/Policies-Programmes-Determining-Material-Subsidiary.pdf) Further, pursuant to provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial data of the Company’s Subsidiaries & Joint Ventures is mentioned in Form AOC-1 as Annexure A of the board’s report.

 

SECRETARIAL STANDARDS

The Directors state that applicable Secretarial Standards, i.e. SS-1 & SS-2, relating to “Meetings of the Board of Directors” and “General Meetings”, respectively have been duly followed by the Company.

 

DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm that: a) in the preparation of annual accounts for the year ended 31st March, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures. b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period. c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. d) the Directors have prepared the annual accounts on a going concern basis. e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

 

CORPORATE GOVERNANCE

The report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) forms an integral part of this Report. The requisite certificate from the Practicing Company Secretary confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

 

RELATED PARTY TRANSACTION

There have been no other materially significant Related Party Transactions between the Company & the Directors, Management, Subsidiaries or relatives except for those disclosed in the Financial Statements. Accordingly, particulars of Contracts or Arrangements with Related Party Transactions referred to in Section 188(1) of the Act in Form AOC-2 does not form part of Directors’ Report.

A Policy on Related Party Transactions as approved by the Board can be accessed on the Company’s website at: (http://flexituff.com/wp-content/uploads/2022/09/Policies-Programmes-RPT.pdf)

 

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility Committee has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board.

The CSR policy can be accessed on the Company’s website at: (http://flexituff.com/wp-content/uploads/2022/09/Policies-Programmes-CSR-policy.pdf) The Annual Report on CSR activities is annexed herewith marked as Annexure B to this Report.

 

RISK MANAGEMENT

In today’s volatile environment, Risk Management is a very important part of business. The main aim of risk management is to identify, monitor & take precautionary measures in respect of the events that may pose risks for the business. The Board & Audit Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis by keeping Risk Management Report before the Board & Audit Committee periodically. The Risk Management Policy can be accessed on the Company’s website at:

(http://flexituff.com/wp-content/uploads/2022/09/Policies-Programmes-Risk-management-POLICY.pdf)

 

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

Details in respect of adequacy of internal financial controls with reference to the Financial Statements are stated in Management Discussion and Analysis which forms part of this Report.

 

DIRECTORS / KEY MANAGERIAL PERSONNEL (KMPS)

There are no changes in the position of Directors/KMPs of the Company from 1st April, 2022 till the date of this report. The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under the Act and the Listing Regulations.

The following policies can be accessed at website of the Company: a) Terms & Conditions for appointment of Independent Director

(http://flexituff.com/wp-content/uploads/2017/09/Policies-and-Programe-Terms-Conditions.pdf) b) Nomination & Remuneration Policy

(http://flexituff.com/wp-content/uploads/2022/09/Policies-Programmes-Nomination-and-Remuneration-Policy.pdf)

 

DIRECTORS SEEKING APPOINTMENT / RE-APPOINTMENT

In accordance with the provisions of the Act & Articles of Association of the Company, Mrs. Alka Sagar (DIN: 07138477), Women Non-Executive Director, liable to retires by rotation at the ensuing Annual General Meeting. The Board of Directors has recommended her reappointment.

 

PERFORMANCE EVALUATION

Pursuant to the applicable provisions of the Companies Act, 2013 and Listing Regulations, the Board has carried out the annual performance evaluation of its own performance, its Committees, the Chairman of the Board and the Directors on the basis of the feedback received from all the Directors of the Company.

Structured performance evaluation questionnaire were circulated to the Directors for: Directors Self & Peer Level Evaluation; Boards Evaluation;

Board Committees Evaluation; and Chairmans Evaluation.

The evaluation questionnaires broadly cover parameters such as their participation in board meeting/other committee meeting, relationship management, knowledge & skill, adherence to the applicable code of conduct for independent directors and maintenance of confidentiality etc.

The summary of rating given by all the directors on the structured performance evaluation was placed before the Board of Directors.

 

EXTRACT OF ANNUAL RETURN

The Ministry of Corporate Affairs (MCA) has notified the Companies (Management and Administration) Amendment Rules, 2020, wherein the companies are no longer required to attach extracts of Annual Return. In the Companies (Management and Administration) Rules, 2014, in rule 12, in sub-rule (1), “provided that a company shall not be required to attach the extract of the annual return with the Board’s report in Form No. MGT.9, in case the web link of such annual return has been disclosed in the Board’s report in accordance with sub-section (3) of section 92 of the Companies Act, 2013”. In compliance of the above amendment extract of the annual report FY 2022-23 will available at: http://flexituff.com/annual-return/

 

AUDITORS AND THEIR REPORTS

STATUTORY AUDITORS

In accordance with the provisions of Section 139 of the Companies, Act, 2013 and the Rules made there under, M/s. Mahesh C Solanki & Co., Chartered Accountants, Indore (FRN.: 006228C), was appointed as the Statutory Joint Auditors of the Company at the 27th Annual General Meeting held on 15th October, 2020 till the conclusion of 32nd Annual General Meeting of the Company to be held in the year 2025. M/s. Mahesh C Solanki & Co., Chartered Accountants, Indore (FRN. 006228C), have confirmed their eligibility under Section 141 of the Act and the Rules framed there under for the appointment as Auditors of the Company and as required under Regulation 33 of the Listing Regulations, 2015.

The Comments on the qualifications in the Auditors’ Report on the financial statements of the Company for financial year 2022-23 are provided in the “Statement on Impact of Audit Qualifications” which is annexed as Annexure C and forms part of this report.

 

SECRETARIAL AUDITOR

M/s. Ritesh Gupta & Co., Company Secretaries were appointed to conduct the secretarial audit of the Company for the Financial Year 2022-23, as required under Section

204 of the Companies Act, 2013 and rules made thereunder.

The Secretarial Audit Report for the Financial Year 2022-23 forms part of the Annual Report as Annexure D to the Board’s Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark, however, the reference to specific event / actions which took place during the year are self-explanatory.

 

DISCLOSURES

NUMBER OF MEETINGS OF THE BOARD

Six (6) meetings of the Board of Directors were held during the year under review. The details of meetings held and attendance of the Directors are detailed in the Corporate Governance Report, which forms part of this report.

 

AUDIT COMMITTEE

The details pertaining to composition, meetings and attendance of audit committee are included in the Corporate Governance Report, which forms part of this report.

 

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Loans, Guarantees and Investments covered under Section 186 of the Companies Act, 2013 forms part of the Notes to the Financial Statements provided in this Annual Report.

 

VIGIL MECHANISM

The Company has a whistle blower policy/vigil mechanism to report genuine concerns or grievances. The Whistle Blower Policy/vigil mechanism has been posted on the website of the Company.

(http://flexituff.com/wp-content/uploads/2022/09/Policies-Programmes-Vigil Mechanism.pdf)

 

CODE OF CONDUCT

The Board has laid down a code of conduct for Board members & Senior Management Personnel as per Regulation 17 & 26 (3) of the Listing Regulations & has been posted on the website of the Company (http://flexituff.com/wp-content/uploads/2019/04/Policies-Programe-Code-of-Conduct.pdf) All the Board members & Senior Management Personnel have affirmed compliance with the said code of conduct for the year ended 31st March, 2023. A declaration to this effect, signed by the Whole-Time Director forms part of this Annual Report.

 

INSIDER TRADING

The Board has adopted the Insider Trading Policy in accordance with the requirements of the SEBI (Prohibition of Insider Trading) Regulations, 2015. The Insider trading Policy of the Company covering code practices and procedures for fair disclosure Unpublished Price Sensitive Information and Code Conduct for the prevention of Insider Trading has been posted on the website of the Company. (http://flexituff.com/wp-content/uploads/2019/04/Policies-Programe-Code of-Conduct-and-Procedures.pdf) (http://flexituff.com/wp-content/uploads/2019/04/Policies-Programe-Code of-Practices-and-Procedures.pdf) All the Board members & KMPs have affirmed compliance with the said code of conduct for the year ended 31st March, 2023.

 

PARTICULARS OF EMPLOYEES

The statement of Disclosure of Remuneration under Section 197 of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (“Rules”), is appended as Annexure E to the Report. The information as per Rule 5(2) of the Rules forms part of this Report. However, as per first proviso to Section 136(1) of the Act and second proviso of Rule 5(2) of the Rules, the Report and Financial Statements are being sent to the Members of the Company excluding the statement of particulars employees under Rule 5(2) of the Rules. Any Member interested in obtaining a copy of the said statement may write to the Company Secretary at the Registered Office the Company.

 

DETAILS OF AMOUNT/SHARES TRANSFERRED TO IEPF DURING THE YEAR

During the year under review, unpaid dividend amounting to Rs. 888/- (Rupees Eight Hundred and Eighty Eight only) pertaining to the Financial Year 2014-15 has been transferred to IEPF along with the corresponding 7 equity shares.

Also, the details of amount and shares still lying in unpaid and unclaimed dividend account are as under:

Dividend for the year
Date of declaration of dividend
Dividend Details (Amount in Rs. Lakhs)
Amount of unpaid dividend#
(Amount in Rs.)	NIL
Due date to claim the dividend
Due date of transfer to Unpaid Dividend
Account
Due date of accepting claim by the
Company	NIL
Date for transfer to IEPF

 

#The amounts of unpaid dividend also include bank credits received pursuant to the cancellation of demand drafts beyond the validity period. The banks have cancelled the issued demand draft in accordance with the SEBI circular dated April 20, 2018 on “Strengthening the Guidelines and Raising Industry Standards for RTA, Issuer companies & Banker to an issue”.

 

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

In compliance with Section 134 of The Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules 2014, a statement giving information regarding Energy Conservation, Technology Absorption and Foreign Exchange earnings and out go is given in Annexure F forming part of this Annual Report.

 

DEMATERIALISATION AND ELECTRONIC REGISTRAR

The equity shares of your Company are available for dematerialization with both NSDL and CDSL under ISIN INE060J01017. As on 31st March 2023, 99.99% equity shares were in demat form and remaining 0.01% equity shares were in physical form.

Our registrar for electronic connectivity with the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) is Linkin-time India Private Limited, Mumbai.

 

HUMAN RESOURCE MANAGEMENT & INDUSTRIAL RELATION

Human Resource plays vital role in the Company. If finance is the blood of any organization then Human Resource is not less than pulse which keeps running production by their hard work day and night. Company focuses on creating best health and safety standards and also has performance management process to motivate people to give their best output and encourages innovation and meritocracy.

Personnel relation with all employees remained cordial and harmonious at all levels throughout the year. Directors wish to place on record their sincere appreciations for the continued, sincere and devoted services rendered by all the employees of the Company.

 

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,

PROHIBITION AND REDRESSAL) ACT, 2013

As per the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act’) and Rules made thereunder, the Company has Internal Complaints Committees (ICC) who inquire into complaints of sexual harassment and recommend appropriate action. During the year under review, no compliant was received from any employee of the Company and hence no complaint was outstanding as on 31st March, 2023.

 

MATERIAL CHANGES AFFECTING THE COMPANY

During the year there were no material change in the Company.

 

DISCLOSURE UNDER THE INSOLVENCY AND BANKRUPTCY CODE

The Company has not made any application under the Insolvency and Bankruptcy Code 2016 during the Financial Year 2022-23.

However following matters are pending-

Case No.	Filed by	Filed against	Brief matters	Status
CP (I.B.) 1694/2018	Flexituff Ventures International Ltd.	M/s Trend Flooring & Ors.	The present application u/s 9 of IBC has been filed by M/s Flexituff Ventures International Ltd. against M/s Trend Flooring towards initiation of CIRP as Corporate Debtors defaulted in payment of Rs.3,06,65,520/- The present application u/s 60(5) of IBC was	Next date of hearing 04.08.2023
IA 2826/2022 in CP (I.B.) 1342/2018	Flexituff Ventures International Limited	RP of M/s Ambica International Food Ltd.	filed by Flexituff Ventures International Ltd. for admission of claim of Rs. 29,54,116/- CIRP of M/s Ambica International Ltd. The present application u/s 7 of IBC has been filed by M/s IFCI Ltd. being a Financial	Disposed off on 04.07.2023 Next date of
CP (I.B.) 53/2022	IFCI Limited	Flexituff Ventures International Ltd.	Creditor for initiation of CIRP against Corporate Debtor Flexituff Ventures as FVIL defaulted in payment of Rs. 63,45,81,612/-	hearing 25.08.2023

 

DISCLOSURE OF VALUATION OF ASSETS

The Company has not done any one time settlement and hence no information is provided on difference between the amount of the valuation done while taking loan from the banks or financial institutions along with the reason thereof.

 

GENERAL DISCLOSURES

The Board states that no disclosure or reporting is required in respect of the following matters as there were no transactions on these items during the year under review: Details relating to deposits covered under Chapter V of the Act.

Issue of Sweat Equity Shares to employees of the Company under any scheme

Details pertaining to Employee Stock Options (ESOPs) as no ESOPs were outstanding as on 31st March, 2023. Issue of differential shares with voting rights as to dividend, voting or otherwise

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future No fraud has been reported by the Auditors to the Audit Committee or the Board.

 

APPRECIATION

The Board takes this opportunity to express its sincere appreciation for the excellent support and cooperation received from company’s bankers, investors, customers, suppliers, statutory authorities for their consistent support to the Company.

The Directors also sincerely acknowledge the outstanding support and services of the workers, staff and executives of the

Company, which have together contributed to the efficient operations and management of the Company.

For and On Behalf of the Board of Directors of

 

Flexituff Ventures International Limited

Saurabh Kalani	Rahul Chouhan
Whole-Time Director	Whole-Time Director
(DIN: 00699380)	(DIN: 03307553)
Date: 11/08/2023
Place: Pithampur