Indian Acrylics Ltd Management Discussions

Management Discussion and Analysis Report for the year under review was stipulated under Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, is presented as under.

a) Acrylic Fibre Industry Global and Indian Perspective

Textile Industry in India is playing a pivotal role in country’s economy and employment generation, especially for women in the rural areas.

With one of the most modernised technological infrastructures and owing to the recent policy announcements such as PLI etc, Indian Textile & Apparel Industry is all poised to grow in the years to come.

Current outlook of the global and Indian textile & apparel industry

As per the market estimates, overall demand in India of Acrylic fibre has decreased this year by appox 7% from nearly 1 Lakh MT demand in a year before. Global Textile Industry in the year has been hit hard high inflation, economic slowdown, geo-political tensions, prolonged Russia-Ukraine war, ongoing Israel Hamas conflict which has resulted in decreased demand of textile & apparel products globally and is thus also impacting the exports of textile & apparel products from India.

The import of Acrylic Fibre into India have increased during the year and local Industry has faced challenge of sale and margins due to increased imports. The surplus capacity in China, Thailand and Peru due to their lower sales prompted them to push their surplus materials into Indian Market this year.

The export of Acrylic fibre from India has decreased this year. Company exported 4173 MT of acrylic fibre and 2182 MT of Acrylic yarns as against export of 5625 MT fibre and 3634 MT yarn during last year. The overall exports from India has decreased during this year.

The focus of the company on seeding of acrylic yarn in the new export markets and development of new varieties as per customer & market needs at the affordable prices helped in sustaining its yarn business albeit margins were eroded due to huge dumping by foreign suppliers.

Industry in India is facing problem of dumped imports of Acrylic Fibre by several countries. The recommendations of Ministry of Commerce, Directorate of Anti-dumping duties following final findings of investigations released in August Sept 2020 against dumping of acrylic fibre being done by several countries like Thailand, Belorussia, Peru, EU etc are still pending implementation by the Ministry of Finance, Govt of India. Forum of Acrylic Fibre has taken up the matter with the Government as well as in the Courts for early levy of anti-dumping duties against dumped imports in India. The Court has ordered for provisional assessment by custom of the imported consignments, however not yet implemented by the authorities. Due to increase in dumping in 2023-24, domestic acrylic fibre industry has also filed fresh antidumping application with the DGTR, Ministry of Commerce recently and requesting the Authorities for investigations.

Business Outlook

The uncertainty in demand caused by recession fears in later half of 2023-24 in US economy, continued Ukraine war and major central banks fighting against high inflation are few challenges going ahead. Company has well diversified product mix of acrylic fibre and yarns with strong customer base across various markets in Africa, Europe, South America and Asian Regions and well placed to grow its production and sales and overcome these challenges.

Internal Control Systems and Their Adequacy:

Your Company has a well-designed Internal Audit programme and dedicated team for independent review of all systems, procedures and financial controls of the Company to bring in the best industry practices, compliance with internal systems & procedures and statuary laws. The Company’s overall internal control system is adequate given size and nature of operations. All important issues are regularly presented to the Audit committee of the Company. Senior management of your Company places emphasis on taking proper actions on the significant issues, findings and recommendations of internal audit, and systems are strengthened appropriately.

Internal Financial Controls: The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

a) Management Perception Of Risk & Concerns:

Risk Management

The Risk Management Committee ensures compliance of all the fiscal, industrial, labour and environments laws by using adequate internal control measures and through regular monitoring by the respective departmental heads in the company.

The following table gives the key risks faced by the Company, and the steps taken to mitigate the same:

Key Risks Impact on IAL Mitigation

Global Spending on clothing have shown strong - Well diversi ed customer base across different Economic correlations with GDP Growth. Uncertain economic geographical locations and across different end Scenario outlook in China can impact the consumer spending uses of bre on clothing and thereby constrain the demand - Target newer markets which might provide growth of acrylic bre. counter-cyclical support

Adverse Any sudden action by the Government to allow duty - Increasing exports share in the turnover of the change in free imports of acrylic bre in India under free trade company by investing in newer markets Govt Policy agreements without corresponding reduction in the development duties on raw materials can impact the company as there are no local producers and company is dependent on imports for its main raw materials

Currency Volatility in currency exchange movements resulting - Currency hedging policy and practices in place Volatility in sudden transaction and translation exposure. - Hedging strategy monitored by risk management committee through regular reviews.

Volatility in crude oil prices resulting in sudden spurt - Increasing value added products in the product Crude Oil or plunge of raw materials prices mix. volatility

- Inventory exposure monitored by risk management committee through regular reviews

Dumping of Large scale dumping by certain countries in India can - Investing in the energy saving, alternate fuels and bre impact the domestic sales new products by in-house R & D.

- Increasing exports sales by developing the new export markets

As such, the Company is monitoring and taking steps to mitigate the risks, if any, which may threaten the existence of the Company.

Cautionary Statement:

Statements in this report on Management Discussion and Analysis describing the Company’s Objectives, projections, estimates, expectations or predictions may be "forward looking" within the meaning of applicable Securities laws and regulations. Actual results could differ materially from those expressed or implied.

		On Behalf of the Board of Directors
Place : Chandigarh	ALOK GOYAL	DHEERAJ GARG
Date : 06.05.2024	EXECUTIVE DIRECTOR	ADDL. MANAGING DIRECTOR
	DIN-08049515	DIN-00034926