Sintex Industries Ltd Management Discussions.

Global economic overview

In year 2020, the global economy endured its deepest recession in last 74 years, as the COVID-19 virus pandemic upended lives and livelihoods. The recession was unprecedented in its geographic scope, the central role of services, and the scale of policy responses. The COVID 19 pandemic has inflicted high and rising human costs worldwide, and the necessary protection measures have severely affected economic activity.

While the COVID-19 virus will stay with us throughout year 2021, the rapid development and deployment of vaccines will enable a transition to a new postpandemic economy.

As per the IMFs World Economic Outlook update (January 2021), while global growth is estimated to decline by 3.5% in 2020, it is expected to rise by 5.5% in 2021. Based on strong policy support and expectations of an early rollout of vaccines, advanced economies are likely to grow by 4.3% in 2021. Though emerging economies are likely to witness varied recovery paths, on average, they are expected to grow by 6.3% in 2021 on the back of a contracted base.

Indian economy

The Indian economy negatively impacted by an unprecedented health crisis in 2020-21 with the highly contagious Coronavirus (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 in 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.

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 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.

However, real GVA in agriculture & allied sectors observed growth at 3.4 percent in 2020-21 against 4.0 percent in 2019-20. This indicates rural economic activity resilience due to 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 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 estimated to contract at 8.3 percent and 20.5 percent (at constant prices) respectively in 2020-21.

The performance of the industrial sectors based on the Index of Industrial Production (IIP) comprising mining, manufacturing and electricity registered a growth of (-) 0.8 percent in 2019- 20 as compared to 3.8 percent in 2018-19. As per the sectoral classification, mining, manufacturing and electricity sectors registered 1.6 percent, (-) 1.4 percent and 1.0 percent growth during 2019-20 respectively. Among the use-based categories, primary goods, capital goods, intermediate goods, infrastructure / construction goods, consumer durables goods and consumer non-durables goods have attained 0.7 percent, (-) 13.9 percent, 9.1 percent, (-) 3.6 percent, (-) 8.7 percent and (-) 0.1 percent growth respectively in 2019-20. The cumulative growth of IIP during April-November 2020-21 is (-) 15.5 percent as compared to 0.3 percent during April- November 2019-20.

Index of Industrial production (IIP growth in percent) since lockdown due to COVID-19 in the year 2020.

Government Initiatives

The Union budget aimed at energising the Indian economy through a combination of short-term, medium-term, and long-term measures.

• In November 2020, the Government of India announced ^ 2.65 lakh crore (US$ 36 billion) stimulus package to generate job opportunities and provide liquidity support to various sectors such as tourism, aviation, construction and housing.

• Approval of production-linked incentives (PLI) scheme to provide 2 trillion (US$ 27 billion) over five years to create jobs and boost production in the country.

• Attracting foreign direct investments under various Government initiatives like Make in India and Digital India.

• Under Make in India initiative, the Government is trying to boost the contribution made by the manufacturing sector with an aim to take it to 25% of the GDP from the current 17%.

• Besides, the Government has also come up with Digital India initiative, which focuses on three core components. The components are to create digital infrastructure, deliver services digitally and increase digital literacy.

• The Government of India is expecting to attract investment of around US$ 100 billion in developing the oil and gas infrastructure during 2019-23.

• The Government of India is going to increase public health spending to 2.5% of the GDP by 2025.

• For implementation of Agriculture Export Policy, Government approved an outlay ^ 2.068 billion (US$ 29.59 million) for 2019, aimed at doubling farmers income by 2022.

The textile industry

The first three quarters of year 2020-21 would go down in the history of economic disruption owing to COVID-19 pandemic across the globe. Even the most developed countries like USA, UK were the worst affected while China and India, the most populous countries could fight against the deadly virus and manage with limited ill effects.

In FY2019-20, the Indian Textile Industry contributed approximately 2.3% to Indias Gross Domestic Product (GDP) (Source - Indian Brand Equity Foundation). During the pandemic, two sectors textiles and agriculture helped to revive Indian economy.

Textile Industry is one of the largest contributors to the countrys exports with around 11.4% share in Indias total export earnings for the fiscal period ended 2019-20 valuing to nearly USD 37.5 billion and growing at a CAGR of 7% since 2004-05. The industry is currently pegged at an estimate of USD 150 billion (INR 10,834 billion) with 75% of the total consumption being witnessed in domestic market, while exports accounted for the remaining 25% of the total market size. India ranked 2nd in textile export with 6% of global share and stood 5th in apparel export with 4% of global share. In terms of employment, Indian textile industry is the second largest employer after agriculture, providing direct and indirect employment to nearly 100 million people in India and accounts for 12% of Indias Industrial production. The sector is broadly classified into three categories, with cotton accounting for 50% share, followed by man-made fibres and jute textiles.

Government thrust on textiles

The Indian textile industry occupies a prominent place in Indias economic development. Hence, the textile industry receives significant attention and resources from the Government through policy changes and allocations in the Union Budget.

The Budget addressed following important points related to textile, apparel and fashion industry:

Following are the features of Indian budget announced for the textile industry

• Physical, Financial Capital and Infrastructure: Announcement of a scheme of Mega Investment Textiles Parks (MITRA) to make the textile industry globally competitive, attract large investments and boost employment generation. The world-class infrastructure with plug and play facilities will help to create global champions for export markets. The Government shall establish 7 Nos. Mega Textile Parks in next 3 years.

• Basic Customs Duty (BCD): On raw cotton basic customs duty imposed to 10% from earlier NIL in order to reduce import of cotton. On raw silk and silk yarn custom duty increased from 10% to 15% to boost the domestic silk industry.

• Custom Duty Rationalization: BCD on Caprolactam, Nylon chips and Nylon fiber & yarn reduced to 5%. (Earlier 7.5%)

• Reduction in Time for Income Tax Proceedings: The time limit for re-opening of assessment reduced to 3 years from the present 6 years.

• Incentives for Start-ups: The eligibility for claiming tax holiday for start-ups extended by one more year, till 31st March, 2022. Further, in order to incentivise funding of the start-ups, capital gains exemption for investment in start-ups extended by one more year, till 31st March, 2022.

• GST: Government to take every possible measure to smoothen the GST structure and remove anomalies such as the inverted duty structure.

Going forward

To boost Indias textile sector and unleash its full potential, the government plans to announce National Textile Policy to make the sector globally competitive.

As per Ministry of Textiles, Indian Textile and Clothing Industry is determined to reach a market size of US$ 350 billion by 2025, the Industry Stakeholders are working very hard in collaboration with the Ministry of Textiles to make it a reality.

Textile & Clothing segment

Textiles and Clothing are one of the three important basic needs of the human beings. However, restrictions imposed on human beings due to pandemic have affected the functioning of this industry. This industry witnessed several months to recover again.

Following disruptions hampered this segment.

Manufacturing shutdown - This industry faced a complete shutdown for around 2-3 months. The companies in "Green zone" received permission to operate their units, but this number was relatively low. Majority of the units operated at sub optimal utilization levels for several months.

Work force shortage: As lock down started, most of the migrant workers preferred to go back to their native places. Also due to stringent rules of lockdown in various states of textile hubs, the migrant workers were unable to return. Hence, this industry faced acute shortage of workers and this led to reduce capacity utilisation of the mills.

Suspended logistics - Pandemic affected the entire textile value chain. Hence, logistics disrupted and external trade hampered. Indias April and May 2020 net trade was around 50 percent, lower month-on-month compared to that of the previous year.

Cancellation of orders - Due to the uncertainty across the market, international and domestic buyers cancelled and suspended their orders, adding to the woes of the industry.

Slump in physical retail sales - Lockdown restrictions across the country resulted in a slump in the retail sales of apparel for at least 4-5 months. Moreover, the festive and wedding season sale had affected deeply.

Emerging of new consumer trends - Indias e-commerce sale of goods and apparel saw a steep rise in 2020 due to change in purchasing pattern. Work-from- home drove the demand for casual wear apparel and home textiles.

Cash flow constraints - The pandemic and consequent lockdown had disturbed the supply chain. Cancellation of orders, delay in payment receivables led to cash flow constraints for textile industry.

The textile market started to recover immediately after relaxing the COVID restrictions. Textile products like Personnel protective equipment (PPE kits), facemasks, hand gloves, socks, shoes, were in high demand as these products were included in the essential commodities to prevent pandemic. As people were at home, garments such as casuals and knit wear, also home textiles products such as bed linen and terry towel witnessed robust demand across the globe. Thus, Indian textile industry bounced back to the pre-COVID level after December 2020.

Below table indicates Indias cotton textiles export update for FY (April - February) 2020-21 (Values in Mn USD)

Commodities Apr 19 - Feb 20 Apr 20 - Feb 21 % Change
Cotton Yarn / Fab. / Made ups / Hand loom products etc. 9,318 8,710 (6.53%)
Man-made yarn / Fab. / Made ups 4,471 3,339 (25.32%)
RMG of all textiles 14,370 10,845 (24.53%)
Jute Mfg. including Floor Covering 321 327 1.74%
Carpet 1,291 1,331 3.16%
Handicrafts excl. handmade carpet 1,674 1,532 (8.49%)
Textiles 17,075 15,240 (10.75%)
Apparel 14,370 10,845 (24.53%)
Textile & Apparel 31,445 26,084 (17.05%)
All commodities 291,870 256,178 (12.23%)
% Share of T&C in total exports 10.8% 10.2%

(Source: TEXPROCIL)

Exports of cotton textiles during the period April - February 2021 have shown a decline of (-) 6.53% reaching a level of USD 8.71 billion over the previous year with exports of USD 9.31 billion during the period April - February 2020. The decline of 6.5% is mainly because of steep falls in April/May.

Cotton Textile exports reached a level of USD 948 million in February 2021 marking a growth of 9.41 per cent against the corresponding month of February 2020, wherein exports were valued at USD 866 million.

In rupee terms, exports during the month of February 2021 reached a level of ^ 6,894 Cr. as against ^ 6,192 Cr. in February 2020 recording a growth of 11.35 per cent in rupee terms.

It shows that overall cotton textile and apparel export has contracted by 17.05 percent in this year due to pandemic. Textiles export has relatively contracted by 10.75 percent due to immediate demand recovery by intermediate industry. However, apparel segment has contracted by 24.53% due to less procurement of woven garments by the consumers. Exports of cotton textiles have shown positive growth from June 2020 onwards till February 2021.

Following table indicates Cotton textiles export data (April-December 2020) (Values in Mn USD)

Commodity

April - December

% % Change
2019 2020 Share 2020/2019
Cotton Textiles total 8,201.23 8,004.47 100.00 (2.4%)
Cotton Yarn 1,996.47 1,918.67 24.0% (3.9%)
Cotton Fabrics 1,859.41 1,583.44 19.8% (14.8%)
Cotton Made ups 3,816.85 3,472.40 43.4% (9.0%)
Raw Cotton 528.48 1,030.36 12.9% 95.0%

(Source: TEXPROCIL)

From the above table it shows that cotton textile export has contracted by 2.4 percent in this year over last year. Raw cotton export has registered highest growth. Secondly, Cotton yarn has registered growth over fabrics and made ups. Cotton yarn export picked up as demand in international market was high. Below chart indicates Indias monthly cotton yarn export.

(Source: TEXPROCIL)

Indias spinning mills were the worst hit amid lack of fiscal support for last decade. Most of the mills had to shut down their operations. Indias cotton yarn industry in the country started to recover as high export demand observed from July to October 2020.

Economic activity has gathered pace after the lockdown restrictions lifted, due to which robust demand for garments such as casuals and knit wear has registered from rural and urban India. Home textile segment was constantly in demand.

Indias monthly cotton yarn exports witnessed in the month of July 2020 after the lifting of lock down to 103 mn kgs. However, as the demand from domestic knitters and weavers increased, export has reduced from November to January period to about 85 mn kgs. China, Bangladesh, Egypt, Portugal, Vietnam were the leading importers of Indian cotton yarn.

Amid concerns on origination of the coronavirus from China, there have already been reports of several international buyers looking at diversifying their sourcing base across countries. Hence, Indias garment exporters received big orders. Several major apparel exporters from India have already started receiving increased orders and are in active discussions with large international buyers, looking at increasing their sourcing from India.

Hence, domestic demand for cotton yarn increased. At a time, consistent high demand of yarn in domestic and export market resulted to increase yarn prices. Yarn supply was short in both the markets as spinners were running at low capacity utilisation level due to shortage of work force. This was the main reasons that led to skyrocketing the yarn prices.

Indian cotton, as its prices were lower compared with global prices, has an excellent price parity, due to which exports were rising from 50 lakh bales in the previous FY to 60-65 lakh bales this year. Demand for Indian cotton is expected to rise in global markets.

With China being the leading apparel exporter, accounting for more than 35 per cent of the global trade and more than three-fourths of Chinas cotton originating from the Xinjiang region, any extension of the ban to a wider base in China could trigger a material shift in global apparel trade in coming years. The shift, which was previously expected to take place gradually over the medium term, will be expedited in the light of this recent development.

While over the past few years, Vietnam and Bangladesh have been the key beneficiaries for a shift away from China, India also stands to gain from any such market opportunity, which may arise, given its strong presence in the cotton-based apparels.

Future prospects:

The Indian textile sector is slowly but steadily showing signs of revival and growth in spite of many constraints such as volatile cotton prices, fluctuation in yarn prices and ominous signs of a "second wave" or "third wave" of the pandemic with growing evidence of new virus strains mutating. Given the global pandemic situation, import restrictions and protectionism being increasingly weaponised by many countries, coupled with the non-availability of containers for shipment of goods will undoubtedly weigh on world trade in the first half of 2021. Experts feel that even the weak export performance last year will have some impact on growth in 2021.

Raw Cotton

The cotton association of India (CAI) has retained its consumption estimate for the current crop year at 330 lakh bales each of 170 kgs. There is an increase of 80 lakh bales in the cotton consumption estimate compared to the previous years consumption estimate of 250 lakh bales of 170 kgs. Each. The consumption is estimated to reach its normal level this year after the disruptions and labour shortage caused on account of the lockdown imposed in the country to arrest spread of COVID-19 pandemic.

The CAI estimated 358.50 lakh bales cotton crop for the season 2020-21 (Date: 12 March 2021)

The MSP of cotton for the 2020-21 season was ^ 5,825 per quintal, against Rs 5,550 in the previous year. Indian farmers had cultivated cotton over 129.57 lakh hectares.

The spinning vertical

Sintex has set up over 6.6 lakh spindles at single location in Gujarat. This location has an advantage that Pipavav seaport is away from 25 kms. This is the major advantage for export of yarn and import of fibres. The factory is close to cotton-cultivated area in India. Thus, transport cost is minimum for raw materials and export of yarn. The company produces 100% cotton combed compact, 100% carded compact and 100% wet linen and various blended yarns such as poly/ cotton, specialty blends such as flax/cotton, flax/viscose, cotton/modal, 100% micro modal and blends with dope dyed fibers etc.

"State of the art" digital technology commensurate with industry 4.0 accreditation, sophisticated machines and highest degree of automation has ensured that the facility operates on a no touch yarn" principle.

The product basket includes 100% cotton yarn (Ne 10s to Ne 140s) compact weaving and knitting yarns in combed varieties to cater to leading weavers and knitters in India and across the globe. Sintex is exporting its yarns to over 50 nations.

Performance in FY 2020-21

Due to the pandemic, all economic activities except for the essential goods and services came to a standstill. The spinning, textile and apparel industry faced more challenges due to its labour intensive nature.

The companys manufacturing operations have affected from the month of March 2020 due to shutdown of Lunsapur plant following nationwide lockdown announced by the Government of India in view of COVID-19.

After monitoring the situation closely, the company had commenced its operations from 12th April 2020, in a phased manner with enforcement of strict working restrictions under guidelines of Government.

The operating scale of manufacturing was lower than targeted, considering substantial volatility in market and risk averseness due to Covid 19, and affected due to delayed opening of textile value chain (fabric/ garmenting) and late pickup of exports.

1) The company enforced strict guidelines while reopening of the manufacturing plants

Initially, the manufacturing facility was shut down for a certain period but when re-initiated the work, several aspects were taken care. SILs priority was to make sure that their people remained safe and move safely in the factory premises. The first and foremost challenge with the advent of COVID-19 was to keep the employees safe, boost their confidence at work place, and maintain social distancing norms. Essential safety policies were designed and implemented. Shop floor work force movement layouts were modified. Foot pedals new sanitizing and hand washing points were installed at various places. Transport buses were sanitised at regular intervals. Wearing of masks made mandatory, awareness sessions held, audio-video aids used to create awareness about people safety. Daily temperature, oxygen % and Human antigen testing facilities were carried out at regular intervals and contact tracing norms strictly followed.

The concept of remote working, commonly called work from home was adapted. Initiated digital meetings and conferences, virtual discussions, webinars etc. While the lack of physical proximity appeared as a challenge initially, it turned out to be an opportunity to save time, cost of travel and convenience.

2) Low utilisation due to shortage of work force, cancellation of orders, suspended logistics and cash flow constraints

2.1) Low utilisation due to shortage of work force

The company tried its best efforts to retain its migrant labours by providing food, grain and basic amenities. However, it was beyond its control as migrant workers preferred to go back to their native places to stay with their families.

2.2) Cancellation of orders

China, Bangladesh, Vietnam and European Union are the major yarn export markets. In the international market, especially Chinese customers held their shipments. The foreign buyers deferred payments for goods already shipped and some refrained from lifting the goods. The companys yarn business hampered as fabric and garment exporters from USA, France and Germany deferred the payment. Many retailers such as GAP, H&M, PVH, Levis had closed their store network. International brands and retailers had cancelled and postponed orders.

Majority of the weavers cancelled their yarn orders in domestic market. Additionally, domestic fabric consumption has reduced due to all India closure. New store openings had stopped and even domestic stores faced an inventory build-up due to apparel sources for the summer season. Further, domestic prices affected negatively when exporters dumped their inventories in the domestic market. Thus, weavers and knitters in domestic as well as export markets cancelled companys yarn orders.

2.3) Suspended logistics

The cessation of shipments in international markets were caused by the lockdown of shops and factories there, following the outbreak. The companys cotton yarn shipments to China, Bangladesh delayed and came to a standstill. The company found it difficult to pursue export orders as in case of any quality issue arises after shipment, travelling to China for clearing the cargo became difficult. Dispatch procedure and clearing of goods at ports became a big challenge. This all led to increase logistic and supply chain period.

2.4) Cash flow constraints

The pandemic has affected to reduce companys export/domestic markets, causing order cancellations/deferral of order, delay in logistics led to inventory build-up and expectation of slower realization of receivables led to higher working capital requirements.

Thus, companys utilisation reduced to 56% from the planned 95% due to shortage of work force, cancellation of orders, suspended logistics and cash flow constraints. From April to November 20 (till Diwali festival) utilisation suffered due to pandemic.

3) Indias cotton prices were competitive in international markets:

The below chart indicates Chinas cotton, International cotton and Indian cotton prices.

(Source: Cotton Incorporated)

International cotton prices were soaring and its prices were 12% higher than Indian cotton prices. Indias cotton price was lowest in the world. Hence, the company witnessed good yarn margins in international markets.

The USAs ban on Xinjiang products induced competition between cotton crops and food crops on cotton growing areas in Xinjiang region. Hence, the Chinas cotton prices have reached the periodical high before the Chinese New Year holiday. For last four months, Chinas cotton prices were 23% higher than International cotton prices. In earlier months Chinas cotton prices were 15% higher than international cotton prices. Chinas cotton yarn prices were higher due to ban imposed by USA on Xinjiang cotton products.

The company has grappled with profitability issue due to a sharp decline in yarn sale in export and domestic markets in first two quarters of the year 2020-21. In the third quarter, especially from December onwards orders started increasing in domestic and export markets. Due to widened demand supply gap for yarns helped to increase margins. The company witnessed good profitability in the last quarter of this year.

Conclusion:

This year company suffered immense financial loss due to following reasons:

1) Outburst of pandemic

2) Working capital and cash flow constraints

3) Lockdown and restrictions on the movement

4) Workforce shortage

5) Re-establish supply chain

During the Chinas New Year in the last week of January 2020, owing to outbreak of Coronavirus, companys export sale came to halt. From mid-March 2020 nationwide lock down was announced in India due to which the company had to stop its operation from 21st March.

Global volatility from the beginning of the financial year caused setback to the companys liquidity position. Working capital and cash flow constraints, cancellation of orders, suspended logistics and migration of work force reduced plant utilisation from 95% to 56%.

Outbreak of the pandemic, cancellation of orders, not lifting of yarn in export and domestic market resulted in reduction of companys yarn sale drastically. Low utilisation was the reasons to reduce EBIDTA margins of yarn. Thus, company suffered huge financial losses in the first two quarters.

The company started taking utmost care of its people from the day one when reopened its operations. From October, onwards demand for yarn started increasing in domestic market due to yarn inventory in the supply chain pipeline was empty. The company witnessed minimum yarn in companys stock and similarly the weavers and knitters were having minimum yarn stock in their processes. Hence, in the month of December, the company had witnessed robust orders of yarn in export as well as domestic markets. Orders were pouring in and shortage of yarn in the markets helped to improve companys margins. Indias cotton prices were competitive in international markets. Hence, the company witnessed good yarn margins in international markets.

Overall company suffered in first two quarters of the year due to the above reasons. In the third quarter especially from November onwards, the company witnessed good EBIDTA margins.

Future prospects & business outlook

The spinning industry showed signs of revival from November onwards. In international market, demand is increasing for cotton yarns. Things are looking better, but ominous signs of a "second wave" or "third wave" of the pandemic with growing evidence of new virus strains mutating is a worry.

The news coming from all part of India about the increase in COVID cases. With Covid-19 restrictions expanded and lockdown measures re-introduced in many states, Indian manufacturers look set to experience a challenging month in April. The Government in the first week of April has asked various State Governments to try to control the rapid spread of the Covid-19 cases. Any stringent restriction, especially in or around important commercial centres like Mumbai, will weigh on factory activity in April as well.

In international markets especially Europe, Bangladesh, France imparted strict guidelines and lockdown in many part of their states. Re-emerging global pandemic situation, import restrictions and protectionism had raised concern by many countries.

Along with this, non-availability of containers for shipment of goods shall undoubtedly weigh on world trade in the first half of 2021. In the current situation, the company may face few challenges due to re-emerging of COVID 19 mutations.

This year Cotton Corporation of India (CCI) is holding majority of the cotton in India. Also, there is very few cotton quantity available with cotton traders. Hence, Indian cotton prices are likely remain stable. In international markets, USA has put sanctions on Xinjiang cotton products due to child labour issues. Hence, Indian cotton and yarn will remain in high demand in international markets.

Profitability for last 5 months is very good and it is likely to continue in the coming months.

Changes in key financial ratios

The details of changes in the key financial ratios as compared to previous year are stated below:

Particulars FY 20-21 FY 19-20 Reason for Significant Change, if any
Debtors Turnover (Days) 28 37 This ratio has been improved on realization of Receivables.
Inventory Turnover (Days) 32 25 This ratio has been increased due to increase in closing Inventory.
Interest Coverage Ratio (Times) (0.14) (0.90) The coverage is negative as compared to previous year due to increase in finance cost and loss for the year.
Current Ratio (Times) 0.35 0.41 The ratio is lower on account of increase in Current Liabilities.
Debt Equity Ratio (Times) 4.15 2.29 The ratio is higher on account of non payment of borrowing and interest accrued during the year.
Operating Profit Margin (%) 10.51% -21.27% The margin is positive on account of increase in sales and reduction in Raw Material cost and other expenses.
Net Profit Margin (%) -77.07% -76.46% N.P margins are lower because of higher depreciation and finance cost.
Return on Net Worth -69.45% -39.94% The return of networth is low due to loss during the year.

Human resource

Sintex firmly believes that its intellectual capital plays a defining role in transforming business strategies into on-ground realities and is the critical catalyst towards sustaining profitable business growth.

In line with this conviction, the management continues to invest in its people capital to nurture skill and build capabilities, which in turn results in sustaining its industry out performance.

The Companys business (fabric and yarn) is managed by a team comprising 5026 members who are expert in their area of operations.

Sintex believes that empowering women fosters stability and prosperity in their family and the local area. In keeping with this belief, the Company has recruited a number of female members for managing the operations at its yarn.

The Company is also investing in a residential colony for its workforce with contemporary amenities namely a shopping center, sports field, amphitheater, small cinema hall and a large mess.

Internal control and adequacy

In an increasingly dynamic and competitive business landscape a robust internal control mechanism is an essential business imperative. For it is a critical element in ensuring that the organisation functions in an ethical manner, complies with all legal and regulatory requirements and meets the generally accepted principles of good corporate governance. It is an extension of the overall corporate risk management framework as well as is an integral part of the accounting and financial reporting process.

The Company has in place adequate systems of internal controls and documented procedures covering all financial and operating functions. These have been designed to provide reasonable assurance with regard to maintaining proper accounting control, monitoring operational efficiency, protecting assets from unauthorised use or losses and ensuring reliability of financial and operational information. The internal controls are designed to ensure that financial and other records are reliable for preparing financial statements, collating other data and for maintaining accountability of assets.

Risk management

The Company has a robust risk management framework to identify and mitigate risks arising out of internal as well as external factors. There is a formal monitoring process at unit and company level, wherein new risks are identified, categorised as per impact and probability, mapped to key responsibilities of select managers and managed with appropriate mitigation plan. To ensure transparency and critical assessment, the Companys Risk Management Team coordinates the risk management system and ensures that it continues to remain relevant with evolving economic and sectoral changes. The risk management framework is reviewed annually by the Audit Committee on behalf of the Board.

Cautionary Statement

Statements in this document that are not historical facts are forward-looking statements. These forward-looking statements may include the Companys objectives, strategies, intentions, projections, expectations, and assumptions regarding the business and the markets in which the company operates. The statements are based on information which is currently available to us, and the Company assumes no obligation to update these statements as circumstances change. There may be a material difference between actual results and those expressed herein. The risks, uncertainties and important factors that could influence the Companys operations and business are the global and domestic economic conditions, the market demand and supply, price fluctuations, currency and market fluctuations, changes in the Governments regulations, statutes and tax regimes, and other factors not specifically mentioned herein but those that are common to the industry