mohota industries ltd share price Management discussions

Management Discussion and Analysis Report



With an overall slowdown in the global economy which is estimated to have contracted by around 3.3% in 2020 on account of COVID-19 pandemic, the prospects in 2021 have shown sizeable improvement and the negative growth is expected to be reversed with positive growth of 6% expected to moderate to 4.4% in 2022. These are unprecedented and uncertain times. Globally, the COVID-19 pandemic has caused massive disruptions across every sphere of human and business activity. There has been an adverse economic impact on people, communities and countries.

The vaccination drive has picked up momentum pan-India and the outlook remains positive with the advent of new vaccines reaching the market. Emerging Markets like India have witnessed a slowdown and there is economic fallout registered on account of sustained lockdowns in various parts of the Country. Growth in India is estimated to have contracted to -7.3% in FY 2021 with the country witnessing a second wave of the pandemic in March, 2021. The localised lockdowns have resumed which are likely to impair economic activity. However, the COVID-19 pandemic has severely impacted economies worldwide. Basis the fallout, the International Monetary Fund has projected a sharp contraction of the global economy to a status much worse than what resulted from the 2008-09 financial crisis.

The measures taken by the government to contain spread of the COVID-19 pandemic have had an impact on the economic activities as well as on the data collection mechanisms. Estimates are, therefore, likely to undergo sharp revisions for the aforesaid causes in due course. V- shaped economic recovery is expected due to mega vaccination drive, recovery in the services sector and strong growth in consumption and investment coupled with resurgence in high frequency indicators such as power demand, rail freight, e-way bills, GST collection, steel consumption, etc.


The COVID-19 pandemic has impacted each and every business in some way or the other, the global textile industry has been drastically impacted. Asia, being one of the largest markets for textile industry in the world has suffered due to sudden drop in international demand for their products coupled with prolonged lockdowns and restrictions in majority of Asian countries. Shortage of cotton and other raw materials and several supply chain disruptions have worsened the situation globally. It is estimated that exports to major buying regions in the European Union, United States, and Japan might decline by approx. 70%.

The key markets in the textile industry are China, European Union, the United States and India, all of which were affected due to the COVID- 19 pandemic.


The textiles and apparels sector is a major contributor to the Indian economy in terms of foreign exchange earnings and employment. Textile & garments industry in India is expected to reach US$223 Billion by 2021 from US$140.4 Billion in 2018. India is the third-largest textile manufacturing industry and contributes approximately 6% to the total textile production, globally.

India ranks 2nd as the largest producer of textiles and garments and is the 5th largest exporter of textiles spanning apparel, home and technical products. The Indian textile industry is set for growth, buoyed by both strong domestic consumption as well as export demand. Favourable demographic, rising per capita income and a shift in customer preference to branded products is expected to revive the textile industry which has been severely impacted by the COVID-19 pandemic.

The Government of India is working on major initiatives and reforms in the Textile sector, including launch of a ‘Mega Integrated Textile Region and Apparel (MITRA) Parkscheme to establish seven textile parks with state-of-the-art infrastructure, common utilities and R&D lab over a three-year period; starting a focused product scheme; positioning the country as a global hub in the man-made fibre (MMF) and technical textiles segments. Competitive advantage, robust demand, favourable government policies, increasing investments and urbanisation are expected to be the key drivers for revival of the industry.

Opportunities and Challenges

The future for the Indian textile industry looks promising, buoyed by strong domestic consumption. Overall, the government has been supportive in encouraging textile industry in India. Many incentives and schemes have been announced in the Union Budget to promote the sector. Further, introduction of GST is seen as a positive step in the long run. With the right government policies, we believe that the Indian Textile Industry is well poised to benefit from the large opportunity offered in the domestic and export market.

However, there are several challenges ahead for the Textile industry for enhancing its competitive strength and global positioning in terms of inflexible labour laws, poor infrastructure and competition from other low cost countries which will have to be addressed to sustain the growth momentum of the industry.


The following are a few strengths of the Indian Textile Industry:

• An Independent and self-reliant industry;

• Large and potential domestic and international market;

• Abundant Raw Material availability that helps industry to control costs and reduces the lead-time across the operations;

• Availability of skilled manpower provides competitive advantage to the industry;

• Availability of large varieties of cotton fiber and has a fast growing synthetic fiber industry;

• Promising export potential.


The following are a few drawbacks of the textile industry, which it has to overcome.

• The Industry is a highly fragmented Industry.

• It is highly dependent on Cotton.

• There is lower productivity in various segments.

• There is a declining Mill Segment.

• Lack of Technological Development that affect the productivity and other activities in whole value chain.

• Infrastructural Bottlenecks and inefficiencies such as, transaction time at ports and transportation time.

• Unfavorable labour laws.

• Lack of trade membership, which restricts us to tap other potential markets.


The Company has only one business segment i.e. "Textiles".


The Company has a proper and adequate Internal Control System to ensure that its assets are safeguarded and protected against unauthorized use and disposition and all the transactions are properly recorded and reported. The Company also has a system of management reviews to ensure compliance with the prescribed procedures and authority levels.

Pursuant to section 134(5)(e) of the Companies Act, 2013. The Company has proper and adequate Internal Control and Internal Financial Control System, same is reviewed by Companys Internal Auditor together with Statutory Auditors, the Report by auditor on the Companys Internal Financial Control System forms a part of Independent Auditors Report.


Employees are the Companys most valuable resources. The Company continues to create a favorable environment at work place. The Company also recognizes the importance of training and continuously deputes its work force in various courses/seminars relating to important management tools like ‘Total Quality Management (TQM). The management is specifically calling professionals from various research institutes to train its workforce. There were 654 permanent employees on the rolls of the Company.

The Company has taken following initiatives for skill development program for worker & staff.

1. Shop floor training to technical staff on "Air Engineering" (Humidification system) by B.T.R.A. a renowned Textile Research Association.

2 Deputed staff members to attend National Textile Conference organized by Textile Association of India.

3. Deputed employees to attend various seminars organized by EPFO, VIA, ICSI etc. as a part of an ongoing development process.

Industrial relations are cordial and satisfactory.

Cautionary Statement:

Statements made in this report describing outlook as well as Companys Plan Projections and expectations may constitute ‘forward looking Statements within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied.

On Behalf of the Board
Place: HINGANGHAT Vinod Kumar Mohota
Date: 14/08/2021 Chairman & Managing Director