We submit herewith the "Management Discussion and Analysis Report" on the business of the Company as applicable to the extent relevant.
GLOBAL ECONOMY OVERVIEW:
Economy in many countries rebounded in 2021 after a sharp decline in 2020. Advanced economies and many middle-income countries reached substantial vaccination rates. International trade picked up, and high commodity prices are benefiting many developing countries. Global growth is expected to moderate from 6.1% in 2021 to 3.6% in 2022 and 2023.
Although, rising energy prices and supply interruptions have resulted in higher and more widespread inflation than expected. Elevated inflation is projected to last longer than prediction, although assuming inflation expectations remain well-anchored, inflation should steadily decline in 2022 as supply-demand imbalances fade and major economies respond with monetary policy.
The emergence of new COVID-19 variants could prolong the pandemic and induce renewed economic disruptions. Moreover, supply chain disruptions, energy price volatility, and localized wage pressures mean uncertainty around inflation. As advanced economies lift policy rates, risks to financial stability in emerging market capital flows, currencies and fiscal positions may arise.
INDIAN ECONOMY OVERVIEW:
India has emerged as the worlds fastest-growing major economy, and it is predicted to be one of the top economic powers in the next decade, owing to its robust democracy and strong partnerships. According to Advance estimates, the Indian economy would expand by 9.2 percent in 2021-22 after declining in 2020-21. This indicates that overall economic activity has surpassed pre-pandemic levels.
With economic momentum resuming, and the long-term advantages of supply-side reforms in the works, the Indian economy is poised to grow at considerable pace. According to IMFs World Economic Outlook (October 2021 edition), Indias nominal GDP, measured in nominal USD market exchange rate is estimated at USD 3,515 Bn in 2023 (FY 2023-24), accounting for 3.3% of global GDP and making it the sixth largest economy in the world When measured in purchasing power parity (PPP) terms, India is estimated to be the third largest economy at PPP USD 12,387 Bn in 2023.
FY 2022-23 is expected to be the first normal year after the onslaught of COVID-19 which virtually eliminated meaningful increase in economic output during the two-year period up to FY21. Indias per capita nominal GDP is estimated to grow by 16% in FY 2021-22 to INR 16,95,743 (USD 2,282.34) after suffering a contraction of 2.4% in FY21.
INDUSTRY STRUCTURE AND DEVELOPMENT
Indias textile sector is one of the oldest industries in Indian economy dating back several centuries. Even today, textiles sector is one of the largest contributors to Indias exports. The textile industry is also labor intensive and is one of the largest employer. The textile industry has two broad segments. First, the unorganized sector consists of handloom, handicrafts and sericulture, which are operated on a small scale and through traditional tools and methods. The second is the organized sector consisting of spinning, apparel and garments segment which apply modern machinery and techniques such as economies of scale. India accounts for good percentage of the worlds production of textile fiber & yarns. Fabric production in the country rose to millions. The industry is the second largest employer after agriculture, providing employment to over millions of people directly and indirectly. The Indian Textile Industry contributes a good percentage to Indias Gross Domestic Product (GDP), and overall Index of Industrial Production (IIP).
The Indian Textiles Industry has an overwhelming presence in the economic life of the country. Apart from providing one of the basic necessities of life, the textiles industry also plays a vital role through its contribution to industrial output, employment generation, and the export earnings of the Country. GDP growth for FY 2021-22 was 7.4%.
OPPORTUNITIES, CHALLENGES AND OUTLOOK
The most significant change in the Indian textile industry has been the advent of man-made fibers (MMF). India has successfully placed its innovative range of MMF textiles in almost all the countries across the globe. The future outlook for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade.
Opportunities available to the Company in the present scenario, which can be seized for the benefit of the Company and ultimately to the stakeholders, can be summarized as under:
1. The government had extended the duty drawback facility on all textile products & increased the rates in some cases to boost exports in the sector.
2. In the Union budget, a good amount has been allocated to the Ministry of Textiles in order to support various schemes covering the textile industry.
3. Capacity built over years has led to low cost of production per unit in Indias textile industry; this has lent a strong competitive advantage to the countrys textile exporters relative to key global peers.
4. Indias growing population has been a key driver of textile consumption growth in the country.
5. The Indian textile industry is set for strong growth, buoyed by both strong domestic consumption as well as export demand
6. Urbanization is expected to support higher growth due to change in fashion & trends.
Based on review of the textile market situation and level of rivalry present in the domestic market, following threats might be present in the market, which can hinder growth of the revenue of the Company:
1. Intense competition between established brands and private label brands.
2. Low cost substitute products from other countries
3. Significant presence of small suppliers has reduced the bargaining power.
4. Major clothing brands have better bargaining power over textile manufacturers, as the product differentiation is low and numbers of players are high and fragmented.
DISSCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE
The financial statements have been prepared in accordance with the requirements of the Companies Act, 2013 and applicable accounting standards issued by the Institute of Chartered Accountants of India. The details of the financial performance of the Company are appearing in the Balance Sheet, Profit & Loss Accounts and other financial statements forming part of this annual report.
INTERNAL FINANCIAL CONTROL SYSTEM
Given the magnitude and nature of its business, the Company has maintained sound and commercial practice with an effective internal control system. The system ensures that all transactions are authorized, recorded and reported correctly to safeguard the assets of the Company and protect them from any loss due to unauthorized use or disposition. The adequate internal information system is in place to ensure proper information flow for the decision-making process. The Company also has well-established processes and clearly defined roles and responsibilities for people at various levels. The control mechanism also involves well documented policies, authorization guidelines commensurate with the level of responsibility and standard operating procedures specific to the respective businesses, adherence to which is strictly ensured. Internal audit is carried out frequently to create awareness and to take corrective actions on the respective units or areas, which need rectification. These reports are then reviewed by the "Management Team" and the "Audit Committee" for follow-up action.
HUMAN RESOURCE DEVELOPMENT
The Company regards its human resources as amongst its most valuable assets and proactively reviews policies and processes by creating a work environment that encourages initiative, provides challenges and opportunities and recognizes the performance and potential of its employees attracting and retaining the best manpower available by providing high degree of motivation.
Your Company believes in trust, transparency & teamwork to improve employees productivity at all levels.
The Management Discussion and Analysis Report containing your Companys objectives, projections, estimates and expectation may constitute certain statements, which are forward looking within the meaning of applicable laws and regulations. The statements in this management discussion and analysis report could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in the governmental regulations, tax regimes, forex markets, economic developments within India and the countries with which the Company conducts business and other incidental factors.
|By order of the Board of Directors|
|For Sueryaa Knitwear Limited|
|Date: 16.08.2022||Bhanu Gupta|
|Place:Ludhiana||Additional (Whole time) Director|