Gravity (India) Management Discussions


The Management of Gravity (India) Limited, is pleased to present its report analyzing the Companys operations in the textile industry segment. The report contains expectations of the Companys business based on the current market environment.

The Management of Gravity (India) Limited, is pleased to present its report analyzing the Companys operations in the textile industry segment. The report contains expectations of the Companys business based on the current market environment.

OVERVIEW OF THE TEXTILE INDUSTRY:

The economic development of India is greatly dependent on export earning of Textile Industry. Textiles represent nearly 30% of the country’s total exports. Providing direct employment to over 45 million persons in the mill, power loom and handloom sectors making it the biggest employer in the country after the agricultural sector.

At present, a third of India’s textile production is exported. India is the world’s second-largest exporter of textiles and apparel, and the textile industry contributes significantly to the country’s economy, making up 7% of industry output, 2% of the national GDP, and 15% of the country’s total exports earnings. The US and the European Union are the two largest markets for Indian textile exporters. With all the export promotion & development planning it is expected to grow to US$2,600 billion by 2025.

OPPORTUNITIES & THREATS:

Ambition of the Government of India, to make India a hub for technical textiles will create an opportunity for the industrial fabric division of your Company to function better as compared to earlier years. Performance of the fabric will see a reasonable growth which will benefit the industry in moving up the value chain. Severe power shortage in most of the states will remain a biggest threat for the utilization of the plant and equipment. Due to shortage of power, the utilization may drop severely and hence volatility in yarn prices may continue. Even though the industry expects the cotton prices to best able, the whole scenario may change, in case China decides to increase their cotton reserves. Hence, it is expected that cotton prices too may have volatility. Due to severe recessionary trends which are continuing in the developed countries, unit realization of products may continue to be under pressure.

SEGMENT-WISE / PRODUCT-WISE PERFORMANCE:

The business segment of the Company is Textiles. Segment wise performance together with discussion on financial performance with reference to operational performance has been in the Directors Report, which should be treated as forming part of this Management Discussions and Analysis.

FUTURE OUTLOOK:

The Indian textile and apparel industry is expected to grow to US$ 190 billion by FY26, driven by increased awareness of goods and higher disposable incomes. Increased penetration of organized retail, favorable demographics, and rising income level will drive demand for textiles. The Government initiatives such as the National Textile Policy, the SMARTH scheme, the easy availability of raw materials, and the rising income levels will also add to this sector’s critical growth.

The future of the textile industry as a whole looks bright. Textile Units with low financial costs and labour costs with modern Machinery will do well. Economy of size and location of the unit will also play a great role in the success of the unit.

RISK AND CONCERNS:

Being an agro-based industry the production of raw material varies from year to year depending on weather conditions, customer demand, price fluctuation etc. And as mentioned before the textile industry has gone through and still going through a pandemic, still slowly it has started recovering. Also the textile industry being a highly fragmented industry leading to high competition and low profit margins is a matter of concern. Changing export dynamics is also a matter of concern.

? Volatility in the raw material prices: Cotton yarn and fabric accounts for approximately, 70% of the total raw material cost. Currently, the Company is able to pass on any rise in the prices of raw material to the consumer. Any inability to pass on the impact of rise in raw material prices may negatively impact the estimated margin of the Company, resulting in lower earnings.

? Entry of Foreign Players: With markets being global and digital, it is becoming easier for foreign brands to penetrate into Indian domestic markets, via direct and indirect strategic tie-ups, largely, in the premium and super-premium segments, thus, creating stiff competition for the existing players in the organized sector.

? Changing customer’s behavior and spending capacity: Rapid change in the customers’ preferences, from one brand to another, makes it very difficult for a Company to establish a permanent connect and in gaining brand loyalty, consequently, leading to loss of business to its competitors. Furthermore, where, the improving Indian demographics have given credence to the Indian consumption story, any downward deviation in economic growth, will impact the consumers’ discretionary spends, thereby, negatively impacting the earning potential of the Company

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Your Company continues to prioritize sustainable control processes that are integral part of organization culture. It has built strong Internal Controls Environment and Risk Assessment / Management systems. These systems enable Company to comply with Internal Company policies, procedures, standard guidelines and local laws to help protect Company’s assets and confidential information against financial losses and unauthorized use. The robust controls environment at your Company is efficiently managed through:

? Controls Self-Assessments (CSAs) are performed during July to December period of every Financial Year across business processes. The purpose of this thorough exercise is to review and evaluate process compliances against standard control objective, activities and attributes. This enables the Company to proactively identify control weaknesses and initiate actions to sustainably mitigate them,

? Governance Board comprises of the Managing Director, Chief Financial Officer, Chief Human Resource Officer, Supply Chain Leader, General Counsel and Sales leader. The Board assesses and reviews enterprise level risks and works with process owners and functional managers to ensure that corrective action is taken, and risk is mitigated as appropriate.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Company has achieved a turnover of Rs 12,75,91,125 (Rupees Twelve Crore Seventy Five Lakh Ninety One Thousand One Hundred and Twenty Five Only) during the year. The net profit of the Company for the year is Rs. 823,907 as against a net loss of Rs. (28,68,040) in the previous year.

HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS:

Over the last few years, your Company has brought with it the need for skills and knowledge to successfully meet the requirements of different charters. Also, with the added emphasis placed on the safe operation. The training given not only covers knowledge and technical skills but also lays stress on behavioral areas, like creating a safety mindset, and attitude building. The Company also seeks the views of its employees for improving human relations through employee satisfaction surveys. The Company continues to have cordial relations with the employees. It recognizes the potential and performance of its employees, provides challenges and opportunities. It endeavors to upgrade knowledge, attitude and skill of the employees. The labour welfare activities are organized by the Company as an ongoing process. The Company has manpower strength of approximately 30 employees we have established key processes like Stewardship and Governance Process, POSH awareness and always doing the right thing. In order to keep the workforce highly engaged & motivated we follow the best-in-class recruitment practices, innovation and digitization, development of employee skills and capabilities, celebrating the key milestones of our employees and employee recognition

DISCLOSURE OF ACCOUNTING TREATMENT:

During the year under review the Company has been adopted prescribed Accounting Standards issued by the Institute of Chartered Accountants of India as applicable to the Company in the preparation of Financial Statements.

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys objectives and expectations may be "forward-looking statement" within the meaning of 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 economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors.

CONCLUSION:

Your Companys primary focus will be to grow volumes across markets. Gravity (India) will address each market depending on local conditions and consumer trends. While were cognize that the global environment is extremely challenging there are new opportunities merging to meet consumer needs. Gravity India will focus on profit able growth through a mix of brand led growth, innovation, efficient cost management and successfully scaling up new businesses.

For and on behalf of the Board of Directors
Varun Rasiklal Thakkar
Place: Mumbai Chairman & Managing Director
Date: 02, August, 2022 DIN: 00894145