GLOBAL OVERVIEW:
Your Company indicated its strategy in the year under review. As promised in our
previous years Report, of the Company have turned over the Company from its dismal state
of affairs to a fairly respectable level.
Textiles is a cyclical sector. It is a big challenge for any Company in the sector to
emerge as a sustaining profit making Company. Factors like a fragmented industry,
historical government policies, technological obsolescence, increased competition,
increased Consumer consciousness & Chinese aggression pose additional challenges.The
demand for textile and clothing is on the rise globally with the Indian market on the
forefront. Despite the upheavals which we have witnessed globally and within India, the
state of Indian textile industry has remained fairly stable – and it will continue to
become stronger owing to the burgeoning domestic market. The growth of our economy and the
rising desires and aspirations of the Indian youth will ensure that the demand for textile
keeps on surging year after year. The potential size of the Indian textile industry is
expected to reach US $ 220 billion by the year 2020. Several international retailers are
also focusing on India due to its emergence as a potential sourcing destination.
As announced in our previous Report, the Company continued to tread further into its
core competence which lie in the textile sector. The Indian textile industry has an
overwhelming presence in the economic life of the country. Apart from providing the basic
necessities of life, the textiles industry also plays a vital role through its
contribution to industrial output, employment generation and export earnings. Thus the
growth and all round development of this industry has a direct bearing on the improvement
of the economy of the nation. Your Company hopes to move on with its objectives in a
phased manner. After gaining preliminary foothold in the sector, it plans to move into
manufacturing and then exports.
Over all the global economy has witnessed weak growth. Weak growth isnt just a problem
for industrialized economies. Emerging economies are finding it increasingly difficult to
maintain the pace of economic expansion theyve recorded over the past decade.
The International Monetary Fund trimmed its outlook for global economic growth, as
anemic output in Europe and Japan hobble the recovery and emerging markets struggle with
rising borrowing costs.
The U.S. growth of 2.8% this year should help perk up prospects for many emerging
markets, where output is slowing.
Introduction
Indias textiles sector is one of the oldest industries in Indian economy dating back
several centuries. Even today, textiles sector is one of the largest contributors to
Indias exports with approximately 11 per cent of total exports. The textiles industry is
also labour intensive and is one of the largest employers. The industry realised export
earnings worth US$ 41.4 billion in 2014-15, a growth of 5.4 per cent^. The textile
industry has two broad segments. First, the unorganised sector consists of handloom,
handicrafts and sericulture, which are operated on a small scale and through traditional
tools and methods. The second is the organised sector consisting of spinning, apparel and
garments segment which apply modern machinery and techniques such as economies of scale.
The Indian textiles industry is extremely varied, with the hand-spun and hand-woven
textiles sectors at one end of the spectrum, while the capital intensive sophisticated
mills sector at the other end of the spectrum. The close linkage of the textile industry
to agriculture (for raw materials such as cotton) and the ancient culture and traditions
of the country in terms of textiles make the Indian textiles sector unique in comparison
to the industries of other countries. The Indian textile industry has the capacity to
produce a wide variety of products suitable to different market segments, both within
India and across the world.
Market Size
The Indian textiles industry, currently estimated at around US$ 108 billion, is
expected to reach US$ 223 billion by 2021. The industry is the second largest employer
after agriculture, providing employment to over 45 million people directly and 60 million
people indirectly. The Indian Textile Industry contributes approximately 5 per cent to
Indias Gross Domestic Product (GDP), and 14 per cent to overall Index of Industrial
Production (IIP).
The Indian textile industry has the potential to reach US$ 500 billion in size#. The
growth implies domestic sales to rise to US$ 315 billion from currently US$ 68 billion. At
the same time, exports are implied to increase to US$ 185 billion from approximately US$
41 billion currently.
Investments
The textiles sector has witnessed a spurt in investment during the last five years. The
industry (including dyed and printed) attracted Foreign Direct Investment (FDI) worth US$
1.85 billion during April 2000 to March 2017.
Some of the major investments in the Indian textiles industry are as follows:
• One of the leading manufacturers and exporters of terry towel, home textile,
yarn and paper in India, has entered into a partnership with French firm Lagardere Active
Group, to launch a premium range of home textiles under the renowned French lifestyle
brand Elle Dcor in India.
• Raymond Group has signed a Memorandum of Understanding (MoU) with Maharashtra
government for setting up a textile manufacturing plant with an investment of Rs 1,400
crore (US$ 207.53 million) in Maharashtras Amravati district.
• Grasim Industries has invested Rs 100 crore (US$ 14.82 million) to develop its
first fabric brand, ‘Liva, which it will distribute through 1,000 outlets as part of
a plan to stay in sync with changing consumer behaviour.
Government Initiatives
The Indian government has come up with a number of export promotion policies for the
textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under
the automatic route.
Some of initiatives taken by the government to further promote the industry are as
under:
• The Union Cabinet has cleared aRs 6,000 crore (US$ 889.44 million) package for
the textile sector, aimed at attracting investments worth Rs 74,000 crore (US$ 10.95
billion) generating 10 million jobs and increasing textile exports by US$ 30 billion in
the next three years.
• The Department of Handlooms and Textiles, Government of India, has tied up with
nine e-commerce players and 70 retailers to increase the reach of handlooms products in
the Indian market, which will generate better prices and continuous business, besides
facilitating direct access to markets and consumers for weavers.
• The Union Ministry of Textiles, which has set a target of doubling textile
exports in 10 years, plans to enter into bilateral agreements with Africa and Australia
along with working on a new textile policy to promote value addition, apart from
finalising guidelines for the revised Textile Upgradation Fund Scheme (TUFS).
• The Government of India is expected to soon announce a new National Textiles
Policy. The new policy aims at creating 35 million new jobs by way of increased
investments by foreign companies, as per Textiles Secretary Mr S K Panda.
• Subsidies on machinery and infrastructure
• The Revised Restructured Technology Up gradation Fund Scheme (RRTUFS) covers
manufacturing of major machinery for technical textiles for 5 per cent interest
reimbursement and 10 per cent capital subsidy in addition to 5 per cent interest
reimbursement also provided to the specified technical textile machinery under RRTUFS.
• Under the Scheme for Integrated Textile Parks (SITP), the Government of India
provides assistance for creation of infrastructure in the parks to the extent of 40 per
cent with a limit up to Rs 40 crore (US$ 6 million). Under this scheme the technical
textile units can also avail its benefits.
• The major machinery for production of technical textiles receives a concessional
customs duty list of 5 per cent.
• Specified technical textile products are covered under Focus Product Scheme.
Under this scheme, exports of these products are entitled for duty credit scrip equivalent
to 2 per cent of freight on board (FOB) value of exports
• The Government of India has implemented several export promotion measures such
as Focus Market Scheme, Focus Product Scheme and Market Linked Focus Product Scheme for
increasing share of Indias textile exports.
• The Ministry of Textiles has approved a Scheme for promoting usage of
geotechnical textiles in North East Region (NER) in order to capitalise on the benefits
of geotechnical textiles. The scheme has been approved with a financial outlay of Rs 427
crore (US$ 63.3 million) for five years from 2014-15.
Road Ahead
The future 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 with the
entry of several international players like Marks & Spencer, Guess and Next into the
Indian market. The organised apparel segment is expected to grow at a Compound Annual
Growth Rate (CAGR) of more than 13 per cent over a 10-year period.
References: Ministry of Textiles, Indian Textile Journal, Department of Industrial
Policy and Promotion, Press Information Bureau.
STRENGTH
India is today recognized as one of the best sourcing destinations for garments,
textiles, accessories and finish: It provides a perfect blend of fashion, design, quality,
patterns, textures, colours and finish.
Labour is skilled and economical while process are highly without taking away from the
quality of the final product. Amazing technological developments, superior design
capabilities and companies that provide integrated logistics solutions are other highly
prized support systems that the industry thrives on. Combined with these manmade assets
are the countrys natural assets which play a large role in boosting the garment industry-
by providing raw materials of world class quality. India the largest producer of Jute the
second largest producer of cotton, silk and cellulosic fibre, the third largest producer
of raw cotton and the fourth largest producer of synthetic fibre.
WEAKNESS
Exporters may find it challenging to manage liquidity in F.Y. 2016-2017 amid increasing
volumes coupled with a long working capital cycle and the consequent higher use of working
capital limits - a characteristic of the textile business. It is to be noted that Indias
position in global arena is on a shaky platform as it is facing tough competition from its
neighbouring countries such as China & Bangladesh. Talking about these three Asian
countries the labour in Bangladesh is cheapest and Indias labour is costliest. The fuel
prices in India are the highest among these countries. China is the leader in exports with
more than 40% market share. From the above point it can clearly be inferred that India is
not in a leading position and will have to work hard to reap success.
RISK MANAGEMENT
In an interdependent, fast-moving world, organizations are increasingly confronted by
risks that are complex in nature and global in consequence. Such risks can be difficult to
anticipate and respond to, even for the most seasoned business leaders.
FINANCIAL PERFORMANCE
The Company has earned profit after tax of Rs. 1,700/- during the current financial
year 2016-17 as against Rs. 348,599/- earned during the previous financial year 2015-16.
Profit before tax is 56,508/- as compared to 504,485 /- in previous year.
RISKS AND CONCERNS
Our revenues and expenses are difficult to predict and can vary significantly from
period to period, which could cause decline in our performance. The economic environment,
pricing pressure and decreased capacity utilization rates could negatively impact our
revenues and operating results. An economic slowdown or other factors that affect the
economic health of the country may affect our business. Our net income may get reduced if
Government of India slashes the subsidies given. Changes in the policies of the Government
of India or political instability, could delay the further liberalization of Indian
economy, which could impact our business prospects. Our failure to complete the orders in
agreed time frame may negatively affect our profitability. Our client contracts are often
conditioned on our performance, which, if unsatisfactory, could result in lesser revenues.
HUMAN RESOURCES / INDUSTRIAL RELATIONS
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, training and structured compensation was the main
thrust this year.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has developed adequate internal control system commensurate to its size and
business to ensure that all assets are safeguarded and protected against any loss from
unauthorized use or disposition and that all transactions are authorized, recorded and
reported correctly. The internal audit report reviewed by the Management together with the
Audit Committee of the Board. The Company has a strong Management Information System as a
part of Control Mechanism.
CAUTIONARY STATEMENT
This report contains forward-looking statements based on certain assumptions and
expectations of future events. Actual performance, results or achievements may differ from
those expressed or implied in any such forward-looking statements. The Company assumes no
responsibility to publicly amend, modify or revise any forward looking statements, on the
basis of any subsequent developments, information or events.
|
By Order of the Board |
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| DATE: 14.08.2017 |
ForRAJLAXMI INDUSTRIES LIMITED |
|
| PLACE: Mumbai |
Sd/- |
Sd/- |
| Regd. Off. |
Rahul Jagnani |
Sonam Sharma |
| GAYATRI COMPLEX, FLAT NO. 161, VAL |
(DIN : 05334200) |
(DIN- 06993677) |
| VILLAGE TAL-RAHNAL, BHIWANDI, DIST- THANE – 421 302 |
|
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+91-9892691696
