(a) INDUSTRY STRUCTURE AND DEVELOPMENTS
The Textile industry is one of the oldest business options in India since the ancient
age. Different types of textile fibers are produced in India, among which cotton, jute,
silk and wool are the major ones. Both skilled laborers and unskilled officials are needed
to run this business smoothly. Thus, the textile industry serves as the platform offering
a huge number of employment opportunities to eligible people in India. The products of the
Indian textile industry with the traditional designs and textures are very popular all
over the world. People associated with this industry hope to see a great comeback in 2022,
overcoming the setback during the past 2 years due to the pandemic situation.
(Source:
https://fashinza.com/fabric/guide/an-overview-of-indias-textile-industry-in-2022/)
(b) COTTON YARN INDUSTRY AND EXPORT
Narendra Goenka, the chairman of the Apparel Export Promotion Council has confirmed
this speedy growth of the Textile Industry in India after the pandemic situation. A
Comprehensive Economic Partnership Agreement is signed between India and the United Arab
Emirates in February 2022, in terms of the exports of textiles and jewelry. The textile
units based in Noida and Tirupur have taken the responsibility of meeting the export
demands, which will start from May 2022. So, these units will increase their manpower up
to 30%, due to which more skilled people will get employment there.
The technical matters of the textile industry have improved a lot in recent years.
However, the Indian textile industry still needs to progress in the research and
development of designs. The quality of raw materials also needs to be upgraded for the
production of the best quality garments. Now, the textile industry contributes 5% to the
GDP from domestic trade and 7% from foreign exports. However, these values are expected to
increase this year, making this industry one of the leaders in the Indian economy.
(c) OPPORTUNITIES AND THREATS
1) Opportunities in Cotton Yarn Segment:
India is now recognized as the largest producer of cotton and jute garments in the
world. There is tough competition from China, Bangladesh, Pakistan, and Vietnam for
exporting textile products in the global market. However, the Indian textile industry
still manages for a comeback even after the decline of the business in 2020 – 21.
Since the textile industry not only comprises large textile mills and high-end garment
boutiques, self-employed artisans from rural areas are also promoted through government
schemes, like MGNREGA. Many rural cooperatives and NGOs are also providing support to
people working on a small-scale for the textile industry.
All garment manufacturing units are returning to the normal state though at a slow pace
at present. The Indian textile industry is aiming to export products worth $40 to $100
billion within 2027. These garment units are fast expanding in size and investments, to
meet the bulk orders pouring in from various foreign countries in the west. The promotion
of this industry through several government schemes has been the greatest in the last
three decades. The apparel industry is progressing fast with the manufacturing of more
varieties of products. This textile business is also spreading in more countries across
the world, leading to more earning of foreign money.
2) Threats in Cotton Yarn Segment:
In the last financial year, the pandemic was still at a great height that eventually
led to the closure of several manufacturing units in the Textile Industry. These factory
owners were forced to close due to the shortage of manpower. The lack of funds to buy raw
materials for production was another drawback in this industry. According to the
government rules, all textile factories had to work with only 50% manpower. Thus, these
Companies could not meet the deadlines of bulk orders, though such orders were rare to
receive at that time. The Indian government imposed new GST with higher rates on
industries. So, the textile industry now finds it harder to pay the taxes on their sales.
Therefore, business owners are quite agitated due to its negative impact.Political
tensions or militant activities in some places hinder the smooth operations of the textile
industry there. Many textile companies face severe labor shortages and a lack of regular
transportation if their factories are located in remote places.
The government provides financial support only to small and medium-scale companies.
Hence, many business owners do not strive for further growth of their textile companies to
keep on receiving those benefits. Cotton textile is the major player in the Indian textile
industry. The price of cotton has risen too much now, which is a major setback for textile
industry owners. They find it hard to maintain their supply chain due to this price hike.
The inflation in the Indian economy results in frequent demands among laborers for
salary hikes. Thus, industry owners do not find the means to expand their business and
compete with global textile leaders from other countries.
Common laborers do not have the skills to produce the best textile designs. They are
not formally trained in textile manufacturing and learn only while working here. This
practice has a negative effect on the quality of end products manufactured by these
textile companies.
Many textile business owners lack updated knowledge of the modern trend. Hence, they
cannot produce stylish products that will satisfy global customers.
The high cost of power in India is another hindrance to textile production. Most modern
machines are power-driven, which raises the overall production costs for business owners.
Unfavorable government policies in India also obstructed the growth of the textile
industry. But other countries provide more support to their textile businesses. Thus, the
textiles of India cannot compete withthem in the global market.
Financial Results:
The Companys financial performance for the year ended March 31, 2023 is summarized
below:
| Particulars |
Year Ended 31stMarch, 2023 |
Year Ended 31stMarch, 2022 |
| Gross Revenue |
5289.70 |
5908.22 |
| Profit before Interest, Depreciation & tax |
93.24 |
363.71 |
| Less : Interest |
45.60 |
27.63 |
| Less : Depreciation |
77.06 |
77.45 |
| Profit before exceptional items and tax |
(29.42) |
258.63 |
| Add : Exceptional Items |
120.17 |
- |
| Profit before Tax |
90.75 |
258.63 |
| Less : Provision for Tax |
88.29 |
8.24 |
| Less: Provision for Dividend |
- |
- |
| Profit after tax & dividend |
2.46 |
250.39 |
| Add : Profit/(Loss) brought forward from previous year |
(2498.83) |
(2749.22) |
| Balance carried to Balance Sheet |
(2496.37) |
(2498.83) |
(d) SEGEMENT-WISE OR PRODUCT-WISE PERFORMANCE
The Company operates in only Single segment; hence segment-wise performance is not
applicable.
(e) OUTLOOK
Indian government has taken a series of positive steps to support the textile industry
in this country. The Union Ministry of Textiles is more active in developing the textile
industry, by constant coordination with business owners of this sector. The Union Budget
for 2022 – 23 also announced some benefits that can help in the growth of the Indian
textile industry.
(f) RISKS AND CONCERNS
While the overall economy is relatively strong and is outperforming major economies,
the textile sector is a notable exception and orders suggest the downturn will continue
well into 2023, raising the risk of layoffs in an industry that employs more than 45
million people. Exports, which constitute about 22% of the industry, have fallen for five
months in a row-declining over 15% year-on-year in November to $3.1 billion. Domestic
sales are sluggish despite strong growth in the overall economy because of high costs and
cheap imported garments, manufacturers say.
(g) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Pursuant to the provisions of section 134(5) (e) Companies Act, 2013, every listed
company has to lay down Internal Financial Controls and ensure that these are adequate and
are operating effectively. Internal Finance Controls means the policies and procedures
adopted by the company for ensuring the following:
• Orderly and efficient conduct of its business
• Adherence to companys policies
• Safeguarding of its assets
• Prevention and detection of frauds and errors
• Accuracy and completeness of the accounting records and timely preparation of
reliable financial information The Company has adequate and suitable internal control
systems that are continuously monitored and updated to ensure that its assets are
safeguarded. These systems also ensure that established regulations are complied with and
pending issues are addressed promptly. The adequacy of the internal control systems are
audited by the internal auditors and the reports are reviewed quarterly by the Audit
Committee. Based on the report of Internal Audit, the Committee makes note of the audit
observations and undertakes corrective actions, where necessary. It maintains a constant
dialogue with the statutory and internal auditors to ensure that internal control systems
are operating effectively.
(h) MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING
NUMBER OF PEOPLE EMPLOYED
During the Financial Year 2022-23 there is no material developments in the area of
Human Resources/Industrial Relations front as well as no change in increase/decrease in
number of people employed.
(i) DETAILS OF SIGNIFICANTCHANGES IN KEY FINANCIAL RATIOS : i. Debtors
Turnover: 6.59 ii. Inventory Turnover: 6.99 iii. Interest Coverage Ratio: 2.04 iv. Current
Ratio: 2.32 v. Debt Equity Ratio: 0.49 vi. Operating Profit Margin (%): 0.31 vii. Net
Profit Margin (%): 0.05
(k) DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY
PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF:
Current year RONW is 0.09% as compared to previous year RONW 7.17%, the dilution in in
RONW is on account of lower profitability due to low realization and higher raw material
consumption
(l) CAUTIONARY STATEMENT
Certain statements in the Management Discussion and Analysis describing the Companys
objectives, predictions may be "forward-looking statements" within the meaning
of applicable laws and regulations. Actual results may vary significantly from the
forward-looking statements contained in this document due to various risks and
uncertainties. These risks and uncertainties include the effect of economic and political
conditions in India, volatility in interest rates, new regulations and Government policies
that may impact the Companys business as well as its ability to implement the strategy.
|
By order of the Board of Directors |
|
For, Premier Synthetics Limited |
|
Gautamchand Surana |
Sachin Kansal |
|
Managing Director |
Independent Director |
| Place: Ahmedabad |
|
|
| Date: 12thAugust, 2023 |
DIN: 00955362 |
DIN: 03566139 |
+91-9892691696
