Suryaamba Spinning Mills Ltd Management Discussions.

At Suryaamba, we recognize that, we have been able to maintain our financial and operational performance, in spite of the challenging macro environment. We maintain our focus on the domestic market and continuing to grow our export business. Considering the near term market challenges, we strive to create opportunities and continue to focus on creating value for our stakeholders.


In terms of GDP, Indian Economy is the fifth largest economy in the world. In 2019, India became a $ 2.7 trillion economy, having added one trillion US dollars in the last five years. The economic survey of the government outlined the blueprint to achieve the vision of making Indian a USD 5 trillion economy by 2024-25. According to the World Bank, the global economy decelerated to an estimated 2.4 percent in 2019, the slowest pace since the global financial crisis. The Indian economy was not immune to the slowdown. The economy faced multiple headwinds and amidst a weak environment for global manufacturing and trade and challenges in the domestic financial sector, the Indian economy slowed down with GDP growth to 4.2% in financial year 2019-20 as compared to 6.1% in financial year 2018-19.

Recognizing financial stress built up in the economy, Government of India undertook initiatives such as liberalizing sectors to attract foreign direct investment, speeding up insolvency resolution process under Insolvency and Bankruptcy Code, upfront capital infusion in public sector banks to alleviate liquidity concerns and reducing corporate tax rates to revive private investments. RBI has taken number of measures to ensure sufficient liquidity in the system since the beginning of 2019-20. We note that it has slashed policy rate (Repo rate) from 6.25% in the beginning of year to 4.4% at the closing of fiscal and at now at 4% in ongoing fiscal so far. We also note this time transmission of rate cuts has happened in a large way and helped across all industries and borrowers.

Despite the slowdown, India has improved its ranking in World Banks ‘Doing Business and moved up by 14 position to 63rd rank in 2019, among 190 countries, which immensely contributed to the increase in global confidence in Indian economy.

However, the recent outbreak of COVID-19, which led to a country wide lockdown to curtail the spread of virus, has posed a altogether new challenge and has altered the outlook of Indian Economy. Government of India and RBI are nevertheless continuously working and taking steps to revive the economy and enhance rural income. Fiscal as well as monetary measures have been introduced and are expected to decelerate this slowdown and will help the economy grow in at rebound at the earliest pace.

Amidst the Covid-19 crisis, Fitch Ratings lowered Indias economic growth estimate for FY 2020-21 to 0.8%, citing a fall in consumer spending and fixed investment and disruption in economic activities. However, it expects a sharp rebound in Indias growth to 6.7% in FY 2021-22. Besides, favorable international oil prices are likely to keep Indias inflation rates within manageable bounds and lower its current account and fiscal deficit.

As per Moodys (a global rating company), Indias GDP growth rate for 2020-21 is expected to be at zero mainly led by steep deterioration in business activities and sharp contraction in consumption trend due to disruption led by COVID-19. However, on a positive note, it has forecasted Indias GDP growth rate to bounce back to 6.6 per cent in 2021-22.



India is among the worlds largest producers of Textiles products. The Indian Textile Industry holds a dominant position and maintaining its uniqueness and strength in both organized and unorganized sector. The domestic textiles and apparel industry contributes 2.3% to Indias GDP and accounts for 13% of industrial production, and 12% of the countrys export earnings. The textiles and apparel industry in India is the second-largest employer in the country providing employment to 45 million people. As an industry the sector significantly contributes to the economy of a country.

India has also become the second-largest manufacturer of PPE and producer of polyester, silk and fibre in the world in the world. More than 600 companies in India are certified to produce PPEs today, whose global market worth is expected to be over $92.5 billion by 2025, up from $52.7 billion in 2019.

The market size of industry is expected to reach $ 223 billion by 2021 from $ 140 billion (domestic and export) in 2018. Exports in the textiles and apparel industry are expected to reach $300 billion by 2024-25 resulting in a tripling of Indian market share from 5% to 15% and create an additional 35 million jobs. By 2022, the Indian textile sector will require additional 17 million workforces.


Indias textile and apparel exports stood at US$ 38.70 billion in FY19 and is expected to increase to US$ 82.00 billion by 2021 from US$ 22.95 billion in FY20 (up to November 2019) (source: ibef).

The growth in demand is expected to continue at 12% CAGR to reach US$ 220 billion by 2025. India has most liberal and transparent policies in Foreign Direct Investment (FDI) amongst emerging countries. India is a promising destination for FDI in the textile sector. The textiles sector has witnessed a spurt in investment during the last five years, it attracted Foreign Direct Investment (FDI) worth US$ 3.48 billion up to March 2020. With its consistent growth performance and abundant cheap skilled manpower, there are enormous opportunities both for domestic and foreign investors to make investments in textile sector in India.

Government Initiatives: India imports significant quantity of technical textiles worth $ 16 billion every year. To reverse this trend and to position India as a global leader in technical textiles, under Union Budget 2020-21, a National Technical Textiles Mission is proposed for a period from 2020-21 to 2023-24 at an estimated outlay of 1,480 crore (US$ 211.76 million). Anti-dumping duty on purified terephthalic acid (PTA), a critical input for textile fibers and yarns, is being abolished. The Ministry of Textiles has been allocated Rs. 3,515 crore in the current Budget 2020-21 and for ATUF Scheme, the fund allocation is 761.90 crore.

The Government of India has taken several measures including Amended Technology Up-gradation Fund Scheme (A-TUFS), scheme is estimated to create employment for 35 lakh people and enable investments worth Rs 95,000 crore (US$ 14.17 billion) by 2022. In 2020, New Textiles Policy 2020 is expected to be released by the Ministry of Textiles. Under the Scheme for Integrated Textile Parks (SITP), 59 textile parks were sanctioned out of which 22 have been completed.


The country has several growth drivers for this industry viz., abundance of natural resources, raw material, competitive manufacturing costs, large and growing domestic market, presence of entire value chains, availability of manpower, export promotion & increase in demand, rising per capita income, organized retail & e-Commerce platform, increasing loans under TUF, growing domestic and foreign investments.

Companys Core Competencies

Suryaamba Spinning Mills Limited is one of the well-known producers of synthetic blended yarn for over a decade and a forward looking Company focused on building quality products, customers satisfaction and promising growth in the industry.

The Company strengthens its position with-

• Management team which has rich experience in marketing & textile manufacturing.

• Availability advanced technology equipment.

• Well-defined quality and process management system.

• Experienced and qualified professionals with rich and proven experience.

• Established systems for emphasis on quality of product.


• Volatility of supply and cost of raw material.

• Competition from other low cost neighboring countries such as Bangladesh, Vietnam, Indonesia and Pakistan is the biggest threats to Indian textile industry.

• Changing consumer behavior, Infrastructure bottlenecks, outdated technology, inflexible labour laws and a fragmented nature of the industry.


Synthetic yarn products are the preferred yarns in the textile industry due to its unique features like lower price and available uniformly throughout the year. Whereas, the near-term outlook remains challenging due to the economic slowdown following lockdown to curb the spread of the COVID-19 pandemic. On the other hand, there also seems to be a short-term opportunity for Indian companies to cater to those markets which were earlier catered by China and Bangladesh and any disruption in supply chain or production of polyester yarn in China, which has a global exports share of 50 per cent, may provide higher export opportunity to Indian polyester yarn manufacturers. Demand revival will also depend on government measures to incentives exports, domestic demand is expected to revive by third quarter as the lockdown is slowly unfolded. Additionally, a headroom for growth as polyester yarn is a cheaper substitute for cotton and other fibers.

The Company is confident and aims to focus on operational excellence and to tide over the current difficult period and capitalize on the future opportunities, however, the same goes in line with global and Indian economy scenario.


World Health Organization (WHO) declared outbreak of Corona virus Disease (COVID-19) a global pandemic. Consequent to this, Government of India declared lockdown on March 23, 2020 and the Company temporarily suspended the operations in at its units in compliance with the lockdown instructions issued by the Central and State Governments. COVID-19 has impacted the normal business operations of the Company by way of interruption in production, supply chain disruption, unavailability of personnel, closure/lock down of production facilities etc. during the lockdown period which has been extended till third week of May, 2020. However, partially production and supply of goods has commenced during the month of April 2020 after obtaining permissions from the appropriate government authorities.

Suryaamba extended its support and cooperation towards all Government Initiatives/ Directions for combating the escalating COVID-19 situation. Company has adopted several measures across its offices and site to ensure business continuity. In order to create awareness and protect employees, some of the measures taken are:

• ‘Work from Home facility for our office staff.

• Following of social distancing norms.

• Minimizing external visitors unless crucial.

• Compulsory hand sanitization for all at frequent intervals.

• Daily periodic sanitization of offices, work-area, company transport, etc.

• Provision of hand sanitizers, masks and medical kit.

• Multiple awareness drives for all employees.

• Strict prohibition on chewing Pan or Gutka.


Risks are integral part of the growth of a business. However, the Company frames the effective risk management which helps to mitigate the risks effectively and ensures business sustainability.

Risk: Mitigation Approach:
Raw Material Price Risk:
High volatility in prices impacts the overall cost of production, energy inputs and finished goods and thus, the profitability. The company thoroughly reviews the purchasing policy so as to control the purchase price of the commodity. Securing the supplies of the key raw material and strong relationship with vendors ensures easy availability to the raw material sources. Increasing share of value added products in all businesses. Focused Cost Management and efficiency improvement.


Human Resources Risk: Non availability of the required talent resources can affect the performance of the Company. Focused talent development and carrying out necessary improvements to attract and retain the best talent. Reviewing and monitoring performance & development of employees.
Competition Risk: With expanding capacity of exiting players and emergence of new entrants and any change in the competition intensity in the global market space, competition is a sustained risk and poses a potential threat to the Company. Strategic initiatives to enhance marketing activities and continuous efforts in enhancing the product portfolio and the brand image of the Company. Increasing level of customer engagement. Trusted partnerships and offering competitive rates to its clients across the globe.
Currency Risk: As the Company deals globally, currency volatility may impacts the overall revenue of the Company. Constant monitoring and hedging, if required, to mitigate any adverse movements in currency fluctuations.
Policy Risk: Implementation of any policy which is not in favour of the Company hampers the operations of the Company. Adherence to government norms is being ensured. Following and utilization of schemes or incentives promoted by the government to boost the industry and stay ahead in the market.
Information Technology Risk: Risks related to Information Technology systems; data integrity and data security. Systems are upgraded regularly with latest security standards, using back up procedures. Security policies and procedures are updated on a periodic basis and users educated on adherence to the policies so as to eliminate data leakages.
Regulatory Risk: Any default can attract penal provisions and may impact the company reputation. To ensure compliance with all applicable statutes and regulations.
Unforeseen /Unavoidable Risk: The beginning of 2020 has witnessed the global spread of COVID-19, i.e. corona virus which has led to worldwide lockdown resulting slow down of economy, restriction in movement, temporary closure of business operations. The Company leverages and takes out necessary measures immediately to curtail such unpredicted situation and challenges posed thereto. Companys response and action initiated on this pandemic are mentioned above.

Note: Financial Risks are covered in the Audited Financial Statements.


The need for environmentally clean and safe operations is companys key priority. The Company policy requires the conduct of all operations in such a manner so as to ensure the safety of all concerned, compliance of statutory and industrial requirements for environment protection and conservation of natural resources to the extent possible.


Management recognizes that employees represent our greatest capital assets and it is only through motivated, creative and committed employees that we can achieve our aims. Driven by strong ethics, quality, integrity and team work, company works towards achievement of its goals and fulfillment of the objectives. The Company provides to its employees favourable work environment that motivates performance and innovation while adhering to high degree of quality and integrity. Assignment, empowerment and accountability is the cornerstone of all the people led processes. The Company continuously nurtures this environment to keep its employees highly motivated and result oriented. Industrial relations during the year continued to be cordial and the Company is committed to maintain good industrial relations through effective communication.

The total permanent employees strength of the Company was 921 as on March 31, 2020.


Suryaamba promotes health and safety of all employees at workplace. The health and safety of our staff is essential and is a key to optimize companys productivity. It appeared to the Company that most of the women workers were in control of many of the household responsibilities along with working at industrial unit of the Company. Considering their wellbeing, the Company organized a two day Health checkup assessment and awareness camp at Companys factory premises from October 04, 2019 to October 05, 2019.

The Company engaged services of CARE Hospitals, Nagpur to conduct general physical examination and medical screening through various tests namely Hemoglobin test, Blood TCDC test, ECG, Blood Pressure, Blood Sugar test, Bone Density test. The women beneficiaries participating in the camp were 224. The CARE Hospital doctors dedicated in the health check-up camp, Dr. Neha Bhargav, Dr. Nazma Parveen and Dr. Sunaina Dhunde spoke and guided our women workers on basic measures to be taken in daily routine to ensure good health. Following the test results and health examination, a medical prescription suggesting remedies and medicines were allotted to ensure their health maintenance.

We believe that, the health checkup eliminates any surprise element related to an individuals health conditions, ability to work, sickness, absence levels and express our care towards our staff and enable them to stay healthy, improved morale and loyalty.


The Company has appropriate systems for Internal Control. The systems are improved and modified continuously to meet with changes in business conditions, statutory and accounting requirements. The Companys internal control systems and procedures commensurate with the size and nature of its operations.

These systems are designed to ensure that all the assets of the Company are safeguarded and protected against any loss and that all the transactions are properly authorized recorded and reported. High accuracy in recording and providing reliable financial & operational support is ensured through stringent procedures.

The Audit Committee of Board of Directors reviews the internal audit report, efficiency and effectiveness of internal control systems and suggests the solution to improve and strengthen. The Internal control system during the year and no material weakness in design or operation was observed.


The Company is engaged in the business of manufacturing and sales of textile products and operates only in one segment i.e., producers of Synthetic blended Yarns. The Company unit maintains standard operational system and certification of "ISO 9001:2015".The production during the year was 9785 MTS.


Net Revenue from operation in FY20 stood at 16219.29 lakhs compared to 16866.22 lakhs in FY19.


EBIDTA for FY20 stood at 1768.55 lakhs compared to 1475.18 lakhs in FY19.

Net Profit

Net Profit for the FY20 stood at 534.47 lakhs translating to EPS of 17.75 compared to 375.14 lakhs translating EPS of 11.67 in FY19.

Details of Significant Changes in key financial ratios, along with detailed explanations therefor:

a. Debtors Turnover : Reduced by 12.14%
b. Inventory Turnover : Reduced by 4.30%
c. Interest Coverage Ratio : Increased by 0.59%
d. Current Ratio : Increased by 0.06%
e. Debt Equity Ratio : Reduced by 0.07%
f. Operating Profit Margin : Increased by 71.69% due to value added products.
g. Net Profit Margin : Increased by 52.17% due to value added products.
h. Return On Net Worth : There has been an increase in return on net worth by 16.97% as compared to previous financial year, due to increased profitability.


In the preparation of the financial statements, the Company has followed the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act, read with relevant rules thereunder. The Significant Accounting Policies which are consistently applied have been set out in the notes to the financial statements.

Cautionary Statement

The statements in this Management Discussion and Analysis Report could differ materially from those expressed or implied. Though the statement and views expressed in the above said report are on the basis of best judgment but the actual future results might differ from whatever is stated in the report. The Company takes no responsibility for any consequence of decisions made based on such statements and holds no obligation to update these in future. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates.