gtn industries ltd share price Management discussions

1. INDUSTRY STRUCTURE & DEVELOPMENTS:

The Textile Industry is one of the oldest Industry in the country and plays a pivotal role in the countrys economy in terms of Industrial Production, Employment and foreign exchange earnings. The Textile Industry has achieved a good growth in last two decades in terms of installed spindles and yarn production and Indias installed spindles were expanded to 55 million at the end of March, 2023 and much capacity not added during the year 2022-23. India is the second largest yarn production capacity in the world next to China. This could happen due to buoyant domestic and international demand, conducive Government Policies. Indian Textile sector contributes to over 2% to the countrys Gross Domestic Product (GDP), accounting for 7% of Industrial Production, over 15% to the countrys export and also employs about 4.5 crores workers directly. In addition, this industry provides indirect employment to large number of workforce and also helps to develop many related ancillaries which generates further employment. It is the second largest employment provider after the agricultural sector.

As per Union Budget, a National Technical Textiles Mission is proposed for a period from 2020-21 to 2023-24 at an estimated outlay of Rs.1,480 crores. It is hoped that textile industry may perform better after arrival of new cotton crop in Oct-Nov 2023 since it is expected that cotton crop is likely to be stable, prices are forecasted to be relatively stable as well as realization on exports due to stable Government. These are favourable indicators for the reasonable growth of textile industry in the country.

COTTON SCENARIO:

Cotton is one of the most important cash crops and accounts for around 21 % of the total global fibre production. In the raw material consumption basket of the Indian textile industry, the proportion of cotton is around 60%. The consumption of cotton is approximately 316 lakh bales (170 kg each) per year. India occupies first position in the world in cotton acreage with around 119.10 lakh hectares under cotton cultivation which is around 36% of the world area of 326.36 lakh hectares. Approximately 62% of Indias Cotton is produced on rain-fed areas and 38% on irrigated lands. India has emerged one of the largest producers, consumers and exporters of cotton in the World.

Cotton plays a major role in sustaining the livelihood of an estimated 5.8 million cotton farmers and 40- 50 million people engaged in related activities such as cotton processing and trade. To support the cotton industry, Government of India announces Minimum Support Price (MSP) for two basic staples groups viz., medium staple and long staple cotton. Cotton Corporation of India (CCI), a Public Sector Undertaking under the Ministry of Textiles, is the nodal agency of Government of India for undertaking MSP operations in the event of prevailing seed cotton (kapas) price touching the MSP level.

MARKETING:

Presently the yarn market in both domestic and overseas is quite subdued, as demand is quite low due to recession fears and other factors. The entire industry is reeling under low demand and price realisations. We are expecting a rebound in the coming months

2. OPPORTUNITIES AND THREATS:

The future of Indian Textile industry is highly depending on availability of raw material at a competitive price. With the introduction of Hybrids and BT Cotton, the cotton production in India is increasing. However, it depends on timing and quantum of monsoon rains and it is expected that the supply of quality cotton will be comfortable in the coming season for 2023-2024.

Chinese exports of Textiles and clothing are declining especially to USA due to political reasons thus, provides an opportunity to India for improving its export performance. In long run, the prospectus of Indian Textile Industry is bright. However, there is a recession in international markets such as Europe and other Asian countries.

Spinning units are highly capital intensive and has to maintain large Raw Material inventory levels due to its seasonality. Your Company makes all efforts to have efficient inventory management and constant efforts are being made to monitor the inventory levels keeping in view of interest costs.

Your company has a system of assessing the risks on an ongoing basis. This includes an effective internal control and management reporting system. Further, the framework also captures the existing practices to manage commodity price risk, interest risk, and foreign exchange risk etc. An important aspect of this framework is to promote a balanced approach that considers risk and return.

Expect things to be better after September 23, when the european markets are back from summer holidays.

3. SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

The Company is mainly engaged in the business of manufacture and export of cotton yarn and accordingly this is the only Single Reportable Segment.

4. OUTLOOK:

The Company continues to be an important player in the field of cotton yarn in medium and fine count segments. There are good prospects for increasing exports of cotton yarn to Asian countries. The company is making all efforts to explore new markets apart from current markets.

5. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has a proper and adequate internal control system to ensure that all assets are safeguarded and protected against loss from unauthorised use or disposition and that all transactions are authorised, recorded and reported correctly.

The internal control is supplemented by an extensive programme of internal audits, review by management and documented policies, guidelines and procedures. The internal control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data and for maintaining accountability of assets.

6. FINANCIAL AND OPERATIONAL PERFORMANCE:

Please refer Directors Report on performance review.

7. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS (INCLUDING NUMBER OF PEOPLE EMPLOYED) :

The Company recognizes the importance and contribution of its human resources for its growth and development and is committed to the development of its people. The company has been adopting methods and practices for Human Resources Development. With utmost respect to human values, Company served its human resources with integrity through a variety of services by using appropriate training, motivation techniques and employee welfare activities etc. Industrial relations were cordial and satisfactory. As on 31st March 2023, the

Company has about 335(including casuals etc.) employees.

8. CAUTIONARY STATEMENT :

Statements made in this report describing the Companys projections, estimates, expectations or predictions may be ‘forward looking predictions within the meaning of applicable securities laws and regulations. Actual results may differ from such estimates, projections, etc. whether expressed or implied. Factors which would make a significant difference to the Companys operations include availability of quality raw cotton, market prices in the domestic and overseas markets, changes in Govt, regulations and tax laws, economic conditions affecting demand/supplies and other environmental factors over which the Company does not have any control.