Sri Ramakrishna Mills (Coimbatore) Ltd Management Discussions.

Industry Structure and Development :

If there is one sector in the country that is self-reliant end-to-end, it is textiles. Unlike the Countries which are dominating the global textile market, India has abundant supply of raw material. It is the largest producer of cotton, accounting for 25 percent of the global output. Over the years a large spinning, weaving and apparel making capacity has been established to convert the raw material into end-products. Labour availability is plenty and, most importantly, a strong domestic market exists.

The Textile being the major employment provider in the manufacturing sector, it roughly employs about 10 crore people directly and indirectly. It has a crucial role and responsibility in the industrial development of the country. This potential compliments Indias significant demographic advantage of a young population for whom gainful employment is a key priority. Further, it also plays a significant role contributing substantially to industrial production and also in the total exports.

Opportunities and Threats

The Countrys domestic market offers sufficient potential for growth and demand for textile products is expected to grow on account of better purchasing capacity. Cotton prices which has been highly volatile, seems to be a major concern for the textile industry. The ongoing trade war between USA and China who have substantial presence in world trade will impact the sector till the issues are resolved.

Outlook

The Textile Industry has been facing severe challenges in the aftermath of demonetization, GST implementation, economic slow down across the globe, US-China Trade War and more recently the corona virus out break. The COVID-19 pandemic has delivered both supply and demand shock to economic activity which is likely to witness a significant downturn in this financial year.

In the circumstances, the rising Government focus and favourable policies and stimulus packages of the Government have been the key ingredient to the growth of Textile Industry in India. “Make in India campaign is attracting manufacturers and FDI in the textile sector. The new National Textile Policy with a major focus to attract manufacturers and initiate technological upgradation and setting up of integrated textile parks, etc., would give necessary fillip for the growth and development of the Industry.

Risk & Concerns

Textile Industry is well known for facing crisis in a cyclical way. There is need to insulate against such adverse conditions and grab the favourable opportunities in the economy such as demographic dividend, good monsoon and the overall optimism. A detailed review of business risks and companys plans to mitigate them is considered by the Audit Committee and the Board. The Company has been taking steps to mitigate foreseeable business risks. Risk evaluation and its management is an ongoing and continuous process within the company and periodically updated to the Audit Committee and Board.

Internal Controls

The Company has adequate internal control system to monitor internal business process, financial reporting and compliance with applicable laws. The adequacy and effectiveness of the control system are being reviewed periodically to see that it conforms to the policies and procedures adopted by the company so as to meet the statutory requirements. The Audit Committee at its meetings regularly reviewed the significant observations of the compliance and other reports.

Human Resources Management

Necessary initiatives have been taken for improving the skills of the employees by providing outside training and deputing them to attend various programmes so as to enable them to update their knowledge. Being a Member of The Southern India Mills Association, the Company avails the services of the Association with regard to development of its human resources.

Promotions are effected after carrying out evaluation of performance of the employees.

Review by Audit Committee

The Management Discussion and Analysis was placed before the Audit Committee and duly reviewed by the Committee.

Financial Ratios

SEBI has mandated under SEBI (LO & DR) Regulations 2015 amendment that the Annual Report for the year ended 31.03.2020 should contain the following ratio for the year and also for the previous year with explanation where the variation is more than 25%

Details

2019-20 2018-19
1. Debtors Turnover times - 1.85
2. Inventory Turnover times 1.19 1.03
3. Interest coverage times 5.43 3.51
4. Current ratio times 1.49 1.13
5. Debt Equity Ratio times 1.95 6.10
6. Operating Margin % 43.90 37.80
7. Net Profit % 17.00 13.20
8. Return on Net worth % 67.20 107.00

During the year 2018-19, the company had entered into Real Estate Development of the property owned by it and this helped it to perform better.

For and on behalf of the Board of Directors
of Sri Ramakrishna Mills (Coimbatore) Limited
D. LAKSHMINARAYANASWAMY
Place : Coimbatore Managing Director
Date : 30.06.2020 (DIN : 00028118)