garware wall ropes ltd Management discussions

Overview of Company

Your Company, Garware Technical Fibres Limited, an ISO 14001:2015 certified organization, was established in 1976, and is a leading manufacturer of technical textiles. A global player, your Company provides innovative solutions in the field of fisheries, aquaculture, shipping, sports, agriculture, coated fabrics, and geo-synthetics. Your Companys products are manufactured in state-of-art facilities at Wai and Pune (both in Maharashtra, India), and are marketed in more than 75 countries worldwide. Through its value-added propositions, your Company has established a dominant presence in domestic ocean fisheries, the international aquaculture business, and several other industry segments.

Business Environment in FY 2022-23

The business environment was moderate to upbeat in different application segments, geographies and markets across the globe. The aquaculture industry was very receptive to new, innovative products which enabled savings in operational costs and energy use, and facilitated ease of use. The markets in this sector became more receptive to differentiated, value-added solutions. The market for geosynthetic products and solutions gained traction with infrastructure and environment protection projects gaining momentum both in the Indian and overseas markets. The market preferred topnotch suppliers of high-quality products with global certifications and the ability to cater to their specific requirements. Logistical costs, which were a major factor in the previous financial years, attained moderate levels in the year under review, and the smooth transportation of goods picked up momentum.

Opportunities and Threats

The WHO has declared formally the end of the COVID-19 pandemic. Though some variants of the virus continue to emerge, the deep disruptions caused by COVID-19 seem unlikely. Under the circumstances, your Company will be able to significantly increase its direct interactions with existing and potential customers. This would not only help in more effective promotion of our products and services but also strengthen our business relationships for mutual benefit.

Competition faced by your Company is here to stay, but with our quality of products and price points, we hope to excel in the market through a combination of application-oriented differentiated products addressing the critical needs of customers backed by a wide range of products of global standards and our supply capability.

Global oil prices may fluctuate periodically considering peak demand and curtailing of production and supply.

Companys Consolidated Financial

Performance in FY 2022-23

Your Company registered total consolidated revenue of Rs. 1305.55 crores for the year ended 31st March 2023, an increase of 9.77% over

the previous years consolidated revenue of

Rs. 1189.40 crores. Consolidated Operating EBITDA was Rs. 230 crores, increasing by 3% compared to the previous financial year.

Consolidated profit before tax in the year under review was Rs. 223.21 crores, an increase of 3.13% over the previous year despite strong inflationary winds

Growth in value-added, differentiated products

aided growth in margins.

Key Consolidated Financial Indicators

l Earning Before Interest, Taxes, Depreciations

and Amortization (EBITDA) – 19.7%

l Net Profit Margin – 13.2% l Earnings per share – Rs. 83.54 l Interest Coverage – 19.7 l Current ratio of the Company – 1.42 l *Debt-equity ratio – 0.13 (previous year 0.08) l **Return on average net worth – 17.3% (previous year 18.5%)

l ***Return on Invested Capital – Pre-tax (RoIC)

47.2%

Risks and Concerns

The post-pandemic recovery in the global economy is expected to be slower due to the weight of inflation and tightening of monetary policies by central banks. Growth across sectors and regions is expected to be divergent. The Indian economy is likely to grow steadily, but weaker global demand, movements in oil prices and monetary policies to address inflationary pressure pose downside risks. As nearly 70% of your Companys business and products are ultimately related to food consumption, and are spread across sectors and geographies, we are poised to handle the challenges and mitigate the negative impact.

Internal Control Systems

Your Company follows well-established policies and procedures to ensure attainment of operational, compliance, and reporting objectives. The internal control system is designed to meet current as well as future needs according to the Companys strategic growth plan. Policies and procedures are regularly reviewed to ensure relevance and comprehensiveness.

The global-standard SAP enterprise resource planning (ERP) system is used to manage day-today transactions seamlessly with the underlying books of accounts. Through continual investment in IT enablement, automated controls within processes have been ensured. The Company has also invested in an IT tool to track crucial compliances. Proactive steps are being taken to ensure compliance with changing policy regulations.

Human Resources Management

Your Companys people are its most valuable asset and the foundation for continued success. Your Company continues to ensure the health and well-being of employees and their families. With a strong belief that everyone has immense potential which can be unlocked through a variety of ways, your Company invests heavily on professional development programmes to enhance employees capabilities for current and future roles, and to build a talent pipeline for the future. Open communication channels across all levels ensure that employees can share their concerns in real time and contribute to solutions. All the HR practices are geared towards driving a performance-oriented culture that fosters innovation.

Your Companys efforts to maintain an employee-centric and value-driven culture reflects in its high scores under the Great Place to Work Survey (GPTW) of 2023. Your Company was recognized as one of Indias Top 25 Best Workplaces in Manufacturing 2023 and one of Indias Top 50 Workplaces Building a Culture of Innovation for All 2023 by GPTW. These accolades are the result of the collective efforts done by all employees. Your Company was also recognized as one of Indias Top 100 Indias Best Companies to Work for in 2022 and 2023.

Cautionary Statement:

Statements in this Management Discussion and Analysis describing your Companys objectives, projections, estimates, and expectations may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied.

* Due to increase of borrowing, your Companys debt-equity ratio has increased as compared to the previous year.

** Mainly due to reduction in current investment and short term borrowing.

*** RoIC = PBIT Less Other Income / (Average Capital Employed less

Average Treasury Surplus Investment)