Pursuant to schedule V of the SEBI (LODR) Regulation, 2015, Management
Discussion and Analysis Report form a part of the Annual Report of the Company. It
indicates the Companys movement in the external environment Vis-a-Vis its own strengths
and resources
Global Economy Overview
The global GDP growth of 3.4% in the Current Year 2023 OCY) was
better than anticipated, despite formidable headwinds such as geopolitical issues, higher
cost of living and slowdown in large emerging markets. The year has seen dedicated efforts
to tackle elevated inflation through rapid interest rate hikes, supported by strong labour
markets and easing supply chain constraints. More positive signs started to appear at the
beginning of the CY with food and energy prices falling back, thus improving business and
consumer sentiments. The full reopening of China is expected to provide the required
positive momentum. The stimulus from Peoples Bank of China (PBOC) with regards
to cut in reserve requirements could also support growth in the global economy. On the
other hand, sticky inflation across other parts of the world has pushed central banks to
maintain their hawkish stance. Despite the declining money supply, the U.S. money supply
remains higher by 38% compared to pre-pandemic levels. However, the growth outlook across
developed markets may weaken as central banks could likely keep the interest rates at peak
levels for an extended period.
In addition to the elevated money supply, the financial sector is
dealing with overlapping crises. In this sector, minor problems could spiral into a
systemic crisis and add to the ongoing inflation problem. The tightening of interest rates
has resulted in the collapse of three smaller banks and one large buy-out. With such
uncertainties, the global growth in the CY is expected to be lower than its normalised
run-rate above 3% with moderate chances of entering a recession over the CY.
Indian Economy Overview
With the world facing geopolitical issues, and trade and supply chain
challenges, Indias success is often looked at closely. The global composite purchasing
managers index (PMI) marked its first expansion during the Financial year 2023,
in February 2023. This was led by recovery in manufacturing and stable contribution from
the service sector. India has consolidated its position in both manufacturing and
services, becoming one of the top performers of PMI expansion. The success can also be
attributed to the fact that it is home to the largest population in the world, now
accounting for >15% of the global population. Also, the demographic division is
favourably skewed towards it being the largest contributor to the global workforce for
several decades now. During 2023, China could benefit from the pent-up demand with its
reopening. India, however, is expected to be the fastest-growing country within the G20.
India has assumed G20 Presidency (a group of 20 countries which represents 75% of global
trade and 85% of global GDP) for 2023. It operates on the philosophy of Vasudhaiva
Kutumbakam: One Earth-One Family-One Future that envisions the whole world as one family
living in harmony with each other.
The macroeconomic outlook for India has improved with interest rates
almost peaking. Also, the comfortable inflation trajectory has resulted RBI to pause its
rate hike cycle.
The structural tailwinds of positioning India as a global manufacturing
outsourcing hub through PLI schemes and FTAs would catalyse the capacity expansion cycle
across industries. This capacity expansion would be largely front loaded by public sector
which is also factored in the FY23 budget. It highlights the central governments
projected spend of a record 7.5 trillion in capacity creation during the year.
The allocation would be largely towards mega public programmes like NIP
and Gati Shakti which would revitalise Indias Infrastructure cycle. Over the last decade,
India has made several reforms which have created a sustainable framework for economic
growth and have laid the foundation for a sustained high-growth phase in the economy.
Improvements in socio-economic parameters and moderation in population growth makes
situations favourable for secular growth in per capita income.
Industry Review
The Indian textile industry is one of the largest in the world with a
large unmatched raw material base and manufacturing strength across the value chain. The
uniqueness of the industry lies in its strength both in the hand-woven sector as well as
in the capital-intensive mill sector. The mill sector is the second largest in the world.
Traditional sectors like handloom, handicrafts and small-scale power-loom units are the
biggest source of employment for millions of people in rural and semi urban area and also
contribute to more than 75% of total textiles production in the country.
The industry is extremely varied, with hand-spun and hand-woven
textiles sectors at one end of the spectrum, while the capital-intensive sophisticated
mills sector on the other end. The decentralized power looms/ hosiery and knitting sector
forms the largest component in the textiles sector. The close linkage of textiles industry
to agriculture (for raw materials such as cotton) and the ancient culture and traditions
of the country in terms of textiles makes it unique in comparison to other industries in
the country. Indias textiles industry has a capacity to produce wide variety of products
suitable for different market segments, both within India and across the world.
The textile industry is one of the largest sources of employment
generation in the country with over 45 million people employed directly and another 6
crore people in allied sectors, including a large number of women and rural population.
The sector has perfect alignment with Governments key initiatives of Make in India, Skill
India, Women Empowerment and Rural Youth Employment.
The major development that textile industry would witness is the demand
of hygienic product where more focus should be given to produce and supply anti-bacterial
and anti-viral fabrics.
Financial Performance and Analysis
(Rupees in Lakhs)
| Particulars |
Standalone for the FY 2022-23 |
Standalone for the FY 2021-22 |
Consolidated for the FY 2022-23 |
| Revenue from Operations |
12,794.16 |
7,454.40 |
12,794.16 |
| Other Income |
8,971.90 |
2,278.03 |
8,971.90 |
| Profit/loss before Depreciation, Finance Costs, Exceptional
items and Tax Expense |
5,536.80 |
(1368.82) |
5,529.04 |
| Less: Depreciation/ Amortisation/ Impairment |
2,871.23 |
3,674.71 |
2,871.23 |
| Profit /loss before Finance Costs, Exceptional items and Tax
Expense |
2,665.57 |
(5,043.53) |
2,657.81 |
| Less: Finance Cost |
50.41 |
170.77 |
50.79 |
| Less: Exceptional Item (Impairment on Property, Plant &
Equipment and Balances written back) |
- |
(1,15,571.23) |
- |
| Profit/ (Loss) Before Taxation |
2,615.16 |
1,10,356.94 |
2,607.29 |
The revenue from operations of the Company has marginally increased
from Rs. 7,454.40 lakhs to Rs. 12,794.16 lakhs during FY23. The increase in the revenue
from operations is on account of the Company new subsidiary as mentioned in the Director
Report which boasted the revenue of the Company. A significant part of this turnaround was
achieved through considerable cost savings.
The Company earns its major revenue from operations from Textile,
Garments, Yarn and Income earned from Job Work and also from Infrastructure segment due to
acquiring the Flowline as a Wholly own subsidiary company. There is a significant decrease
in the PBT of the Company during FY23 amounting to Rs. 2,615.16 lakhs as compared to
amounting to Rs. 1,10,356.93 lakhs because Balance written back amount was square off in
during FY23.
Key Financial Ratios
| Particulars |
As at March 31, 20223 |
As at March 31, 2022 |
| Current Ratio (in times) |
0.42 |
0.41 |
| Debt-Equity ratio (in times) |
- |
0.46 |
| Inventory turnover ratio |
21.23 |
11.15 |
| Return on equity ratio (in %) |
(11.78%) |
302.73% |
| Trade receivables turnover ratio (in times) |
15.58 |
8.71 |
| Trade payables turnover ratio (in times) |
5.86 |
4.21 |
| Net capital turnover ratio (in times) |
(1.13) |
(0.10) |
| Net profit ratio (in %) |
21% |
1490% |
| Return on capital employed (in %) |
111% |
(20%) |
The formulae used in the computation of the above ratios are as
follows:
| Ratio |
Formula |
| Current Ratio |
Current Assets / Current Liabilities |
| Debt Equity Ratio |
Debt consists of borrowings / Total Equity |
| Inventory turnover ratio |
Revenue from operations / Average Inventory |
| Return on equity ratio (in %) |
Profit for the year (after tax) / Average total equity |
| Trade receivables turnover ratio (in times) |
Revenue from operations / Average trade receivables |
| Trade payables turnover ratio (in times) |
Cost of material consumed and purchase of stock-in-trade +
Manufacturing cost + Other expenses / Average trade payables |
| Net capital turnover ratio (in times) |
Revenue from operations / Average working capital (i.e. Total
current assets less Total current liabilities) |
| Net profit ratio (in %) |
Profit for the year (after tax) / Revenue from operations |
| Return on capital employed (in %) |
Profit for the year (after tax) / Tangible net worth + Debt
consists of borrowings + Deferred tax liabilities |
Cautionary Statement
Statements in the Management Discussion & Analysis report
describing the Companys objectives, estimates or projections may be forward looking
statements within the meaning of applicable securities law and regulations. Actual results
may materially differ from those expressed or implied. Important factors that can make a
difference to the Companys operations include change in the main clients purchase
procedures, changes in Government regulations, tax regimes, economic outlook and other
incidental factors. These statements have been based on current expectations and
projections about future events. Wherever possible, all precautions have been taken to
identify such statements by using words such as anticipate, estimate, expect,
project, intend, plan, believe and words of similar substance in connection with
any discussion of future performance. Such statements, however, involve known and unknown
risks, significant changes in political and economic environment in India or key markets
abroad, tax laws, litigation, labour relations, exchange rate fluctuations, interest and
other costs and may cause actual results to differ materially. There is no certainty that
these forward-looking statements will be realised, although due care has been taken in
making these assumptions. There is no obligation to publicly update any forward-looking
statements, whether as a result of new information, future events or otherwise.
Appreciation
The Board of Directors place on record sincere gratitude and
appreciation for all the employees of the Company. Our consistent growth was made possible
by their hard work, solidarity, cooperation, and dedication during the year.
The Board conveys its appreciation for its customers, shareholders,
suppliers as well as vendors, bankers, business associates, regulatory and government
authorities for their continued support.
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