GB Global Ltd Management Discussions.

1. Industrial Structure & Development


World economic activity moderated from 3.8% in 2017 to 3.6% in 2018. This slowdown can be attributed to weakening market sentiment, trade policy uncertainty and concerns regarding Chinas outlook. However, the US witnessed a boost due to the fiscal stimulus, while the Eurozone faced slow growth due to the reduction in net exports. Trade-related disputes dominated the markets during 2018, which slowed global trade growth significantly below the 2017 average. Certain other factors that contributed to the fall in economic growth are the trade dispute between the US and China, a stricter banking credit regime in China, stabilizing monetary policies in some of the larger advanced economies, stress in some developing economies such as Argentina and Turkey and disruption in the automotive industry in Germany post the issuance of new emission norms.


Global growth is expected to decline to 3.3% in 2019 before picking up slightly to 3.6% in 2020 [Source: International Monetary Fund (IMF) and World Economic Outlook, April 2019]. Higher trade policy uncertainties and sharp tightening of global financial conditions are likely to act as key risks to global economic growth in 2019. The slight boost to the economy in 2020 would be on the back of significant monetary policy accommodation in major economies due to the lack of inflationary pressures. In the US, fading effects of fiscal stimulus and increasing interest rates will control economic growth. China has also ramped up its policy stimulus to counter trade tariffs. Also, the prospect of the US-China trade tension is expected to improve.


Despite marginal growth to 6.8% this fiscal, the Indian economy remains the fastest growing major economy in the world. Increased consumption, rising disposable income and subsequent increase in spending contributed to propelling Indias economy. Government reforms such as the Goods and Services Tax (GST) led to the development of a more organised economy. The governments push to infrastructure, visible in projects such as metro rails, freight corridors and port development, has increased the Gross Fixed Capital (GFC) from 9.3% in FY18 to 10% in FY19. India improved its ranking in the World Banks Ease of Doing Business index by 53 positions in the last two years, to now assume the 77th position among 190 countries.

The Indian Textile industry adds 14% to the industrial production and 8% to the GDP of India. It provides employment to 38 million people and thus, is the second largest employment provider after agriculture. The Indian Apparel & Textile Industry is one of the largest sources of foreign exchange flow into the country with the apparel exports accounting for almost 21% of the total exports of the country.

The Garment Industry of India is one trillion industry. Almost 33 % of its knitwear production and about 20% of its woven-garment production, both by volume, enters export markets. Overall about 25 % of the volume of its garment production goes into export markets, leaving 75 % for domestic consumption. Organized sector of the garment industry is roughly 20% of the total industry, concentrating chiefly on exports. These are usually limited Companies while the rest are proprietary or partnership Companies. Geographically, mens garments are largely produced in western and southern India while production of ladies garments predominates in North India. Eastern section of India specializes in children garments. Fibre-wise, 80% of the production is of cotton garments, 15% of synthetic/mixed garments and the rest of silk and wool garments. The industry manufactures different types of garments for men, women and children. These includes overcoats/raincoats, suits, ensembles, jackets, dresses, skirts, trousers, shirts, blouses, inner-garments, T-shirts, jerseys/pullovers, babies garments as well as accessories like shawls/scarves, handkerchiefs, gloves and parts of garments. Fabric constitutes 65 to 70% of the cost of production with labour making up a further 15% and the rest go for overheads and manufacturers profit.

Export of garments and accessories from India are routed to all corners of the world. However, the USA, EU and Canada together account for 70% of world exports. Markets in Asia, Africa, East Europe, Australia, New Zealand and countries in the Pacific Ocean account for the rest. A number of supplying countries from Asia have come into existence, notably, Bangladesh, Vietnam, Srilanka, Cambodia and Pakistan resulting in cut-throat competition in the supply of popular varieties helping to bring down prices. India has had to adopt innovative practices by upgrading the quality of product in order to sustain (leave alone increase) her market share in the world community. In recent years, the down slide in US economy has had a restraining effect on garment exports from India, but the industry is now coming to terms with the development. As a labour-oriented industry, the activity in production and marketing has now shifted to Asia with India and China being leading suppliers as well as markets for garments.

Today, the biggest concern is to keep the factory running at all costs, in hope of better business tomorrow or to work and ensure that the bottom lines are not affected. To be able to get and sustain business round the year at target profitability is a marketing challenge. Sustained focus on lower fixed costs is continuous challenge for manufacturing, which puts reverse pressure during peak months. The strategy is a mix then — to have a basket of customers which gives desired profitability business in the lean production months and also plan business, if required, at lower contributions / prices for sustained capacity utilization, so that fixed costs are taken care-off and overall profitability is less affected.

2. Financial Overview of the Company:

The total revenue from operations for the year 2018-19 was Rs. 29,236.74 Lakh consisting of 54.65 % from textiles sector and 45.35 % from garment sector. The total loss before tax was Rs. 3,834.06 Lakh. The Corporate Insolvency Resolution Process (CIRP) was initiated by the lenders of the Company and Resolution Professional (RP) was appointed to look after the business of the Company, so for better half of the year RP managed the operations of the Company.

SWOT Analysis:


• Availability of low cost and proficient manpower that can contribute extensively in the growth of the industry.

• The economy is growing rapidly and one can observe a potential international and domestic market.

• The fiber industry is growing at a rapid speed.

• Natural demand drivers including rising income levels, increasing urbanisation and growth of the purchasing population drive domestic demand.


• Huge disintegration of the textile industry in India.

• Dependency on cotton, the prices of which remained volatile through the last Financial Year impacting the profitability of the industry.

• High power costs and long export lead times are eroding Indias export competitiveness across the textile chain.

• Very low investment on R&D.


• Branded fashion is experiencing robust demand fuelled by rising incomes, increasing discretionary spending, improving access and growing aspiration for brands.

An upsurge in the purchasing power and disposable income of Indian customers has opened room for new market development.

• Large scale FDI in Textile sector would support the future investment demands.


• Increasing competing from other countries viz.,China, Bangladesh etc.

• Increased discounting in Industry.

• Prices of raw material as well as energy costs, the two major input costs are significantly dependent on crude oil prices. Changes in oil prices could lead to impact on margins and profitability.

3. Human Resources:

In the ever changing business environment where people are key differentiator, the Company believes it is essential to have credible, transparent and uniform people management process. Driven by this belief and to keep ourselves abreast of the changing external scenario, our People Management process get continually updated.

4. Business Outlook

According to the International Monetary Fund (IMF), India is expected to grow at 7.3% in CY19 and 7.5% in CY20. Benign inflation expectations, reduction in repo rates and sustained policy reforms that boost investment, ease banking sector concerns and emphasise infrastructure development are expected to bode well for the economy.

The consumer sentiment remained weak for a major portion of the year and is expected to remain the same forthcoming period. The Company had subdued yet sustained its operations even during Corporate Insolvency Resolution Process (CIRP) and now is endeavoring to strengthened its business and financial position. The inflationary environment was stable during this period and interest rates were on declining trend. Going forward, the macroeconomic environment will continue to play a vital role with crude oil prices, rupee movement and interest rate trends impacting the revival of consumer sentiment. The formalisation of the economy would provideslongterm advantages to organised players and the Company poised to resume its growth trajectory as the opportunities unfold.

Cautionary Statement:

The statements in this report on Management Discussion and Analysis describing the Companys objectives, estimates, expectations or projections, outlook etc., may constitute forward looking statements within the meaning of the applicable securities laws and regulations. Actual results may differ from such expectations, projections etc., whether express or implied. These statements are based on certain assumptions and expectations of future events over which the Company has no direct control. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements on the basis of any subsequent developments, information or events.