R&B Denims Ltd Management Discussions.


Statements in the Directors Report & Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make difference to the Companys operations include raw material availability and its prices, cyclical demand and pricing in the Companys principle markets, changes in Government regulations, tax regimes, economic developments within India and the countries in which the Company conducts business and other ancillary factors.


The Indian economy was negatively impacted by an unprecedented health crisis in 2020-21 with the highly contagious corona virus (Covid-19) spreading across the country. In response to the pandemic, Government has taken several proactive preventive and mitigating measures starting with progressive tightening of international travel, issue of advisories for the members of the public, setting up quarantine facilities, contact tracing of persons infected by the virus and various social distancing measures. Government imposed a strict 21 days nationwide lockdown from 25th March, 2020, under the Disaster Management Act, 2005, with subsequent extensions and relaxations, to contain the spread of Covid-19 while ramping up the health infrastructure in the country. The lockdown measures, imposed to contain the spread of Covid-19 pandemic in India, ubiquitously affected employment, business, trade, manufacturing, and services activities. The real Gross Domestic Product (GDP) growth is projected to contract by 7.7 percent in 2020-21 as compared to a growth of 4.2 percent in 2019-20. GDP growth, however, is expected to rebound strongly in 2021-22 owing to the reform measures undertaken by the Government.

As per the first Advance Estimates of annual national income released by the National Statistical Office (NSO), Real GDP is estimated to contract by 7.7 percent in 2020-21, as compared to a growth of 4.2 percent in 2019-20. This contraction in GDP growth is mainly attributed to the contraction in industry and services sector. The growth of Gross Value Added (GVA) at constant (2011-12) basic prices is estimated to contract by 7.2 percent in 2020-21, as compared to a growth of 3.9 percent achieved in 2019-20. Positive growth in real GVA in agriculture & allied sectors at 3.4 percent in 202021 against 4.0 percent in PE of 2019-20 indicates resilience of rural economic activity to the Covid-19 pandemic. From the demand side, private consumption expenditure is estimated to contract at 9.5 percent in 2020-21 as against a growth of 5.3 percent in 2019-20 and fixed investment is estimated to decline by 14.5 percent in 2020-21 as against 2.8 percent in 2019-20. Government consumption final expenditure is estimated to grow at 5.8 percent in 2020-21 as against 11.8 percent in 2019-20. Exports and imports of goods and services are estimated to contract at 8.3 percent and 20.5 percent (at constant prices) respectively in 2020-21.


The textiles and apparel industry in India has strengths across the entire value chain from fiber, yarn, fabric to apparel. It is highly diversified with a wide range of segments ranging from products of traditional handloom, handicrafts, wool and silk products to the organized textile industry. The organized textile industry is characterized by the use of capital-intensive technology for mass production of textile products and includes spinning, weaving, processing, and apparel manufacturing.

The domestic textiles and apparel industry stood at $108.5 bn in 2019-20 of which $75 bn was domestically consumed while the remaining portion worth $28.4 bn was exported to the world market. Textiles and garments industry is expected to reach $190 bn by 2025-26 from $103.4 bn in 2020-21.

Cotton production supports 5.8 million farmers and 40-50 million people in allied sectors.

Further, the domestic consumption of $75 bn was divided into apparel at $55 bn, technical textiles at $15 bn and home furnishings at $5 bn. While exports comprised of apparel exports at $12 bn; home textiles exports at $4.8 bn; fabric exports at $4 bn; yarn exports at $3.8 bn; fiber exports at $1.8 bn and others at $2 bn.


India is working on major initiatives, to boost its technical textile industry. Owing to the pandemic, the demand for technical textiles in the form of PPE suits and equipment is on rise. Government is supporting the sector through funding and machinery sponsoring.

Top players in the sector are attaining sustainability in their products by manufacturing textiles that use natural recyclable materials.

The future for the Indian textiles industry looks promising, buoyed by 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.

High economic growth has resulted in higher disposable income. This has led to rise in demand for products creating a huge domestic market.

Major Trends in Textile & Apparel Industry:

1. Emergence of new garmenting hubs: Increase in labour and raw material cost has brought a shift in global textile industry, forcing companies to shift their base from developed countries to developing countries like India, Ethiopia, Myanmar, Vietnam and Cambodia. These developing countries offer cheap labour and good quality raw material at lower prices.

2. Increasing importance of Industry 4.0: Textile 4.0 is a fourth industrial revolution focusing on automation of industry. This automation can be achieved by data exchange, robotics, the internet of things, cloud computing and through various other measures. This automation will result in lower operating cost with customary processes and improved quality standards.

3. Development of new trade Alliances: Trade alliances and Free Trade Agreement (FTA) are some measures by various governments to connect markets. Through this the exchange of technologies will become easier. These alliances will ultimately lead to increase in flow of FDI, improved infrastructure and more job opportunities helping economies to grow.

5. Shift towards Sustainable Fashion: With rising awareness about climate change, consumers prefer brands that adopt sustainable business practices. As a result, the textile industry has been witnessing a shift towards sustainable processes right from manufacturing of products to selling them. This shift will not only enable them to reduce their footprints on the environment but also offer sustainable fashion solutions.


Since the last decade, the Indian Denim Industry has shown a high-quality boom. Today, the country has a great denim production capacity of around 1.1 billion meters per annum.

By the year 2020, the worldwide denim marketplace is forecast to reach USD 64.1 billion. The Indian denim marketplace covers 80-85 percentage of total denim manufacturing. Despite this amazing

statistic, the Indian denim production contributes only 5 percent to the worldwide textile industry.

According to industry experts, denim is the handiest segment in India that can develop manifolds to the existing marketplace.

Growing denim manufacturers across the globe are looking at India as an emerging denim export area wing to its first-class standards, cost-effectiveness, and a massive pool of tremendous workforce.

In the Indian apparel market, the denim market is driven by growing disposable incomes, westernization of work culture, and ensuing upward push inside the popularity of denim jeans.

In the era of globalization, younger India prefers denim as part of their wardrobe essential. As consistent with the Indian consumer story, the middle class is majorly driving the boom of denim marketplace.

Indian production and intake have grown at a compounded annual growth rate (CAGR) of as much as 15 percent over the past decade and is predicted to develop at similar rate in the coming years.


Indian Denim Industry is showing a notable increase in recent years. Indian denim brands and manufacturers are focusing on increasing their export globally. Considering the significant proportion that India commands inside the international trade of textile and garb, and the industry is ready to add more exceptional manufacturing capabilities.

Along with a boom in potential, encouraging fabric guidelines and favorable exchange fee moves could help India achieve a large export boom.

By the year 2020, the additional ability will be added to existing production facilities; the ratio of home and exports is possibly to alternate from 65:35 to 55:45.

The Indian government is taking many initiatives to enhance the countrys textile area. The benefits offered by government authorities are in all likelihood to percolate to the Indian denim industry in the coming years. This will also ensure its steady growth, and fuel the growth of the denim industry in India.


Denim wear has dominated the garment space for a long time. With innovation & trends set by the fashion industry it is good to have a look at the product trends in the denim industry.

Fits: Nineties Denim is making its way in the market as a vintage trend concept, and attracting a lot of eyeballs, especially from the youth segment. A looser fit - varying from baggy, high-waisted jeans, oversized and slightly ill-fitted are making a comeback in the market. The sale of straight leg jeans is also gaining momentum and it could be the future of denims in the years to come.

Colors: The classic blue wash & greys are making a comeback. White is also making its mark in the denim sector as searches for white denim rose 42% since the beginning of March 2019 as per Global Fashion Search Platform, Lyst. The monochromatic trend is gaining momentum. The wide acceptance of the same has encouraged brands to continue it for the future as well.

Design: Denim design and patterns like ruffled trims, embroidered patches, knots, cigarette hem ankle length, jeans with slits etc. are catching the youths attention. The popularity of at leisure wear has influenced street wear in the last few years and denim has started following the same trend by incorporating side stripes, ribbons & pin-tucks etc. to lend a sporty chic feel to the pieces.

Fashion Trends: The one trend that has been going on for ages now is denim on denim. One can easily carry a casual look while wearing their favorite denim with a denim shirt. This trend ensures

that the consumption of denim will grow at a higher rate in the coming years. In a report by Edited, the outerwear category in denim has grown 101% in the last two years. The printed and embroidered denims are appealing to the youth. Designs like slangs, flora & fauna are being used with denim jeans, jackets etc. The culottes are gaining a lot of popularity among the working population as smart casuals like denim is strongly holding up as a part of corporate wear.

Fabric: Denim fabric is primarily made up of cotton but in the last decade or so, the demand for stretch and soft handle denim is growing exponentially. People are looking for feel good factor in their denim, so comfortable and stretchable fabrics are taking centre stage. Mills continue to invest in elastic fabrications, be it stretch in the warp, bi- stretch or hyper-stretch. The use of blended fabric with Lycra, modal & tencel in denim will grow rapidly in the coming times.



• Jeans are a wardrobe staple that everyone owns.

• The denim market is segmented into smaller and niche sections, making it easier to target different consumers. The demand is increasing in both domestic as well as international markets.

• Competitors are not competing on exactly the same product. Difference styles, prices and materials are available.

• Easy diversification into other product lines like footwear, innerwear, accessories to make it a complete lifestyle brand.

• Automation of production processes and proper infrastructure

• Availability of raw materials WEAKNESS

• The high impact the cotton industry has on the environment as a result of denim manufacturing.

• The denim market is already dominated by several big brands.

• Increase in mid-market / value retailers results in a negative impact for the higher end retailers and increase an opportunity to introduce lower market brands.

• Fluctuation in prices to cope up with changing demands and trends.

• Short time for optimization of products.

• Unavailability of skilled labour.

• Increase in unit cost, high tariff barriers and export duties.


• Better consumer knowledge and power driving the demand for more ethical and sustainable denim

• Innovative ways of manufacturing denim and more ways to differentiate from competitors.

• People are willing to buy quality products and long lasting investment pieces at a competitive prices.

• Establishment of E-commerce allows more consumers to enter the chain of market.

• Apart from manufacturing jeans the fabric is used in manufacturing of other products like shirts, trousers, handbags etc.

• Introduction of sustainable development practices.


• The market is saturated with existing brands.

• The market is continuously growing with brands coming up with innovative ways to compete and stay relevant in the market.

• The ethical denim market already has a number of early entrants which have gained significant market share.

• Unstable economy results in reduced consumer confidence and spending.

• The entry of several international players in the retail industry after opening up of FDI would also pose as a threat for the brand.

• It is difficult to make balance between price and quality when competitors have lower price.

• Quick obsolesce of technology.


R & B Denims Limited makes constant efforts to include the diversity in people around the globe by creating products that would meet every customers wishes. Customers are also offered delivery services, and R&B Denims Limited makes sure that the products are delivered on time regardless of any procurement hassles. The company believes in working with passion to honor every commitment made to its customers. It also prioritizes regular product innovation to give customers the best experience. Quality and variety has always been one of the major focuses of the company.


(Rs. in Lakhs)
Particulars For the year ended 31-03-2021* For the year ended 31-03-2020*
Revenue from operations 17,415.28 25,790.78
Other Income 351.09 44.92
Total Revenue 17,766.37 25,835.70
Profit before tax and Exceptional Items 1,015.99 452.76
Exceptional Items 0.00 0.00
Profit before Taxation 1,015.99 452.76
- Current Tax (187.10) (134.08)
- Deferred Tax 5.20 9.18
- Short Provision for Income Tax expense relating to prior Year (1.59) 1.16
Net Profit/ (Loss) For The Year 832.49 329.02
Other Comprehensive Income for the Year, Net of Tax 13.67 6.69
Total Comprehensive Income for the Year 846.16 335.71

* Figures regrouped wherever necessary

The Company discloses financial results on quarterly basis of which results are subjected to limited review and publishes audited financial results on an annual basis. The Financial Statements as stated above are also available on the Companys website www.rnbdenims.com.

During the year, Your Company recorded total revenue of 17,766.37 Lacs against Rs. 25,835.70 Lacs

in the previous year, representing a decrease of 31.23% during the year and Profit before Tax Rs. 1,015.99 Lacs as compared to Rs. 452.76 Lacs during the year. Total Income during the year Rs. 846.16 as compared to Rs. 335.71 in the previous year.


The Indian textile industry at large, as well as the denim industry in specific, is expected to grow further in the coming years. The global industry also has a promising future. This implies growth opportunities for R & B Denims Limited, in the domestic as well as global market. Owing to the growth in demand of apparels, especially from developing countries, as well as rise in income, the demand for denim has significantly increased and will continue to grow. Over the last 4-5 years, denim demand has increased steadily and several Indian denim players, including our company, have increased their capacity under the prevailing government incentive scheme. The industry has become more competitive in these terms. However, the recent outbreak of Covid-19 pandemic has significantly impacted the industry as well as the Company. The situation has caused temporary slowdown and is estimated to bounce back once the situation gets normalized. The Companys values that focus on constant evolution and product innovation will help it in maintaining its strong standing in the industry and will eventually help in growing further in the future.


The Company has made adequate investment for an effective internal control and risk-mitigation system, and they are constantly assessed and strengthened from time to time with new standard operating procedures. The Audit committee, in its meeting, along with the CFO formulates a detailed audit plan for the internal auditor to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. The Internal Auditors attend the Meetings of the Audit Committee at regular basis and submit their recommendations to the Audit Committee. The Audit Committee in consultation with the Statutory Auditors and the Business Heads reviews the recommendations placed by the Internal Auditors, suggests improvements, take corrective actions, wherever needed, to strengthen the internal control system and place it before the Board. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.



The Company is exposed to specific risks that are particular to its business and environment within which it operates, including Foreign Exchange Risk, Interest Rate Risk, Commodity Price Risk, Risk of Product Concentration and other Business Risk. While risk is an inherent aspects of any business, the Company is conscious of the need to have an effective monitoring mechanism and has put in place appropriate measure for its mitigation including business portfolio risk, financial risk and legal risk and internal process risk.

The list of the potential risks the industry is exposed to domestically/internationally is given below:

Business Operational Risk: The business operational risk is defined as the risk of loss resulting from inadequate or failed internal processes, people and systems, or from external events like economic and market conditions, cut throat competitions at local as well as at international level, introduction of new players in textile markets, even events which are not directly connected with the organization like natural disasters, political and military turmoil etc. It can be minimized by decreasing labour turnover, power cost, logistics, balancing demand & supply risks, implementing latest technologies to create new and innovative designs of textile products, techniques required to upgrade plants, boiler house, machines, equipment, Un-interrupted availability of raw material

at competitive prices so as to avoid production loss, maintenance of quality and harmonizing production for completing the orders in time as well. Fluctuations in yarn prices in international market which can impact the price / cost of a particular product(s) and its blend(s) is also a part of business operational risk.

Environmental Risk: The safety of environment is important because of its ecological, economic or social significance to an ecosystem. If environment get impact/suffer more due to highly polluting nature or due to violation of any environmental law/norms by the industry/business then it may get adverse remarks from the Regulator/Statutory Authority or may have to face penal provisions as well as implications. An effort should be made to recycle the waste, make reusable products, and use natural resources instead of hazardous chemicals to protect the environment.

Raw material risk: There is always a risk of inadequate or non-availability of raw materials in the market due to volatility in the prices of cotton, transportation cost etc which could impede business profits and prospects.

Quality risk: Easy entry of various competitors in the market could affect the quality of products in order to match the competitive prices. Also inability to match the stringent quality standards of leading retails brands consistently could impact product off take.

Working capital risk: To expand the business operations requires increased working capital and its proper management.

Purchasing power risk: It means loss of purchasing power due to the effect of inflation. This risk is also known as inflation risk. When there is inflation in the economy, the currency loses its value due to the rising price level in the economy. The higher the inflation rate, the faster the money loses its value.

Foreign Exchange / Currency risk: It is the uncertainty associated with changes in the relative value of currencies. Currency risk arises from the change in price of one currency against another. The Company while doing foreign transactions deals with the currencies of other countries and therefore any fluctuations in foreign currency may impact margins of Company. The fluctuations in the exchange rate are caused basically by the supply of and the demand for the currencies being exchanged. The depreciation in exchange rate increases the risk of foreign banks, which leads to large foreign currency exposures in the emerging markets. The adverse exchange rate movement increases the repayment obligations of the banks borrowers in terms of domestic currency. The investors or companies, in order to avoid currency risks should properly hedge their positions with the foreign banks.

Financial Risk: It is the uncertainty associated with how firms finance its business like by issue of shares, debentures, taking loans from government / financial institutions etc. Such financial transactions also include risk of default in payment of interest, dividend or repayment of capital due to various internal or external factors like increase in credit days of debtors, inflation, interest rate fluctuations, change in government policies etc. It may lead to loss of liquidity, falling assets value, significant change in cash inflow and outflow etc.

Liquidity Risk: Liquidity Risk reflects the possibility/position that a party may have insufficient funds to settle an obligation for full value when due because of insufficient capital or difficulty in selling as asset or an investment to generate capital, but will have funds to cover settlement obligations on some unspecified date thereafter. In non-bankruptcy situations, the allowable methods to cover short positions are generally driven by local market conventions. As a result, liquidity could be adversely affected by prohibitions on transactions such as Repos, Reverse Repos, Securities Lending and other allied components.

Global Risk: Global risk refers to an uncertain event or condition that can cause significant negative

impact to several countries or industries for a long period of time. India is still emerging in the market of textile industries. There is a tremendous competition around the world. Indian manufacturers will have to face a tough fight to sustain in the competition. Due to poor infrastructure facilities, the production and transaction cost remain high in India. Also Indias logistic disadvantage due to its geographical location can give it a major thumbs-down in global trade. As a result, high cost of shipments and longer lead time coupled with lack of infrastructure facility may prove to be a major hindrance. To overcome this problem, India needs to increase the size of its industrial infrastructure to capture the efficiencies of the economies of scale and it must cluster the textile production.

Political Risk: Political risk may be defined as the probability that a political event will impact adversely on a firms profit. It represents the financial risk that a countrys government will suddenly change its policies. A new law or a change in an existing could have a significant impact on an investment. Whatever laws the government passes today may be extinct tomorrow. This risk covers restriction on remittances in the buyers country or any government action which may block or delay payment to the exporter, war, revolution or civil commotion in the buyers country, cancellation or imposition of new export / import licensing restrictions in the buyers country, any other kind of loss occurring either in India or outside India which is not within the control of the exporter or the buyer.

Technological risk: Technology can response corporate culture and facilitate innovative procedures. In a garment manufacturing industry, the firm is constantly required to make changes and transformations in the production process over time, upgrade their machinery besides creating new facilities and additional capacities in order to survive in the highly competitive market.

13. Working Capital

Working capital requirement in the business went up because of the fact that our key distributors are required to offer elongated credit to the garment manufacturers who are their customers, and the garment manufacturers are also required to offer extended credit periods to their own customers and thus in the process the entire working capital cycle has been significantly elongated.


The Company has appropriate internal control systems for business processes, with regard to efficiency of operations, financial reporting, compliance with applicable laws and regulations etc. All operating parameters are monitored and controlled. Regular internal audits and checks ensure that responsibilities are executed effectively. The system is improved and modified continuously to meet with changes in business conditions, statutory and accounting requirements. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control systems and suggests improvement for strengthening them, from time to time.


The Company rely that the health and safety of the workers and the persons residing in the vicinity of its plants is fundamental to the business. Commitment to the identification and elimination or control of the workplace hazards for protection of all is utmost importance. The manufacturing operations are conducted to ensure sensitivity towards the environment and minimize waste by encouraging "Green" practices. The Company continued to enjoy healthy industrial relations during the year.


Sustainability has been deeply embedded into the Companys business and has become an integral part of its decision making process while considering social, economic and environmental dimensions. During the year 2020-21, a Sustainable Development Strategy was developed with a focus on the following areas:

1. Water Pollution Control Measures

• Our Company adopted the Policy called "Reduce, Reuse and Recycle" and installed the Rain water harvesting system for Reducing water consumption additionally we are Re-using the water utilized at finishing stage of Denim Fabric. Also, our Company is a member of Gujarat Eco-Textile Park (GETP) since 2014, the Company has make sure that it implements various measures across all its operations to control fugitive emissions from polluting our water bodies and also Re-Cycling the polluted water to reusable condition.

2. Air Pollution Control Measures

• The Company has also installed Air Receiver in the weaving department to reduce and control on toxin emissions. Our Company has obtained a license from Gujarat Pollution Control Board (GPCB) to ensure pollution control. GPCB ensures that the pollution control limits are maintained by surprise inspections at the factory.

3. Power & Energy Control Measures

• Our company has invested in Solar and Wind Energy in FY 2020-2021. The Company generates renewable energy in-house through roof-top solar PV, off-site captive wind farms. Solar Plant is commenced from the mid of April 2021 and Wind Plant is commence from 1st August, 2021. A Combined Renewable energy of solar and wind will be around 9.6 Million units in a year. This would be equivalent to Rs. 60% of total power Consumption of the Company.


The company believes Health & Safety as an indispensable province. Company has placed suitable facilities for all workers and employees like proper lighting, ventilation, no congestion, medical kits, stretchers, fire extinguishers etc. at prominent places. Personnel at supervisory level have been trained in basic life support techniques.

The safety measures taken by the company has resulted in improving the conditions under which workers are employed and work, consequently increasing the productivity.


The company is equipped with modern infrastructure facilities which assist in smooth production. The companys manufacturing unit is outfitted with advanced machines and equipment and a trained staff, who have years of experience behind them.

To sell products to the clients, the company has facilitated a smooth transportation mechanism through a strong base of transporters and traders.


Ratios (Based on Standalone Financials) 2020-21 2019-2020
Debtor Turnover Ratio 3.49 times 5.89 times
Inventory Turnover Ratio 19.66 times 25.13 times
Interest Coverage Ratio 3.72 times 2.28 times
Current Ratio 1.36 times 1.03 times
Debt Equity Ratio 1.08 times 1.33 times
Operating Profit Margin 9.82% 6.32%
Net Profit Margin 4.78% 1.28%
Return on Net worth 19.31% 9.49%


The above Management Discussion and Analysis contains certain forward looking statements within the meaning of applicable security laws and regulations. These pertain to the Companys future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties, regarding a fluctuations in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals, time and cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulation etc. In accordance with the Code of Corporate Governance approved by the Securities and Exchange Board of India, shareholders and readers are cautioned that in the case of data and information external to the Company, no representation is made on its accuracy or comprehensiveness though the same are based on sources thought to be reliable. The Company does not undertake to make any announcement in case any of these forward looking statements become materially incorrect in future or update any forward looking statements made from time to time on behalf of the Company.

For the Board of R & B Denims
Director Limited
Sd/- Sd/-
Rajkumar Borana Amit Dalmia
Place: Surat Managing Director Whole Time Director
Date: 31/07/2021 DIN:01091166 DIN:00034642