svp global textiles ltd share price Management discussions


This report covers the operations and financial performance of the Company for the year ended 31st March, 2022 and forms a part of the Directors Report.

Forward looking statements made in this Report, are based on certain assumptions and expectations of future events. The company cannot guarantee that these assumptions and expectations will be accurate or will be realized.

Business & Performance Overview:

SVP Global Textiles Ltd. (SVP) is the fastest growing Multinational cotton yarn manufacturing company. The Company has consolidated manufacturing capacity of over 400,000 spindles and 5900 Rotors and is one of the leading Compact Cotton Yarn manufacturer in India i.e. the highest quality of cotton yarn in the world.

The financial statements have been prepared in accordance with Ind AS Rules, prescribed under Section 133 of the Companies Act, 2013 read with the Companies (Indian Accounting Standards) Rules, 2015 and the other recognized accounting practices and policies to the extent applicable.

The summarized standalone financial performance is as under:

Particulars F.Y. 2021 -22 F.Y. 2020 -21
(Amount Rs. in lakhs) (Amount Rs. in lakhs)
Total Turnover 11942.03 10408.93
Depreciation & Amortization 735.04 742.05
Total Expenditure 11814.63 10300.41
Profit Before Tax 127.40 108.52
Profit After Tax 129.80 108.52
Equity Capital 1265.00 1265.00
Reserves & Surplus 8001.18 7908.61

The summarized Consolidated Financial performance is as under:

Particulars F.Y. 2021 - 22 F.Y. 2020 - 21
(Amount Rs. In Lakh) (Amount Rs. In Lakh )
Total Turnover 177838.44 142239.72
Depreciation & Amortization 8574.08 8401.99
Total Expenditure 170702.24 139737.06
Profit Before Tax 7136.21 2502.66
Profit After Tax 7128.97 2485.02
Equity Capital 1265.00 1265.00
Reserves & Surplus 56897.14 95580.82

The Management accepts responsibility for the integrity and objectivity of these statements as well as for the various estimates & judgments used therein.

Industry Structure and Developments:

The Indian textile industry has a significant presence in the Indian economy as well as in the International textile economy. The importance of textile sector to the Indian economy is manifested in terms of its contribution to the industrial production, employment generation and foreign exchange earnings. India is the worlds fifth-largest exporter of textiles and apparel, and the textile industry contributes significantly to the countrys economy, making up 13% of industrial production, 2.3% of the national GDP, and 12% of the countrys total exports earnings. It employs about 45 million people, making it the biggest employer in the country after the agricultural sector.

The Indian textiles industry is extremely varied, with the hand- spun and hand woven textiles sectors at one end of the spectrum, while the capital intensive sophisticated mills sector at the other end of the spectrum. The decentralized power looms/ hosiery and knitting sector form the largest component of the textiles sector. The close linkage of the textile industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles make the Indian textiles sector unique in comparison to the industries of other countries. The Indian textile industry has the capacity to produce a wide variety of products suitable to different market segments, both within India and across the world.

The textiles industry in India is also labour intensive and is one of the largest employers. The textile industry has two broad segments. First, the un-organized 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.

Outlook

The FY 2021-22 has also been a challenging year like the previous FY 2020-21 for textile sector. Covid-19 brought the entire world to a standstill affecting markets and supply chains globally. Though the FY 2021-22 started as a promising year quickly turned again into difficult one since the impact of pandemic has not subsided and continued to pose challenges. The situation has become aggravated by the demand, supply and liquidity shocks during the FY 2021-22 also especially abnormal increase in raw material cost without corresponding increase in sale price of finished goods. Despite these challenges, the Company is able to sustain operations and reported 12% increase in revenues from Rs.95.79 crores in FY 2021 to Rs.107.35 crores in FY 2022. The Company has now almost reached normalcy with the support of Bankers, customers and all stakeholders.

With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade. Several international players paving their path in the Indian market testifies the fact. Going forward, the Indian cotton textile industry is expected to showcase a stable growth supported by stable input prices, healthy capacity utilization and steady domestic demand.

Exports have been a core feature of Indias textile sector. The Indian textiles export market, estimated at $18 billion, is expected to grow at a CAGR of 4% compared to the global CAGR of 3% over 2016-26.

The fundamental strength of the Indian textile industry is its strong production base of wide range of fibre and yarns - from natural fibres like cotton, jute, silk and wool to synthetic and manmade fibres such as polyester, viscose, nylon and acrylic. The challenge here is the fluctuation in prices of the raw materials like wool and increase in oil prices which increase the input costs.

Indian economy

The long term growth perspective of Indian Economy remained positive mainly due to its young population. Though Indias GDP has contracted by 7.3% in 2020-22 mainly due to the impact of Covid-19 pandemic, the economy is expected to rebound and grow at 9.5% in 2021-22 as per RBI forecast.

Opportunities and Threats:

India has the potential to double its market size in the long run as China is losing its competitive advantage in textiles mainly on account of increasing labor & power costs, the appreciating Yuan, and focus on the domestic market with high value products. The shift from China to India is expected to happen in the long run, to make India a dependable source of supply for the World.

The Union Cabinet under the Chairmanship of Prime Minister Shri Narendra Modi has given approval for a special package for employment generation and promotion of exports in Textile and Apparel sector. The move comes in the backdrop of the package of reforms announced by the Government for generation of one Crore jobs in the textile and apparel industry over next 3 years.

Increasing competition from countries like Bangladesh, Vietnam, Pakistan and Sri Lanka due to favorable tariff structures on exports to developed markets like the US, EU, Canada, Australia, etc poses a significant challenge to Indian exports. Exports from India attract a much higher duty as compared to other Asian countries.

Risk and Concerns:

The US dollar has strengthened continuously against the Indian Rupee and other currencies, due to the Russia - Ukraine war and the recession in the European market.

Risks can come from uncertainties in foreign exchange financial markets, legal liabilities, credit risk, accidents, natural causes and disasters. Your company has adopted appropriate procedure and policies to safeguard it against such type of risks and uncertainty.

Corporate Social Responsibility

The company is socially responsible corporate citizen committed to deliver a positive impact across social, economic and environmental parameters. We use all process/techniques commensurate with environment, safety, health, energy conservation.

Internal Control systems and their adequacy:

The Company has a well-established framework of internal controls in all areas of its operations, including suitable monitoring procedures and competent personnel. In addition to statutory audit, the financial controls of the Company at various locations are reviewed by the Internal Auditors, who report their findings to the Audit Committee of the Board. The Audit Committee is headed by an Independent Director and this ensures independence of functions and transparency of the process of supervision. The Committee meets on a regular basis to review the progress of the internal audit initiatives, significant audit observations and planning and implementation of follow-up action required. The Company conducts its business with integrity and high standards of ethical behavior and in compliance with the laws and regulations that govern its business.

The Companys internal control system aims to ensure that:

All Statutory Laws and regulations are complied with;

The instructions and directional guidelines fixed by Executive Management or the Management/ Board are applied;

The Companys internal processes are functioning correctly, particularly those implicating the security of its assets;

Financial information is reliable; and generally contributes to the control over its activities, to the efficiency of its operations and to the efficient utilization of its resources.

Material development in Human Resources / Industrial Relation:

The Company is having a competent team of dedicated employees. The company recognizes the importance and the contribution of its human resources for its growth and development. The company follows a progressive policy to retain its employees including their Training and skill development. The focus of all aspects of Human Resource Development is on developing a superior workforce so that the organization and individual employee can accomplish their work goals of service to customers. HR policies of your company are being aligned with the current trends in the market. The Company follows a recognition and reward scheme that motivates the employees to perform better.

Prohibition of Insider Trading

The Company has implemented a policy of prohibiting Insider trading in conformity with applicable regulations of the Securities Exchange Board of India (SEBI). Necessary procedures have been laid down for prohibition of Insider Trading.

Health and Safety Measures

As a conscientious and caring employer, the Company actively pursues safety and health measures continuously. Modern occupational health and medical services are accessible to all employees through well-equipped occupational health center at all manufacturing units. At all Plants, adequate safety measures for prevention of any untoward incident have always been taken. The Company has a range of policies, including on quality, safety and health aspects to guide the employees work practices, actions and decisions. The Company strives to continuously improve the effectiveness of its policies and the employees are encouraged to contribute their best in this direction. All employees are obliged to ensure that they fully understand all policies and they do fully comply with the requirements thereof.

Cautionary Statement

Statement in this Managements Discussion and Analysis detailing the Companys objectives, projections, estimates, expectations or predictions are "forward-looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, finished goods prices, feedstock availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, economic developments within India and the countries within which the Company conducts business and other factors such as litigation and labour negotiations.

The Company assumes no responsibility in respect of the forward looking statements herein, which may undergo changes in future on the basis of subsequent developments, information or events.

CERTIFICATE OF NON-DISQUALIFICATION OF DIRECTORS

(Pursuant to Regulation 34(3) and Schedule V Para C clause (10) (i) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015)

To

The Members,

SVP GLOBAL TEXTILES LIMITED

(CIN: L17290MH1982PLC026358)

97, Maker Tower "F" 9th Floor Cuffe Parade, Mumbai MH - 400005

I have examined the relevant registers, records, forms, returns and disclosures received from the Directors of SVP GLOBAL TEXTILES LIMITED having CIN L17290MH1982PLC026358 and having registered office at 97, Maker Tower "F" 9th Floor Cuffe Parade, Mumbai - 400 005 (hereinafter referred to as the Company), produced before me by the Company for the purpose of issuing this Certificate, in accordance with Regulation 34(3) read with Schedule V Para-C Sub clause 10 (i) of the Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In my opinion and to the best of my information and according to the verifications (including Directors Identification Number (DIN) status at the portal www.mca.gov.in) as considered necessary and explanations furnished to me by the Company & its officers, I hereby certify that none of the Directors on the Board of the Company as stated below for the Financial Year ending on 31st March 2022 have been debarred or disqualified from being appointed or continuing as Directors of companies by the Securities and Exchange Board of India, Ministry of Corporate Affairs or any such other Statutory Authority.

Sr. No. Name of Director DIN Date of appointment in Company
1 CHIRAG PITTIE 00117368 28/06/2004
2 PRAVEEN SHELLEY 01922237 31/03/2015
3 PRAKASH LAVJI VAGHELA 07768595 14/08/2018
4 BHAGAWATI KALPESH DONGA 08537080 23/08/2019
5 NIRAJ RAJKUMAR LAHOTI 08034144 04/09/2020
6 JINESH BHARAT SHAH 08847375 04/09/2020

Ensuring the eligibility for the appointment / continuity of every Director on the Board is the responsibility of the management of the Company. My responsibility is to express an opinion on these based on my verification. This certificate is neither an assurance as to the future viability of the Company nor of the efficiency or effectiveness with which the management has conducted the affairs of the Company.

Shravan A. Gupta & Associates
Practicing Company Secretary
Sd/-
Shravan A. Gupta
ACS: 27484, CP: 9990
Date : 30th May, 2022
Place: Mumbai