The Board of Directors is pleased to share with you the Management Discussion and
Analysis Report for the Financial Year ended on March 31,2023.
COMPANY SYNOPSIS
Jindal Worldwide Limited (JWL or The Company), is Asias largest
fully integrated manufacturer of denim, bottom weights, premium printed shirting, and yarn
dyeing. The Company employs cutting-edge technology in its spinning, dyeing, weaving, and
finishing processes, leveraging its four state-of-the art manufacturing facilities located
in Ahmedabad. JWL offers innovative designs that incorporate the latest trends and employs
only high-quality fabrics to build trust with stakeholders and attract a strong clientele.
The Company strives to cater its products to both domestic and international markets,
aligning with its objective of becoming a leading global denim manufacturer. Recently JWL
has forayed into high growth business opportunities starting with a venture in two-wheeler
electronic vehicles. It is committed to being a resilient organization with a clear
vision, focusing on strengthening its core and emerging stronger.
ANNUAL FINANCIAL PERFORMANCE
JWL has leveraged its strengths, team cohesion, and talented workforce to deliver
high-quality products and consolidate its position as a responsible organization. Despite
the unprecedented challenges faced by the Indian economy, JWL has performed with
exceptional dedication, marking a significant milestone in the Companys history.
During the year under review, the Company achieved a standalone net profit of Rs.
11,411.09 Lacs, while the consolidated net profit after tax was Rs. 11,571.67 Lacs. JWL
also witnessed a rise in its margins in a record-breaking inflationary environment, with
improved per meter realization across the Board. The Company continued to grow its
domestic business with very strong traction.
Details of significant changes (i.e., change of 25% or more as compared to the
immediate previous financial year) in key financial ratios, along with detailed
explanations thereof:
Pursuant to the amendment made in Schedule V of the SEBI (Listing Obligations &
Disclosure Regulations) Regulations, 2015, details of significant changes (on standalone
basis) (i.e., change of 25% or more as compared to the immediate previous financial year)
in key financial ratios and any change in return on net worth of the Company, including
explanations, therefore, are given below:
| Sr. No. |
Key Financial Ratios |
Current Financial Year
(2022-2023) |
Previous Financial Year
(2021-2022) |
% Change between Current
Financial Year & Previous Financial Year |
Detailed Explanation of
Significant Changes |
| 1 |
Debtor Turnover Ratio |
4.34 |
5.96 |
(27.29) |
As per note: |
| 2 |
Inventory Turnover |
8.05 |
9.71 |
(17.10) |
1. The decrease
in these ratios is due to decrease in operations of the Company. |
| 3 |
Return on Capital Employed |
0.15 |
0.16 |
(5.55) |
| 4 |
Net Profit Margin (%) |
0.05 |
0.04 |
26.60 |
| 5 |
Interest
Coverage Ratio |
5.21 |
4.06 |
28.32 |
| 2. The increase
in the ratios is due to increase in profit margin of the Company. |
| 6 |
Current Ratio |
1.83 |
1.72 |
6.66 |
| 7 |
Debt Equity Ratio |
0.92 |
1.12 |
(17.67) |
| 8 |
Operating Profit Margin (%) |
10.19 |
8.22 |
23.96 |
GLOBAL ECONOMY OVERVIEW
The global economy is displaying signs of a steady recovery despite the significant
impact of the conflict between Russia and Ukraine and the Covid-19 pandemic. As economies
gradually reopen, supply chain disruptions are diminishing, and the energy and food
markets, which were previously affected by the war, are stabilizing. Moreover, many
central banks are taking significant and coordinated measures to tighten monetary policy,
with the aim of achieving positive results as inflation approaches its target.
However, despite the improved business environment, the advanced economies are expected
to face a significant slowdown in growth, with a decline from 2.7% in 2022 to 1.3% in 2023
due to the fragmentation in geoeconomics. Conversely, emerging markets and developing
economies exhibit stronger economic prospects than advanced economies, with the average
growth rate projected to reach 3.9% in 2023, with a further increase to 4.2% in 2024.
Global Economic Growth (% Change)
At present, the global trade outlook is facing potential challenges due to renewed
bottlenecks in the supply chain and weaker- than-expected global demand. Moreover, the
intensification of trade protectionism, fragmentation of trade networks, and security
concerns regarding supply chains could exacerbate trade challenges, potentially leading to
a slowdown in trade growth and increase in supply chain disruptions.
(Source: https://www.imf.org/en/Publicatiors/WEO/Issues/2023/04/11/world-ecoromic-outlook-april-2023)
INDIAN ECONOMY OVERVIEW
The Indian economy has successfully returned to its pre-pandemic growth trajectory in
2022-2023. However, India is currently facing the challenge of addressing inflation, which
has been further compounded by the ongoing Russia-Ukraine conflict. Despite these
challenges, the advanced estimates of Economic Survey 2023 continue to project India as
the fastest-growing major economy, with estimated growth rates of 7.0% in 2022-2023.
Buoyed by its strong fundamentals, India has emerged as a significant force in the
global economy, demonstrating remarkable progress over the past decade. It has advanced
from being the tenth-largest economy in the world based on exchange rates to now occupying
the fifth position. Furthermore, India has also secured its position as the third-largest
economy globally in terms of Purchasing Power Parity (PPP). This achievement is attributed
to key reforms that have been implemented, such as liberalization, the reduction of
bureaucratic hurdles and corruption, investments in infrastructure, and increased
accessibility of finance for small and medium-sized enterprises.
India experienced a decrease in its Consumer Price Inflation (CPI) rate to 4.7% in
April 2023, compared to its peak of 7.8% in April 2022. This decline can be attributed to
the global economic slowdown and interest rate hikes, which resulted in a significant
reduction in wholesale price inflation. However, core inflation remained persistent at
around 6%, indicating the ongoing impact of supply shocks experienced during 2022-2023.
Additionally, as demand continues to recover, there has been a noticeable rise in service
inflation.
(Source: https://www.indiabudaet.gov.in/economicsurvey/doc/echapter.pdf)
The textile industry is projected to experience a promising growth trend, with an
anticipated compound annual growth rate (CAGR) of 5.67% worldwide during the period of
2022-2027. This growth is expected to be driven by factors such as increasing population,
rising disposable income and changing fashion trends. As the population increases,
particularly in emerging economies like India and China, the demand for textiles and
clothing is expected to rise further.
The apparel industry has experienced significant growth driven by several factors,
including the increasing disposable income, the rising global population, and the rapid
expansion of e-commerce. The popularity of online shopping has surged due to its
convenience, vast array of options, and lower prices. As a result, the online channel has
witnessed tremendous growth, accounting for 15.9% of the industrys total value, with
specialized online retailers leading the way.
Furthermore, the industry is undergoing a transformation towards sustainable and
eco-friendly practices, which is also contributing to its growth. With consumers becoming
increasingly aware of the environmental impact of clothing production, they are actively
seeking sustainable clothing options. This shift towards sustainability has opened up new
opportunities, particularly in the eco-fashion sector.
Global Textile Market, Forecasted Market size, 2022-2027
(in USD Billion)
(Source: Global Yarn, Fiber, and Thread Market Briefing 2023)
INDIAN TEXTILE & APPAREL INDUSTRY OVERVIEW AND OUTLOOK
India is a significant player in the global textile and apparel industry, ranking sixth
in the world in terms of exports. The technical textiles segment in India is valued at
approximately USD 16 Billion, accounting for approximately 6% of the global market. In
addition, India is the second-largest producer of man-made fibers after China. Major
export destinations for Indian textiles and apparel include the USA, EU-27, and the UK,
which collectively account for around 50% of Indias textiles and apparel exports. The
Indian textile and clothing industry is also a significant employer, with over 45 Million
people employed directly and another 100 Million employed in allied industries, ranking
second in terms of employment prospects.
The textiles and apparel industry in India is a significant contributor to the
countrys economy, accounting for 2.3% of the GDP, 7% of industrial production, 12% of
exports, and 21% of total employment. The industry is dominated by small players, as it is
economically feasible to manufacture apparel at any scale. The availability of skilled
manpower and cost-effective production are among the industrys competitive advantages.
(Source:https://texmin.nic.in/sites/default/files/Fnglish%70Final%70M0T%70Annual%70Report%707077-73%70%78Fnglish%79
0. pdf)
As per a report by IMARC, the Indian textile and apparel industry has achieved a market
size of USD 172.3 Billion in 2022 and will continue to grow at a CAGR of 14.59% from 2023
to 2028, with a forecasted market value of USD 387.3 Billion in 2028. This impressive
growth is attributed to various factors, including the increasing demand for high-quality
clothing and footwear, the Governments implementation of schemes to empower weavers, and
the rising popularity of ethically sourced sustainable materials.
(Source: https://www.imarcgroup.com/indian-textiles-apparel-market#:~:text=The%20lndian%20textile%20and%20apparel%20
market%20was.US%24%20172.3%20Billion%20in%202022.)
2.3% 12%
Contribution to Countrys GDP Contribution to Exports
7% 21%
Contribution to Industrial Production Contribution to Total employment
GOVERNMENT INITIATIVES
The Indian Government is committed to fostering the growth and development of the
textile sector, and has implemented various initiatives to support it, including the
Production Linked Incentive (PLI) Scheme, the Remission of Duties and Taxes on Exported
Products (RoDTEP) Scheme, Make in India, the development of Mega Textile Parks, and the
National Technical Textiles Mission, among others. These measures are designed to
encourage investments in the textile industry and stimulate its growth.
The Indian Government has sanctioned the Pradhan Mantri Mega Integrated Textile
Region and Apparel (PM MITRA) Scheme to establish seven textile parks in
Greenfield/Brownfield sites, with a total investment of Rs. 44.45 Billion over
seven years, up to 2027-2028. PM MITRA aims to enhance the competitiveness of the Indian
textile sector, create more job opportunities, and attract significant investment. The
latest upgradation of the initiative aims to establish a total of 65 textile parks across
the country.
The Scheme for Capacity Building in Textile Sector (SAMARTH) was designed to
address the skilled manpower requirements of the sector. It is closely aligned with the
Skill India program and the Ministry of Skill Development and Entrepreneurships skilling
program framework. The scheme is aimed at enhancing the quality and productivity of the
workforce and has been approved for implementation until March 2024.
Way back in January 2016, the Amended Technology Up-gradation Fund Scheme (ATUFS) was
introduced in India as part of the Make in India initiative to enhance ease of doing
business, create job opportunities, and boost exports. The scheme offers credit-linked
Capital Investment Subsidy (CIS) to textile units (excluding spinning) to acquire
benchmarked machinery, with the ultimate objective of achieving manufacturing excellence
by minimizing environmental impact and defects. The scheme aims to achieve the Zero
effect and Zero defect standard for the textile industry.
The Production Linked Incentive (PLI) Scheme is an initiative to encourage the
production of MMF apparel, MMF fabrics, and technical textile products in India. The
scheme aims to create 60-70 major players in the global market, bring in new investment of
about Rs. 190 Billion and generate nearly 7,50,000 new job opportunities in the
country.
GLOBAL DENIM INDUSTRY AND ITS OUTLOOK
According to market research, the global denim jeans market was valued at USD 64.5
Billion in 2022 and is projected to reach USD 95.2 Billion by 2030, exhibiting a CAGR of
5% during the analysis period of 2022-2030.
The denim market is expected to experience substantial growth in the upcoming years,
primarily due to the increase in urbanization and the growing trend of denim shirts.
Additionally, the growing popularity of stretchable denim jeans that blend cotton with
synthetic materials is expected to contribute significantly to the growth of the denim
market. Moreover, Government initiatives aimed at improving product manufacturing are
expected to further boost the denim markets growth. However, the rise in demand for
cheaper woolen wear may hinder the growth of the denim market during the forecast period.
The rise in disposable income, increased per capita consumption, growing awareness of
clothing suitable for different body types, and the increasing acceptance of casual attire
in the workplace are all contributing to the escalating demand for denim apparel.
Moreover, the rise in spending capacity in developing countries of the Asia-Pacific
region, such as India and China, has led to increased expenditure on personal grooming and
clothing, which has further propelled the growth of the global denim jeans market.
(Source: https://www.researchandmarkets.com/reports/12n6797/denimieans global
strategic business report)
INDIAN DENIM INDUSTRY AND ITS OUTLOOK
India has long been at the forefront of producing high-quality denim fabrics. Recently,
the demand for jeans within the domestic market has been increasing steadily and at a
faster pace than the global average. Over the past few years, the domestic denim market in
India has exhibited an average CAGR of 8% - 9%, and is predicted to reach an estimated Rs.
91,894 Crores by 2028.
With an annual capacity of over 1,600 Million meters, India has the second-largest
installed capacity for denim fabrics in the world, behind China. Of the total capacity for
Indian denim fabric, around 850-900 Million meters are consumed domestically, including
the production of local jeans for export purposes. The remaining fabric is exported to
various countries, including Bangladesh, Colombia, Venezuela, Egypt and Sri Lanka.
In order to enhance their denim manufacturing capabilities, several mills are
strategically investing in spindles. This move enables them to capture additional domestic
and international markets and reduce their dependence on yarn markets. By implementing
this backward integration approach, companies can exercise greater control over the
availability of raw materials and schedule cost-effective manufacturing processes in a
timely manner. It is noteworthy that newer businesses are striving to expand their
operations, while larger and more established mills are focusing on consolidation efforts.
This trend indicates a positive outlook for the denim manufacturing industry in India.
(Source:https://www.financialexpress.com/industry/strong-demand-in-india-quite-supportive-for-future-growth-of-denim-
industry/2949598/)
OPPORTUNITIES Government Initiatives
The Government has launched various support schemes and policies for the textiles
industry to enhance its global competitiveness. These schemes focus on export promotion,
infrastructure development, and technology upgradation, among other areas. These
initiatives aim to provide necessary support to the companies within the textiles
industry, while empowering them to enhance their global competitiveness.
Rising per Capita Fiber Consumption
The demand for eco-friendly fibers has seen remarkable growth, with an increase in
their per capita use. This can be attributed to several factors, such as rising disposable
income of households, changing textile trends, and the global phenomenon of urbanization,
which has led to a higher demand for high-quality fibers and textiles. Additionally, both
consumers and retailers are now seeking a wider range of fibers and yarns to meet their
diverse needs.
Localized Supply Chains
The current disruptions caused by high fuel costs, port bottlenecks, and inflationary
pressures are expected to persist in the near future. These challenges create an
opportunity for fashion companies that have local and integrated supply chains to
strengthen their position by catering to customer demands in their respective regions of
operation.
Sustainable Fabrics on the Rise
To minimize its environmental footprint, the fashion industry is continually striving
to incorporate sustainability into every aspect of its business. The implementation of
closed-loop recycling is a significant stride towards this goal, as it reduces the
extraction of virgin raw materials and significantly decreases industrial waste. In an
effort to increase transparency and customer loyalty, many brands are now using product
passports to improve the authenticity and recyclability of their products.
CHALLENGES
Lack of Resources
The apparel industry is facing a challenge with the limited availability of raw
materials and labor, which has resulted in higher retail prices and reduced consumer
demand for clothing. Meeting the demand for these scarce raw materials could also lead to
increased costs, further impacting the industry.
Rising Inventory Level
The apparel industry faces uncertain demand, prompting manufacturers to adopt
strategies like lean retailing and reducing inventory, which restrained overall production
in the market. Consequently, suppliers have come to depend on local manufacturers with
shorter lead times and closer proximity. This approach helps mitigate the risks associated
with order cancellations and the resulting losses for both suppliers and manufacturers.
INDIAN ELECTRIC VEHICLE (EV) MARKET
The electric vehicle (EV) sector in India is experiencing rapid expansion, attributed
to multiple factors such as growing concerns over air pollution, Government incentives,
and declining battery costs. According to the Economic Survey 2023, Indias domestic
market for EVs is projected to witness an impressive compound annual growth rate (CAGR) of
49% between 2022 and 2030, with an estimated annual sales volume of 10 Million units by
2030. Moreover, this industry is anticipated to generate approximately 50 Million direct
and indirect employment opportunities by 2030.
To facilitate the robust development of the EV sector, the Indian Government has
implemented a range of policies and incentives. Notably, the Faster Adoption and
Manufacturing of Electric Vehicles (FAME) Scheme has been introduced to encourage EV
adoption by providing financial incentives to buyers. In addition, the National Electric
Mobility Mission Plan has been established to promote the domestic manufacturing of EVs
and their components. Furthermore, the Government has set an ambitious target of achieving
30% electrification of its vehicle fleet by 2030, further bolstering the growth prospects
of the EV industry in India. These proactive initiatives and goals indicate a promising
trajectory for the Indian EV industry, offering abundant opportunities for both domestic
and international stakeholders.
Electric Vehicle Sales in India
| Segment |
2022-2023 |
2021-2022 |
| 2W |
7,20,733 |
2,52,539 |
| 3W |
3,99,540 |
1,88,447 |
| PV |
39,562 |
17,760 |
| Total |
11,71,944 |
4,58,746 |
(Source: https://www.autocarpro.in/analysis-sales/ev-sales-in-india-hit-117-million-units-in-fy2023-charge-past-100000-
for-six-months-in-a-row-114543)
(Source: https://corpbiz.io/learning/government-initiatives-for-electric-vehicles-in-india/#:~:text=FAME%20II%20plan%20
was%20launched.set%20to%20expire%20in%202022)
JWLS APPROACH TO RISK MITIGATION AND STRATEGIES
The Companys Board of Directors has implimented a comprehensive risk management
strategy, which includes a framework for identifying, analyzing and mitigating risks. This
framework involves continuously scanning the Companys business environment and monitoring
both internal and external risk factors to ensure a proactive approach to risk management.
| Nature of Risk |
Impact |
Mitigation Strategy |
| Economic Risk |
The Companys financial
performance can be impacted by global economic downturns and business disruptions, such as
the recent Covid-19 pandemic. |
To mitigate this risk, JWL
is committed to prove high-quality products and enhance its business presence in various
geographies through appropriate strategies. |
| Currency Volatility Risk |
Currency volatility poses a
risk to the Companys profitability. |
To mitigate this risk, JWL
actively monitors the currency exposure and employs effective currency trading practices. |
| Competition Risk |
The emergence of new players in
emerging countries with lower production costs can potentially impact the Companys market
share. |
To mitigate this risk, JWL
places strong focus on research and development. In addition, its innovative high-quality
textile solutions provide it with a competitive advantage over its peers. |
| Environmental Risk |
Non-compliance with relevant
environmental regulations may affect the Companys manufacturing processes. |
To mitigate this risk, JWL
adheres to all industry standards and relevant legislation by conducting regular internal
audits and following established manufacturing processes. |
| Raw Material Risk |
Price volatility in raw
materials, particularly cotton, has a negative impact on the Companys production costs. |
To mitigate this risk, JWL
has implemented a raw material management policy to monitor cotton prices on an ongoing
basis. |
INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY
An independent internal audit function is an important element of a companys
internal control system. JWL possesses a strong and comprehensive internal control system,
specifically designed to guarantee the accuracy and reliability of financial information,
as well as the integrity of records used in the preparation of financial statements and
other reports. This system ensures the responsible management of assets, aligning with the
size and complexity of JWLs operations. The Company firmly believes that this provides,
among other things, a reasonable assurance that transactions are executed with appropriate
management authorization and oversight. JWLs internal control system is supplemented
by a comprehensive program of internal audits, reviewed by senior management and
documented policies, guidelines, and procedures. The internal audit findings provide vital
inputs for risk identification and assessment. Further, periodic assessment of business
risks is carried out by the Management and the Audit Committee of Board to identify and
address significant threats that may hinder the accomplishment of JWLs business
objectives. It also ensures that the business transactions are recorded in all material,
with respect to permitted preparation of financial statements in conformity with
established accounting principles, along with the assets of the Company being adequately
safeguarded against significant misuse or loss.
ENVIRONMENT, HEALTH AND SAFETY (EHS)
JWL is committed to its Environment, Health and Safety (EHS) initiatives, which aim to
promote long-term sustainability and value for the Company and its stakeholders. It
understands that EHS-related incidents can have significant regulatory and reputational
consequences. Therefore, it organizes awareness workshops to ensure the safety of
personnel involved in the Companys production operations. Alongside, the Company takes
various measures to avoid any unforeseen incidents that could jeopardize its EHS
objectives. As a responsible corporate citizen, JWL is proactive in addressing
environmental issues and acknowledges its social responsibilities. It is dedicated to
achieving environmental and economic benefits by promoting energy efficiency, water
conservation, chemical usage reduction, and waste management. The Company ensures
compliance with all obligations related to its products, with a focus on environmental and
occupational health and safety. Preserving the
natural environment and promoting community well-being are integral components of its
corporate social responsibility. JWL recognizes that acting responsibly and sustainably
can create new business and social opportunities, increase shareholder value, enhance its
brand and reputation with multiple stakeholder groups, and protect the environment and
natural resources for their immeasurable value.
HUMAN RESOURCE MANAGEMENT
JWL considers its team, comprising 2,769 employees, to be its most valuable and
indispensable asset. The teams collective competencies, skills and knowledge are
essential for driving the Company forward and creating an agile and performance- oriented
organization. It strives to create a supportive environment that fosters employee
engagement and enables them to find meaning in their work, while contributing to the
Companys success. It promotes inclusivity and diversity in the workplace and provides a
safe working environment. The Companys human resource policies align closely with
the overall business strategy and play an integral role in executing business operations.
JWL understands the importance of well-trained and motivated employees in achieving its
goals. To this end, the Company places great emphasis on employee retention by diligently
identifying and allocating suitable individuals to appropriate job positions.
DISCLOSURE OF ACCOUNTING TREATMENT
The financial statements of the Company have been prepared in accordance with the
Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting
Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016
read with Section 133 of the Companies Act, 2013.
WAY FORWARD
JWL is adapting to challenges and leveraging them as opportunities by learning from its
experiences over the past few years and enhancing its business model with agility. The
Company has achieved new milestones in the past year and is now striving for greater
profitability and reach through geographic and product category expansions, aimed at
strengthening the team, enhancing scale, and placing a greater emphasis on sustainability.
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