Prakash Woollen & Synthetic Mills Ltd Management Discussions

1) OVERVIEW OF THE ECONOMY Global Economy

The global textile industry impacts nearly every human being on the planet. The global textile industry is a manufacturing sector thats currently worth nearly three trillion dollars (in U.S. dollars) and includes the production, refinement, and sale of both synthetic and natural fibers used in thousands of industries. The global textile market is broken into a number of sectors shown in this chart:

THE MARKET HAS VARIOUS SUB-SEGMENTS AND INCLUDES DIFFERENT TYPES OF PRODUCTS Textile Market Segmentation

Textiles

Fibres

• Cotton fibres

• Silk fibres

• Wool fibres

• Animal fibres

• Plant fibres

• Man-made/ Synthetic fibres

Yarn

• Single Yarn

• Plied/Multiple Yarn

• Specilly Yarn

Fabrics

Household

• Bedding textiles

• Furnishing textiles

• Home textiles

Technical

• Mobile textiles

• Sports textiles

• Industrial textiles

Garments

Mens Wear

Womens Wear

Childrens Wear

As you can see, the textile industry encompasses a broad and diverse range of products with an even wider range of applications. That diversity is one of many factors that makes the textile industry one of the most vital to the economic well-being of people all over the world. (Source: https://study.com/academy/lesson/global-textile-industry.html )

Indian economy

Indias textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, with the capital-intensive sophisticated mills sector at the other end. The fundamental strength of the textile industry in India is its strong production base of a wide range of fibre/ yarns from natural fibres like cotton, jute, silk, and wool, to synthetic/man-made fibres like polyester, viscose, nylon and acrylic.

The decentralized power looms/ hosiery and knitting sector form the largest component of 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 a wide variety of products suitable for different market segments, both within India and across the world. (Source:

In order to attract private equity and employee more people, the government introduced various schemes such as the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS) and Mega Integrated Textile Region and Apparel (MITRA) Park scheme.(Source: https://www.ibef.org/industry/textiles )

2) ANALYSIS AND REVIEW

The textile industry is a crucial sector of the global economy, encompassing the production of fibers, yarns, fabrics, and finished textile products. Heres a comprehensive analysis and review of the textile industry:

Global Overview:

Market Size and Growth: The textile industry is one of the largest in the world, with a global market size valued in the hundreds of billions of dollars annually. It has been experiencing steady growth, driven by increasing demand for clothing, technical textiles, and home textiles.

Key Players: Major players include countries like China, India, Bangladesh, Vietnam, and Turkey, which are significant producers and exporters of textiles and apparel. Developed countries like the United States, Germany, and Japan also play important roles in high-end textile manufacturing.

Supply Chain Dynamics: The industry is characterized by complex global supply chains, where raw materials (like cotton, wool, and synthetic fibers) are sourced globally, processed into yarns and fabrics, and then manufactured into finished goods

Market Segments:

Apparel: This segment includes clothing for men, women, and children, as well as fashion accessories. It is the largest segment of the textile industry.

Home Textiles: Products like bedding, towels, curtains, and carpets fall under this category.

Technical Textiles: These are functional textiles used in applications such as automotive, healthcare, construction, and industrial sectors.

3) Strengths and Weakness

A textile SWOT analysis is a structured planning method that is used to evaluate the strength, weaknesses, opportunities, and threats involved in a project or a business venture. A textile SWOT analysis can be carried out for a place, person, or product. A textile industry SWOT analysis will help the proper management to know about the ins and outs of this sector.

Textile Industry SWOT Analysis Strengths

Strengths are a key part of this textile industry swot analysis. This will help one to pinpoint the strong points of their business. This will most definitely result in the improvement of the business. Some of the strengths of the textile industry swot analysis are enlisted below:

Flexible Labor Market: This sector in particular needs an abundance of manpower. However, in Asia, the price of labor is very low. The labor rates in the textile industry (compiled by Warner International) show that the average hourly wage rates for Bangladesh, India, Pakistan, and Sri Lanka were respectively 0.23, 0.56, 0.49, and 0.39 USD.

Worldwide Demand: Clothing articles are one of the basic human needs. Everyone wants to have a good quality product for a lower price. Thats where the textile industries come in. They offer decent clothes for a reasonable price. This is the main reason, they get many buyers.

Involved Industries Increasing: In modern society, many support industries are growing. These industries form a relationship of mutualism with the textile industry. Both parties are dependent on each other. These industries are dyeing, finishing, embroidery, printing, etc.

Strong backward linkage facilities: This industry possesses strong backward linkage facilities. This has proven to be a great asset on multiple occasions. This causes this sector to improve more in its own way. Also, it provides the industry with some much- needed support.

Presence of economic zones: An economic zone is a type of facility that ensures that the buyer gets to buy many products with the least tax possible. This encourages buyers to buy more from this industry. This, as a result, allows the textile SWOT industry to make more sales and earn many profits. (Source: https://swothub.com/textile-industry-swot-analysis/ )

Textile Industry SWOT Analysis Weaknesses

This part of the textile industry swot analysis will solely focus on the weaknesses of this sector. These points are the ones that hold back this industrys overall growth. These are enlisted below:

Lack of modern machinery: The textile industry lacks technology-oriented machinery and production systems. If these arent updated then they could take a heavy toll on its production. This will later reflect in its sales and profits.

Unable to go with the flow: Once a steady line of the production system is in place, it is very hard to suddenly change it to accommodate any new type of clothing article. As a result, it lacks product diversification. It also has a very short lead time which is not good for this line of work. It holds back the whole industry.

Lack of forecasting: Lack of forecasting is the main cause of production setbacks. If an industry is unable to provide a good forecast, it often causes major issues in the marketing sector. The quantity available does not match the assumed quantity.

Depending on some specific buyers: Dependency on a few particular buyers can be the downfall of this industry. Many of the farmhouses depend on a few of their known customers for their sales. They do not get many new buyers most of the time and this causes their sales rate to pummel once any of these buyers drop out or change their choice of farmhouses.

Higher bank interest and insurance policy: This industry has to face a lot of unfair treatment. Especially when it comes to banks and insurance companies. Banks require a high interest while taking loans, which is illogical. Many insurance companies, if not all, have high-priced insurance policies with partial conditions. The industry has to suffer for this.

(Source: https://swothub.com/textile-industry-swot-analysis/ )

4) Opportunities and Threats

Textile Industry SWOT Analysis Opportunities

A textile industry SWOT analysis offers the best possible opportunities for the textile industry. This will clearly show which part of the sector could be so much better with a little push. Lets take a look at them:

Buyer attention to the Asian market: Many international buyers are more interested in the Asian section of the market. This may be a golden opportunity for Asian industries to take the market by storm. It will also be a huge turning point for this industry in general.

Open costing facility for the international buyer: Many international customers find their interest in this field being renewed by the open costing facility. This gives them a huge advantage to draw more buyers in.

Government and non-government training programs: There are a lot of people who work in this field. Even though they have curiosity, they often lack the skills that are needed. So, these government and non-government training programs can help them to enhance their skill set. This provides the chance for improvement in this sector.

Buyer initiatives for productivity: In this field, many times buyers take responsibility to initiate the push for productivity. This shows that the buyers are actually interested in the said products. So, this gives a huge boost to morale.

(Source: https://swothub.com/textile-industry-swot-analysis/ )

Textile Industry SWOT Analysis Threats

Textile SWOT analysis threats can come from other competitors, manufacturers, and from world economics.

In a textile SWOT analysis, the textile sector may face threats from other industries, such as those that manufacture synthetic materials, from consumer demand changes, price swings for raw materials, trade restrictions, and shifts in consumer preferences. Its crucial to take into account how technological advancements may affect production processes because they may cause disruptions and raise competition. The textile industry also needs to be aware of possible supply chains disruptions like pandemics, natural disasters, and labor disputes.

Any SWOT analysis that has helped the business in any way has a stunning compilation of the factors that pose threats to it. A textile industry swot analysis will help to highlight these threats. They are enlisted below:

E-shops and on-demand shops: There are many e-shops and on-demand shops that are mushrooming their way into the market. Now, the market actually has some internal competition going on. So, these new shops often end up stealing a lot of customers away from the industry.

High making cost: The making cost for this industry is quite high and very hard to achieve. So this makes having profit very hard.

Freight on board cost: The seller often has to take responsibility for goods, freight, and marine insurance. This is a convenient system no doubt. But if an accident happens the loss is very hard to deal with. This will majorly impact its earnings of it.

Political and environmental crisis: Countries that have a troublesome political environment have fewer buyers than those that dont have them. Environmental issues can also influence the flow of buyers in a country.

(Source: https://swothub.com/textile-industry-swot-analysis/ )

5) Risk and Concerns

One of the oldest industries in the world is textile production. Because the majority of businesses cater to the worldwide garment, fashion and textile market, its also one of the most international sectors. However, the dynamic global environment has altered consumer tastes, increased cost volatility, and introduced fresh hazards to the environment. Risk management in the textile and fashion industry involves identifying, assessing, and mitigating potential risks that can impact the business operations and objectives. The necessity of risk management in the textile and fashion industry cannot be emphasized given the ferociously uncertain nature of the year 2020. Nowadays, networks with the highest resilience are prioritized by businesses.

Types of Risks in Textile and Fashion Industry:

External risks:

In a supply chain, exposure to external hazards can happen both upstream and downstream and is influenced by market, environmental, and business factors.

Supply risks:

Lack of access to the materials needed for production results in supply risks. Supply outages can cause delays and strained relationships with customers

Demand risks:

Demand risks are related to underestimating the markets attraction to your offerings. They may result from a lack of understanding of consumer trends or unexpected shifts in the demand environment.

Environmental risks:

When your supply chain is negatively impacted by economic, political, ecological, or social variables, this is referred to as an environmental risk. The China-US trade conflict and the COVID-19 pandemic are two notable examples.

Internal risks:

As contrast to external dangers, are mostly under your control. By doing an audit of your workflows, communications, planning, and processes to see what is working and what may be improved, you can find them.

Manufacturing risks:

Any potential disruption to your production or process is a manufacturing risk. They can result from unhealthy or broken machinery, overworked labour, insufficient production management, and many other things.

Business risk:

Internal business risks are those that relate to adjustments that inevitably impact how you communicate with your stakeholders and business partners. Examples include changing up your management teams key players or implementing new customer communications guidelines.Rs.

Planning and control risks:

It might result in the purchase of unneeded equipment or the loss of productive inputs due to a poor or inaccurate appraisal of your companys demands. (Source: https://textilelearner.net/risk-management-in-textile-and-fashion-industry/ )

Risk Management in Textile and Fashion Industry:

a) You can move on to management after analyzing and comprehending the variety of hazards that your business faces. The risk management strategy youll employ depends on how likely it is for a certain danger to materialize and how severe its consequences will be.

b) For instance, you can decide to keep or accept low-priority industry risks. On the other side, you must take steps to lessen the risks likelihood of happening or completely avoid it. Its also beneficial to concentrate on actions that lessen the consequences if the danger materializes .

c) Reliable action and reference guides can be found in diligent record-keeping of all risk management processes and policies. Youll probably encounter poor documentation, which can lead to protocol ambiguities that impair risk management effectiveness.

d) Use ethical business practices as a requirement - Create policies that outline your organizations dedication to conducting business in a manner that respects both the environment and human rights.

e) Create a responsible sourcing strategy. Create a strategy that ranks operations according to risk. It can be helpful to identify and priorities focus areas if you rank the hazards according to likelihood and severity.

f) Work together with your suppliers to find solutions to issues - After identifying risks in your organization, collaborate with all stakeholders to investigate all options and overcome obstacles. The systemic problems youre experiencing wont likely be resolved by terminating a contract.

g) Make supply chain visibility a top priority. Gather data about your suppliers along the whole supply chain. By doing this, youll be able to identify the weaker employees and take their needs into account. Reciprocity, for instance, will help you stay ahead of the continuously changing threats by enhancing visibility across your entire organization to better reduce business exposure and manage risks.

h) Its critical to distinguish between supply chain risk management and excessively defensive risk mitigation because the latter might impede development. You run the risk of limiting innovation, which could be detrimental to your ability to expand, if you completely ban taking calculated risks.

i) The development of technology has expanded the range of risk management options and can guarantee that you have the knowledge required to take these crucial calculated risks.

j) An effective supply chain risk map will segment the components that require management, which is best accomplished by creating a framework. The so-called PPRR model, one of the most popular for controlling supply chain risk, is based on four pillars:

• Implementing strategies to reduce or stop possible supply chain hazards from happening is what is meant by prevention.

• Preparedness entails creating a backup plan in case the supply chain is disrupted. This is also known as being "risk ready. "

• Response is about carrying out your backup plan to lessen the effects should an interruption occur. In order to avoid confusion about roles when its time to take action, this calls for excellent communication amongst the people concerned.

• Recovery entails taking the necessary actions to restore business as soon and effectively as possible. This might involve anything from wise resource allocation to finding alternative producers for production inputs.

(Source: https://textilelearner.net/risk-management-in-textile-and-fashion-industry/ )

6) Internal Control Systems and their Adequacy

The Companys internal audit system has been continuously monitored and updated to ensure that assets are safeguarded, established regulations are complied with and pending issues are addressed promptly. The Audit Committee reviews reports presented by the internal auditors on a regular basis. The Committee makes note of the audit observations and takes corrective actions, if necessary. It maintains constant dialogue with statutory and internal auditors to ensure that internal control systems are operating effectively. Apart from the above the company has engaged M/s Pulkit Rastogi & Co. - Amroha, Chartered Accountant, to conduct Internal Audit during the year 2023-24.

7) Financial and operational performance

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013 and Generally Accepted Accounting Principles in India. Please refer Directors Report in this respect.

The Company is engaged in the blankets business only. Therefore there is only one reportable segment in accordance with the Accounting Standards on Segment Reporting (Ind AS 108).

There are no material changes or commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of this Report.

8) Human Resources and Industrial Relations

Human resource is considered as the most valuable of all resources available to the Company. The Company believes that the quality of the employees is the key to its success and is committed to equip them with skills, enabling them to seamlessly evolve with ongoing technological advancements. During the year the no. of employees associated with the company were 419.

The role of human resource management in organization is at counter stage. Managers are aware that HRM is a function that must play a vital role in the success of organization. It is an active participant in charting the strategic course an organization must take place to remain competitive, productive and efficient. Its focal point is people, people are the life blood of the organization. The uniqueness of HRM lies in its emphases on the people in work setting and its concerns for the well living and comfort of the human resources in an organization.

Industrial relation is the one of the major component which determine the potentiality and stability of the employees as well as helps to enrich the productivity of the business establishments. Textile industries were contributing more to the Indian economy in terms of export earnings as well as generating employment opportunities. The relationship between the employees and employers determine the productivity of the enterprises. If the industrial relation is good the enterprise will attain the success in all the side especially in terms of producing the materials without much defects.

9) Key Financial Ratios

Changes in key financial ratios are as under:

S. No. Ratio	2023-2024	2022-2023	% Variance	Reason for variance
1 Debtors turnover Ratio	20.92	22.39	- 6.57	-
2 Inventory turnover Ratio	3.52	6.04	- 41.71	3
3 Interest Coverage ratio	2.29	0.51	349.02	4
4 Current Ratio	1.08	1.16	- 7.09	1
5 Debt Equity Ratio	1.09	1.07	2.42	2
6 Operating profit margin (%)	5.28	- 1.66%	418.07	4
7 Net profit Margin (%)	0.94	- 4.86	119.34	4
8 Return on Net Worth (%)	2.00	- 10.69	118.71	4

Reason for variance

1 Usage of Internal accruals in new projects caused decline in current ratio and increase in net capital turnover ratio.

2 New Term loans for new projects caused increase in the ratio.

3 Increase in inventory reduces the ratio.

4 Net profit/ loss in the current year caused improvement/decline in the ratio.

	For and on behalf of the Board of Directors
	Satish Kumar Raj
Place: Vill Amhera (J.P.Nagar)	Chairman
Date : 20th July 2024	DIN:00852221