Neelam Linens and Garments India Ltd Management Discussions

We operate as a soft home furnishing company based out of Maharashtra, India, extending our services to a global clientele, including USA, Australia and Far East. We specialize in the processing, finishing and supplying of bedsheets, Pillow cover, Duvet Cover, Towels, Rugs, Doher, Shirts & Garments predominantly for discounted retail outlets. We source surplus or slightly imperfect fabric from the domestic market, applying value-added services such as designing, digital printing, dyeing, stitching, embroidery, and other enhancements. Subsequently, we distribute these refined products to discounted retail outlets in diverse countries. We entered the apparel industry by starting an in-house production of mens and womens fashion apparel since 2023.

Our Company also earns revenue from sale of import licenses. An import license is a governmental authorization required for the importation of goods that are not freely importable. Licenses of this form restrict the number of items entering a country to exactly the requirements of those products and the countrys customs regulations. The government primarily offers the licenses as a financial incentive to exporters, and once granted, they become commodities. Import licenses, which grant the holder the right to import goods that may be restricted or regulated, are considered a service when they are sold or transferred.

The sale of license business of the Company can be bifurcated into two parts, i.e. sale of the import license received from the government as an incentive and trading of the import license available in the market. The sale of import license received from government as a part of incentive includes RODTEP (Remission of duties and taxes on export product) and ROSCTL (Rebate of state & central Taxes and Levies). These e-scripts are issued by customs in respect of Remission of embedded local duties & taxes levied on FOB value of the exported goods. As the Company does not import any type of goods, they sale the same to the importer available in the market at a reasonable discount.

To make Indian product competitive against the nation such as Vietnam, Bangladesh, Thailand etc., government give incentive to the eligible exporters. Textile industry is one of the industry which is covered under this scheme.

The other part of the sale of license is the trading activity that the Company does in the license market. In this regard the Company purchases the license from any exporter one of the exporter and then sells the same to the importer for earning the margin available in between this activity. This activity is facilitated by the trade intermediary such as broker or agents, through whom the buyer and seller are connected.

Healthy financial performance:

We believe our history of strong financial success is a result of our emphasis on operational and functional excellence and efficiency. We made 2,179.26 Lakhs, 10,233.91 Lakhs, 10,356.30 Lakhs and 10,152.67 Lakhs in total revenue from the sale of items for the period ended June 30, 2024, and financial years that ended March 31, 2024, 2023, and 2022, respectively. The net profit after tax for the period ended June 30, 2024, and fiscal year that concluded on March 31, 2024, 2023, and 2022 was 80.46 lakhs, 246.05 lakhs, 237.8 lakhs and 298.57 lakhs respectively. The EBITDA for the same period was 283.16 Lakhs, 781.11 Lakhs, 652.51 Lakhs and 593.62 Lakhs. For the period ended June 30, 2024 and the fiscal year that concluded on March 31, 2024, 2023, and 2022, respectively, we have reported Return on Equity of 2.99%, 10.48%, 13.32% and 22.63%, , along with a total debt to equity ratio of 3.12, 2.97, 3.11 and 3.48, as well as a Return on Capital Employed of 3.84%, 13.69%, 13.64% and 16.74% for such period.

Manufacturing Units :

We operate out of our manufacturing operations out of two units. Unit 1 is located at Gala No. 103, 104, 105, 106, 107 First Floor, Prithvi Complex Building No A-3, Old Agra Road, Bhiwandi, Thane- 421302, Maharashtra, India and Unit 2 occupies 2^nd Floor of the same complex with Gala No. 201, 202, 203, 204, 205, 206, 207 and 208. Our manufacturing units are strategically located with availability of transportation, which facilitates convenient transportation of our products.

Our Units are supported by infrastructure for storage of raw materials, manufacturing of our products, storage of finished goods, together with a quality control. Our Unit 1 is engaged in cutting fabric and stitching whereas Unit 2 has checking department and packing department.

Procurement and Processing Method:

We have following products namely, Bed Sheets, Towels, Pillow covers, Rugs, Hand towels / napkins, Doher, Shirts and T-shirts. The process of Bedsheet, Pillow covers, Shirts and T-shirts are processed at our units and other products are just procured readily and sold after the process of thread cutting, final quality check and packaging by us. Below is the process of bedsheet, pillow covers, Shirts and T-shirts:

Bedsheet, pillow covers, Shirts and T-shirts:

Strengths:

Fine lines begin with higher thread count, to get higher thread count one requires high quality of the cotton that depends on the length of the individual fibers. High thread count bedding is used in all the western countries as it is the status symbol for the riches, as the higher the count the better the fabric. By procuring surplus or slightly imperfect fabric in bulk from our suppliers, we benefit from advantageous pricing, allowing us to acquire these materials at a reduced cost. This strategic sourcing enables us to offer modified and customized products to our customers at discounted prices. Our ability to obtain these fabrics at a lower expense translates into significant cost savings, which we pass on to our customers, ensuring that they can enjoy high-quality, tailor-made products at affordable rates.

Our promoters experience in the textile sector has allowed us to quickly respond to market developments by identifying emerging trends and adapting our product offerings accordingly. Through their extensive industry experience and wide network of contacts, our promoters have been able to identify and pursue our customers. This has allowed us to expand our operational capacities by leveraging the resources and expertise of other organizations.

To cater to the growing demand from our existing customers and to meet the requirements of new customers, we intend to invest the embroidery machines, which will help to improve the efficiency and the quality of work. We believe in providing quality products to our customers. We are devoted to quality assurance. We believe that our quality products have earned us goodwill from our customers, which has resulted in customer retention and order repetition and also new addition to the customer base. We provide products with competitive rates.

Strategy:

Moving forward, we intend to tap new markets and further sell directly through our stores. Direct Selling to customers by opening and developing our stores will improve our margins. This strategy will empower us to have more control over pricing and distribution, allowing us to build stronger relationships with our customers. By selling directly to customers, we can offer tailored solutions and better meet their requirements. This will not only increase our revenue potential but also enable us to showcase the quality and value of our products, positioning us as a trusted and preferred supplier in the market.

Optimization and reduction of costs remains our key focus area, and we continue to work towards attaining cost efficiencies, whether it be in supply chain management or during the production process. Our core team also focuses on the refinement of our manufacturing processes, aimed at improved yield and efficiency, by optimizing and modifications of various parameters. We also propose to develop eco-friendly and cost-effective production processes. We are also focused on improving our cost efficiency by optimizing the effective sourcing of raw materials, which we have ensured, as a business strategy, over the last several years.

Our Companys strategy is focused on introducing new product to cater to the requirements of our customers as well as garnering the attention of more customers. This helps in strengthening the relationship with the existing customer network through a wide range of products while also onboarding new customers from untapped geographies. Identifying and developing new products is a continuous exercise that our management team engages into as that there is an immense demand in the global markets for unique designs, good quality and competitively priced products.

Our Company intends to improve functional efficiencies to achieve cost reductions to have a competitive edge over our peers. We believe that this can be done through economies of scale and repeat purchases of our customers. Increasing our penetration in newer regions with new range of products, will enable us to penetrate new catchment areas within these regions and optimize our infrastructure. As a result of these measures, our company will be able to increase its market share and profitability. Moreover, we will be expanding our exports to several markets through outsourcing. This will reduce financial leverage and improve operational efficiency and reduce risk.

Information technology:

We believe that an appropriate information technology infrastructure is important in order to support the growth of our business. Our IT infrastructure enables us to track procurement of fabrics, sale of finished goods and orders from distributors/suppliers/discounted retail outlets. We utilize accounting and Tally software which covers sales, purchase, inventory and financial reporting, across our office and the processing facility.

Competition:

There are various un-organized players providing similar type of products. Existing established players in the local vicinity gives us competition in terms of products. We also face competition from various agencies which provide same services as ours in both online and offline ways with different innovations, So, there is a constant flow of competition in the market with moving demand and supply.

Quality Control:

We have many skilled staff in each department to control quality of product. We have departments like storage, cutting, stitching, checking & final packaging. In each department, there is a designated quality control manager who are responsible for quality of the products. They are tasked with identifying any defects or issues and implementing corrective measures to address them. Apart from the departmental quality control managers, we also have a in house Quality Control team and this team is responsible for inspecting the final product. In addition to in-house quality control measures, we also hire external agencies to inspect goods and shares inspection report to the buyer.

Acknowledgement:

Your directors take this opportunity to express their deep sense of gratitude to the vendors, business associates, employees, investors and banks for their continued support and co-operation during the year under review.