THE GLOBAL ECONOMY
The global economy was sluggish in 2022 and is estimated to have grown at 3.2% in 2022,
compared to 6% in 2021. For 2023, the IMF has projected global economy growth at 2.9%. A
few factors contributed to the slowdown in 2022 - continued geopolitical tensions and
hostilities in Eastern Europe, exceptionally high inflation and recessionary pressures in
major economies, synchronized rate hikes by central banks around the world (including the
Federal Reserve) leading to a global liquidity squeeze, the collapse of banks in the
United States and the pandemic-induced slowdown in China.
THE INDIAN ECONOMY
According to the World Bank, India is projected to witness GDP growth of 6.3% in the
fiscal year 2023-24, contingent upon the course of global economic and political
developments. This optimistic growth forecast is underpinned by several favourable factors
- the recovery of private consumption leading to increased production activity and
augmented capital expenditure, steady inflation, and the central governments thrust on
infrastructure and its outlay of Rs 1.97 lakh crores for Production-Linked Incentive
Schemes to encourage domestic manufacturing.
THE GLOBAL TEXTILE INDUSTRY
The global textile industry grew to USD 610.91 billion in 2023 from USD 573.22 billion
in 2022 at a compounded annual growth rate (CAGR) of 6.6%. It is expected to grow to USD
755.38 billion by 2027 at a CAGR of 5.5%. The global technical textiles market is expected
to grow at a CAGR of 5.2% to reach USD 274 billion by 2027, thereby presenting a large
opportunity.
The Asia-Pacific region is poised to grow fastest and is valued at USD 76.8 billion in
2022 and is projected to grow at an impressive rate with a CAGR of 6 % to reach USD 102.6
billion by 2027. This growth is attributed to sectors including healthcare, automotive,
construction and industrial development.
THE INDIAN TEXTILE INDUSTRY AND OUTLOOK
India is among the worlds largest producers of Textiles and Apparel. The domestic
apparel & textile industry in India contributes approximately 2.3% to the countrys
GDP, 7% of industry output in value terms and 12% of the countrys export earnings.
Furthermore, the industry is the 2nd largest employer in the country providing
direct employment to 45 Mn people and 100 Mn people in related industries.
The Indian Technical Textiles segment is estimated at USD 16 billion, approximately 6%
of the global market. India is the second largest producer of manmade fibres (MMF) after
China and is the worlds 6th largest exporter of MMF textiles (MMF textiles
makes up 17% of Indias textile exports).
[Source: https://www.investindia.gov.in/sector/textiles-apparel]
OPPORTUNITIES
The textile industry in India is particularly robust due to the wide availability of
natural and synthetic fibres and yarns. The textile industry in India is technologically
advanced and capital-intensive. Since the trend of industrialization in trade has grown
prevalent in consumer goods sectors and labour-intensive industries, there are enormous
opportunities in the textile sector.
The future of the Indian textiles industry looks promising, buoyed by strong domestic
consumption as well as export demand. India is working on various major initiatives to
boost its technical textile industry. Furthermore, the ongoing Free Trade Agreements (FTA)
negotiations with Australia, the EU, UAE and Canada will be extremely advantageous for
Indian textile exporters, who have been at a disadvantage to competing neighbouring
countries that enjoy lower duties on their exports to the major importing countries around
the world.
With the collective global sentiment against China, there has been a shift to other
countries for sourcing raw materials. The first alternatives were Bangladesh and Vietnam,
which have now become saturated. For the last few seasons, many customers have migrated
their sourcing to India. Furthermore, these customers have continued to purchase raw
materials for these programs from India, indicating a permanent shift. This is an
opportunity for your Company to expand its horizon in various countries.
Our long-standing relationship with our major customers has been one of the most
significant factors contributing to our growth. These lasting relationships are results of
our commitment to quality and customer service.
GOVERNMENT INITIATIVES
There have been a number of Central Government initiatives that will provide impetus to
the textile industry:
a) The central government has increased the budget outlay from Rs 3,579 crores in
2022-23 to Rs 4,389.34 crores in 2023-34. For the Amended Technology Upgradation Fund
(ATUF), the government has increased the outlay from Rs 650 crores in 2022-23 to Rs 900
crores in 2023-24.
b) The government has allowed 100% foreign direct investment (FDI) in the textile
industry under the automatic route.
c) The scheme of Rebate of State and Central Taxes and Levies (RoSCTL), that was
effective from March 2019, has been extended till March 31, 2024 for exports of
apparel/garments and made-ups in order to make the Indian textile sector competitive in
the international market.
d) The government has launched the Pradhan Mantri Mega Integrated Textile Region and
Apparel (PM MITRA) scheme with an outlay of Rs 4,445 crores to improve the infrastructure
of the textile industry, to boost employment, to attract large investment in the
industry and to enable the industry to become more competitive globally.
e) The Scheme for Capacity Building in the Textile Sector (SCBTS) has been launched by
the government with an outlay of Rs 1,300 crores for skill development in the textile
industry.
THREATS, RISKS AND CONCERNS
The Company faces various business risks like foreign currency exposure, volatility in
interest rates and the fluctuation in cost of raw materials and crude. Apart from this,
the Company also faces regulatory risks like the change in government policies with
respect to imports and exports. Your Company is trying to mitigate the risks at all levels
to the extent possible, by taking appropriate steps in this direction.
The cost of power is another vital component and accounts for 15%-20% of the overall
production cost in textile spinning. Higher Industrial Power Tariff Rates in your
companys geography of operation is an area that needs to be addressed. In an effort to
insulate the Company from fluctuations in the aforementioned Industrial Power Tariff
Rates, reduce the Companys carbon footprint and reduce overall operational costs, the
Company has installed Solar Panels on the rooftops of our manufacturing units in Udaipur.
The first 3.45 MW of solar capacity has been successfully commissioned and is operating
satisfactorily. We endeavour to strategically scale this capacity up to 5MW in the
financial year 2023-24.
The results of our business operations are dependent on our ability to effectively plan
our manufacturing processes and on our ability to optimally utilize our manufacturing
capacities. Any disruption to our manufacturing process may affect our business operations
due to reasons which are beyond our control.
SEGMENT-WISE AND PRODUCT-WISE PERFORMANCE
The Companys primary business segment is Yarn, hence there is no other segment-wise
information provided. The Company has no activity outside India except the Export of the
Yarn manufactured in India.
Rs. In Lakh
| Revenue from Operations |
2022-23 |
2021-22 |
| Export |
21,316.05 |
24,790.85 |
| Domestic |
14,489.12 |
9,951.92 |
| Total |
35,805.17 |
34,742.77 |
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Company has put in place an adequate system of internal control commensurate with
its size and nature of business to safeguard and protect from loss, unauthorized use or
disposition of its assets. All the transactions are properly authorized, recorded and
reported to the Management. The Company is following all the applicable Accounting
Standards for properly maintaining the books of accounts and reporting financial
statements. The internal auditor of the Company checks and verifies the internal control
system and monitors them in accordance with the policy adopted by the Company. The Audit
Committee of the Board of Directors, Statutory Auditor and Department Heads are appraised
of the internal audit finding and corrective action is taken thereon. The audit
observations and the managements responses are placed before the Audit Committee. We
believe that our internal financial control system is designed effectively and is
operating as intended.
DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The operational performance of the company has been highlighted in the Directors
Report which is an integral part of the Annual Report.
HUMAN RESOURCES
The Company recognizes the importance of its employees as a key asset instrumental to
its growth. The Company believes in the acquisition, retention and betterment of talented
team players. With the philosophy of inclusive growth, the Company has further redefined
its performance management system. The system focuses on the progression of individual
employees while emphasising the importance of organisational goals. Under this system,
there is an increased thrust on job rotation and multi- skilling. The Companys Human
Resource Department is committed to positively developing employees with an emphasis on
productivity, quality and customer satisfaction. In order to maintain a skilled workforce,
the company regularly provides in-house training to its employees and also deputes them to
machinery manufacturers and training institutes for specific training as and when the need
arises.
The Company has a well-developed management information system which provides the
required information to the all levels of management. Such reports are routinely analysed
and effective steps are taken to control the product quality, efficiency, utilisation and
productivity in company.
The strength of the companys workforce at the end of the financial year was 1841. This
includes both skilled and unskilled manpower.
KEY FINANCIAL RATIO AND DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
| Particulars |
Financial Year |
Change in % |
Reason (If more than 25% Change) |
| 31.03.2023 |
31.03.2022 |
| Debtor Turnover Ratio (no. of days) |
7.65 |
5.70 |
-33.62 |
Due to the sluggish market scenario, the
Company has extended more credit to the domestic customers |
| Inventory Turnover Ratio (no. of days) |
46.15 |
46.69 |
1.15 |
- |
| Interest coverage Ratio (DSCR) |
1.51 |
1.90 |
20.52 |
- |
| Current Ratio |
0.94 |
0.96 |
2.08 |
- |
| Debt / Equity Ratio |
1.50 |
1.03 |
-45.63 |
As the Company is expanding, it has availed
term loans from financial institutions and banks |
| Operating Profit margin (%) |
8.26% |
10.72% |
22.94 |
- |
| Net Profit Margin (%) |
3.47% |
5.22% |
33.52 |
The global slowdown has impacted demand in
both the domestic and export markets. |
| Return on Net Worth |
8.64% |
14.61% |
40.86 |
Subdued demand has resulted in a decrease in
profit, which has resulted in a decrease in this ratio. |
+91-9892691696
