[Pursuant to Regulation 34 read with Para B of Schedule V of SEBI (Listing Obligations
and Disclosures Requirements) Regulations, 2015]
Your Directors are pleased to present the Management Discussion and Analysis Report for
the year ended 31st March 2023.
Global Economy Overview:
The global economy was estimated to have grown at a slower pace 3.2% in 2022, compared
to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect). The
relatively slow global growthof 2022 was marked by the Russian invasion of Ukraine,
unprecedented inflation, pandemic-induced slowdown in China, higher interest rates, global
liquidity squeeze and quantitative tightening by the US Federal Reserve.
The challenges of 2022 translated into moderated spending, disrupted trade and
increased energy costs. Global inflation was 8.8% in 2022, among the highest in decades.
US consumer prices increased about 6.5% in 2022, the highest in four decades. The Federal
Reserve raised its benchmark interest rate to its highest in 15 years.
The global equities, bonds, and crypto assets reported an aggregated value drawdown of
USD26 trillion from peak, equivalent to 26% of the global gross domestic product (GDP). In
2022, there was a concurrently unique decline in bond and equity markets; 2022 was the
only year when the S&P 500 and 10-year US treasuries delivered negative returns of
more than 10%.
Indian Economy Overview:
Even as the global conflict remained geographically distant from India, ripples
comprised increased oil import bills, inflation, cautious government and a sluggish equity
market. India reported an estimated economic growth of 7.2% in FY 2022-23. India emerged
as the second fastest-growing G20 economy in FY 2022- 23. India had retained its position
as the fifth-largest global economy and was seen as a principal driver of the global
economy (with China).
Indias headline foreign direct investment (FDI) numbers rose from US$74.01 billion in
2021 to a record $84.8 billion in 2021-22, a 14% Y-o-Y increase due to 100% FDI approval
via automatic route in the Insurance sector, civil aviation, coal sector, telecom, pharma,
infrastructure. In 2022-23, the government was estimated to have addressed 77% of its
disinvestment target (Rs. 50,000 crore against a target of Rs. 65,000 crore).
Industry Structure and Development:
The Indian Textile and Apparel industry has been a significant contributor to the
Indian economy andcontinues to play a pivotal role in Indias growth story through its
contribution to industrial output,employment generation and export earnings. India is one
of the few countries with a complete andintegrated textile value chain having production
at each level of textile manufacturing.
Indias heritage of handmade carpet has been recognized worldwide for their excellent
design and quality with a commending share in global exports, for its subtle elegance,
ecofriendliness and exquisite vibrant color craftsmanship with a human touch.
India is today a leader in the international handmade carpet market. India is the
worlds largest producer and exporter of handmade carpets in terms of value and volume.
Around 85-90% of carpets manufactured in India are exported. India exports around 40% of
worldwide handmade carpets.
Among the various types of carpets exported from India, handmade carpets like woollen,
rugs, druggets, durries, cotton carpets, etc. account for the highest share of exports.
From April 2022-January 2023, Indias carpet exports stood at US$ 1.55 billion. In 2021
-22, India exported US$ 1.51 billion worth of these handmade carpets recording a growth of
18.8%. This was followed by US$ 168.67 million worth of jute carpets & floor coverings
exports accounting for 7.8% of the total exports. Apart from these, India also exported
handloom carpets & floor coverings, coir carpets & floor coverings, and silk
carpets worth US$ 125.06 million, US$ 113.15 million, and US$ 10.62 million, respectively.
The Indian carpet industry is very vibrant and has considerable potential for growth.
However, lesser innovation techniques, outdated technology, labor law issues and lack of
infrastructural facilities are major barriers that make this industry less competent as
compared to other carpet supplying countries. All these, along with the burden of high
fixed cost, will severely impact performance of th eCompany.
Opportunities and Threats:
• Opportunities
Nowadays, carpets serve multiple functions such as beautifying floors, enabling
cushioning for stairs, covering floors for comfortable sitting and enhancing the decor of
commercial spaces. Wall-to-wall carpeting, or using large rugs to covers certain parts of
floors are some of the ways commercial workspaces tend to use carpets.
Carpet and rugs market is expected to grow during the forecast period, owing to the
rising preference for modular carpet solutions among end-users. The increase in renovation
activities for residential and commercial purposes and the use of carpets and rugs for
floor decoration, are also driving the growth of the market. The market is also gaining
traction owing to the increase in adoption of carpets and rugs in the countries with cold
climatic conditions as they provide thermal insulation benefits.
Increasing government investments in construction sector and renovation of airports,
government buildings and hospitals are likely to create lucrative opportunity in upcoming
years for flooring and carpets manufacturing especially in emerging countries like India,
China, Brazil, UAE, Russia and Australia.
• Threats
With increase in raw material prices, the Indian manufacturers are not able to compete
with other carpet producing countries and this has had an impact on the exports of the
carpets from India. Moreover, alternative flooring materials such as ceramics, marble,
granite and other innovative and decorative flooring materials are cheap substitutes of
carpets as they are easy on maintenance and is therefore a major threat for the carpet
industry.
Hand-made carpets, while unique, have certain quality irregularities that make them
unappealing for some European and North American customers. This includes inconsistencies
in the dying, weaving and shape (due to the conditions under which the carpets are
weaved).
Segment Wise Performance:
The Company operates in single segments i.e. carpets business. Hence, The Business
Segmentsreporting in accordance with Accounting Standard 17 ‘Segment Reporting is
not applicable.
Outlook:
The outlook for the carpet industry in India is promising with several factors
contributing to its growth potential. Indian carpet sector has been identified as an
important sector for growth by the Indian Government. Many new business models and
collaborations are emerging, which are likely to provide new opportunities for these
industry.
For our industry it is very important to recover the trust of the consumer on the other
hand income loss among the consumers may translate into a fall in consumption of
non-essential goods like carpets, in turn affecting the prospects for businesses and
economies. Given the capacity and the current available technology, the Company will
continue to perform on the same lines and will continue to strive to improve and boost the
performance.
Risk and Concerns:
The Company derives revenue from the domestic market. With the increase in availability
of multiple flooring options available and the exorbitant prices and cost of maintaining
carpets, there is a risk of change in customer preference which may adversely affect the
demand of the products and indirectly the revenue and growth of the Company.
Non-availability of raw materials, lack of manpower, technologies up-gradation in the
peer group and non-availability of timely working capital needs exacerbates the risks
hovering over the Company.
Company is taking appropriate steps in order to tackle the aforementioned risks by
adopting in time suitable strategies, so as to positively modify the risk profile of the
Company by eliminating key risk factors and minimizing the risk areas.
Internal Control Systems and theirAdequacy:
The Company has a proper and adequate internal controls system commensurate with its
size Company complies with all applicable statutes, policies, procedures, listing
requirements and management guidelines. It adheres to applicable Accounting Standards and
Polices. The systems are subjected to supervision by the Board of Directors and the Audit
Committee, duly supported by Corporate Governance.
Material Development in Human Resources:
The Company recognizes the importance and contribution made by its employees and
strongly believes that people are its greatest asset, and this has been the focal point of
all its Human Resource Management (HRM) practices. The Company has amicable relations with
its employees and staff that seeks to improves employees performance and ability to work
with the Company.
Significant changes in the Key financial ratios and other parameters:
There are no significant changes in the Key financial ratios and other parameters of
the Company as compared to the previous year.
Cautionary Statement:
Statements in the Management and Discussion Analysis which seek to describe the
Companys objective, projections, estimates, expectations or predictions may be considered
to be forward looking statements within the meaning of the applicable securities laws and
regulations. Actual results could differ materially from those expressed or implied.
Important factors that could make a difference to the Companys operations include Indian
demand and supply conditions, availability of working capital, raw material prices,
changes in government regulations, tax regime, economic developments within India and
globally.
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