nitin spinners ltd split Management discussions


Global Economic Overview and Outlook

The year 2021 was a year of global recovery. The global economy registered a GDP growth of 6.1%, its strongest post-recession pace in 80 years. The recovery gained pace in the first half of the year. Policy level adjustments by several countries improved the overall economies and the sentiment of people. However, the recovery was slowed down considerably in the second half of the year due to increasing supply chain disruptions across countries. On the brighter side, the supply-chain disruptions have been significantly fading, which is now catering to the global markets, albeit gradually.

However, uncertainties in terms of inflation and subsequent rise in food and energy costs are expected to loom over the economic performance, owing to the geopolitical conflicts and other external shocks. As a result Global growth is expected to slump to 2.9 % in 2022.

Indian Economic Overview

Indias GDP growth rate for 2021-2022 is 8.7%, after contracting 6.6% during the previous fiscal. Exports have driven Indias economic recovery on the demand side, reaching 113% of its pre-pandemic level in 2021-22. In addition to Indias effort, the increase in worldwide expenditure as a result of better pandemic management globally also had a role in Indias remarkable export record. Additionally, spending increased in India as imports increased to 117% of their pre-pandemic level. There was overall economic growth in India during the year under review.

Outlook of Indian Economy

In India, GDP is anticipated to slow to 7.5% in the fiscal year 2022-2023, with geopolitical concerns, increasing prices, and supply chain disruptions balancing a rebound in services demand following the epidemic. The successful implementation of the Production Linked Incentive Scheme (PLIS) in 14 industries, the growth of renewable energy sources while reducing reliance on crude oil imports, and the development of the financial sector as evidenced by the improvement of financial metrics and an increase in credit demand have all been significant positive developments that will support economic growth.

Global Textile and Apparel Industry Review and Outlook

The size of the global textile market was estimated at USD 993.6 billion in 2021 and is anticipated to grow at a compound annual growth rate (CAGR) of 4.0% from 2022 to 2030. Over the forecast period, the market is anticipated to increase due to rising demand for clothing from the fashion sector and the expansion of e-commerce platforms.

During the year there were some major happening in textiles trade which are as under:-

a) US ban on import of cotton products from Chinas Xinjiang region on account of human rights violation caused a major shake-up in the global textile supply chain. The region accounts for four-fifths of Chinas domestic cotton production and about one-fifth of the worlds cotton production.

b) Cotton prices registered unprecedented growth in 2021 and 2022. The Cotlook A index started the year around 77 US cents and peaked at approx. 120 US cents in November, 21 an increase of 55%. In 2022 also the prices further rose to US 155 Cents. Prices of all other major fibres also increased in the range of 35-45% in 2021.

c) All year long, the industry suffered immensely from global container shortage resulting in unprecedented increase in vessel shipping costs.

d) Sustainability remained a key theme with emergence of several low impact materials & technologies and business models around sustainability

Indian Textile and Apparel Industry

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. India is the 6th largest exporter of Textiles & Apparel in the world. Indias textiles and clothing industry are one of the mainstays of the national economy. Indias domestic clothing and textile sector makes for 12% of the nations export revenue, 7% of the industrys value-added production, and 5% of the nations GDP. India has a share of 4% of the global trade in textiles and apparel. The industry is significant from the standpoint of employment as well. It provides both direct and indirect work and a source of income for millions of people, including a sizable number of women and rural residents.

The governments main focus has been increasing textile manufacturing by creating the best-in-class manufacturing infrastructure, upgrading technology to foster innovation, enhancing skills, and leveraging the sectors historical advantages to make Indias development inclusive and participatory.


Indian domestic textile and apparel market is estimated to be US$ 99 bn. in 2021-22 which has recovered 30% from 2020-21. The Indian textile and apparel industry is expected to grow at 10% CAGR to US$ 190 billion by FY26, driven by increased awareness of goods and higher disposable incomes. Increased penetration of organised retail, favourable demographics, and rising income level will drive demand for textiles. The Government initiatives such as the PLI Scheme, National Textile Policy, Mega Textiles Park scheme, the SMARTH scheme, the easy availability of raw materials, and the rising income levels will also add to this sectors critical growth.

Cotton Industry

One of the most significant cash crops, cotton contributes around 25% of the worlds total fibre production. The percentage of cotton in the raw materials consumed by the Indian textile industry is roughly 60%. India is one of the worlds biggest producers, users, and exporters of cotton.

An estimated 5.8 million cotton growers and 40-50 million people employed in allied industries, including commerce and processing cotton, depend heavily on cotton for their livelihoods. The government of India declares Minimum Sustain Price (MSP) for medium staple and long-staple cotton in order to support the cotton sector. The cotton production in India in cotton season 2020-21 was 352 lac bales and in 202122 cotton season the same is estimated to be 315 lac bales.


Rise in per capita income of Indian Household to drive demand

The rise is disposable income and rising middle class will drive demand of Textiles and apparel.

The Industry can focus on value-added or premium products with new Capex. This will help companies with the suitable capacity to capture the future demand early and increase their margins.

China Plus One Strategy

Many Companies across the world are contemplating diversifying their dependence on China for their sourcing requirement. They are looking to source from developing Asian countries like India, Vietnam, Thailand, Bangladesh and Malaysia. Indian Textiles Trade is likely to benefit from this altered situation owing to its competitive advantage, conducive business environment, and favourable government policies.

100% FDI allowance

It will encourage the foreign apparel industry to enter the Indian market. Already, the existing global investors in the Indian textile industry include prominent western brands such as Zara, Forever 21, Levis, Benetton, C&A, GAP, H&M and Marks & Spencer etc. It also allows them to be near raw material suppliers, as India is one of the few countries in the world with presence across the textile value chain.

Improving farming techniques

Despite being the worlds largest cotton producer, Indias yield in terms of kilograms of cotton per hectare of land under cotton cultivation is extremely low. Indias output is about 462 kg/ha, as against the world average yield of 787 kgs/ha. Modernisation of farming techniques and the use of machinery and equipment are likely to culminate into higher profits. Furthermore, the rising trend of the agritech theme in start-ups is expected to act as a tailwind.

Exporters gaining from strong global demand

India is the worlds second-largest textile exporter. Capacity built over years has led to low cost of production per unit in Indias textile industry. This has lent a strong competitive advantage to the countrys textile exporters over key global peers

Government Policies

The Central Government has announced Production Link Incentive Scheme (PLI) for Textile sector, Mega Textiles park schemes and the Government of Rajasthan has put in place Rajasthan Investment Promotion Scheme provides for Interest, Electricity Duty etc. subsidies for installation/ expansion of Textiles Units.


Availability of cotton

Any significant damage to cotton crops in India or overseas due to natural calamities may cause severe price, supply disruption and create uncertainty.

Pandemic and its variants

Any further waves of the pandemic and its variants can disrupt trade.

Dependency on labour

The Indian textile industry is still a highly labour-intensive one, unlike other countries, where a large part of the pro-

cess is automated. This dependency on labour makes the sector vulnerable to the cost of rising wages.

Government Policies

The Central Government imposed Custom Duty and Agriculture Cess on Import of Cotton which has increased cost of imported cotton.

Company Overview

Incorporated in 1992 in Bhilwara with a small capacity of only 384 rotors, Nitin Spinners over the years has expanded its operations to include open-end yarns, ring-spun yarns, blended yarns, knitted fabrics, and finished woven fabrics.

It now has an installed capacity of 3,07,344 Spindles and 3,488 Rotors, producing 75,000 tons of yarn per annum. It also has an installed capacity of 63 Knitting Machines, producing 8,500 tons of knitted fabrics per annum and 168 looms and dyeing, printing, and finishing capacities to make approximately 300 lakh meters of fabrics per annum.

The Companys manufacturing units are strategically located near places from where it sources its raw materials. It is also well connected to major ports and markets. Investment in world-class technology, continuous growth and value addition, commitment to consistent product quality, emphasis on customer satisfaction and timely delivery of products are integral to the Companys way of functioning.

Financial and product wise Performance

(H in Crores)
Particulars 2021-22 2020-21
Revenue from operations 2692.32 1624.41
Other income 1.84 1.90
Total income 2694.16 1626.31
Earnings Before Interest, Tax and Depreciation & Amortization 653.45 259.16
Profit for the year 326.14 68.87
EPS (Basic) (In H) 58.01 12.25
EPS (Diluted) (In H) 58.01 12.25

For financial and product-wise performance concerning operational performance, please refer to the Financial Results and Operational Performance section of the Boards Report.

Segment-wise performance

The Company operates in a Single Segment of Textiles.

Details of Significant Changes

(i.e., change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations, therefore:

2021-22 2020-21 % change Reason for change
Inventory Turnover 6.63 4.58 44.69% Better Sales Realisation
Interest Coverage Ratio 11.81 4.21 180.53% Improved due to higher operating profit margins
Current Ratio 1.83 1.27 44.63% Improved due to higher operating cash flow
Debt Equity Ratio 0.57 1.20 -52.72% Reduced due to repayments of term loan and improved profitabilty
Debtors Turnover 11.19 9.79 14.21% Average realisation period reduced
Operating Profit Margin 24.27% 15.95% 52.16% Increased sale of value-added products, cost optimisation, and better realisations
Net Profit Margin 12.11% 4.24% 185.71% Increase in Sale of Value added Products and higher margin
Return on Net Worth 37.24% 12.23% 204.50% Due to higher profits
Earnings Per Share 58.01 12.25 373.55% Due to higher profits

Risk and Concerns

Risk management measures are essential to a governance system. Therefore, it contributes to its strategic goals and safeguards its value, assets, and reputation. Here are some of the risks and mitigation strategies of Nitin Spinners:

Risk Impact Mitigation
Competition Risk An increase in competition could negatively impact the market share, margin profile and return on capital employed. The distinctly differentiated brand image, longstanding customer relationships, focus on value addition and economies of scale help the Company mitigate this risk.
Foreign Currency Given that exports constitute 63% of the revenue, strengthening the Indian Rupee could hamper the revenue. The Company mitigates this risk by way of its robust currency hedging mechanisms and systems and export pricing.
Exchange Rate Risk
Raw Material Price An increase in cotton prices can adversely impact the profitability of the Company. The Company has a team that constantly monitors the cotton prices and follows a consistent stocking policy to hedge against any sharp movements.
Inflation Risk
Reputation Risk Any delay in payments to lenders/ suppliers or poor quality of products can lead to loss of trust in our integrity and adversely impact business performance. The Company makes a conscious attempt to meet the expectations of all stakeholders and have stringent quality control procedures in place to ensure superior product quality.
Customer concentration risk Any concentration of customers can cause loss of revenue in case of failure of any big customer. The Company continuously aims to strengthen its customer relationships and strives to add new customers across geographies to diversify the customer base.

Environment and Safety

Clean and safe environmental operations form Nitin Spinners key priorities. The Company conducts all its operations, ensuring the safety of everyone concerned, compliance with statutory and industrial requirements for environment protection, and conservation of natural resources to the extent possible. The Company is also accredited with OHSAS18001:2007 (Occupational Health & Safety Management System) certification from the British Standards India (BSI).

Human Resources

Human resource is a crucial asset for a Company to achieve sustained growth. To attract, retain and develop its talent pool, the Company has consistently recognised talent, imparted training, and followed the golden principle of rewarding performance. Besides, it is committed to individual well-being and safety at the work place and it is proud to attract the talent that it needs for future growth. Most importantly, it places great emphasis on eliminating all forms of discrimination in terms of employment and professional activities (gender, age, race, political affiliation, religion, among others). It pays special attention to professional equality, gender equality, the employment of seniors and young people, the employment of people with disabilities. It also has been accredited with S.A. 8000:2014 (Social Accountability System) certification from the BSI. As of 31st March, 2022, the Companys strength stood at 5205 employees.

Internal Control Systems and their Adequacy

Nitin Spinners has appropriate systems for internal control. These systems are continually improved and modified to meet the changes in the business conditions and the statutory and accounting requirements. The Company also has a robust Management Information System, an integral part of the control mechanism. The Audit Committee of the Board of Directors reviews the efficiency and effectiveness of the internal control systems. It then suggests solutions to improve and strengthen. The internal control system was tested during the year, and no material weakness in design or operations was found.

Cautionary Statements

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions, may be forward-looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. 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 Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other incidental factors.

For and on Behalf of the Board of Directors
Place : Hamirgarh, Bhilwara Chairman
Date : 06th August, 2022 (DIN - 00060746)

Registered Office:

16-17 KM Stone, Chittor Road,

Hamirgarh, Bhilwara - 311025.