We submit herewith the "Management Discussion and Analysis
Report" on the business of the Company as applicable to the extent relevant.
GLOBAL ECONOMY OVERVIEW
The Textile Industry is expected to grow from USD 723 billion in 2023
to USD 859 billion by 2028, at a CAGR of 3.52% during the forecast period (2023-2028).
The COVID-19 pandemic has challenged the textile industry drastically
in 2020. Asia, which is one of the largest markets for the textile industry in the world,
has suffered from the prolonged lockdowns and restrictions in the majority of Asian
countries along with the sudden drop in international demand for their products. The loss
was particularly high in countries where the textile industry accounted for a larger share
of the exports. According to the study by the International Labour Organization (ILO) the
global textile trade collapsed during the first half of 2020. Also, exports to the major
buying regions in the European Union, the United States, and Japan fell by around 70%. The
industry also suffered several supply chain disruptions due to the shortages of cotton and
other raw materials. The textile industry is an ever-growing market, with key competitors
being China, the European Union, the United States, and India. China is the worlds
leading producer and exporter of both raw textiles and garments. The United States is the
leading producer and exporter of raw cotton, while also being the top importer of raw
textiles and garments. The textile industry of the European Union comprises Germany,
Spain, France, Italy, and Portugal at the forefront with a value of more than 1/5th of the
global textile industry. India is the third-largest textile manufacturing industry and is
responsible for more than 6% of the total textile production, globally. The rapid
industrialization in the developed and developing countries and the evolving technology
are helping the textile industry to have modern installations which are capable of
high-efficient fabric production. These factors are helping the textile industry to record
more revenues during the study period and are expected to help the industry further in the
forecast period.
TEXTILE INDUSTRY IN INDIA- STRUCTURE AND DEVELOPMENT
Indian textile industry is known globally for its products and it is
the second largest producer and exporter of textiles and garments China being the first in
the world market. Indian market accounts for about 14 percent of the worlds
production of textile fibers and yarns. It has a vast variety of textile production
which includes cotton, jute, handicraft, silk, hosiery and wool. India is first in jute
production, second largest producer of silk, cotton, manmade fiber and filament and third
in cellulosic fiber in the world. The textile industry occupies an important place in
Indian economy too.
India has emerged as the worlds fastest-growing major economy,
and it is predicted to be one of the top economic powers in the next decade, owing to its
robust democracy and strong partnerships. The export demand in India is mainly driven by
the US, the largest market, accounting for 60 per cent of Indias home textile
exports. Compared to a 9 per cent increase in Indias home textile product export of
US $ 5.7 billion in FY 2021, exports to the US increased by 14 per cent, while exports to
the other major markets of the UK and the EU reported a year-on-year decline during the
year.
In the Western world, terry towels generate majority of sales in the
towel segment. Even in India, the largest global suppliers from the country are now
looking aggressively at domestic branded terry towel market. The high growth potential
with good margins is the attraction.
ROLE OF INDIAN TEXTILE INDUSTRY IN THE ECONOMY
Textile industry plays a significant role in the economy. The Indian
textile industry is one of the largest and most important sectors in the economy in terms
of output, foreign exchange earnings and employment in India. 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 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.
The government is also planning to double the size of the Indian
textile and apparel industry in the near future. This move is expected to take the textile
market to 209 billion USD by 2029. They are supporting the sector through funding and
machinery sponsoring. Through initiatives like "Skill India" and "Make in
India", they are promoting business and skilling opportunities for inclusive growth
of the sector. Also, the export promotion policies for the textiles sector allowing 100%
FDI in the sector under the automatic route has been quite helpful for boosting players
and consumers in the sector.
OPPORTUNITIES, CHALLENGES AND OUTLOOK
Opportunities
The most significant change in the Indian textile industry has been the
advent of man-made fibers (MMF). India has successfully placed its innovative range of MMF
textiles in almost all the countries across the globe. The future outlook for the Indian
textile industry looks promising, buoyed by both strong domestic consumption as well as
export demand. With consumerism and disposable income on the rise, the retail sector has
experienced a rapid growth in the past decade.
Opportunities available to the Company in the present scenario, which
can be seized for the benefit of the Company and ultimately to the stakeholders, can be
summarized as under:
1. The government had extended the duty drawback facility on all
textile products & increased the rates in some cases to boost exports in the sector.
2. In the Union budget, a good amount has been allocated to the
Ministry of Textiles in order to support various schemes covering the textile industry.
3. 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 relative to key global peers.
4. Indias growing population has been a key driver of textile
consumption growth in the country.
5. The Indian textile industry is set for strong growth, buoyed by both
strong domestic consumption as well as export demand
6. Urbanization is expected to support higher growth due to change in
fashion & trends.
Threats
Based on review of the textile market situation and level of rivalry
present in the domestic market, following threats might be present in the market, which
can hinder growth of the revenue of the Company:
1. Intense competition between established brands and private label
brands.
2. Low cost substitute products from other countries
3. Significant presence of small suppliers has reduced the bargaining
power.
4. Major clothing brands have better bargaining power over textile
manufacturers, as the product differentiation is low and numbers of players are high and
fragmented.
Outlook
The government of India has initiated various policies to support
textile and apparel sectors growth for the long-term horizon. With the allowance of
100% FDI in the sector under the automatic route it is expected to attract USD 140 billion
(INR 10,485 billion) foreign investments in the coming years and also carried out high
investments under various schemes like Integrated Textile Parks (SITP) and
Technology Upgradation Fund Scheme (TUFS) to encourage the flow of more private equity and
to train workforce. For further accelerating the growth in the textile industry, the
Textile Ministry assigned INR 6,900 Million (USD 106.58 million) for the set-up of 21
readymade garment manufacturing units in seven states for the development and
modernization of Indian Textile Sector. India has also become the second largest
manufacturer of PPE in the world with more than 600 companies in India certified to
produce PPEs today whose global market worth is predicted to be over USD 92.5
billion (INR 6,927 billion) by the end of 2025, as compared to USD 52.7 billion (INR 3,971
billion) in 2019 which would further enhance the textile products demand in coming years.
Being largely a consumer driven industry, textile and apparel sectors growth and
performance is majorly dependent on Indias growing economy. The growth in the
textile and apparel sector is sustained by the strong domestic consumption as well as
export demand over the medium term. India has high abundance of raw material, particularly
with respect to cotton where it is quite cost competitive, together with healthy
infrastructure and skilled labor force as compared to neighbouring countries like
Bangladesh and Sri Lanka, which is expected to provide support in expanding the
countrys share in the global textile and apparel market. It is estimated that India
has the potential to reach USD 70 billion (INR 5,242 billion) in exports and achieve much
higher share of the global market by 2024.
The government has launched an Emergency Credit Line Guarantee Scheme.
The aim of this scheme is to provide funds to micro and small textile business owners.
This will help them to invest in increasing their production and minimize the effect of
the pandemic. This scheme will be available till March 2023, with a huge guarantee cover.
The Indian government has allowed 100% Foreign Direct Investment (FDI) in the textile
industry. Thus, it will be easier for small companies to grow and export their products to
other countries.
The National Technical Textiles Mission was proposed in the Union
Budget for 2020-21. It will be active till 2023-24 with an estimated expense of Rs 1480
crore for the betterment of the textile industry.
DISSCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL
PERFORMANCE
The financial statements have been prepared in accordance with the
requirements of the Companies Act, 2013 and applicable accounting standards issued by the
Institute of Chartered Accountants of India. The details of the financial performance of
the Company are appearing in the Balance Sheet, Profit & Loss Accounts and other
financial statements forming part of this annual report.
INTERNAL CONTROL SYSTEM
Given the magnitude and nature of its business, the Company has
maintained sound and commercial practice with an effective internal control system. The
system ensures that all transactions are authorized, recorded and reported correctly to
safeguard the assets of the Company and protect them from any loss due to unauthorized use
or disposition. The adequate internal information system is in place to ensure proper
information flow for the decision-making process. The Company also has well-established
processes and clearly defined roles and responsibilities for people at various levels. The
control mechanism also involves well documented policies, authorization guidelines
commensurate with the level of responsibility and standard operating procedures specific
to the respective businesses, adherence to which is strictly ensured. Internal audit is
carried out frequently to create awareness and to take corrective actions on the
respective units or areas, which need rectification. These reports are then reviewed by
the "Management Team" and the "Audit Committee" for follow-up action.
HUMAN RESOURCE DEVELOPMENT
The Company regards its human resources as amongst its most valuable
assets and proactively reviews policies and processes by creating a work environment that
encourages initiative, provides challenges and opportunities and recognizes the
performance and potential of its employees attracting and retaining the best manpower
available by providing high degree of motivation.
Your Company believes in trust, transparency & teamwork to improve
employees productivity at all levels.
CAUTIONARY STATEMENT
The management discussion and analysis report containing your
Companys objectives, projections, estimates and expectation may constitute certain
statements, which are forward looking within the meaning of applicable laws and
regulations. The statements in this management discussion and analysis report could differ
materially from those expressed or implied. Important factors that could make a difference
to the Companys operation include raw material availability and prices, cyclical
demand and pricing in the Companys principal markets, changes in the governmental
regulations, tax regimes, forex markets, economic developments within India and the
countries with which the Company conducts business and other incidental factors.
|
On behalf of Board of Directors |
|
For Rahul Merchandising Limited |
|
VAIBHAV GOEL |
Date: 14.08.2023 |
Whole Time Director |
Place: New Delhi |
DIN: 07899594 |
Independent Auditors Certificate Regarding compliance of
conditions of Corporate Governance
To the Members of
RAHUL MERCHANDISING LIMITED,
We have examined the compliance of conditions of Corporate Governance
by RAHUL MERCHANDISING LIMITED for the year ended on 31st March, 2023 as stipulated
in Regulations 17 to 27 and clauses (b) to (i) of Regulation 46(2) and para C and D of
Schedule V to the Securities and Exchange Board of India (SEBI) (Listing Obligations and
Disclosure Requirements) Regulations, 2015 (the "Listing Regulations").
Managements Responsibility
The compliance of conditions of Corporate Governance is the
responsibility of the Management. This responsibility includes the design, implementation
and maintenance of internal control and procedures to ensure the compliance with the
conditions of the Corporate Governance stipulated in the Listing Regulations.
Auditors Responsibility
Our responsibility is limited to examining the procedures and
implementation thereof adopted by the Company for ensuring compliance with the conditions
of the Corporate Governance. It is neither an audit nor an expression of opinion on the
Financial Statements of the Company.
We have examined the books of account and other relevant records and
documents maintained by the Company for the purposes of providing reasonable assurance on
the compliance with Corporate Governance requirements by the Company.
We have carried out an examination of the relevant records of the
Company in accordance with the Guidance Note on Certification of Corporate Governance
issued by the Institute of Chartered Accountants of India (the ICAI), the Standards on
Auditing specified under Section 143 (10) of the Companies Act, 2013, in so far as
applicable for the purpose of this certificate and as per the Guidance Note on Reports or
Certificates for Special Purposes issued by the ICAI which requires that we comply with
the ethical requirements of the Code of Ethics issued by the ICAI. We have complied with
the relevant applicable requirements of the Standard on Quality Control (SQC) 1, quality
control for firms that perform audits and reviews of Historical Financial Information and
Other Assurance and Related Services Engagements.
Opinion
Based on our examination of the relevant records and according to the
information and explanations provided to us and the representations provided by the
management, we certify that the Company has complied with the conditions of Corporate
Governance as stipulated in the Listing Regulations, as applicable for the year ended
March 31st, 2023, as referred to in paragraph 1 above.
We further state that such compliance is neither an assurance as to the
future viability of the Company nor of the efficiency or effectiveness with which the
management has conducted the affairs of the Company.
|
For V S S A & Associates |
|
Chartered Accountants |
|
{Firm Registration No. 012421N} |
| Place: New Delhi |
CA Samir Vaid |
| Dated: 25.04.2023 |
Partner |
|
Membership No. 091309 |
|
UDIN: 23091309BGXHPT5179 |
+91-9892691696
