Indo Count Industries Ltd Management Discussions

Economic Overview

World Economy

The global economy has shown resilience in 2023 despite facing significant challenges with a GDP growth rate of 3.0%, which slowed from 3.5% in 2022. Advanced economies experienced a slowdown from 2.6% to 1.5%, while emerging and developing economies saw a modest decline from 4.1% to 4.0%. Geopolitical tensions, such as the Russia-Ukraine conflict, have led to disruptions in global trade, resulting in elevated uncertainties and volatility in financial markets.

There has been a gradual decline in inflation from 8.7% in 2022 to 6.9% in 2023. Despite the decline, inflation has been a major concern, with prices rising across regions due to trade disruption. Still, tighter monetary policies and lower commodity prices have contributed to a decline in inflation. The impact of inflation on the economy has been mixed, with some regions experiencing a decreased purchasing power while others have seen an increased demand for certain products.

Central banks have taken decisive action to combat inflation by maintaining tight monetary policies, leading to high interest rates and a stronger U.S. dollar. Geopolitical developments will continue to influence the economy, but the resilience shown in 2023 is a testament to the ability of businesses and policymakers.

Outlook

Looking ahead to 2024, the outlook is positive and the global growth is projected to stay at 3.2% in 2024 and 2025. Elevated central bank rates to fight inflation and a withdrawal of fiscal support amid high debt weigh in on economic activity. Inflation is falling faster than expected in most regions amid unwinding supply-side issues and restrictive monetary policy. Global inflation is expected to fall to 5.9% in 2024 and 4.5% in 2025. Increased investment in technology and innovation is expected in 2024. While the challenges persist, the global economy is poised for a recovery in 2024, driven by the resilience and adaptability of businesses, policymakers and individuals.

The U.S. Economy

The U.S. economy commenced 2024 on sturdy ground, buoyed by robust consumer spending and business investment. However, challenges loom on the horizon, notably rising consumer debt and elevated interest rates, which are expected to temper economic growth. While a recession is not predicted for 2024, a slowdown in consumer spending growth is anticipated. GDP growth will likely dip to under 1% in Q2 and Q3 before converging towards its potential of approximately 2% in 2025.

Consumer spending, resilient in 2023 despite inflation and higher interest rates, is showing signs of softening in early 2024. Factors contributing to this softening include slowing real disposable personal income growth, dwindling pandemic savings, rising household debts and increasing delinquencies. Moreover, the proliferation of buy now, pay later plans may further impact future spending as bills come due.

Business investment, which saw a slowdown in the latter half of 2023 due to interest rate increases, is expected to face further challenges in the first half of 2024 as the Federal Reserve delays interest rate cuts until Sept-Oct. Although residential investment shows signs of growth in Q3 2023, it may not see sustained improvement until interest rates decline.

Government spending, fuelled by federal non-defence spending on infrastructure investment, supports economic growth. However, political uncertainty surrounding fiscal policy could potentially impact government spending in the years ahead.

Labour market tightness remains persistent, attributed to the Baby Boomer generations retirement and businesses reluctance to lay off workers. While some softening in the labour market is expected, a significant downturn is not foreseen.

Inflation, although making progress in 2023, has seen a slowdown in momentum, influenced by emerging trends in energy markets and certain service industries. The forecast for 2% inflation is pushed back to Q4 2024, with expectations of interest rate cuts totalling 25-50 basis points in 2024 and an additional 50-75 basis points in 2025, contingent upon the inflation trajectory.

Overall, while challenges exist, the U.S. economic outlook remains positive. With a resilient consumer base, ongoing government support and persistent labour market strength, the economy is poised to navigate the headwinds and gradually return to sustainable growth in the coming years.

Outlook

The U.S. economy defies expectations, consistently outperforming projections despite concerns over rising interest rates, inflationary pressures, potential slowdowns and consumer spending patterns. With each passing month, it appears more likely that policymakers have skilfully engineered what some might call a soft landing scenario. In this delicate balance, inflation is reined in without triggering an economic downturn.

The U.S. economy started 2024 strong, though challenges like rising consumer debt and higher interest rates may slow growth. Consumer spending, resilient in 2023, is softening due to dwindling pandemic savings and increased debt. We anticipate a temporary slowdown in Q2 and Q3 as households adjust, with a rebound likely later in 2024.

Inflation progress slowed recently, but with support from cooling rental prices, we project reaching 2% by Q4 2024. Anticipating Fed rate cuts starting in Sept-Oct, totalling 100-125 bps in 2024 and 2025, hinges on the inflation trajectory.

The European region

The economic outlook for Europe is mixed, with expectations of a decrease in consumer price pressures after two years of high inflation. Eurozone inflation, which peaked at 10.6% in the prior year, declined to 2.9% in October 2023, primarily due to falling energy prices. This trend is extending to other consumption categories. Monetary tightening efforts are set to continue, albeit slower, leading to forecasts of decreasing headline inflation for both the eurozone and the EU.

Economic growth faced challenges in 2023, but a rebound is anticipated in the coming year, driven by consumption recovery, robust labour markets and reduced inflation. Investments are expected to rise, supported by initiatives like the Recovery and Resilience Facility. GDP growth is expected to increase in 2024, with slight differences between the EU and the euro area. Fiscal indicators suggest a marginal decline in the EUs general government deficit, although uncertainties remain due to geopolitical tensions, potential energy supply disruptions and economic developments in major trading partners. Additionally, the impact of climate change on the environment and the economy is becoming increasingly evident.

Outlook

The Winter Interim Forecast downgrades the 2023 growth outlook for the EU and euro area to a modest 0.5%. Projections for 2024 adjusted to 0.9% growth in the EU and 0.8% in the euro area, and for 2025, growth projections are 1.7% in the EU and 1.5% in the euro area.

Inflation forecasts show a downward trend, with EU HICP inflation expected to decrease from 6.3% in 2023 to 3.0% in 2024 and 2.5% in 2025. The euro area is expected to decrease from 5.4% in 2023 to 2.7% in 2024 and 2.2% in 2025.

Despite modest growth driven by post-pandemic momentum, challenges like declining purchasing power and geopolitical tensions persist. However, positive developments in inflation moderation and robust labour markets signal potential economic acceleration, while ongoing geopolitical tensions and climate risks pose threats.

Indian Economy

Indias economy rebounded vigorously in the first quarter of FY 23, surpassing the UK to claim the fifth position globally after successfully recovering from the tumultuous shock of the COVID-19 pandemic. This growth trend remained persistent, and the gross domestic product (GDP) for the fourth quarter (Q4) of 2023-24 is estimated to reach 6.7%, and the overall GDP growth for FY 24 is projected to be 6.9 to 7%. This growth was propelled by robust domestic demand for both consumption and investment, further amplified by the Governments sustained emphasis on capital expenditure during the initial half of FY 24. Furthermore, higher tax collections during that quarter also drove a surprisingly high growth rate of 8.4% in Q3.

In the period spanning April 2023 to March 2024, Indias service exports soared to US$ 339.62 billion, underlining the nations prowess in this sector. Additionally, the combined exports, encompassing services and merchandise, for the same timeframe totalled US$ 776.68 billion, showcasing Indias prowess on the global trade front. The surge in employment opportunities, coupled with a notable rise in private consumption buoyed by an upswing in consumer sentiment, is poised to bolster GDP growth in the forthcoming months.

Net Direct Tax collections (provisional) for FY 24 exceed Union Budget Estimates by H1.35 lakh crore. Net Direct Tax collections stand at H19.58 lakh crore, marking a growth of 17.70% YoY. This strong performance in direct tax collection is a welcome sign for the Indian economy. It suggests potential economic growth and gives the government more resources to accelerate further development.

Prospects for future government capital spending remain promising, supported by tax buoyancy, a streamlined tax system featuring lower rates, a comprehensive assessment and rationalisation of the tariff structure, and the digitisation of tax filing processes. Over the medium term, escalated capital outlays on infrastructure and asset-building initiatives are anticipated to enhance growth multipliers, fostering sustainable economic expansion.

Indias ascent as the fastest-growing major global economy underscores its trajectory towards becoming one of the top three economic powerhouses over the next decade. This trajectory is underpinned by Indias robust democratic framework and steadfast international partnerships.

Furthermore, Indias allure as an investment destination has strengthened amid the prevailing global unpredictability and volatility. The substantial influx of funds directed towards India-focused ventures in 2022 is a testament to investors confidence in the compelling Invest in India narrative.

Outlook

The Ministry of Finances report predicts nearly 7% growth for Indias economy in FY 25, driven by strong domestic demand. This continues as a robust growth trend, with rates of 7.2% in 2022-23 and 8.7% in 2021-22. The fiscal year 2023-24 is expected to see a 7.3% growth rate, reinforcing Indias status as the fastest-growing major economy.

Government reforms and investments in infrastructure and manufacturing have fuelled this growth. Looking ahead, the report projects sustained growth above 7%, with India poised to become the third-largest global economy within three years, aiming for a GDP of US$ 5 trillion. By 2030, India aims to become a US$ 7 trillion economy, marking a significant milestone in improving the quality of life for its people.

Factors supporting this outlook include stable GDP growth, manageable inflation, political stability and signs of monetary policy stabilisation.

The Textile Industry

Global textile market

Though seemingly past the worst of the COVID-19 pandemic, the textile industry is still grappling with significant challenges. The pandemics impact lingers through weakened demand and rising production costs. Further strain has been placed on the industry by the ongoing conflict in Ukraine, Russia, and West Asia, adversely affecting the Red Sea freight movement by pushing up costs and increasing sailing time.

Rising raw material costs have squeezed the textile industry, forcing companies to rethink how they source materials globally. Strict COVID-19 restrictions in China have disrupted supply chains, leading Western businesses to look to neighbouring countries for textile production.

There are signs of a slow recovery, but the industry needs to find a balance between fluctuating demand and ongoing uncertainties. Many companies have seen a significant drop in orders due to weaker consumer spending caused by inflation. This trend highlights the need for the industry to adapt and develop strategies to overcome these challenges and achieve long-term growth.

Outlook

Despite the challenges faced by the industry, the global outlook for the textile market looks positive.

The global textile market, valued at US$ 1,837.27 billion in 2023, is poised for significant expansion and is projected to exhibit a robust compound annual growth rate (CAGR) of 7.4% in revenue from 2024 to 2030.

Several key factors propel this growth trajectory. Firstly, shifting consumer preferences and evolving lifestyle trends drive demand for textiles across various segments. Additionally, the rapid expansion of the global population catalyses market expansion, creating a heightened need for textile products worldwide.

Moreover, burgeoning population coupled with rising income levels, particularly in emerging economies like India and China, have led to increased expenditure on textiles, further fuelling market growth.

Furthermore, technological advancements and innovative breakthroughs in textile manufacturing processes, including automation, digital printing and the development of smart textiles, are reshaping the industry landscape. These advancements not only enhance production efficiency but also offer novel functionalities and applications, contributing to the overall dynamism and competitiveness of the textile market.

The U.S. Textile Market

The U.S. textile industry is a significant force, boasting a market value estimated at US$ 251.79 billion in 2022. Projecting a healthy 3.1% CAGR from 2023 to 2030, the U.S. market is poised to maintain its leadership position within North America. Furthermore, the U.S. is the worlds second-largest exporter of textile-related products, highlighting its global influence.

Innovation is another hallmark of the U.S. textile industry. The nation is a recognised leader in textile research and development, consistently pushing boundaries to create next-generation materials. This dedication to progress ensures the U.S. textile complex remains at the forefront of the industry.

Consumer trends are also playing a key role in market growth. Fashion is assuming an ever-increasing importance in the American lifestyle. Constant exposure to advertising fuels impulsive buying, driving demand for stylish apparel.

The market is further fuelled by fashion brands strategic segmentation of apparel. Introducing venue-specific clothing lines, encompassing airport, swimwear, casual, and party wear, is expected to increase apparel production significantly. This, in turn, will translate into a heightened demand for high-quality textiles in the U.S. market.

The European Textile Market

The European Textile Market, estimated at US$ 185.80 billion in 2024, is poised for robust expansion, with projections indicating a climb to US$ 219.89 billion by 2029, representing a notable CAGR of 3.43% during the forecast period (2024-2029).

ThetextileindustryisasignificantpillaroftheeconomyinEurope, providing gainful employment to approximately 6% of the total manufacturing workforce. Post-COVID-19, a discernible trend has emerged wherein the younger demographic is inclined to embrace the latest fashion trends. The dynamic nature of fashion, characterised by frequent collection turnovers, has instigated shifts in consumer behaviour, fostering a culture of adaptability and novelty.

Digital platforms and innovative marketing strategies have swiftly permeated the European fashion landscape, catalysing the emergence of new brands leveraging e-commerce platforms. These digital avenues, augmented by immersive technologies such as virtual reality, offer companies unprecedented opportunities to engage consumers and drive sales. Notably, the convergence of fashion and online apparel has propelled e-commerce sales to new heights, amplifying consumer spending within the European textile market.

Europes rich tapestry of leading retailers, renowned designers and innovative entrepreneurs positions the region as a global hub for premium fashion and high-quality textiles. The allure of European fashion extends not only to established high-income markets like the U.S., Switzerland, Japan and Canada but also to burgeoning economies such as China, Hong Kong, Russia, Turkey and the Middle East. Moreover, the European industrys prowess in technical textiles underscores its international competitiveness, with exports and imports experiencing sustained growth over the years.

The Indian Textile Market

The Indian textile industry, a major contributor to the nations economy, faced significant hurdles in 2023. Fluctuating cotton prices, declining demand and underutilised capacity hampered growth. Additionally, competition from cheaper imports of fabrics and garments from China and Bangladesh squeezed margins. Weakened demand from key export markets like the U.S. and the EU further exacerbated the situation.

Domestic sales also slowed, with consumer spending shifting towards essential items, electronics and vehicles. This trend was particularly evident during the usually vibrant festival season. Rising freight costs due to unrest in the Red Sea added another concern, impacting operational costs and competitiveness.

Despite these setbacks, the Indian textile and apparel market remains poised for growth. Forecasts suggest a robust 10% compound annual growth rate (CAGR), projecting a market size of US$ 350 billion by 2030.

Encouragingly, CRISIL anticipates a rebound in the industry by 2024, driven by three key factors: sustained domestic demand, gradual export recovery and more stable cotton prices. Domestic consumption, which accounts for the lions share of demand, continues to expand steadily. Additionally, pre-seasonal demand from Western markets is expected to bolster garment uptake from India, stimulating growth across the value chain. Improved consumer demand should prompt major international retailers to replenish their inventories, further benefitting Indian exporters.

Building strong Indian garment brands is another crucial step towards long-term success. Initiatives like the Brands of India event, showcasing domestic brands in international markets, are a positive development in this direction.

Further, Kasturi Cottons collaborative endeavour with the government of India, textile trade bodies, and industry stakeholders aims to elevate the intrinsic value of Indian-grown cotton through stringent benchmarked specifications. Serving as the epitome of quality, Kasturi Cotton sets a new industry standard, transcending its conventional role as a raw material. It signifies the pinnacle of excellence, promising superior quality and performance for consumers and industry alike.

In conclusion, while the Indian textile industry grappled with challenges in 2023, a favourable outlook emerges for 2024. Easing cost pressures, a potential rise in domestic and export demand, and strategic brand-building initiatives can pave the way for sustained growth. However, addressing structural issues and leveraging government support remains critical for the industrys long-term prosperity.

Exports

India, a major player in the global textile and apparel industry, is the worlds second-largest manufacturer, trailing behind China. This industry significantly contributes to Indias economy, constituting over 4% of the GDP and accounting for more than 14% of the countrys annual export earnings.

Recent data, however, paints a mixed picture of Indias textile exports. While historically robust, the industry has encountered challenges in the face of global economic dynamics. A McKinsey Report indicates a slowdown in global retail sales of clothes, attributed to factors like high inflation and waning consumer confidence following robust growth until mid-2022.

Indias export performance has felt the pinch, with textile exports experiencing a 4.2% year-on-year decline in the first 11 months of the current financial year. Economic headwinds in key markets such as the EU, the U.S. and West Asia have further dampened prospects.

The Red Sea crisis has added to the woes, impacting the export of textile products, including ready-made garments, to foreign markets. This confluence of factors presents a challenging landscape for Indias textile industry.

Despite the downturn, there are glimmers of optimism. Industry experts anticipate a potential turnaround, particularly with signs of recovery in the U.S. market. The Apparel Export Promotion Council (AEPC) remains positive, projecting a growth trajectory for textile exports from US$ 45 billion to US$ 50 billion in the fiscal year 2023-24 compared to the previous year.

In conclusion, while Indias textile and apparel industry faces formidable challenges, there are avenues for growth and resilience. Strategic measures and favourable market conditions can position India to navigate the current headwinds and emerge stronger in the global textile landscape.

Home Textile Market

Home textiles encompass a range of decorative and functional fabrics for home furnishing. The market witnesses steady growth globally, fuelled by evolving lifestyles and a penchant for trendsetting d?cor. A blend of natural and artificial fibres often enhances durability. European markets favour handwoven textiles, with customers willing to invest significantly. North America presents promising growth prospects. While offline sales persist, online channels experience faster expansion. However, COVID-19 has severely impacted the industry, halting production in major hubs like India and China, disrupting supply chains and triggering layoffs amidst plummeting demand. The pandemic also halted import-export activities, particularly in key markets like Europe and the U.S.

Global scenario

The global home textile market is experiencing significant growth, driven by increasing consumer demand for luxury home d?cor and sustainable fabrics. The market size was valued at US$124.72 billion in 2023 and is projected to expand at a compound annual growth rate (CAGR) of 6% from 2024 to 2030. Segment-wise, the bed linen market accounted for the largest share, with over 45% of global revenues in 2023, due to the growing trend of home d?cor and the need for comfortable and stylish bedding. The bathroom and kitchen textile segments are also expected to witness significant growth during the forecast period.

Distribution channel-wise, offline sales continue to dominate the market, accounting for over 65% of global revenues in 2023 due to the tactile nature of home textiles and the preference for physical shopping experiences. However, online sales are expected to grow rapidly during the forecast period, driven by the increasing popularity of e-commerce and digital platforms. Geographically, the Asia-Pacific region dominated the global textile market, accounting for over 20% of global revenues in 2023, driven by a growing middle-class population, urbanisation and increasing disposable incomes in countries such as China, India and Japan. Europe and North America are also significant markets, driven by the demand for luxury and sustainable home textiles.

Overall, the global home textile market is expected to witness significant growth during the coming years, driven by consumer demand for comfort, sustainability and style.

FY 25 trend

The growing demand for synthetic fibres, especially polyester, is also contributing to the markets growth, with the synthetic fibre market expected to reach US$ 98.21 billion by 2030. Additionally, the market for home textiles and furnishing fabrics is wide and varied, with a growing demand for better-quality stain-resistant and flame-retardant home textiles.

Mid-term trend

The global home textile market is expected to grow, driven by consumer preferences for home d?cor and sustainable home textile fabrics. The market is expected to reach US$ 185.97 billion by 2030. Mid-term trends shaping the industry include a rising demand in the Asia-Pacific region. Product innovation, quality improvement and value-added features are becoming increasingly important, while the bed linen and bedspread segment is experiencing more popularity. Furthermore, home textiles are becoming a form of self-expression and personal style, with vintage and high-end options gaining traction. The hospitality and healthcare sectors are also driving demand, while the residential sector continues to be a significant market for home textiles. Overall, the home textile market is expected to experience robust growth and transformation in the coming years.

Indian Scenario

The Indian home textile market presents a significant opportunity for growth, with the country being the worlds second-largest textile and clothing exporter and second-largest producer of silk and cotton. The textile industry is a substantial employment generator in India, directly employing 45 million people.

The Indian home textile industry is thriving for several reasons. More people in India have money to spend, and the population is growing. This means theres a bigger market for home textiles. More stores are also selling these items, making them easier to find. Further, constructing new houses, hotels, and hospitals creates a demand for even more home textiles. India is a major player in the global market for home textiles, accounting for nearly 7% of all trade and occupies a significant share of exports to the United States.

Domestic demand

The Indian home textile market is thriving, driven by growing consumer awareness and demand for household products. The bed linen and bedspread segment is experiencing significant growth, while the recovering hospitality industry is also fuelling demand. Rising incomes and urbanisation drive growth in the residential segment, and online sales are rising. Government initiatives like Make in India promote local manufacturers, and innovative products like organic bed linen are gaining traction. Overall, the Indian home textile market is poised for growth and expansion.

Performance in FY24

The size of the Indian home textile market will be around US$ 9.60 billion in 2024 and may grow to US$ 15.36 billion by 2029, as predictions during the forecast period of 2024-2029 suggest a CAGR of 9.84%. The Indian home textile market is experiencing significant growth, attracting the attention of both domestic and foreign brands. Indian home textiles are increasingly sought-after worldwide because of their high quality. This is due to a focus on making better products and adding special features. Indian companies constantly improve their manufacturing processes and invest in research and development to create innovative textiles. Theyre also finding ways to add value, such as making the textiles more durable or eco-friendly. As a result, Indian home textiles are becoming a popular choice for international buyers.

Trend in FY25

Indias home textiles industry is a powerhouse in global markets. This strength stems from a healthy foundation – a strong supply of raw materials, a diverse product portfolio, and well-established manufacturing capabilities across the entire value chain. The Ministry of Textiles estimates the home textiles market to reach US$ 10 billion for FY 24 and projects a CAGR of around 7% between FY 24 and FY 31. Competitive costs, strong domestic market growth, and a complete value chain are the reasons behind this expansion. Rising incomes and the real estate boom further drive demand for home textiles.

Future trends

The Indian home textile industry stands at the threshold of exponential expansion, projected to soar to a staggering value of US$15.36 billion by 2029, growing at a CAGR of 9.84% from 2024 onwards. Sustainability is a key focus, with companies adopting eco-friendly and circular business models. Technical textiles, driven by technological advancements and demand from various industries, will play a crucial role. Theres a shift towards man-made fibres, emphasising yarn quality and a rising demand for natural fibres. Digital textile printing will also gain traction, enabling faster production. These trends will shape the industrys growth in the coming years.

The Cotton Season

Global cotton production will likely be 5 million bales (217.7 kg) lower this season (October 2023-September 2024) as the output in China, the U.S., Australia and India has been affected. Global cotton lint production is projected at 25.4 million metric tons (MT) in the 2023-2024 season, a rise of 3.25% from 24.6 million metric tons in 2022-2023. However, production is projected to dip marginally from 23.5 million MT in 2022-2023 to 23.4 million MT in 2023-2024, per the International Cotton Advisory Committee (ICAC).

The U.S.

The U.S. cotton market holds a significant position globally as a major producer and exporter. The cotton production in the U.S. in FY 2024-25 is expected to rise to 16.0 million bales, driven by a nearly 8% increase in planted area and a 15% decline in the abandonment rate.

India

Despite challenges posed by the El Ni?o effect, the Cotton Association of India (CAI) has released its estimate for the 2023-24 marketing season, projecting a cotton production of 29.51 million bales. While this figure marks a decline from the previous year, its essential to recognise the resilience of Indias cotton industry in the face of adversity.

The cotton marketing season, spanning from October to September, witnessed a reduction in planting, contributing to the dip in production. However, its crucial to view this in context. One bale of cotton weighs approximately 170 kg, indicating the scale of the industrys contribution despite its challenges.

The decrease of 7.49% from the previous years production might seem concerning at first glance. However, its essential to acknowledge the efforts and ingenuity of cotton farmers who continue to navigate various obstacles to sustain this vital sector of Indias economy.

As North India gears up for the 2024-25 kharif cotton planting season, agricultural stakeholders anticipate a potential decrease in cotton acreage. This projected decline stems from a confluence of challenges. Persistent infestations of the pink bollworm (PBW) threaten crop yields, while depressed market prices for cotton fibre make the crop less profitable for farmers. Additionally, escalating labour costs further strain margins, disincentivising some from planting cotton.

Operational and Financial Performance

Indo Count improved its performance yet again in FY 2024. The Company is growing, and the financial parameters are getting stronger.

Standalone performance Highlights

Delivered sales volume of 96.8 Mn meters for FY 24 Achieved total revenue of H3,378.55 crores for FY 24

EBIDTA stood at H569.17 crores for FY 24 as against H443.61 crores in previous year Achieved net profit of H320.30 crores for the year ended

March 31, 2024 EPS stood at H16.17

Consolidated Performance Highlights

Achieved total revenue of H3,600.79 crores for FY 24 as against H3,042.98 crores in previous year EBIDTA stood at H602.74 crores for FY 24 Achieved net profit of H337.92 crores for the year ended 31st March, 2024 EPS stood at H17.06

The Company has declared the highest dividend percentage of 110% on the face value of H2/- per equity share by way of Final Dividend for 2023-24. The Company has been consistently declaring dividends for the past eight years. The Company operates only in a single segment, i.e., the textile segment.

Performance Highlights

(C In Crore)

Particulars	Standalone		Consolidated
	2023-24	2022-23	2023-24	2022-23
Revenue from operations	3,332.31	2,783.59	3,557.07	3,011.55
Other Income	46.24	34.14	43.72	31.43
Tota Revenue	3,378.55	2,817.73	3,600.79	3,042.98
EBIDTA	569.17	443.61	602.74	485.70
Less: Finance Cost	66.19	57.65	69.85	62.38
Less: Depreciation	71.88	62.55	82.58	64.73
Profit before Exceptional Items and Tax	431.10	323.41	450.31	358.59
Profit before Tax	431.10	323.41	450.31	358.59
Tax Expenses / (Credit)	110.80	85.24	112.39	81.81
Net Profit	320.30	238.17	337.92	276.78
Other comprehensive Income (net of tax)	2.07	(15.43)	(1.94)	(40.34)
Total Comprehensive Income	322.37	222.74	335.98	236.44
Basic & Diluted EPS (in C)	16.17	12.03	17.06	13.97

Key Financial Parameters

Particulars	Standalone		Consolidated
	2023-24	2022-23	2023-24	2022-23
Current ratio	1.81	1.78	1.81	1.80
Debt-Equity Ratio	0.46	0.48	0.46	0.49
Interest Coverage ratio	7.51	6.61	7.45	6.75
Net Profit Margin (%)	9.61	8.56	9.50	9.19
Return on Net Worth (%)	16.80	14.26	17.41	16.36
Operating Profit Margin (%)	14.59	13.45	14.32	13.77
Inventory Turnover Ratio	2.84	2.57	2.7	2.39
Debtors Turnover (Days)	62	68	52	58

Note: There is no variance higher than 25% on a Y-o-Y basis.

Internal Control Systems and Their Adequacy

The Companys well-established internal control systems ensure the achievement of its operational, compliance and reporting objectives. The Company has suitable policies and procedures commensurate with its current size and future growth. A broader internal controls and external audits system has been defined and deployed to effect continuous improvements and protect the business from potential vulnerabilities. Policies and procedures play a critical role in the operationalisation of internal controls. The Company also appropriately uses its systems and various applications to put checks and controls in place to strengthen this internal control framework. Further, the Company has embarked on a digital transformation journey and is in the process of migrating to SAP S/4HANA as a strategic step that can significantly enhance internal control systems. All such internal controls and their adequacy, financial and risk management policies, significant audit findings and compliance with accounting standards are regularly reviewed by the Audit Committee of the Board of Directors.

Outlook and Strategy

Despite a challenging economic and geopolitical environment, the Company maintain a profitable growth trajectory. Retail sales in the U.S. market have remained resilient and almost returned to pre-COVID levels despite higher inflation and borrowing costs, driven principally by consumer spending and the growing influence of e-commerce. Looking ahead, we anticipate sustained demand due to easing inflation and likely interest rate cuts, solidifying our leadership position in the global home textile bed linen market. The home textiles market is strong, driven by global demand from the hospitality and residential sectors. With the acquisition of the iconic Wamsutta brand, a stalwart in the American market for over a century and the expansion of our licensed brand portfolio with Fieldcrest and Waverly, we are strategically positioned to derive higher contribution. The potential of the Wamsutta brand to add revenues over the next 3 to 4 years is substantial, with half of this anticipated from the bedding segment and the remainder from complementary home products like rugs, towels, curtains, windows, etcetera.

We have achieved a significant milestone by installing a 9.3-megawatt solar power generation unit in Bhilad, Gujarat. This strategic move will help the Company achieve its commitment to curb greenhouse gas emissions and Bhilad units operations to be powered by renewable energy up to 90% of its requirements.

Human Resources

The Company places paramount importance on the calibre of its workforce, recognising it as the cornerstone of success. Dedicated to empowering employees with the requisite skills to adapt to ever-evolving technological landscapes seamlessly, the Company fosters a culture of continuous learning and growth.

The Human Resource (HR) team is at the heart of this commitment and is entrusted with nurturing and retaining the Companys intellectual capital within the dynamic textile industry. With a steadfast focus on safety, the Company conducts comprehensive audits of its facilities to ensure the well-being of employees. Furthermore, plant safety committees have been established to diligently monitor and address safety concerns.

Central to its ethos is cultivating a supportive and rewarding work environment where merit is celebrated, and healthy workplace culture is actively promoted. As of 31st March 2024, the Company boasted a workforce of 3,626, supplemented by 3,816 personnel on contractual arrangements.

Risk and Concerns

Indo Counts approach to risk strategy is anchored in a well-defined risk appetite, meticulously calibrated against a spectrum of risk criteria. These criteria, shaped by sector-specific dynamics, available liquidity, and targeted earnings within acceptable volatility thresholds, serve as guiding beacons for operational decisions.

At the core of the Companys risk management ethos lies a comprehensive framework that spans strategic planning and day-to-day operations. Proactively identifying, assessing, and mitigating risks, this framework transcends conventional boundaries, engaging key managers across the organisation.

A structured monitoring mechanism operates at unit and company-wide levels, facilitating the prompt identification of new risks. These risks are methodically categorised based on their potential impact and probability, then assigned to select managers who oversee their management with tailored mitigation strategies.

In a commitment to transparency and robust evaluation, Indo Count maintains a dedicated Risk Management Committee entrusted with orchestrating the risk management architecture. Furthermore, the efficacy of the risk management framework undergoes rigorous annual scrutiny by the Audit Committee, acting on behalf of the Board, ensuring continual refinement and alignment with evolving business landscapes.

Major risks hovering over the Companys business include: Geopolitical tensions like trade war between major economies, restrictive trade policies and sharp fluctuations in currency.

Inflation is expected to remain elevated, driven by commodity price increases, which will also add pressure on margins.

Reduced purchasing power may result in significant shifts in consumer behaviour, negatively impacting the textile market.

Any significant fluctuation in the raw material prices.

To mitigate these risks, the Company hedges its currency besides taking appropriate risk mitigation measures.

A detailed list of principal Risks and their mitigation is forming part of this Annual Report.