jet knitwears ltd share price Management discussions

ECONOMIC OUTLOOK

GLOBAL:

The global economic outlook for the year 2022-23 presented a mix of hope and challenges on the path to recovery from the COVID-19 pandemic. Following the unprecedented downturn in2021, the global economy has shown signs of improvement, but the journey to a full rebound remainsuncertain.

During the year 2022-23, the worldseconomic growth witnessed a recovery from the setbacks caused by the COVID-19 pandemic. Advanced economies regained momentum as pandemic-related restrictions ease. This rebound lead to a moderate global economic growth rate, with emerging markets and developing economies also contributing to the overall expansion.

One of the primary challenges faced during this period was the ongoing struggle with inflation. As economies reopen and demand surges, supply chain disruptions and rising input costs lead to inflationary pressures. Central banks faced the dilemma of balancing economic recovery with inflation containment, potentially resulting in adjustments to monetary policies that impacted borrowing costs and investment decisions. Supply chain disruptions, which emerged during the pandemic, persisted as economies navigate post-pandemic challenges. Shortages of critical components, raw materials, and transportation bottlenecks hampered production capacities and contribute to higher costs for businesses.

Additionally, debt burdens and financial vulnerabilities pose significant risks to the global economic landscape. Public debt as a ratio to GDP soared across the world during COVID-19 and remain elevated, posing a growing challenge for policymakers, particularly as real interest rates are risingacross the world. Furthermore, geopolitical tensions (Russia-Ukraine War) and trade disputes between major economies had disrupted global trade and investment flows, affecting overall economic growth. Cooperation and coordination among nations will vital to resolving such issues and promoting stability in the international economic landscape.

While the economic recovery appears promising, uncertainties surrounding global economy could also cast a shadow on growth prospects. The baseline forecast is for growth to fall from 3.4percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023 In conclusion, the global economic outlook for 2022-23 showed potential for growth, but it wassubject to risks and uncertainties. With concerted efforts from governments, central banks, and international institutions, it is possible to navigate the certain challenges and lay the groundwork for a resilient and equitable global economy in the years to come.

(Source: Global Economic Outlook, IMF)

INDIAN:

During the fiscal year 2022-23, the Indian economy faced several challenges that significantly impacted its growth trajectory. These challenges were largely a result of the lingering effects ofthe COVID-19 pandemic, coupled with various d omestic and global factors. However, the demonstrated resilience and initiated measures thatled to a gradual economic recovery.

One of the key challenges faced by the Indian economy was the uneven pace of recovery across sectors. While certain industries like information technology and pharmaceuticals witnessed robust growth due to the increased demand for digital services and healthcare products; others, such as tourism, hospitality, and small manufacturing businesses, continued to struggle under the weight of pandemic-induced market slump and reduced consumer spending. The second major challenge was the surge in inflation rates. Rising fuel prices due to Russia Ukraine War, supply chain disruptions, and increased transportation costs put upward pressure on consumerprices. As a result, the cost of living rose, affecting the purchasing power of the average citizen and leading to potential social and political ramifications The Indian Rupee weakness against the US Dollar alsoadded to inflationary pressure.

To address these challenges, the Indian government introduced a combination of monetary and fiscal policies. Additionally, the government launched various stimulus packages and infrastructure projects to spur economic activity and create job opportunities. Moreover, the government alsofocused to attract foreign investments and encourage domestic manufacturing.Initiatives like the Production-Linked Incentive (PLI) scheme aimed to enhance Indias manufacturing capabilities and reduce dependency on imports.

As a result of these efforts, the Indian economy gradually started to show signs of recovery by the end of 2022-23. The Indian economy grew by 6.8% in 2022- making it the fifth largest economy globally in the terms of nominal GDP.Despite global volatility, GDP growth rates improved, inflation stabilized, and unemployment began to recede. Theeconomys resilience, combined with the implementation of strategic policies, played a crucial role in navigating the challenges and setting a path towards a more sustainable and inclusive recovery in the following years.

INDUSTRY STRUCTURE AND DEVELOPMENT

Textiles & Apparels

Indias textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated mills sector at the other end. The fundamental strength of the textile industry in India is its strong production base of a wide range of fibre/yarns from natural fibres like cotton, jute, silk and wool, to synthetic/man-made fibres like polyester, viscose, nylon and acrylic. The Indian textile and apparel industry is highly diversified with a wide range of segments ranging from products of traditional handloom, handicrafts, wool, and silk products to the organized textile industry. The organized textile industry in India is characterized by the use of capital-intensive technology for the mass production of textile products and includes spinning, weaving, processing, and apparel manufacturing.

The global textile market size was valued at USD 1,695.13 billion in 2022 and is anticipated to grow at a compound annual growth rate (CAGR) of 7.6% in terms of revenue from 2023 to 2030. India is the 5th largest producer of textiles in the whole world with a market size of nearly $22 billion, which the government hopes to build up to $300 billion by 2047.

This industry globally as well as domestically serves as the platform offering a huge number of employment opportunities to eligible people. Indias textiles industry has around 4.5 Crores employed workers including 35.22 lakhs handloom workers across the country.

Indias readymade garment exports to see a CAGR of 12-13% and will surpass $ 30 Bn by 2027. Indias Textiles Exports were highest ever in FY 2021-22, crossing US$ 44 Bn. The exports comprised of apparel exports at $12 Bn; home textiles exports at $4.8 Bn; fabric exports at $4 Bn; yarn exports at $3.8 Bn; fiber exports at $1.8 Bn and others at $2 Bn. In addition to this, the domestic apparel & textile industry contributes approx. 2% to the countrys GDP & 7% of industry output in value terms. The share of textile, apparel and handicrafts in Indias total exports was 11.4% in 2020-21. India stands as the 3rd largest exporter of Textiles & Apparel in the world.

India is a largest cotton producer (23%) in the world and has the highest area under cotton cultivation (39% of world area). Cotton production in India is projected to reach 7.2 million tonnes (~43 million bales of 170 kg each) by 2030, driven by increasing demand from consumers. In F.Y. 2022-23, exports of readymade garments (RMG) cotton including accessories stood at US$ 7.68 billion till January 2023. It is expected to surpass US$ 30 billion by 2027, with an estimated 4.6-4.9% share globally. Natural fibres are regarded as the backbone of the Indian textile industry, which is expected to grow from US$138 billion to US$195 billion by 2025. Further India is also the 2nd largest producer of silk in the world and 95% of the worlds hand-woven fabric comes from the country itself. India has also produced 90 Lakh bales of raw jute in FY 2021-22.

India has also become the second-largest manufacturer of PPE in the world. More than 600 companies in India are certified to produce PPEs today, whose global market worth is expected to be over $92.5 Bn by 2025, up from $52.7 Bn in 2019. India also enjoys a comparative advantage in terms of skilled manpower and in cost of production, relative to major textile producers.

In order to attain robust growth in the Indian Textile and Apparel Industry, the Government of India has introduced multiple schemes like Scheme for Capacity Building in Textile Sector (SAMARTH) to address the skilled manpower requirement across textile sector and this scheme was formulated under the broad policy guidelines of “Skill India” initiative and in alignment with the framework adopted for skilling programmes by Ministry of Skill Development and Entrepreneurship. The scheme is approved for implementation till March, 2024.

Additionally, creation of National Technical Textiles Mission for a period of 4 years (2020-21 to 2023-24) was approved with an outlay of Rs.1480 Crores for developing usage of technical textiles in various flagship missions, programmes of the country including strategic sectors.

The Production Linked Incentive (PLI) Scheme is to promote production of MMF apparel, MMF Fabrics and Products of Technical Textiles in the country to create 60-70 global players, attract fresh investment of Rs. 19,000 Crores approximately and generate almost 7.5 Lakhs new employment opportunities.

Further, to attract investment for ‘Make In India initiative and to boost employment generation through setting up of 7 (Seven) PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks in Greenfield/Brownfield sites with world class infrastructure including plug and play facility with an outlay of Rs. 4445 Crores for a period of seven years up to 2027-28. Scheme for Integrated Textile Parks (SITP) provides support for creation of world-class infrastructure facilities for setting up of textile units.

Integrated Processing Development Scheme (IPDS) facilitates the textile industry to meet the required environmental standards and to support new Common Effluent Treatment Plants (CETP)/ upgradation of CEPTs in existing processing clusters as well as new processing parks especially in the Coastal Zones. Special Package for Textile and Apparel sector: Rs. 6000 Crore package was launched in June 2016 to boost employment and export potential in the apparel and made up segments.

Innerwear Market Segment

Rapid urbanization across India is one of the key factors driving the growth of the market. With the increasing female workforce participation and rising expenditure capacities, consumer preference is shifting toward trendy intimate wear, sports, bridal, and regular lingerie products. Over the years, innerwear had only been considered as an essential commodity, but there has been a significant shift in trend due to the increasing fashion consciousness among the millennials; it transformed into a fashion statement. As a result of this shift, industry players have placed greater emphasis on widening its innerwear product range both mens as well as womens. The growing availability of premium, customizable, and economical lingerie variants, coupled with the extensive celebrity collaborations and brand promotion activities on social media to expand the consumer base, are primarily driving the India innerwear market.

The global innerwear market has been bifurcated in terms of product type, material type, end user, age group, category type, distribution channel, and region. According to product type, the market has been segregated into top innerwear, bottom innerwear, and shapewear. Over the last few years, the premium innerwear market has also been gaining significant traction with the entry of global players in collaboration with Indian brands. Higher discretionary spending, rise in number of working women, and the increasing fashion consciousness among the populace, especially the millennials, and the increasing number of middle-class households is projected to catalyse the demand for the inner wear industry. Moreover, the increasing adoption of organized retail channels is providing a thrust to the lingerie market growth. Product manufacturers and vendors are widely utilizing e-commerce platforms to provide premium-quality branded lingerie to consumers with enhanced convenience.

Additionally, various product innovations, such as the integration of online retail platforms with artificial intelligence (AI) and big data solutions, are acting as other growth-inducing factors. These solutions enable the product manufacturers to monitor the shopping habits of the consumers and provide personalized experiences to the shoppers. In line with this, the launch of innovative nursing brassieres and seamless briefs is also contributing to the growth of the market. Other factors, including extensive celebrity collaborations and brand promotional activities on social media to attract a wider consumer base, along with the increasing preference for lingerie products among males, are anticipated to drive the market toward growth. We expect the India lingerie market to exhibit a CAGR of 18% during 2022-2026.

OPPORTUNITIES AND THREATS

Opportunities.

The Indian government has several portals for the welfare of laborers. Udyam, NCS, e-Shram, and ASEEM are the government portals that help people in finding employment in various MSMEs. All these portals are now interlinked to help business owners in finding manpower.

The Union Finance Minister has emphasized the development of infrastructure and the setting of centralized Effluent treatment plants for the textile industry under IPDS and CETP. So, funds are allotted in the current budget for these purposes, for the best interest of this industry in India. Production-linked incentive (PLI) scheme launched for promoting the apparel industry has attracted investment of Rs. 19,000 Crores approximately and generate almost 7.5 Lakhs new employment opportunities.

With regard to ‘Make In India initiative and to boost employment generation through setting up of 7 (Seven) PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks in Greenfield/Brownfield sites with world class infrastructure

Increase in fashion and brand consciousness making consumers more aspirational and discerning; increasing urban women population and women corporate workforce has proved to be beneficial for women segment of apparel market.

Today with technological advancements, we notice a wide array of comfortable fabrics being used. From nylon to organic cotton, spandex blend cotton fabric to modal and from micro-fiber to more durable material. This has led to product innovations in the industry.

Threats & challenges

The post pandemic effects and multiple global as well as domestic factors have slowed down the commercial activities. The lack of funds to buy raw materials for production was another drawback in this industry. Political tensions or militant activities in some places hinder the smooth operations of the textile industry there. Many textile companies face severe labor shortages and a lack of regular transportation if their factories are located in remote places. The inflation in the Indian economy results in frequent demands among laborers for salary hikes. Thus, industry owners do not find the means to expand their business and compete with global textile leaders from other countries. The high cost of power in India is another hindrance to textile production. Most modern machines are power-driven, which raises the overall production costs for business owners. Fluctuating prices of the raw materials such as cotton, yarn, and chemicals, and thereby raising price of the finished products not be viable in a competitive market. Ever changing fashion needs of consumers put industry players in a pressure to constantly adapt emerging fashion trends in the markets. Several International apparel brands are entering into India as the country is emerging as one of the largest apparel market in the world and on the other hand new start ups are entering market with aggressive marketing and discounts.

PRODUCT WISE PERFORMANCE

The company is engaged in the business of manufacturing garments. Therefore there is no separate reportable segment. However, your Company have been marketing products through strong brands “JET” and “LYCOT”. “JET” is 36 years old whereas “LYCOT” is 16 years old. Your Company believes in providing those products to our consumers that are Skin Friendly and Anti-Bacterial. Your Company markets its products through various brands like “Lycot Australia”, “Jet”, “Jet Eco”, “Fresh- Long”, “Boski” and “Take- off” . Various product manufactured by our Company are Vest, Underwear (including Boxers, Briefs & Trunks), Brassiere, Panties, Socks, T-shirts, Thermals, Lowers, etc. Our Company caters to everyday range of comfortable Innerwear, Socks, T-shirts and Thermals which are available in superior cotton fabrics, vibrant styles and are ideally suited for men and women. Product wise Performance during the year is as under:

S.NO PRODUCT WISE DETAILS	2022-23	2021-22
1. Hosiery Products	2942.01	1422.67
2. Winter Garments	265.04	2	40
3. Ladies Garments	319.52	3	18
4. Cotton Cloth	86.40	2069.95
5. J eans	37.39	4
Total	3		650.35

RISK AND CONCERN

The Company has robust risk management procedures to identify and evaluate risks on an ongoing basis. The Company believes that risks that are well managed can create opportunities, whereas risks that are incorrectly managed could lead to financial and reputation loss. Appropriate steps are taken in consultations with all concerned to mitigate such risks. The following are some of the key risks as perceived by the Company:

Availability of Labour

The ability to retain existing talent and attract new talent assumes crucial importance. The industry is growing at a fast pace, in a highly labour intensive sector and demand for experienced and trained manpower is outstripping supply. The Company has created long term plans with the objective of motivating employees to create a sense of “belonging” and a ‘feel good environment. The company is also aggressively taking steps to monitor and improve productivity, which will mitigate the impact of labour and material cost increases to some extent.

Economic Uncertainty:

Slow economic growth in the international or national economies and uncertainties regarding future economic prospects, among other things, could affect consumer discretionary spending and therefore can impact business. Through brand strengthening and expanding presence across the globe the Company endeavours to mitigate the impact of this risk as far as possible.

Increase in Input and Labour costs:

The availability of raw materials at reasonable rates is one of the main concerns of the company. However the company is confident that increases in raw material cost, if and when they occur, can be passed on to consumers because of the strong pricing power of its brands. The company is also aggressively taking steps to monitor and improve productivity, which will mitigate the impact of labour and material cost increases to some extent.

OUTLOOK

The future of the textile market and the innerwear category appears promising domestically as well as globally. In anticipation of growing demand, the company has substantially expanded its installed capacity. Your Company operates from Kanpur with having dealers/vendors in Uttar Pradesh. Enhancing our presence in additional region will enable us to reach out to a larger population. Further, our Company believes in maintain long term relationship with our customers by adding value through innovations, quality assurance and timely delivery of our products which will ultimately enhance our sales. It has been a long and motivating journey towards this pinnacle of success and no efforts are being spared to further strengthen the accomplishments of the company.

INTERNAL CONTROL SYSTEM AND ADEQUACY

Management has overall responsibility for the Companys internal control system to safeguard the assets and to ensure reliability of financial records. The Company has an adequate internal control system commensurate with its size and nature of its business. The Company has a detailed budgetary control system and the actual performance is reviewed periodically and decisions taken accordingly. The Company also conducts regular internal audits to test the adequacy and efficacy of its internal control processes and bring out any deviation to internal control procedures.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

In order to achieve operational excellence and maintain a competitive edge, the Company invests in building and nurturing a strong talented pool by instituting best practices with respect to its employees. The Company makes substantive and sustained efforts towards building an eco-system which promotes the development and advancement of all its employees and employees feel a sense of belonging to the Company and camaraderie with their team, and aspire for individual excellence while contributing to achieve departmental objectives. The Company has strength of about 57 employees as on March 31, 2023.

DISCUSSION ON FINANCIAL PERFORMANCE W ITH RESPECT TO OPERATIONAL PERFORMANCE

Our Revenue from operations has decreased from 4092.89 Lacs (F.Y. 2021-22) to Rs. 3650.35 Lacs during the financial year 2022-23. The Depreciation and amortization expense has decreased from 58.42 Lacs (FY 2021-22) to 47.06 Lacs (FY 2022-23). Our Operating, Administrative and other expenses have been decreased from 647.62 Lacs (FY 2021-22) to 582.73 Lacs (FY 2022-23). Net profit has increased from 114.96 Lacs (FY 2021-22) to 121.14 Lacs (FY 2022-23).

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS ALONG W ITH EXPLANATION

In compliance with the requirement of the Listing Regulations, the key financial ratios of the Company along with explanation for significant changes (i.e., for change of 25% or more as compared to the immediately previous financial year will be termed as ‘significant changes), has been provided hereunder:

S.no. Particulars	FY 2022-	FY 2021-	% Variance	Reason for variation of more than 25%
	23	22
(i) Debtors Turnover	2.57	2.50	2.86		-
(ii) Inventory Turnover	1.92	2.34	-18.13		-
(iii) Interest Coverage Ratio	2.81	3.15	-10.84		-
(iv) Current Ratio	2.31	2	2	7	1.44
(v) Debt Equity Ratio	0.77	0.89	-12.44		-
(vi) Operating Profit Margin	7.55%	6.58%	14.80		-
(%)
(vii) Net Profit Margin (%)	3.32%	2.81%	1	8.15
(viii) Return on Net Worth (%)	1 4.89% 1	5	.84%	-6.04	-

CAUTIONARY STATEMENT

Statements in the Management Discussion Analysis describing the Companys objectives, projections, estimates and expectations may be considered as “forward looking statements” within the meaning of applicable securities laws and regulations. The Company cannot guarantee that these assumptions are accurate or will be realized. Actual results could differ materially from those expressed or implied. The Company assumes no responsibility in respect to the forward looking statements herein which may undergo changes in future on the basis of subsequent developments, information or events.

(Sources & References: Ministry of Textiles, Indian Textile Journal, Department of Industrial Policy and Promotion, Press Information Bureau, KPMG Deloitte analysis, Pib, Ibef, fashinza )