S K International Export Ltd Management Discussions

Report

The key issues of the Management Discussion and Analysis are given below.

1. Global Outlook:

The Textile Industry is expected to grow from USD 723 billion in 2024 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 1/5^th 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. (source: https://www.mordorintelligence.com/)

2. Textile Industry & Market Growth in India:

The textile industry is one of the oldest business options in India since the ancient age and the second largest employer in India.

India is the worlds second-largest producer of textiles and garments. Both skilled laborers and unskilled officials are needed to run this business smoothly. The products of the Indian textile industry with traditional designs and textures are very popular all over the world. 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.

Market Size

Indias textiles industry has around 4.5 crore employed workers including 3 0.50 lakh handloom workers across the country.

The textiles and apparel industry contribute 2.3% to the countrys GDP, 13% to industrial production and 12% to exports. India has a 4% share of the global trade in textiles and apparel.

India is the 5^th largest producer of technical textiles in the whole world with a market size of nearly $22 Bn, which is proposed to build up to $300 Bn by 2047.

Investment

Total FDI inflows in the textiles sector stood at US $ 4.47 billion upto March 2024.

In order to attract private equity (PE) and employee more people, the government introduced various schemes such as the Scheme for Integrated Textile Parks (SITP), Technology Upgradation Fund Scheme (TUFS) and Mega Integrated Textile Region and Apparel (MITRA) Park scheme.

Government Initiatives

The Indian Government has come up with several export promotion policies for the textile sector. It has also allowed 100% FDI in the sector under the automatic route.

Initiatives taken by the Government of India are:

The Government of India has earmarked a corpus of Rs. 1,000 crore (US$ 127.72 million) dedicated to research and development of the technical textiles sector. Out of this, Rs.133.83 crore (US$ 17.5 million) is for the Textile Cluster Development Scheme, Rs. 100 crores (US$ 13.07 million) for the National Technical Textiles Mission, and Rs. 15 crores (US$ 1.96 million) each for PM Mega Integrated Textile Region and Apparel parks scheme and the PLI Scheme. The government allocated funds worth Rs. 17,822 crores (US$ 2.38 billion) between FY16-22 for the ‘Amended Technology Up-gradation Fund Scheme (A-TUFS), to boost the Indian textile industry and enable ease of doing business. The policies and initiatives taken by the Government of India depict the faith it is investing in the industry to explore and expand. India has the potential to increase its capacity and the growth is visible, its time for the manufacturing of quality yarns for garments for India and the world.

Production Linked Incentive (PLI) Scheme - The PLI Scheme for Textiles to promote production of MMF apparel, MMF Fabrics and Products of Technical Textiles in the country to create 60-70 global players, attract fresh investment of Rs. 19,000 crore approximately and generate almost 7.5 lakh new employment opportunities.

PM-MITRA: To attract investment for ‘Make In India initiative and to boost employment generation through setting up of 7 (Seven) PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks in Greenfield/Brownfield sites with world class infrastructure including plug and play facility with an outlay of Rs.4445 crore for a period of seven years upto 2027-28.

Scheme for Integrated Textile Parks (SITP): The scheme provides support for creation of world-class infrastructure facilities for setting up of textile units.

Integrated Processing Development Scheme (IPDS): In order to facilitate the textile industry to meet the required environmental standards and to support new Common Effluent Treatment Plants (CETP)/ upgradation of CEPTs in existing processing clusters as well as new processing parks specially in the Coastal Zones.

Special Package for Textile and Apparel sector: Rs. 6000 crore package was launched in June 2016 to boost employment and export potential in the apparel and made up segments.

Various sectoral schemes to support traditional textile sectors such as handlooms, handicraft, silk and jute.

Road Ahead

India is working on major initiatives to boost its technical textile industry. There is tough competition from China, Bangladesh, Pakistan, and Vietnam for exporting textile products in the global market. However, the Indian textile industry still manages for a comeback even after the decline of the business in 2020 – 21.

India is projected to be the second most attractive market by 2025, contributing up to US$ 121 billion, while China is projected to be the most attractive market, contributing up to US$ 378 billion. In 2017-2018, India has one of the fastest-growing economies, with a GDP growth rate of 7.2%. This increases the spending power of the general population and stimulates demand for textile sector goods. This expansion results in a vast array of manufacturing capacities for diverse items that may be shipped both inside India and beyond.

In addition, India has one of the most diverse textile industries, with hand-woven textiles on one end and capital-intensive mills on the other, resulting in a vast range of possibilities within the textile industry.

To overcome the existing obstacles faced by the textile industry and accomplish the anticipated worldwide market objective, Indias textile sector must make several modifications and apply some new practices to increase its competitiveness. One of the implementations to boost production includes a greater emphasis on technological upgrades and weaving capacity expansion. Additionally, state governments should provide clearance for effluent treatment facilities to elevate the commercial market in its entirety.

The Indian textile sector would thrive to tremendous heights if both the national and state governments provide adequate assistance to its small and large-scale players. In addition to educating their staff to suit the changing needs of the contemporary market, the Indian textile sector should also consider decreasing the levies placed on government-subsidized exports.

Moreover, ensuring a sufficient supply of gas is crucial to the textile industrys continued operation. The creation of capital subsidies, the provision of a single point of contact for resolving industry issues, and the establishment of a set price for yarn on an annual basis would facilitate the flow of labor and aid the nations impoverished farmers.

With a rise in disposable income, the need for goods in the Indian textile sector has expanded, resulting in enormous demand in both the local and foreign markets. Consequently, Indias textile industry has a bright future due to the rapid expansion of the retail sector, government assistance, and investments. (source: www.timesofindia.indiatimes.com)

3. Our Business:

Our Company has created a distinct identity of its own in the International business domain and mainly caters to European market i.e. Spain, Germany, France, Netherlands, and UK. Our Company is a manufacturer and exporter in Scarves and Beachwear. Our Company is engaged in manufacturing and marketing of women and mens apparels like scarves, shawls, sarongs, headband & bandanas and Beachwear garments in all qualities like silk, viscose, cotton, polyester & wool and several blends. We also entered in the ethnic wear category by developing trendy dupattas at affordable prices catering women who look for fashionable styles at affordable prices.

We are also gearing ourselves for manufacturing and trading of Indian ethnic wears offering wide range of ethnic wears category by developing trendy dupattas for women. Our Company believes that fashion is for all women and hence, took a challenge to provide the affordable range of fashionable garments to the women in international and domestic market. We have also entered into the Kids segment with our own domestic brand Sand Kastle for Beachwear/Holiday wear garments, and fashion accessories. Our raw material sourcing is from all over India thus sourcing provides a huge variety of fabrics and trims at best possible prices thus keeping our costs low. We use modern machinery for our manufacturing requirements, our Company has never shied away from purchasing any modern equipment to maintain the high standards that we have set for ourselves. This enables us to reduce the time spent in completing your order. With our own design team, we have endeavored to introduce new styles, fits, finishes. We have clean in house production facilities like sewing, cutting, ironing, finishing, quality control, packing & dispatch.

A major portion of our product is manufactured at our in-house factory at Virar (Palghar). We manufacture products on make to order basis as per current fashion forecast for several big brands in International & domestic markets. We serve our customers through the channels of wholesale, retail and e-commerce in domestic market. We are also registered as member exporter with Apparel Export Promotion Council.

We offer an extensive range of designs, colours, styles and patterns of Indian ethnic wears offering wide range of ethnic wears like dupattas, best suited for every occasion. With large number of different colours and styles, customers have a good number of options. Right from the initial stage that involves the client preferences to constructing the most desirable Collections, we ensure complete satisfaction to our client. We not only develop styles as per international trends, but we also appreciate the needs of each customer and hence we develop sample collections for customers according to their needs. We make the garments according to customers preferences and demand.

Our focus is on maintaining relationship with big brands to get orders at large scale to increase our business and revenue. Our Export production is on make to order basis. We facilitate our clients with accessories/trims/packing as per their requirement which include labels, tags, poly bags, cartons in qualities, sizes &colours as per the requirement & their specification manuals.

Quality is of the paramount importance as it can essentially make or break a brand. A failure to maintain quality standard can prove to be extremely detrimental to the business of our Company. We give quality utmost priority at all stages of production to ensure our customers are thoroughly satisfied. We have three levels of quality checks in place to make sure that the requisite quality of the product is being achieved at every stage of manufacture from raw materials to boxed stock. We constantly endeavor to maintain and exceed customer expectations consistently in all aspects of quality. Every order goes through careful quality inspection by our qualified checkers during every stage of production until final dispatch. We believe our Companys edge over its competitors is the value-price relationship, Superior Design collection, timely delivery and efficient supply chain. We are synonymous with providing an all compassing service i.e. Sourcing, Quality, Value and Reliability of supply as required by the client. Our system incorporating numerous and varied suppliers give us that edge to stay one-step ahead of our competitors in todays rapidly moving business market. We strive to offer flexibility which suits your individual clients needs. Customer satisfaction is top priority with Company as we believe in maintaining a regular client base which is proof that our clients are issuing repeat orders and therefore are very satisfied with our service.

We were established with a clear horizon and passion of serving the fashion industry. We firmly believe in customer offering, customer centric approach, standard product quality, ethical business practices with social compliance and corporate governance.

Our Company is equipped with a dedicated team of creative people (Fashion designers, Fashion Technologists, CAD Designers, Sketch and Paint Artists, and Stylists) involved in fashion forecasting styles, patterns, fits and finishes to meet the latest fashion trends.

Our capabilities have made us confident of efficiently fulfilling customers requirements around the globe and set milestones in the global market. We thus invite new business ventures and bulk orders and assure long lasting business relations with the commitment of timely delivery of orders.

4. Risk Management:

The Company possesses a well-defined risk management framework. The primary goal of risk management is to recognize, supervise and undertake preventative steps with reference to incidents that may create risks for the business.

5. Internal control systems and their adequacy:

The Companys internal control system (including internal financial control system) has been monitored continuously and updated to ensure that assets are safeguarded, regulations established are complied with and pending issues are promptly addressed. The reports presented by internal auditors are reviewed by the audit committee on a routine basis. The committee makes note of the audit observations and takes corrective actions, if necessary. The committee maintains constant dialogue with statutory and internal auditors to make sure that internal control systems are operating effectively.

6. Cautionary Statement:

The statements made in this section describe the Companys objectives, projections, expectation and estimations which may be ‘forward looking statements within the meaning of applicable securities laws and regulations

For SK International Export Limited	Sd/-	Sd/-
	Hitesh S Sadh	Purti H Sadh
Mumbai	Managing Director	Director
September 6, 2024	DIN: 03055331	DIN: 08228285