Sri Ramakrishna Mills (Coimbatore) Ltd Management Discussions.

Industry Structure and Development :

The Indian Textile Industry is one of the Worlds largest producers of Textile and apparel. The domestic Textiles and Apparel Segment contribute 2% of Indias GDP, bring in 12% export earnings and approximately 5% share of global exports. The PLI Scheme announced by Govt. of India together with establishment of MITRA aims to fortify the Textile Industry to pull investments in cutting edge technology, enhance efficiency and create economy of scale besides enabling them to get on par with global competitors. According to the official statement, promotion of the manufacturing sector and creation of conducive manufacturing eco system will not only enable integration with global supply chain but also establish backward linkages with the MSME Sector of the Country. It will lead to overall growth in the economy and create huge employment opportunities.

Opportunities and Threats

The second wave of the pandemic has been brutal and has ravaged the nation. However, it is believed that the effects of the pandemic are just a pause in Indias consumption and growth story. The pandemic has pushed business to break new ground and reimagine the future that is equitable, sustainable and purposeful. To achieve this, it would be necessary to take concerted efforts from the government, businesses and individuals.

A growing middle class, the distinct advantage of having one of the youngest population in the world and growing internet penetration enabling better access than ever before portends that India is poised for unprecedented growth in the future.

The effects and longevity of the pandemic are still unknown and this would certainly have a bearing on the business for the year 2021-22. Barring this, the company expects to perform reasonably well in view of the various stimulus provided by the Government.

Outlook

Domestic conditions are not too favourable with ongoing lockdown impacting consumption demand negatively with the threat of third wave growing, a revival in demand will take longer than anticipated.

Owing to Covid Pandemic, the world economy is going through historical downturn. It has caught companies across the world by complete surprise Corporate recovery hinges on how well the virus is handled and with a strong stimulus announced by the Government. Despite the hardship experienced in the present circumstances, the industry is gearing up to meet the strong export demand catalyzed by geopolitical reasons thereby turning the crisis into opportunity.

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 31.03.2021 should contain the following ratios for the year and also for the previous year with explanation where the variation is more than 25%

Details 2020-21 2019-20
1. Debtors Turnover times 1.40 1.56
2. Inventory Turnover times 0.62 1.19
3. Interest coverage times 1.48 5.43
4. Current ratio times 1.29 1.49
5. Debt Equity Ratio times 1.67 1.95
6. Operating Margin % 27.06 43.90
7. Net Profit % 3.04 17.00
8. Return on Net worth % 6.93 61.20

The performance of the company was affected because of the impact of the pandemic during the year 2020-21.

For and on behalf of the Board of Directors of Sri Ramakrishna Mills (Coimbatore) Limited
D. LAKSHMINARAYANASWAMY
Place : Coimbatore Managing Director
Date : 29.06.2021 (DIN : 00028118)

ANNEXURE TO MANAGEMENT DISCUSSION & ANALYSIS REPORT

EFFECT OF COVID-19

The Pandemic erupted in 2020-21 has caused unprecedented disruption to economic activity the world over, propelling the already slowing global economy to recessionary shock The Indian economy also recorded a substantial contraction in 2020-21 with several sectors experiencing severe demand destruction. The performance of the company was very subdued due to disruptions from Covid-19 lock downs during the year 2020-21. It had impacted production volumes, sales, cash flows and margins besides shortage of man power. Thus, the growth figures came crashing down in the year 2020-21.

Governments and Central Banks around the world have loosened fiscal and monetary policies in an effort to revive growth.

Company availed the facility of Rs.1.71 crores provided by its bankers under the Guaranteed Emergency Credit Line announced by the Government of India.

In the Real Estate Development Sector, the company experienced delay in receipt of material and shortage of manpower which led to delay in completing the project by six months. It is expected that the delivery of Villas could be in March 2022. In the circumstances, the schemes announced by Govt. of India viz. MITRA AND PLI Scheme would help the Textile Industry to achieve economy of scale and cost advantage as well so that the industry would be able to meet the challenges of the competitors and step into growth path.