Riba Textiles Ltd Management Discussions

The global textile market size was valued at USD 1,837.27 billion in 2023 and is anticipated to grow at a compound annual growth rate (CAGR) of 7.4% in revenue from 2024 to 2030. The ever-increasing apparel demand from the fashion industry and the meteoric growth of e-commerce platforms are expected to drive market growth over the forecast period. The textile industry works on three major principles: designing, producing, and distributing different flexible materials such as yarn and clothing. Many processes, such as knitting, crocheting, weaving, and others, are primarily used to manufacture a wide range of finished and semi-finished goods in bedding, clothing, apparel, medical, and other accessories.

The global apparel market size is expected to reach US$ 2.6 trillion in 2025 growing by a projected rate of 4%.

The major growth drivers of the global apparel market will be the developing economies, mainly China & India, both growing in double digits China will become the biggest apparel market adding more than US$ 378 bn. in market size by 2025 while India will be the second most attractive apparel market adding around US$ 121 bn. by 2025

The textiles and apparel industry in India has strengths across the entire value chain from fiber, yarn, fabric to apparel. The Indian textile and apparel industry 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 in India. The organized textile industry in India is characterized by the use of capital-intensive technology for the mass production of textile products and includes spinning, weaving, processing, and apparel manufacturing.

India produced 94 Lakh bales of raw jute in FY 2022-23 as per the 3rd Advance Estimate Of Directorate Of Economics And Statistics (DES).

The Indian textile and apparel market size is estimated around $165 Bn in 2022, with domestic market constituting $125 Bn and exports contributing $40 Bn.

The market size of the industry is projected to grow at a 10% CAGR to reach $350 Bn by 2030.

India scaled its highest ever exports tally at $44.4 Bn in Textiles and Apparel (T&A) including Handicrafts in FY 2021-22, indicating a substantial increase of 41% and 26% over corresponding figures in FY 2020-21 and FY 2019-20, respectively.

Indias estimated cotton production is 5.84 MMT during 2022-23 i.e. 23.83% of world cotton production of 24.51 MMT. India is also the 2nd largest consumer of cotton in the world with estimated consumption of 5.29 MMT i.e. 22.24% of world cotton consumption of 23.79 MMT

The Indian terry towel industry has seen growth in recent years, with the category growing at a 15% compound annual growth rate (CAGR) and net margins growing at 5% CAGR. In 2022, India was the second largest exporter of cotton terry towelling, after China, with exports valued at $1.27 billion. However, some say that Indias leadership in the cotton terry towel market could be challenged if the government doesnt make policy changes to make it easier for exporters and ensure raw materials are available.

3. Government Initiatives

PM MITRA Scheme

The government launched the PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks Scheme to build and develop textile infrastructure. The scheme is inspired by the 5F vision: Farm to Fibre to Factory to Fashion to Foreign.

PLI Scheme

The government also launched the Production Linked Incentive (PLI) Scheme for Textiles, with an investment of INR 10,683 crore over the next five years, to promote the production of man-made fibres (MMF) apparel. The MMF are artificially produced fibres and are becoming common among the weavers and spinners in India. The PLI scheme also promotes the production of technical textile products in the country.

Kasturi Cotton Bharat

Kasturi Cotton Bharat programme of the Ministry of Textiles is a first-of-its-kind branding, traceability and certification exercise carried out jointly by the Government of India, Trade Bodies and Industry to promote the cotton produced in India.

National Technical Textile Mission (NTTM)

The GOI launched the National Technical Textiles Mission (NTTM). It promotes the development and export of technical textiles.

Further Market Access Initiative scheme provides financial support to various Export Promotion Councils and Trade Bodies engaged in promotion of textiles and garments exports, for organising and participating in trade fairs, exhibitions, buyer-seller meets etc. Government has put in place liberal and transparent investor-friendly Foreign Direct Investment (FDI) policy. 100% FDI is allowed in the textile sector under the automatic route. The amount of investment brought through FDI in the textile sector from 2017-2022 was US $ 1522.23 million.

Growing Demand from the Hospitality Sector to Boost Market Expansion

Increasing number of international visitors is projected to drive growth of cotton market share. In addition, rising government’s spending on the infrastructure development including roads, airports and hotels accelerates the market growth. In addition, growing prevalence of the e-commerce industry combined with their easy return and exchange policy is likely to boost the market’s growth. For instance according to the U.S. Census Bureau News, e-commerce sales in the U.S. reached to USD 870 billion in 2021, an increase of 14.2% over 2020 and an increase of 50.5% over 2019.

5. WEAKNESSES

Fluctuation in the cost of raw materials affects the production of the product and hands limiting the product revenues globally. Additionally, the higher cost of technology and production process also restricts the product demand worldwide. Higher raw material cost increase the production cost at company level. This raises the price of the final product and consequently hindering the growth of the market. Moreover labors are involved throughout the supply chain, from sourcing to transporting and delivering the final products. If there is a chance change in the labor force along the way, there may be a change in the commodity price and hence restraining the market growth. For instance, in the event of labor shifts such as labor strike, there will be fewer workers to procure or ship materials, resulting in reducing the supply and impacting the price of raw materials.

Riba Textiles Limited is an export-oriented Terry Towels, its allied products & Tufted Rugs manufacturing unit based 100 kms from New Delhi in the state Of Haryana, India. Riba is registered on the Indian stock market and has been growing emblematically over the past decade with present capacity of 8,000 tons annually. The production unit encompasses 16 acres of land with a built-up area of 400,000 square feet incorporating all the state-of-the-art machineries from across the globe. Riba is a fully integrated unit with an ultramodern composite plant incorporating Dyeing, Weaving, Finishing, Sublimation, Embroideries and Riba is able to transmute cotton yarn into marvelous towels / bath rugs for our perceptive customers. The array of towels and allied products comprise of all possible permutations and combinations buttressed by the newest designs developed by Riba design team plus product improvement by the production team.

Riba is particularly proud to be the leading manufacturer of beach towels in India with an enormous jacquard weaving capacity servicing customers from both seasonal beach markets above and below the equator. Our line of customers takes account of departmental stores and importers right across the globe with trades in 30 countries incorporating maximum continents.

Riba is a socially responsible manufacturer having all the indispensable compliances from the most stringent customers accompanied by BSCI 2.0 / ISO 9001:2015 / Oekotex 100 certifications.

7. Initiatives has been taken by the Company

During the f.y 2023-24 company made an investment in plant & Machiery of Rs 7.95 core to increase production / sales, and also company have a further plan to increase weaving capcacity in next year and expect that an amount of approx. Rs 15 crore to invest in Plant & machinery.

8. Financial Performance / Product wise Performance

During the year under review (2023-24) your company has achieved a turnover of Rs.24689.43 Lacs against the last year (2022-23) turnover of Rs.24269.43 Lacs. Your Company has earned a net profit of Rs. 791.76 Lacs in 2023-24 as against a profit of Rs. 740.25 Lacs during 2022-23. In view of improving financial results and positive outlook of the near future, your directors are hopeful that in current year better financial results would follow.

9. Key Financial Ratios

# The Company has worked on their operating margin, which is marginally increased debt improved our interest and debt service coverage ratios.

10. Risks and concerns

Our major markets are western countries which are all going through recessionary impacts of covid related inflationary pressures and the Ukraine war is making the situation worse. Riba has increased our market penetration both within countries and also added new markets to offset these challenges and hope to manage the situation as per in the past.

11. Internal Control Systems and their adequacy

The company has a proper and adequate system of internal controls commensurate with its size to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and the transactions are authorized, recorded and reported correctly.

There is an Internal Audit Committee with clearly laid down powers and responsibilities that are entrusted to them to ensure that the Internal Audit Department works independently. This department maintains various manuals which contain various controls and checklists that are to be carried out before execution of any activity.

Internal checks are exercised so that the various procedures are laid at the time of delegation of authorities and other procedures are strictly followed. The delegation clearly indicates the powers along with the monetary limits, wherever necessary, that can be exercised by various levels of Managers in the Company.

Similarly, the Company has well defined manuals for all the functional areas, viz., Production, Sales, Administration, Personnel, etc. These manuals contain elaborate procedures and checklist for the related activities. Necessary controls and checks are exercised by strictly adhering to the various procedures and checklist prescribed in the Manuals. Also these are updated from time to time on ongoing basis, keeping in view the latest developments in different areas. Proper controls and checks are exercised by the company by following the procedures prescribed in the various manuals. The company is in the process of developing software for improving our systems further.

12. Material Developments in Human Resources/ industrial relations front, including number of people employed

The company believes that employees are the real strength of organization. Employee involvement continued to receive the focus it deserves. The Company has identified Human Resources Development as a major strategic initiative since it believes that people’s contribution will be the main engine for growth. Current efforts include building skills, attracting and retaining talent and nurturing and developing leadership potential.

Industrial relations during the year remained cordial and initiative were taken to enhance productivity of employees. The company is gearing itself to take on the challenges in the business environment and march towards achieving its mission with success. At present company is employing man power of around 950 peoples including technical, non-technical, managerial and non- managerial, casual and contract labor.

13. Cautionary Statement

Statements used in the Management Discussion and Analysis should be read in conjunction with the Company’s Audited standalone financials along with the auditor’s report as on March 31, 2024 which forms an integral part of the annual report, describing the Company’s objectives, projections, estimates and expectations, may constitute forward looking statements within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ.