Jinaams Dress Ltd Management Discussions

1. Overview of the Economy:

Indias textiles sector is one of the oldest industries in Indian economy dating back several centuries. India‘s overall textile exports during F.Y. 2017-18 stood at US$ 39.2 billion and is expected to increase to US$ 82.00 billion by 2021from US$ 31.65 billion in F.Y.2019 (up to Jan 19).

The Indian textiles industry is extremely varied, with the hand-spun and hand-woven textiles sectors at one end of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The decentralized power looms/ hosiery and knitting sector form the largest component of the textiles sector. The close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles make the Indian textiles sector unique in comparison to the industries of other countries. The Indian textile industry has the capacity to produce a wide variety of products suitable to different market segments, both within India and across the world.

The Textile Sector in India ranks next to Agriculture. Textile is one of Indias oldest industries and has a formidable presence in the national economy in as much as it contributes to about 14 per cent of manufacturing value-addition, accounts for around one-third of our gross export earnings and provides gainful employment to millions of people. The textile industry occupies a unique place in our country. One of the earliest to come into existence in India, it accounts for 14% of the total Industrial production, contributes to nearly 30% of the total exports and is the second largest employment generator after agriculture.

Textile Industry is providing one of the most basic needs of people and the holds importance; maintaining sustained growth for improving quality of life. It has a unique position as a self-reliant industry, from the production of raw materials to the delivery of finished products, with substantial value-addition at each stage of processing; it is a major contribution to the country‘s economy. This paper deals with structure, growth and size of the Indian textile industry, role of textile industry in economy, key advantages of the industry, textile industry export and global scenario and strength, weakness, opportunities and treats of the Indian textile industry.

Opportunities & Threats:

Opportunities:

• Low per-capita domestic consumption of textile indicating significant potential growth.

• Domestic market extremely sensitive to fashion fads and this has resulted in the development of a responsive garment industry.

• Companies need to concentrate on new product developments.

• Increased use of CAD to develop designing capabilities and for developing greater options.

Threats:

• Industry is prone to change in government policies, any material changes in the duty or International prices may adversely impact our financials

• There are no entry barriers in our industry which puts us to the threat of competition from new entrants

• Prices of products are prone to exchange rate fluctuations

• Alternative competitive advantages would continue to be a barrier.

2. Segment-wise or product-wise performance

The Company is presently operational in Manufacturing and trading of Textile Fabrics & Garments. We are engaged in the manufacturing and trading of designer wear of women like Indo-Western, Ethnic wear, Salwarsuits, Lengha Choli etc. and we deal in designer women apparels. We believe that our Company brings the finest collection of Designer like Indo-Western, Ethnic wear, Salwar suits, Lengha Choli etc and we have a unique destination to shop and styles. With our experience in Indian Ethnic merchandise market, we have developed and honed our systems to provide bespoke patterns ranging from traditional designs to even modern contemporary which spell out sheer beauty and class.

Our Company markets products under the brand name "Asmira", "Bahni", "Floral", "Heroine", "Jinaam", "Razah", "Zareen", "Roma", "Tiara" and "Formm". We are both in retail and wholesale business where we provide our designs and satisfy our customers. We serve our customers through a range of channels such as retail and wholesale. We have to acquire fabric and accessories from several suppliers and have worked with them for a long time. We have our own designer team who develops new styles, fits, finishes to meet the latest fashion trends. In a season, the team works on over several designs, out of which a few are picked up to constitute the new season collection. Our Company‘s core competency lies in our deep understanding of our customer‘s buying preferences and behavior across the Indian market. We believe that our strong relationships with suppliers will enable us to continue to grow our business. Due to our relationships with our suppliers, we get quality and timely supplies of fabric and accessories which enables us to manage our inventories and supply quality products on timely basis to our customers and in turn has enabled us to generate repeat business.

3. Outlook

The growth in the economy, the reforms initiated by the Government and the increase outlay on infrastructure spend will lead to greater prosperity and rise in income levels. This will drive growth in disciplinary spends. This bodes well for the branded apparels business. JDL with its investment in key segments, strong brands and distribution network is well equipped to grow strongly in years ahead. In anticipation of growing demand, the Company has substantially expanded its installed capacity.

4. Risk and Concerns

• High Fragmented Industry with large number of small-Size and technologically outdated plants.

• Lack of Trained Manpower and low labour Productivity due to lack of Technological Development.

• High Energy cost and transportation costs are matter of Concern.

• Highly Lobour Intensive Manufacturing Process.

• The US with 12 other countries has challenged almost all of Indias export programmes and filed a complaint at the WTO about Indias export subsidy programmes claiming that it harm its workers.

5. Internal Control Systems

The Company has in place an adequate system of internal control commensurate with its size and nature of its business. These have been designed to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly and the business operations are conducted as per the prescribed policies and procedures of the Company. The Audit committee and the management have reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same.

6. Financial Performance and Operational Performance

During the year, Your Company recorded total revenue of Rs. 14,990.81 Lakhs during the current financial year as compared to total revenue of Rs. 15,422.93 Lakhs in financial year 2017-18 and Profit before Tax for the year 2018-19 stood at Rs. 1093.27 Lakhs as compared to Profit before tax of Rs. 1192.46 Lakhs in financial year 2017-18. Profit after Tax for the current year stood at Rs. 783.27 Lakhs as compared to Profit after Tax of Rs. 782.54 Lakhs in financial year 2017-18.

7. Material Developments in Human Resources

Your Company firmly believes that its human resources are the key enablers for the growth of the Company and important asset. Hence, the success of the Company is closely aligned to the goals of the human resources of the Company. Taking into this account, your Company continued to Invest in developing its human capita and establishing its brand on the market to attract and retain the best talent.

Employee relations during the period under review continued to be healthy, cordial and harmonious at all levels and your Company is committed to maintain good relations with the employees.

8. Significant Changes

9. Return on Networth

F.Y. 2017-18 : 19.73%

F.Y. 2018-19 : 17.25%