SPL Industries Management Discussions

The Board of Directors is pleased to share with you the Management Discussion and Analysis Report for the Financial Year ended on March 31,2023.


SPL has a leading Apparel Export House and has one of the largest vertically integrated knitwear plants in India, leading manufacturer & exporter of Knitted fabric and Knitted garments. SPL offers innovative designs that incorporate the latest trends and employs only high-quality fabrics to build trust with stakeholders and attract a strong clientele. The company is reputed for excellent Product Development and Design Capability. The Company strives to cater its products to both domestic and international markets, aligning with its objective of becoming a leading global manufacturer. It is committed to being a resilient organization with a clear vision, focusing on strengthening its core and emerging stronger.

Annual Financial Performance

SPL has leveraged its strengths, team cohesion, and talented workforce to deliver high-quality products and consolidate its position as a responsible organization. Despite the unprecedented challenges faced by the Indian economy, SPL has performed with exceptional dedication, marking a significant milestone in the Companys history.

During the year under review, the Company achieved a standalone net profit of Rs. 2383.59 Lakhs as compared to Rs. 2108.42 Lakhs in previous financial year with an increase of around 13.05%. SPL also witnessed a rise in its margins in a record-breaking inflationary environment.. The Company continued to grow its domestic business with very strong traction.

Details of significant changes (Le., change of 25% or more as compared to the immediate previous financial year) in key financial ratios, along with detailed explanations thereof:

Pursuant to the amendment made in Schedule V of the SEBI (Listing Obligations & Disclosure Regulations) Regulations, 2015, details of significant changes (on standalone basis) (i.e., change of 25% or more as compared to the immediate previous financial year) in key financial ratios and any change in return on net worth of the Company, including explanations, therefore, are given below:

Sc No. Key Financial Ratios Current Financial Year (2022-23) Previous Financial Year (2021-22) % Change between Current Financial Year & Previous Financial Year
1 Current Ratio 3.69 2.94 25.50
2 Debt- Equity Ratio 0.06 0.03 88.71
3 Debt Service Coverage Ratio 33.67 45.59 (26.14)
4 Return on Equity (ROE) 13.58 13.78 (1.44)
5 Inventory turnover ratio 6.27 20.80 (69.86)
6 Trade Receivables turnover ratio 6.85 6.23 9.87
7 Trade Payables turnover ratio 10.97 7.77 41.23
8 Net capital turnover ratio 5.29 2.33 127.27
9 Net profit ratio 8.37 10.66 (21.42)
10 Return on capital employed (ROCE) 16.59 17.33 (4.27)
11 Return on Investment (ROI) 1.14 0.31 270.77

Detailed Explanation of Significant Changes-As per Notes on ratio (Note No. 54(iii))

1. Improvement in Current Ratio primarily indicating higher Current Assets Base and Optional Current Liabilities.

2. Change in Debt Equity Ratio is due increase in borrowings during the Year.

3. Change in Debt service coverage Ratio is due increase in borrowings during the Year.

4. Change in Inventory Turnover Ratio is due to increase in Average Inventory at year end.

5. Change in Trade Payables Turnover Ratio is due to increase in Purchases during the Year.

6. Change in Capital Turnover Ratio is due to increase in increase in Revenue.

7. Increase in Return on Investment is due to increase in Investments during the Year.


The global economy is displaying signs of a steady recovery despite the significant impact of the conflict between Russia and Ukraine and the Covid-19 pandemic. As economies gradually reopen, supply chain disruptions are diminishing, which were previously affected by the war, are stabilizing. International Monetary Fund (IMF) has announced a 3.2 per cent revised downward forecast to global growth in 2022 and 2.9 per cent in 2023. It has also revised inflation upwards to 6.6 per cent in advanced economies and 9.5 per cent in emerging and developing economies.

The global economy is still reeling from the pandemic and Russias invasion of Ukraine. We are now facing a gloomy and uncertain outlook. Many of the downside risks we identified in the World Economic Outlook are now materialising.

• First, higher-than-expected and broader inflation, especially in the US and major European economies. This is triggering a major tightening of monetary and financial conditions.

• Second, a worse than anticipated slowdown in China, amid COVID-19 outbreaks and lockdowns.

• Third, further negative spill overs from the war in Ukraine and the associated sanctions and countersanctions,

Many central banks are taking significant and coordinated measures to tighten monetary policy, with the aim of achieving positive results as inflation approaches its target.

World Economic Outlook, July 2023: Near-Term Resilience, Persistent Challenges

Global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 2024. The rise in central bank policy rates to fight inflation continues to weigh on economic activity. Global headline inflation is expected to fall from 8.7 percent in 2022 to 6.8 percent in 2023 and 5.2 percent in 2024. Underlying (core) inflation is projected to decline more gradually, and forecasts for inflation in 2024 have been revised upward.

World Economic Outlook, April 2023: A Rocky Recovery

The baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. In a plausible alternative scenario with further financial sector stress, global growth declines to about 2.5 percent in 2023 with advanced economy growth falling below 1 percent. Global headline inflation in the baseline is set to fall from 8.7 percent in 2022 to 7.0 percent in 2023 on the back of lower commodity prices but underlying (core) inflation is likely to decline more slowly. Inflations return to target is unlikely before 2025 in most cases.

World Economic Outlook, October 2022: Countering the Cost-of-Living Crisis

Global economic activity is experiencing a broad-based and sharper-than-expected slowdown, with inflation higher than seen in several decades. The cost-of-living crisis, tightening financial conditions in most regions, Russias invasion of Ukraine, and the lingering COVID-19 pandemic all weigh heavily on the outlook. Global growth is forecast to slow from 6.0 percent in 2021 to 3.2 percent in 2022 and 2.7 percent in 2023. This is the weakest growth profile since 2001 except for the global financial crisis and the acute phase of the COVID-19 pandemic. Global inflation is forecast to rise from 4.7 percent in 2021 to 8.8 percent in 2022 but to decline to 6.5 percent in 2023 and to 4.1 percent by 2024. Monetary policy should stay the course to restore price stability, and fiscal policy should aim to alleviate the cost-of-living pressures while maintaining a sufficiently tight stance aligned with monetary policy. Structural reforms can further support the fight against inflation by improving productivity and easing supply constraints, while multilateral cooperation is necessary for fast-tracking the green energy transition and preventing fragmentation.

World Economic Outlook Update, April 2022: War Sets Back the Global Recovery

The war in Ukraine has triggered a costly humanitarian crisis that demands a peaceful resolution. At the same time, economic damage from the conflict will contribute to a significant slowdown in global growth in 2022 and add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest. Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8 and 0.2 percentage points lower for 2022 and 2023 than projected in January. Beyond 2023, global growth is forecast to decline to about 3.3 percent over the medium term. War-induced commodity price increases and broadening price pressures have led to 2022 inflation projections of 5.7 percent in advanced economies and 8.7 percent in emerging market and developing economies—1.8 and 2.8 percentage points higher than projected last January. Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential.

(Source: https: / /www.imf.org/en/Publications/WEO)

Indian Economy

The International Monetary Fund (IMF) revised Indias GDP growth forecast to 6.1% for 2023, up from 5.9% projected by the financial institution earlier this year, reflecting momentum from stronger-than-expected growth in the fourth quarter of 2022 as a result of stronger domestic investment. The IMF kept the growth forecast for 2024 at 6.3%.

Fitch Ratings raised its FY24 (2023-24) growth forecast for the Indian economy to 6.3%, from 6% predicted earlier, citing strong growth in the April-June quarter so far and sustained near-term momentum.

Meanwhile, the Reserve Bank of India (RBI) has projected FY24 Indian economic growth at 6.5%. In terms of quarterly break-ups, the central bank expects 8% growth in the June quarter, followed by 6.5%, 6% and 5.7% in the subsequent quarters.

Policy tightening by central banks in response to inflation has raised the cost of borrowing, constraining economic activity. Immediate concerns about the health of the banking sector have subsided, but high interest rates are filtering through the financial system, and banks in advanced economies have significantly tightened lending standards, curtailing the supply of credit.

(Source: https://www.imf.org/ en/ News/Articles/2023/ 03/06/ cf-india-can-balance-curbing-emissions-and-economic-growth)

Textile Industry

The textile industry is projected to experience a promising growth trend, with an anticipated compound annual growth rate (CAGR) of 5.67% worldwide during the period of 2022-2027. This growth is expected to be driven by factors such as increasing population, rising disposable income and changing fashion trends. As the population increases, particularly in emerging economies like India and China, the demand for textiles and clothing is expected to rise further.

The apparel industry has experienced significant growth driven by several factors, including the increasing disposable income, the rising global population, and the rapid expansion of e-commerce. The popularity of online shopping has surged due to its convenience, vast array of options, and lower prices. As a result, the online channel has witnessed tremendous growth, accounting for 15.9% of the industrys total value, with specialized online retailers leading the way.

Furthermore, the industry is undergoing a transformation towards sustainable and eco-friendly practices, which is also contributing to its growth. With consumers becoming increasingly aware of the environmental impact of clothing production, they are actively seeking sustainable clothing options. This shift towards sustainability has opened up new opportunities, particularly in the eco-fashion sector.


Government Initiatives

The Textile industry is one of the countrys most significant sources of employment generation, with an estimated 4.5 crore people directly engaged in this sector, including a large number of women and the rural population. In the current financial year, the textile industry has been facing the challenge of moderating exports compared to FY22. However, the levels in the eight six months still prevail, 9.5 per cent higher than the corresponding pre-pandemic level of FY20. Export of readymade garments registered a growth of 3.2 per cent YoY basis during the same period. FDI inflows into the textile sector are yet to recover to pre-pandemic levels.

To develop integrated large-scale and modern industrial infrastructure facilities for the entire value chain of the textile industry, the government approved the setting up of seven PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks. The parks will not only reduce logistics costs and improve the competitiveness of Indian Textiles but also boost employment generation, attract domestic investment and FDI, and position India firmly in the global textile market. The parks are expected to create a total of one lakh direct and two lakh indirect employment.

Further, to boost the production capacity, the government launched the Textile PLI

Scheme with an approved outlay of ^10,683 crore over five years starting from 1st January 2022 to promote investments and increase the production of Man-Made Fibre (MMF) Apparel, MMF Fabrics and Products of Technical Textiles. This will enable the textile sector to achieve size and scale, enhancing export competitiveness. In the approved 64 applications so far, the proposed total investment commitment is ?19,798 crore, with projected turnover and employment generation ol TI .9 lakh crore and 2.5 lakh, respectively.

(Source: https://www.indiabudget.gov.in/ economicsurvey/)

Rising per Capita Fiber Consumption

The demand for eco-friendly fibers has seen remarkable growth, with an increase in their per capita use. This can be attributed to several factors, such as rising disposable income of households, changing textile trends, and the global phenomenon of urbanization, which has led to a higher demand for high-quality fibers and textiles. Additionally, both consumers and retailers are now seeking a wider range of fibers and yarns to meet their diverse needs.

Localized Supply Chains

The current disruptions caused by high fuel costs, port bottlenecks, and inflationary pressures are expected to persist in the near future. These challenges create an opportunity for fashion companies that have local and integrated supply chains to strengthen their position by catering to customer demands in their respective regions of operation.

Sustainable Fabrics on the Rise

To minimize its environmental footprint, the fashion industry is continually striving to incorporate sustainability into every aspect of its business. The implementation of closed-loop recycling is a significant stride towards this goal, as it reduces the extraction of virgin raw materials and significantly decreases industrial waste. In an effort to increase transparency and customer loyalty, many brands are now using product passports to improve the authenticity and recyclability of their products.

CHALLENGES Lack of Resources

The apparel industry is facing a challenge with the limited availability of raw materials and labor, which has resulted in higher retail prices and reduced consumer demand for clothing. Meeting the demand for these scarce raw materials could also lead to increased costs, further impacting the industry.

Rising Inventory Level

The apparel industry faces uncertain demand, prompting manufacturers to adopt strategies like lean retailing and reducing inventory, which restrained overall production in the market. Consequently, suppliers have come to depend on local manufacturers with shorter lead times and closer proximity. This approach helps mitigate the risks associated with order cancellations and the resulting losses for both suppliers and manufacturers.


The Companys Board of Directors has implemented a comprehensive risk management strategy, which includes a framework for identifying, analysing and mitigating risks. This framework involves continuously scanning the Companys business environment and monitoring both internal and external risk factors to ensure a proactive approach to risk management.

Nature of Risk Impact Mitigation Strategy
Economic Risk The Companys financial performance can be impacted by global economic downturns and business disruptions, such as the recent Covid-19 pandemic. To mitigate this risk, SPL is committed to prove high- quality products and enhance its business presence in various geographies through appropriate strategies
Currency Volatility Risk Currency volatility poses a risk to the Companys profitability. To mitigate this risk, SPL actively monitors the currency exposure and employs effective currency trading practices
Competition Risk The emergence of new players in emerging countries with lower production costs can potentially impact the Companys market share To mitigate this risk, SPL places strong focus on research and development. In addition, its innovative high-quality textile solutions provide it with a competitive advantage over its peers.
Environmental Risk Non-compliance with relevant environmental regulations may affect the Companys manufacturmg processes To mitigate this risk, SPL adheres to all industry standards and relevant legislation by conducting regular internal audits and following established manufacturing processes
Raw Material Risk Price volatility in raw materials, particularly cotton, has a negative impact on the Companys production costs. To mitigate this risk, SPL has implemented a raw material management policy to monitor cotton prices on an ongoing basis.


An independent internal audit function is an important element of a companys internal control system. SPL possesses a strong and comprehensive internal control system, specifically designed to guarantee the accuracy and reliability of financial information, as well as the integrity of records used in the preparation of financial statements and other reports. This system ensures the responsible management of assets, aligning with the size and complexity of SPLs operations. The Company firmly believes that this provides, among other things, a reasonable assurance that transactions are executed with appropriate management authorization and oversight.

SPLs internal control system is supplemented by a comprehensive program of internal audits, reviewed by senior management and documented policies, guidelines, and procedures. The internal audit findings provide vital inputs for risk identification and assessment. Further, periodic assessment of business risks is carried out by the Management and the Audit Committee of Board to identify and address significant threats that may hinder the accomplishment of SPLs business objectives. It also ensures that the business transactions are recorded in all material, with respect to permitted preparation of financial statements in conformity with established accounting principles, along with the assets of the Company being adequately safeguarded against significant misuse or loss.


SPL is committed to its Environment, Health and Safety (EHS) initiatives, which aim to promote long-term sustainability and value for the Company and its stakeholders. It understands that EHS-related incidents can have significant regulatory and reputational consequences. Therefore, it organizes awareness workshops to ensure the safety of personnel involved in the Companys production operations. Alongside, the Company takes various measures to avoid any unforeseen incidents that could jeopardize its EHS objectives. As a responsible corporate citizen, SPL is proactive in addressing environmental issues and acknowledges its social responsibilities. It is dedicated to achieving environmental and economic benefits by promoting energy efficiency, water conservation, chemical usage reduction, and waste management. The Company ensures compliance with all obligations related to its products, with a focus on environmental and occupational health and safety. Preserving the natural environment and promoting community well-being are integral components of its corporate social responsibility. SPL recognizes that acting responsibly and sustainably can create new business and social opportunities, increase shareholder value, enhance its brand and

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SPL considers its team, comprising 382 employees, to be its most valuable and indispensable asset. The teams collective competencies, skills and knowledge are essential for driving the Company forward and creating an agile and performance oriented organization. It strives to create a supportive environment that fosters employee engagement and enables them to find meaning in their work, while contributing to the Companys success. It promotes inclusivity and diversity in the workplace and provides a safe working environment. The Companys human resource policies align closely with the overall business strategy and play an integral role in executing business operations. SPL understands the importance of well-trained and motivated employees in achieving its goals. To this end, the Company places great emphasis on employee retention by diligently identifying and allocating suitable individuals to appropriate job positions.


The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind-AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) (Amendment) Rules, 2016 read with Section 133 of the Companies Act, 2013.


SPL is adapting to challenges and leveraging them as opportunities by learning from its experiences over the past few years and enhancing its business model with agility. The Company has achieved new milestones in the past year and is now striving for greater profitability and reach through geographic and product category expansions, aimed at strengthening the team, enhancing scale, and placing a greater emphasis on sustainability

Global market for apparel

The apparel market encompasses every kind of clothing, from sportswear to business wear, from value clothing to statement luxury pieces. After the market recovered in 2021 from the effects of the corona virus (COVID-19) pandemic, high inflation in 2022 posed more difficulties for the global apparel industry. The cost of production rose, and consumer confidence fell.

Global apparel market-statistics & facts

The revenue of the global apparel market was calculated to amount to 1.53 trillion U.S. dollars in 2022, a slight decrease on the previous year. However, revenue was forecast to increase in 2023, to more than 1.7 trillion dollars. The countries that account for the majority of this apparel demand are the United States and China, both generating substantially higher revenues than any other country. It is perhaps no surprise that the same two countries play a significant role in international trade. In 2021, China led the rankings for the highest value of apparel exports. The U.S. was second only to the EU in the value of apparel imports.

(Source: https:// www.statista.com/topics/5091/apparel-market-worldwide/#topicOverview)

Indias Export (Principal Commodity wise) is as follows:

Commodity 2021-22 2022-23
Readymade Garment 16,015 16,192
Cotton Textiles 17,166 11,083
Man-made textiles 6,294 5,411
Wool & Woolen textiles 166 205
Silk Products 109 94
Handloom Products 269 182
Carpets 1,790 1,366
Jute Products 537 462

(Source: https://texmin.nic.in/textile-data)

Indias Import (Principal Commodity wise) is as follows:

Commodity 2021-22 2022-23
Readymade Garment 1,265 1,755
Cotton Textiles 2,143 3,404
Man-made textiles 3,433 3,783
Wool & Woolen textiles 320 358
Silk Products 148 271
Handloom Products 2 1
Carpets 100 36
Jute Products 248 294

(Source: https://texmin.nic.in/textile-data~l

The Indian market for textiles

As per the Annual Report 2022-23 of the Ministry of Textiles, The Indian textile industry is the second largest producer of MMF Fibre after China. India is the 3rd largest exporter of Textiles & Apparel in the world. Indias textiles and clothing industry is one of the mainstays of the national economy. The share of textile and apparel (T&A) including handicrafts in Indias total merchandise exports stood at a significant 10.5% in 2021-22. India has a share of 4.6% of the global trade in textiles and apparel. Major textile and apparel export destinations for India are USA, EU-27 and UK, accounts for approximately 50% of Indias textiles and apparel exports.

The availability of cotton is one of the reasons for India being strong in the textile industry. India occupies first position in the world in cotton acreage with around 119.10 lakh hectares under cotton cultivation which is around 36% of the world area of 326.36 lakh hectares.

Policy support for the Textile industry

The government of India has been providing support for the textile industry through various policy measures.

• Technology Upgradation: Amended Technology Fund Upgradation Scheme (ATUFS): This scheme aims to promote investment in the textile industry and the generation of employment. Eligible units would be reimbursed Capital Investment Subsidy.

• Support for Skilling: Samarth was formulated under the broad skilling framework adopted by M/ o Skill Development & Entrepreneurship with advanced features such as Aadhaar Enabled Biometric Attendance System (AEBAS), Training of Trainers (ToT), CCTV recording of training programme, dedicated call centre with helpline number, mobile app based Management Information System (MIS), on-line monitoring of the training process etc.

• Infrastructure Development: PM-MITRA Scheme aims to set up seven PM Mega Integrated Textile Region and Apparel (PM MITRA) Parks in Greenfield/Brownfield sites with world-class during a period of seven years up to 2027-28.

• Advancing sustainability and circularity: Textile Cluster Development Scheme (TCDS) from 2021-22 to 2025-26 with a view to create an integrated workspace and linkages-based ecosystem for existing as well as potential textile units to make them operationally and financially viable.

(Source: https://texmin.nic.in/documents/annual-report)