GB Global Management Discussions


Pursuant to schedule V of the SEBI (LODR) Regulation, 2015, Management Discussion and Analysis Report form a part of the Annual Report of the Company. It indicates the Companys movement in the external environment Vis-a-Vis its own strengths and resources

Global Economy Overview

The global GDP growth of 3.4% in the Current Year 2023 OCY) was better than anticipated, despite formidable headwinds such as geopolitical issues, higher cost of living and slowdown in large emerging markets. The year has seen dedicated efforts to tackle elevated inflation through rapid interest rate hikes, supported by strong labour markets and easing supply chain constraints. More positive signs started to appear at the beginning of the CY with food and energy prices falling back, thus improving business and consumer sentiments. The full reopening of China is expected to provide the required positive momentum. The stimulus from Peoples Bank of China (PBOC) with regards to cut in reserve requirements could also support growth in the global economy. On the other hand, sticky inflation across other parts of the world has pushed central banks to maintain their hawkish stance. Despite the declining money supply, the U.S. money supply remains higher by 38% compared to pre-pandemic levels. However, the growth outlook across developed markets may weaken as central banks could likely keep the interest rates at peak levels for an extended period.

In addition to the elevated money supply, the financial sector is dealing with overlapping crises. In this sector, minor problems could spiral into a systemic crisis and add to the ongoing inflation problem. The tightening of interest rates has resulted in the collapse of three smaller banks and one large buy-out. With such uncertainties, the global growth in the CY is expected to be lower than its normalised run-rate above 3% with moderate chances of entering a recession over the CY.

Indian Economy Overview

With the world facing geopolitical issues, and trade and supply chain challenges, Indias success is often looked at closely. The global composite purchasing managers index (PMI) marked its first expansion during the Financial year 2023, in February 2023. This was led by recovery in manufacturing and stable contribution from the service sector. India has consolidated its position in both manufacturing and services, becoming one of the top performers of PMI expansion. The success can also be attributed to the fact that it is home to the largest population in the world, now accounting for >15% of the global population. Also, the demographic division is favourably skewed towards it being the largest contributor to the global workforce for several decades now. During 2023, China could benefit from the pent-up demand with its reopening. India, however, is expected to be the fastest-growing country within the G20. India has assumed G20 Presidency (a group of 20 countries which represents 75% of global trade and 85% of global GDP) for 2023. It operates on the philosophy of Vasudhaiva Kutumbakam: One Earth-One Family-One Future that envisions the whole world as one family living in harmony with each other.

The macroeconomic outlook for India has improved with interest rates almost peaking. Also, the comfortable inflation trajectory has resulted RBI to pause its rate hike cycle.

The structural tailwinds of positioning India as a global manufacturing outsourcing hub through PLI schemes and FTAs would catalyse the capacity expansion cycle across industries. This capacity expansion would be largely front loaded by public sector which is also factored in the FY23 budget. It highlights the central governments projected spend of a record 7.5 trillion in capacity creation during the year.

The allocation would be largely towards mega public programmes like NIP and Gati Shakti which would revitalise Indias Infrastructure cycle. Over the last decade, India has made several reforms which have created a sustainable framework for economic growth and have laid the foundation for a sustained high-growth phase in the economy. Improvements in socio-economic parameters and moderation in population growth makes situations favourable for secular growth in per capita income.

Industry Review

The Indian textile industry is one of the largest in the world with a large unmatched raw material base and manufacturing strength across the value chain. The uniqueness of the industry lies in its strength both in the hand-woven sector as well as in the capital-intensive mill sector. The mill sector is the second largest in the world. Traditional sectors like handloom, handicrafts and small-scale power-loom units are the biggest source of employment for millions of people in rural and semi urban area and also contribute to more than 75% of total textiles production in the country.

The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, while the capital-intensive sophisticated mills sector on the other end. The decentralized 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. Indias textiles industry has a capacity to produce wide variety of products suitable for different market segments, both within India and across the world.

The textile industry is one of the largest sources of employment generation in the country with over 45 million people employed directly and another 6 crore people in allied sectors, including a large number of women and rural population. The sector has perfect alignment with Governments key initiatives of Make in India, Skill India, Women Empowerment and Rural Youth Employment.

The major development that textile industry would witness is the demand of hygienic product where more focus should be given to produce and supply anti-bacterial and anti-viral fabrics.

Financial Performance and Analysis

(Rupees in Lakhs)

Particulars Standalone for the FY 2022-23 Standalone for the FY 2021-22 Consolidated for the FY 2022-23
Revenue from Operations 12,794.16 7,454.40 12,794.16
Other Income 8,971.90 2,278.03 8,971.90
Profit/loss before Depreciation, Finance Costs, Exceptional items and Tax Expense 5,536.80 (1368.82) 5,529.04
Less: Depreciation/ Amortisation/ Impairment 2,871.23 3,674.71 2,871.23
Profit /loss before Finance Costs, Exceptional items and Tax Expense 2,665.57 (5,043.53) 2,657.81
Less: Finance Cost 50.41 170.77 50.79
Less: Exceptional Item (Impairment on Property, Plant & Equipment and Balances written back) - (1,15,571.23) -
Profit/ (Loss) Before Taxation 2,615.16 1,10,356.94 2,607.29

The revenue from operations of the Company has marginally increased from Rs. 7,454.40 lakhs to Rs. 12,794.16 lakhs during FY23. The increase in the revenue from operations is on account of the Company new subsidiary as mentioned in the Director Report which boasted the revenue of the Company. A significant part of this turnaround was achieved through considerable cost savings.

The Company earns its major revenue from operations from Textile, Garments, Yarn and Income earned from Job Work and also from Infrastructure segment due to acquiring the Flowline as a Wholly own subsidiary company. There is a significant decrease in the PBT of the Company during FY23 amounting to Rs. 2,615.16 lakhs as compared to amounting to Rs. 1,10,356.93 lakhs because Balance written back amount was square off in during FY23.

Key Financial Ratios

Particulars As at March 31, 20223 As at March 31, 2022
Current Ratio (in times) 0.42 0.41
Debt-Equity ratio (in times) - 0.46
Inventory turnover ratio 21.23 11.15
Return on equity ratio (in %) (11.78%) 302.73%
Trade receivables turnover ratio (in times) 15.58 8.71
Trade payables turnover ratio (in times) 5.86 4.21
Net capital turnover ratio (in times) (1.13) (0.10)
Net profit ratio (in %) 21% 1490%
Return on capital employed (in %) 111% (20%)

The formulae used in the computation of the above ratios are as follows:

Ratio Formula
Current Ratio Current Assets / Current Liabilities
Debt Equity Ratio Debt consists of borrowings / Total Equity
Inventory turnover ratio Revenue from operations / Average Inventory
Return on equity ratio (in %) Profit for the year (after tax) / Average total equity
Trade receivables turnover ratio (in times) Revenue from operations / Average trade receivables
Trade payables turnover ratio (in times) Cost of material consumed and purchase of stock-in-trade + Manufacturing cost + Other expenses / Average trade payables
Net capital turnover ratio (in times) Revenue from operations / Average working capital (i.e. Total current assets less Total current liabilities)
Net profit ratio (in %) Profit for the year (after tax) / Revenue from operations
Return on capital employed (in %) Profit for the year (after tax) / Tangible net worth + Debt consists of borrowings + Deferred tax liabilities

Cautionary Statement

Statements in the Management Discussion & Analysis report describing the Companys objectives, estimates or projections may be forward looking statements within the meaning of applicable securities law and regulations. Actual results may materially differ from those expressed or implied. Important factors that can make a difference to the Companys operations include change in the main clients purchase procedures, changes in Government regulations, tax regimes, economic outlook and other incidental factors. These statements have been based on current expectations and projections about future events. Wherever possible, all precautions have been taken to identify such statements by using words such as anticipate, estimate, expect, project, intend, plan, believe and words of similar substance in connection with any discussion of future performance. Such statements, however, involve known and unknown risks, significant changes in political and economic environment in India or key markets abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and other costs and may cause actual results to differ materially. There is no certainty that these forward-looking statements will be realised, although due care has been taken in making these assumptions. There is no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

Appreciation

The Board of Directors place on record sincere gratitude and appreciation for all the employees of the Company. Our consistent growth was made possible by their hard work, solidarity, cooperation, and dedication during the year.

The Board conveys its appreciation for its customers, shareholders, suppliers as well as vendors, bankers, business associates, regulatory and government authorities for their continued support.