svp housing ltd share price Management discussions


Global economy

Overview: The global economic growth was estimated at a slower rate of 3.4% in 2022, compared to 5.9% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect]. The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic-induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades. US consumer prices increased about 6.5% in 2022, the highest in four decades. The Federal Reserve raised its benchmark interest rate to its highest in 15 years. The result is that the world ended in 2022 concerned that the following year would be slower.

Outlook: The global economy is expected to grow 2.8% in 2023, influenced by the ongoing Russia-Ukraine conflict. Despite these challenges, there are positive elements within the global economic landscape. Approximately 70% of the global economy demonstrates resilience, with no major financial distress observed in large emerging economies. Driven by these positive factors, global inflation is likely to be still relatively high at 4.3% in 2024. Interestingly, even as the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half the global growth (Source: IMF).

Indian economy

Overview: Indias economic growth was 7.2% in FY 2022-23. India emerged as the second fastest-growing G20 economy in FY 2022-23. India overtook UK to become the fifth-largest global economy. India surpassed China to become the worlds most populous nation (Source: IMF, World Bank)

As Indias domestic demand remained steady amidst a global slowdown, import growth in FY23 was estimated at 16.5% to $714 billion as against $613 billion in FY22. Indias merchandise exports were up 6% to $447 billion. Indias total exports (merchandise and services] grew 14 percent to a record of $775 billion and is expected to touch $900 billion in FY2023-24. Indias current account deficit, a crucial indicator of the countrys balance of payments position, was US$67 billion or 2% of GDP. Indias fiscal deficit was in nominal terms at ~ Rs 17.55 lakh crore, which is 6.4% of the countrys GDP for the year ending March 31, 2023.

Indias headline foreign direct investment (FDI) numbers rose to a record $84.8 billion in FY2021-22, However, during the fiscal year 2022-23, the country experienced a 16% decrease in foreign direct investment (FDI] inflows, amounting to $71 billion on a gross basis. This decline can be attributed to the unfavourable global economic conditions and stands as the first contraction in FDI in the past ten years.

Outlook: There are green shoots of economic revival, marked by an increase in rural growth during the last quarter and an appreciable decline in consumer price index inflation to less than 5 percent in April 2023. India is expected to grow around 6-6.5 percent in FY2024, catalysed in no small measure by the governments 35% capital expenditure. The growth could also be driven by broad-based credit expansion, better capacity utilisation and improving trade deficit. Headline and core inflation could trend down.

Growth drivers

Rising population: In April 2023, India has overtaken China as the worlds most populous country with a population of 1.4286 billion.

Urbanisation: As of 2020, around one-third of Indias population was living in cities. By 2031, 75% of Indias national income is expected to come from cities.

Growing middle class income: India is expected to form 23% of the global middle class, leading to an increase in households earning between USD10,000 and USD50,000 per year.

Workforce: India has the second largest workforce in the world and stands at 55th among 60 countries with the highest average salary compared to China which ranks at 39.

E-commerce growth: Indian e-commerce market is expected to reach $350 billion by 2050, on account of greater internet penetration, rising incomes and growing population.

Digital penetration: Digital penetration has played a crucial role in the substantial growth of online retailing in the country. The increasing availability and accessibility of the internet have led to a surge in the number of consumers opting for online shopping. These consumers seek convenience, a wide range of options, attractive offers and hassle- free return policies. As a result, the textile industry has been able to reach customers in every corner of the nation, capitalizing on the expanding digital landscape. (Source: Investlndia, Times of India, downtoearth.org, Economic Times)

Global textile and apparel market

The worldwide textile market reached a substantial value of USD 1,695.13 billion in 2022, the market is further projected to experience significant expansion with a compound annual growth rate (CAGR) of 7.6% in terms of revenue from 2023 to 2030. On the product side, the natural fibre product segment dominated the market with a significant revenue share of 44.1% due to its extensive use in the fashion and apparel industry. The polyester product segment is also poised for significant growth at 7.4% from 2023 to 2030. Nylon holds the third-largest market share and is expected to witness a CAGR of 8.1% due to its resilience and moisture-absorbing properties.

In 2023, the worldwide apparel market has achieved a valuation of USD 1,334.90 billion. Projections indicate a prospective growth trajectory, with an anticipated increase to USD 1,673.90 billion by 2028. This growth is set to unfold at a CAGR of 4.63% during the forecast period. Such expansion is bolstered by the infusion of innovative designs and the

growing preference for diverse fashion choices. Notably, the surge in internet exposure and the prevalence of e-commerce platforms among consumers have substantially elevated fashion awareness. This, in turn, has amplified the accessibility of high-end brands and exclusive limited-edition products.

(Source: grandviewresearch, mordorintelligence)

Indian textile and apparel market

The textile sector stands as a pivotal pillar within the Indian economy, emerging as the second-largest employer following agriculture. In the fiscal year 2022-23, the Indian textile and clothing industrys valuation is approximated at $172.3 billion. This sector is characterized by a division where 70% of its worth is attributed to domestic consumption, with the remaining 30% attributed to exports. A substantial portion of the industrys revenue, approximately $80 billion, is attributed to retail sales of garments.

Projections illustrate a promising trajectory for the domestic market, with an expected CAGR of 14.59%. This growth is anticipated to propel the domestic markets value to $387.3 billion by the year 2028. Notably, India holds the distinction of being the worlds largest cotton producer, contributing to 23% of global production, and also boasts the highest expanse of land dedicated to cotton cultivation, accounting for 39% of the global total. In addition, India holds the position of the second-largest global producer of both polyester and viscose, both of which are significant man-made fibers. The consumption of polyester in India is projected to double, reaching 8.5 million tons by 2030, up from the current estimate of 4.4 million tons, growing at a CAGR of 8%. This surge in consumption is chiefly propelled by the burgeoning demand in both the domestic and export markets, fostering Indias growth within the sector.

(Source: Imarcgroup)

Company Overview:

During current year 2023-24, pursuant to Open Offer made by Mr. Vishnu Dutt Khandelwal and Mr. Sandeep Khandelwal under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 vide letter of offer dated March 31, 2023, for acquisition of control of the Company and pursuant to Share Purchase Agreement ("SPA") dated 06 January 2023, Mr. Vishnu Dutt Khandelwal and Mr. Sandeep Khandelwal have become New Promoters/ part of Promoter Group of the Company and the existing Promoter Group ceased to be the Promoters of the Company.

With the acquisition of the Company by new promoters, the company is now focused to engage in the manufacturing or dealing in all kinds of plastic and textile products (whether primary, intermediate or in final form), virgin or recycled, including spinning, knitting, weaving, garmenting etc.

Financial review

The Company achieved a total income of ^ 23.02 lakh during FY 2023 as against ^ 2310.49 lakh during FY 2022. During the year under the review, the Company has incurred a loss of ^ 233.59 Lakh.

Key financial ratios

Particulars Financial year ended March 31, 2023 Financial year ended March 31, 2022
Debtors turnover (x) 0.02 4.78
Inventory turnover (x) 27207.36 73.93
Interest coverage ratio (x) negative negative
Current ratio (x) 11.60 322.66
Debt-equity ratio (x) 0.09 0.00
Operating Profit Margin (%) (EBIT) negative negative
Net Profit Margin (%) negative negative
Return on Equity (%) negative negative

Ratio decreased drastically due to decrease in revenue from operations.

Ratio decreased drastically due to increase in borrowings.

Risk management

The risk management is an ongoing process and the Board members periodically review the business risks and minimization procedures. There are no risks which in the opinion of the Board are of the nature that can threaten the existence of the Company.

Human resource review

The Company endeavors to foster a work environment that is secure, transparent, healthy, forward-thinking and inclusive, with the aim of enhancing employee productivity.

Internal control systems and their adequacy

The internal control system is an integral part of the general organizational structure of the Company. The Board of Directors offers its guidance and strategic supervision to the Executive Directors and management. The Audit Committee also regularly reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same.

Cautionary statement

The statements in the Management Discussion and Analysis section describing the Companys objectives, projections, estimates and prediction may be considered as forward-looking statements. All statements that address expectations or projections about the future, including but not limited to statements about the Companys strategy for growth, product development, market positioning, expenditures and financial results are based on certain assumptions and expectations of future events. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company assumes no responsibility to publicly amend, modify or revise any forwardlooking statement on the basis of any subsequent developments, information or events.