<dhhead>Management Discussion and Analysis Report</dhhead>
Structure and Development of the MMF Industry
The man-made fibre (MMF) industry mainly comprises polyester and viscose. While polyester accounts for almost 77.5% of the share, viscose holds the remaining share. The MMF industry in India is on the rise, and the country has been predominantly a hub of cotton textiles. As the global focus shifts towards MMF, the Indian government recognises the potential growth and employment opportunities in the domestic MMF sector. MMF is now the preferred choice among weavers and spinners in the country to stay cost-competitive, contributing about 100% of non-cotton and blended fabrics. MMF holds an advantage against natural fibres like cotton in India for being reliable even during unpredictable weather conditions. With the potential for growth and employment in the MMF sector, the Indian Government has taken multiple initiatives to fuel the MMF industry. These initiatives include the Production Linked Incentive (PLI) Scheme for textiles with an approval of 10,683 Crore over five years. Aiming to boost the production of MMF apparel, MMF fabrics, and technical textile products in India, the scheme is to foster the overall growth of the textile industry. The PM Mega Integrated Textile Region and Apparel (PM MITRA) scheme aims to create an integrated textile value chain, including spinning, weaving, processing/dyeing, and printing for garment manufacturing under the same roof. The
Indian Government has approved an outlay of 4,445 Crore for a period up to 2027-28.
Outlook
India is the second largest producer of MMF textiles after China, producing all kinds of synthetic fibres, including polyester, viscose, nylon, or acrylic. From curtains to drapes to interior blinds or tarpaulins, the demand for MMF products has driven the rise of the MMF industry. Meanwhile, India will likely see a 75% increase in exports of MMF textiles, reaching around $11.4 billion in 2030, bolstered by several government initiatives, such as the Production
Linked Incentive (PLI) Scheme and free trade agreements with the UAE and Australia. Additionally, the Indian Government launched the scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) to boost export goods, including MMF, removing anti-dumping duty since February 2020 on purified terephthalic acid (PTA), a critical raw material to produce MMF and yarn. The trend for man-made fibre began recently in India following the skyrocketing cotton prices. As cotton crops were to hit a 15-year low in FY 2023-24, prices increased, and the demand for MMF textiles in the domestic market grew. Amid this, Chinese exporters are increasingly dumping cheap MMF in India. There has been a rise of 50% in the MMF textiles coming to India from China in the last four years. The Government of India has supported the MMF industry by putting quality control order (QCO) norms and requiring BIS certification for imports of polyester staple fibre (PSF), partially oriented yarn (POY) and fully drawn yarn (FDY) to control dumping of such products at unfair prices.
Opportunities and Threats
The MMF industry in India offers dynamic opportunities with skilled labour, cheaper raw materials, and a growing demand for synthetic fibres. Indias MMF market will likely grow but on a slow scale. The domestic market is facing a significant crisis due to the rising imports of MMF and higher domestic prices, leading to Indian manufacturers struggling with competitive prices. Textile hubs in Ludhiana, Surat and Erode have been struggling with large-scale dumping of MMF from the Chinese market. Reportedly,
MMF imports have nearly doubled in the last three years, posing a severe threat to a sector valued at about $60 billion. However, the Government of India recently supported the MMF industry by fixing QCO norms requiring BIS certification and lowering the import price of a few knitted fabrics. This impact is likely to be significant on the Companys product segments and will improve demand positions and operational margins.
About the Company
We have been one of the known players in the evolving polyester industry in India for the last three decades, with a state-of-the-art integrated manufacturing complex at Butibori near Nagpur, Maharashtra. Our Company is proud to be one of the nations largest dedicated polyester manufacturers with a niche in unmatched quality products. We offer a wide range of polyester products such as polyester staple fibre (PSF), partially oriented yarn (POY), draw texturised yarn (DTY), fully drawn yarn (FDY), and polyester chips. We have several technical collaborations with technology leaders across the globe, including Japan, Germany, and the US.
With a customer-focused approach, our Company prioritises high-quality standards and innovative business practices. We have a strong global presence across 35 countries worldwide. The Company has ventured into a new product segment, i.e., bottle grade pet resin of 650 tonnes per day installed capacity w.e.f. June 02, 2023, using the expertise of our principal, Indorama Ventures Public Company Limited, Thailand, who are number one in said product segment globally. We are ramping up our bottle-grade polyethylene terephthalate (PET) resin production to capture the domestic market extensively in a phased manner to make the Companys operations more sustainable to market volatilities in our product segments.
Our Financial and Operational Performance Corporate Strengths
With a legacy of more than three decades, we boast an annual capacity of 6,72,000 tonnes at our production facility in Butibori, Maharashtra.
Our manufacturing unit benefits from their strategic locations, accessible nationwide.
Our integrated facility enables us to be the most cost-effective producer.
Our robust quality and process management enables us to deliver best-in-class quality products.
As a tech-led, we have streamlined operations with modern equipment.
We are proud to be a dominant player in the domestic as well as international markets.
We foster long-term relations with our loyal clients.
We benefit as the subsidiary of Indorama Ventures Public Company Limited (IVL) in technology, finance, operations management bandwidth.
Proven Legacy: With more than three decades of experience, we boast an integrated production facility in
Maharashtra, with an annual capacity of 6,72,000 tonnes. Our diverse product range includes polyester stable fibre, polyester filament yarn, draw texturised yarn, fully drawn yarn, polyester chips and bottle added grade PET resin during the year.
Nationwide Accessibility: Our manufacturing unit benefits from a strategic location in the centre of India ensuring ) efficiency, in meeting the demand across the country. )
Cost-effective Operations: Our integrated facility ) maintain cost efficiency and competitivenessinthemarket ) )
Best-in-class Quality and Processes: We consistently and efficiently deliver high-quality goods via our robust quality and process management systems.
Technological Expertise: Our Company has streamlined cost-competitive operations by investing in state-of-the equipment, improving the overall quality of our products.
Global Presence: We are a dominant player in India and enjoy a significant presence overseas, with a footprint in Asia, Europe, Africa, and the US.
Enduring Client Relationships: We have forged long-standing ties with our loyal clients worldwide, which testify to stability and credibility of our products.
Dependable Parentage: As a subsidiary of Indorama Ventures
Public Company Limited (IVL), a prominent player in the bottle-grade pet resin and fibre industry, our Company leverages shared synergies in technology, finance, and operations our advantage.
Production Performance Production Data
Product (TPA) |
FY 2024 |
FY 2023 |
PSF |
157,361 |
207,176 |
Polyester, Filament Fibre |
35,938 |
44,979 |
(Net of Captive) |
||
DTY |
81,510 |
95,618 |
Polyester Chips |
79,950 |
13,543 |
Total (Net of Captive) |
354,759 |
361,316 |
Particular |
FY 2024 |
FY 2023 |
Total income |
3,716.76 |
3,930.79 |
EBITDA |
1.78 |
73.00 |
PBT |
(141.66) |
(19.27) |
PAT |
(141.66) |
(19.27) |
Book value per share ( ) |
16.63 |
22.09 |
Earnings per share ( ) |
(5.43) |
(0.74) |
Key Ratios
Particular |
FY 2024 |
FY 2023 |
Debtorsturnoverratio |
15.72 |
21.75 |
Inventoryturnoverratio |
6.14 |
6.41 |
Interestcoverageratio |
(0.5) |
1.44 |
Currentratio |
0.65 |
0.85 |
Debt-equityratio |
2.31 |
1.15 |
Operating profit margin (%) |
0.05 |
1.85% |
Net profit margin (%) |
(4.01)% |
(0.49)% |
Risks and Concerns art Our Company has established a robust risk management system, which is essential for achieving our business objectives and ensuring sustainable growth. To manage risks transactionally, we have adopted a decentralised risk management approach. By managing risks effectively, we can identify, evaluate, and control potential threats to our Companys capital and earnings, including financial uncertainties, legal liabilities, technical challenges, the strategic management failures, and accidents. We address the entire spectrum of risks by relying on a comprehensive risk management methodology and framework.
Significant Risks and Mitigation Measures
to Risks |
Mitigation Measures |
Cost Risk: |
|
The cost of raw materials for polyester production is subject to change due to fluctuations in suppliers as much as possible crude oil price, posing a risk to the overall production cost. |
We source our primary raw material, such as PTA, from local to reduce price volatility and transit time. |
We engage in vendor renegotiation and explore alternative procurement options to reduce the raw material cost. |
|
Our pricing policy is synchronised with public raw material price indices. |
|
Quality Risk: Any decline in product quality could harm our reputation. |
The implementation of rigorous quality control measures and reliable technological support plays a crucial role in upholding the output quality. |
Our quality standards adhere to ISO 9001:2008 certification. |
|
We have a well-equipped quality control laboratory that leverages state-of-the-art technology and software to deliver high-quality products consistently. |
Employee Risk: An inability to attract and retain talented employees could restrict our growth. |
We follow a standardised and merit-based recruitment process that relies on a well- organised and accurate selection approach to ensure fairness and impartiality. |
Our employee retention strategy revolves around objective evaluation methods and performance appraisals that eliminate bias. |
|
We offer incentives to motivate and retain talented employees, including awards and recognition. |
|
We aim to cultivate a positive work environment and promote staff engagement and overall job satisfaction. |
|
Technological Risk: Technological obsolescence can harm our operational performance. |
We have established numerous technological collaborations with leading technology firms across the globe. |
Our commitment to reengineering and continuous improvement is crucial to maintaining our competitive edge. |
|
We prioritise ongoing investment in technological advancements. |
|
We monitor operations closely to ensure smooth functioning. |
|
Competition Risk: We face high business risk from our competitors in the market. |
Building customer trust,expanding our customer base, and meeting unique demands are critical focus areas. |
We aim to offer a broad range of value-added products to a large customer base. |
|
Forex Risk: Fluctuationsin values across the globe pose a significant challenge for us. |
We manage currency fluctuations by balancing export receipts and import payments. |
To mitigate currency volatility risk, we purchase forward contracts based on our requirements and assessments. |
Power Generation and Sourcing
In June 2020, we discontinued power generation at our captive cogeneration facility to transition to sourcing all required power from the state distribution company (DISCOM). However, we maintain diesel generators (DGs) in standby mode as a backup power source to meet critical power requirements in during an outage at the DISCOM. We constantly monitor power consumption internally and externally to identify ways to reduce costs.
Internal Controls Systems and their Adequacy
We have an effective internal control system that ensures the effectiveness of our systems, processes, and controls. An independent agency and an internal enterprise risk management team conduct an internal audit, covering all major areas and processes per the managements review plan. We review the compliance of standard operating procedures and management-approved policies and identify improvement areas. The internal audit process checks if all systems and processes are appropriate for the size and structure of the business. Adequate internal control systems are in place to protect your Companys assets by promptly identifying and mitigating risks. The internal audit report is reviewed with the management and Audit Committee members to monitor the current systems and take corrective measures to strengthen the control measures.
Statutory Compliance
The Company Secretary and Compliance Officer reviews all our units and declares our adherence to relevant statutes, including SEBI regulations, the Companies Act 2013, and other applicable laws, at every Board Meeting. They ensure compliance with these regulations.
Human Resources and Industrial Relations
Our accomplishments are attributable to our employees talent, skills, quality, and experience. We have implemented a structured performance management programme to enhance workforce engagement and retain the best talent in the Company. We also offer our employees growth opportunities within our organisation.
We believe in cultivating a collaborative and pleasant working environment and maintaining transparency.
Safety, Health and Environment
Our sustainability depends on effective measures for safety, health, and environmental concerns. We strive to showcase environmental and social responsibility across all our operations, aiming to positively impact communities, including employees, the public, and the environment. Our safety, health, and environmental goals include complying with all industry-related laws, and we believe in shared responsibility for adhering to these regulations throughout the organisations hierarchy. We hold the ISO 45001:2018 certification for occupational health and safety
(OH&S) management and have established an OH&S system and policy to ensure stringent compliance.
Fire and Safety currency
We adhere to all the legal compliance requirements outlined in the Factories Act 1948, Maharashtra Factories Rules 1963, and
Maharashtra Fire Prevention and Life Safety Measures Rules.
Our management continuously strives to educate and raise awareness awareness about fire and safety among employees, their family members, and contractor workers.
There were no significant fire incidents or fatalities in the financial year 2023-24. Fire audits were conducted on July 27,
2023 and January 27, 2024, as mandated by the Maharashtra
Fire Prevention and Life Safety Measures (Amendment) Act,
2023. During the year, we covered the following topics under our fire and safety training: a) First aid training b) Golden safety rules c) Safety training for project employees and d) Incident investigation procedure Apart from the above, we started a behavioural safety culture initiative for all employees. The Company has a comprehensive on-site emergency management plan to handle any emergency within and outside the plant premises, which is regularly updated.
Health and Safety
Maintaining high health and safety standards has always been our topmost priority and it is an integral part of our operations. Our Butibori plant houses a well-equipped health centre staffed with highly skilled doctors and nurses, alongside an ambulance and other medical facilities, to ensure the availability of medical assistance to employees, their families, contractors, and the public at all times.
Our health centre also conducts regular employee health checks and provides advice on health, diet, and exercise. Apart from this, first aid boxes have been provided strategically across the plant, periodic medical examinations are conducted for all employees, and health awareness lectures are delivered regularly.
Environment
Our mission is to conserve the environment, and every operation is guided by advanced protection measures. We limit pollution at the source during various stages, including treatment and disposal, and emphasise efficient operations. We maintain environmental balance, with solid and hazardous waste laws enforced for limited effluent discharge and increased water recycling. We actively seek ways to minimise our carbon footprint.
Information Technology
Weimplementedseveraldigitaltransformationinitiatives,including rolling out the SuccessFactors for eligible staff and configuring and integrating. Our Wholly Owned Subsidiaries, Indorama Yarns Private Limited and Indorama Ventures Yarns Private Limited, into the SAP ERP central component (SAP ECC) setup. We have cloud-based O365 suite to enhance user collaboration and ease of use and implemented MFA-based authentication for VPN access to improve security. Furthermore, we have an asset management system for software license management and compliance and implemented a cloud backup solution for critical application data.
Information technology general controls (ITGC) and statutory audits were effectively managed, with gaps addressed and closure within defined timelines. We reinforced the infrastructure, including servers and networks, to improve security and align with STCP audits and requirements.
Cautionary Statement
The Companys management is responsible for the financial statements in this report, which follow Indias accounting principles. Statements in this management discussion and analysis section that describe the Companys objectives, plans, and expectations may be considered forward-looking statements.
The management has attempted to identify such statements using phrases like anticipate, estimate, expect, project, intend,
plan, and believe. However, such statements are subject to known and unknown risks, and actual results may differ due to changes in the political and economic environment, tax laws, litigation, and other factors. The management cannot guarantee that these statements will be realised and has no commitment to update them publicly.
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