Spenta International Ltd Management Discussions.


The Indian economy remains one of the fastest growing economy in the world. Socks have come to become an integral part of the daily clothing as well as a fashion statement. With a stable government, a series of strong policies and measures will help our economy to grow at a sustainable rate and increase consumption. With urbanization, increase in income and foreign brands coming to Indian market the domestic consumption is bound to increase.

The socks industry being majorly an unorganized and fragmented sector the entire industry size and figures cannot be estimated. The socks and accessories market in India has grown tremendously over the decade. Indian socks industry is maturing and with urban population evolving, demand for casuals, sports and fashion socks is picking up. Millenials are very brand conscious and demand for branded wear is on the rise. There is growth in the industry in tier I and II markets and brand awareness is growing significantly.


The demand for socks in India and other countries is on the rise. The flow of orders has been progressively increasing for last few years. Your Company is well poised to seize opportunities available in the sock knitting industry on account of its state-of-the-art production facilities, technical expertise, good quality culture and emphasis on product innovation and growth potential.

Market is shifting towards Branded Garment. Your Company has been ahead in making investment in plant and machinery to meet the growth and meet the huge demand creation in the market. Your company is working with international brands. We are constantly experimenting products made from innovative yarns and eco-friendly chemicals for manufacturing most comfortable socks especially for sports. These technically innovative socks are much in demand by international brands.

Due to international and domestic economy slow down currently, trade disputes, India signing international trade treaties, the threat of slow demand for few quarters is possible. Your company is therefore is increasing the customer base and also shortly planning to venture into ecommerce selling to overcome this.


The Company has one segment activity namely socks, in line with the definition of "segment" as per Accounting Standard 17 issued by the Institute of Chartered Accountants of India. The performance of the Company is discussed separately in the Directors Report.


Due to constant investment in latest machinery your company is able to target a vast audience, enhancing product quality, improving delivery schedules and giving superior customer service. Expectations are high, prospects are bright, but capitalizing on the new emerging opportunities will be a challenge for the socks manufacturing Companies.

The Companys Socks Division is optimistic of growth through continued network expansion and innovation. The Business will continue to focus on increasing the premium and fashion quotient of its offerings on the basis of a deep understanding of consumer preferences and delivering products of world-class quality.


The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of internal control system and suggests improvements for strengthening them. The Internal control system is improved and modified continuously to meet the changes in business conditions, statutory and accounting requirements. Your Company believes in formulating adequate and effective internal control systems and implementing the same to ensure that assets and interests of the Company are safe guarded and reliability of accounting data and accuracy are ensured with proper checks and balances.

The Company has a sound Management Information System which is an integral part of the control mechanism. The Audit Committee of the Board of Directors and Statutory Auditors are periodically apprised of the internal audit findings and corrective actions taken.


During the year under review the total production of the socks was satisfactory. The Profit before tax recorded during the year was Rs. 320.92 Lakhs as against Rs. 257.49 Lakhs in the previous financial year.



As always, people development continues to be an extremely important area in your Company. Anchoring developmental conversations at every level and ensuring that all managers are skilled in holding developmental conversations has been an area of focus. The industrial relations remained cordial throughout the year. The employees of the Company have extended a very productive co-operation in the efforts of the management to carry the Company to greater heights. Continuous training down the line is a normal feature in the Company to upgrade the skills and knowledge of the employees and workmen of the Company.


Important factors that could make a difference to the companys operations include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors. Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied.


The major challenge that the textile, apparel and hosiery industry faces is of ever-increasing production costs arising out of rising wages, power and other overheads.

However, the outlook for cotton yarn exporters is negative due to a slowdown in demand for yarn particularly from China, leading to softer yarn realizations and lower capacity utilization. Currently India has a small share in the global textile trade. Industry trackers say that India is well positioned to gain from weak input prices and growing demand for apparels.

The Indian cotton textile sector that has not been faring quite well for the past few years could see some stability in the current financial year as per the report by India Ratings and Research. The sector is expected to maintain an overall stable outlook led by stable spinning margins in the cotton yarn segment, range-bound cotton prices and favorable domestic and export demand. Unfavorable cotton-polyester staple fibre spreads have hurt substitution demand for synthetic fibres and synthetic yarn. Lower export competitiveness of Indian synthetic yarn also contributes to the subdued outlook as import and central excise duty continue on man-made fibres.

H. Ratio Analysis:

Particulars 2018-19 2017-18 Change
Debtors Turnover Ratio 107 days 98 days 9.18%
Inventory Turnover Ratio 5.16 4.45 15.95%
Interest coverage Ratio 4.19 3.45 21.45%
Current Ratio 2.43 1.86 30.65%
Debt Equity Ratio 0.23:1 0.31:1 -25.81%
Operating Profit Margin Ratio (%) 20.41% 21.00% -2.81
Net Profit Margin Ratio (%) 5.02 4.93% 1.83
Return on Net worth (%) 8.01% 6.94% 15.42

Debtors Turnover Ratio: Marginal Change due to increase in credit period. Inventory Turnover Ratio: Change is due to better inventory management. Interest Coverage Ratio: Change indicates better financial health. Current Ratio: Change is because of better performance.

Debt Equity Ratio: Change is due to repayment of debts.

Return On Net Worth: Company has been able to generate better return by registering almost 15 % growth.