WORLD ECONOMY
Global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. While the forecast for 2023 is modestly higher than predicted in the April 2023 World Economic Outlook (WEO), it remains weak by historical standards. The rise in central bank policy rates to fight inflation continues to weigh on economic activity. Global headline inflation is expected to fall from 8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024. Underlying (core) inflation is projected to decline more gradually, and forecasts for inflation in 2024 have been revised upward.
The recent resolution of the US debt ceiling standoff and, earlier this year, strong action by authorities to contain turbulence in US and Swiss banking reduced the immediate risks of financial sector turmoil. This moderated adverse risks to the outlook. However, the balance of risks to global growth remains tilted to the downside. Inflation could remain high and even rise if further shocks occur, including those from an intensification of the war in Ukraine and extreme weather-related events, triggering more restrictive monetary policy. Financial sector turbulence could resume as markets adjust to further policy tightening by central banks. Chinas recovery could slow, in part as a result of unresolved real estate problems, with negative cross-border spillovers. Sovereign debt distress could spread to a wider group of economies. On the upside, inflation could fall faster than expected, reducing the need for tight monetary policy, and domestic demand could again prove more resilient.
In most economies, the priority remains achieving sustained disinflation while ensuring financial stability. Therefore, central banks should remain focused on restoring price stability and strengthen financial supervision and risk monitoring. Should market strains materialize, countries should provide liquidity promptly while mitigating the possibility of moral hazard. They should also build fiscal buffers, with the composition of fiscal adjustment ensuring targeted support for the most vulnerable. Improvements to the supply side of the economy would facilitate fiscal consolidation and a smoother decline of inflation toward target levels.
INDIAN ECONOMY
The Indian economy performed well in the financial year 2020-23, despite the challenges posed by the COVID-19 pandemic and the Russia-Ukraine war. The economy has faced downfall in the current financial year with 8.7% in 2021-22, the fastest pace of growth in two decades to 7% in the current financial year.
The Indian economy is expected to continue to grow in the coming years, but at a slower pace than in the past few years. The challenges posed by the COVID-19 pandemic and the Russia-Ukraine war
will continue to weigh on the economy, but the governments policies are aimed at mitigating these challenges and ensuring a sustainable growth trajectory.
However the government has implemented specific policies to support the economy, The government has;
Increased public spending on infrastructure and social programs.
Provided tax relief to businesses and individuals.
T aken steps to improve the ease of doing business in India.
Signed free trade agreements with other countries.
GLOBAL TEXTILE INDUSTRY
The global textile market grew from about $573 billion in 2022 to about US$ 610 billion in 2023 at a compound annual growth rate (CAGR) of 6.6%. The Russia- Ukraine war has led to an increase in commodity prices and supply chain disruptions, causing inflation across goods and services impacting economies across the globe. The textile market is however expected to grow to about US$ 755 billion in 2027 at a CAGR of 5.5%.
The COVID-19 pandemic and the Russia - Ukraine war had challenged the textile industry drastically which is now on a recovery stage. Increasing demand for apparel from the fashion industry coupled with the growth of e-commerce platforms is expected to drive the market growth over the next few years.
The textile industry is an ever-growing market, with key competitors being China, the European Union, the United States, and India. China is the worlds leading producer and exporter of both raw textiles and garments. India is among the top five textile manufacturing country and is responsible for more than 6% of the total textile production, globally. The rapid industrialization in the developed and developing countries and the evolving technology are helping the textile industry to have modern installations which are capable of high-efficient fabric production.
INDIAN TEXTILE INDUSTRY
India is the worlds second-largest producer of textiles and garments the industry grew at a healthy pace of 14.59%, making it the second-fastest growing textile industry in the world.
The contribution of technical textiles to the Indian and world economy is significant. In India, technical textiles accounted for 17% of the total textile market in 2023. The industry is expected to grow at a CAGR of 10% from 2023 to 2028.
The world market for technical textiles is also growing rapidly. The market was valued at $227.5 billion in 2023 and is expected to reach $350 billion by 2028.
In FY 2022-23, exports of readymade garments cotton including accessories stood at US$ 7.68 billion till January 2023. It is expected to surpass US$ 30 billion by 2027, with an estimated 4.64.9% share globally.
The technical textile market is expected to continue to grow in the coming years. The growth of the global economy, increasing demand for safety and security textiles, and growing demand for filtration and separation textiles are all expected to drive the market. The Indian technical textile market is also expected to grow rapidly, due to the growing domestic demand, government support, and availability of skilled labor.
COMPANY OVERVIEW
Established in 1980, KG Petrochem Limited (hereafter referred to as the Company). Founded by Mr Gauri Shanker Kandoi, Whole Time Director & Chairman; first-generation entrepreneur which is headquartered in Jaipur Rajasthan.
Your company is engaged in the business of manufacturing and services as under:-
i. Manufacturing and marketing of Terry Towel, Made-ups & Garments etc. in the international market as well as domestic - Textile Division.
ii. Manufacturing and marketing of Garments Products i.e. Bath Robe, Pillow, Cushion Cover and Quilts etc. - Garment Division.
iii. Consignment Stockiest of GAIL (I) LTD. for marketing and distribution of polymers in Rajasthan- Agency Division.
iv. Technical Textiles - Manufacturing of Artificial leather through technical textile OPPORTUNITIES & THREATS
The Company is exposed to risk from market interest rates and increase of raw material prices, compliance risk, people risk, currency movements, change in Indian government policies and competition. The Company proactively manages these risks through forward booking and Inventory Management, proactive management of vendor development and relationships, and Companys strong reputation for quality, product, differentiation and services. The Company is mitigating the compliance risk through regular review of legal compliances through internal as well as external compliance. Companys strategy of providing end-to-end solutions and innovative products, hedges significant portion of its export revenues expected for the following year, The Company continuously monitors govt policies and take measures to minimize any adverse impact and maintaining strong relationship with clients helps in reducing competitive risks. Rising of Rupees against USD will be a big loss to the company along with few changes made in GST regime
BUSINESS OUTLOOK
With the efficient management and employee strength to boast of, the Company constantly endeavors to keep with the trend of increase in the turnover and reduction in expenses. We therefore hope to keep this trend going with ongoing efforts to increase the domestic as well as new
foreign markets, adequately training the manpower to effect the reduction in costs and increase in productivity and efficiency. International as well as domestic competitive market environment continues to put pressure on the companys selling price of the product.
INTERNAL CONTROL SYSTEMS & THEIR ADEQUACY
The Companys robust internal control systems for financial reporting are commensurate with the size and industries in which it operates. These systems ensure efficiency and productivity at all levels as well as safeguards its assets. Stringent procedures are in place to ascertain high accuracy in recording and providing consistent financial and operational support. Business operations are closely monitored by the internal team and an Audit Committee. The Management Board is promptly notified in case of any deviations. To ensure seamless growth, risk identification and assessment, as well as mitigation strategies are designed basis these findings.
The corporate audit division headed by Chief Financial Officer continuously monitors the effectiveness of the internal controls with an objective to provide to the Audit Committee and the Board of Directors, an independent, objective and reasonable assurance of the adequacy and effectiveness of the organizations risk management, control and governance processes. The division also assesses opportunities for improvement in business processes, systems & controls; provides recommendations, designed to add value to the organization and follows up on the implementation of corrective actions and improvements in business processes after review by the Audit Committee of the Board of Directors.
RISK & CONCERNS
The Company is exposed to risk from market interest rates and increase of raw material prices, compliance risk, people risk, currency movements, change in Indian government policies and competition. The Company is impacted by the change in the business environment both within the Country and globally and this necessitates continues evaluation. The Company proactively manages these risks through forward booking and Inventory Management, proactive management of vendor development and relationships, and Companys strong reputation for quality, product, differentiation and services. The Company is mitigating the compliance risk through regular review of legal compliances through internal as well as external compliance. Companys strategy of providing end-to-end solutions and innovative products, hedges significant portion of its export revenues expected for the following year, The Company continuously monitors govt policies and take measures to minimize any adverse impact and maintaining strong relationship with clients helps in reducing competitive risks. Rising of Rupees against USD will be a big loss to the company along with few changes made in GST regime.
STATUTORY COMPLIANCE
On obtaining confirmation of having complied with all the statutory requirements, a declaration regarding compliance of the provisions of various statutes is made elsewhere in this report.
INDUSTRIAL RELATIONS
As in the past, Industrial relations continued to remain cordial at the manufacturing units of the company.
MATERIAL DEVELOPMENT IN HUMAN RESOURCES / INDUSTRIAL RELATIONS
We look our employees as our most valuable assets and have been working towards keeping them motivated and enthused. The employees of the company are working in a healthy atmosphere. The Company is constantly endeavoring to source and develop skilled manpower at all levels. Lack of skilled manpower availability is a challenge of today. But the Company is constantly recruiting fresher and trains them to become suitably skilled.
CAUTIONARY STATEMENT
The Management Discussion and Analysis Report containing your Companys objectives, projections, estimates and expectations may incorporate certain statements, which are forwardlooking within the meaning of applicable laws and regulations. The statements in this Management Discussion and Analysis Report could differ materially from those expressed or implied elsewhere. Important factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in governmental regulations, tax regimes, forex markets, economic developments within India and the countries within which the Company conducts business besides other incidental factors.
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