ECONOMIC OVERVIEW GLOBAL ECONOMY
Despite the global growth rate slowing down to 3.2% in 2022, which was more than 1%
weaker than anticipated in 2021, there have been recent positive indications of
improvement. Although headline inflation started to decline, it remained elevated and
persisted for a prolonged duration. Fortunately, the recent decline in energy and food
prices has been a significant contributing factor to the early 2023 surge in activity and
sentiment. Even though these prices remain relatively high compared to pre-Russia Ukraine
war levels, their decrease bolstered the purchasing power of businesses and households.
This, in turn, has helped to alleviate headline inflation. Additionally, the abrupt early
reopening of China had a positive impact on global activity, easing supply chain pressures
and providing a significant boost to international tourism.
The growth rate in advanced economies is projected to slow down significantly,
declining from 2.7% in 2022 to 1.3% in 2023, primarily due to geoeconomic fragmentation.
In contrast, emerging markets and developing economies are anticipated to have better
economic prospects, with the average growth rate estimated to reach 3.9% in 2023, and a
predicted increase to 4.2% in 2024. The slowdown was primarily attributed to the
Russia-Ukraine conflict, which led to a cost-of-living crisis in multiple countries. The
expected recovery for the next two years is projected to be moderate.
Global Economic Growth (% Change)
Year-on-year |
Estimate |
Projections |
|
2022 |
2023 |
2024 |
World |
3.4 |
2.8 |
3.0 |
Advanced Economies |
2.7 |
1.3 |
1.4 |
Emerging markets and developing economies |
4.0 |
3.9 |
4.2 |
While certain countries, regions, and territories have made notable strides in
recovering from the Covid-19 pandemic, the global outlook continues to be uneven. For
several nations, pre-existing political and economic challenges have hindered progress,
making the road to recovery an uphill task. Despite the headway made, the global economy
is preparing itself for another round of obstacles. This is due to the sluggish pace of
structural reforms, increasing trade tensions, dwindling direct investment, and slower
adoption of innovation and technology in fragmented regions. Nevertheless, it is widely
anticipated that this downturn will be moderate, offering all countries an opportunity to
effectively address global issues.
(Source:
https://www.imf.org/en/PubIications/WEO/Issues/2023/04/11/world-economic-outlook-april-2023)
INDIAN ECONOMY
India has emerged as a significant player in the global economy. It has made impressive
progress over the past decade, upgrading from the tenth to the fifth-largest economy in
the world. The countrys economic success can be attributed to crucial reforms, such as
liberalisation, streamlining bureaucracy, reducing corruption, investing in
infrastructure, and improving access to financing for small and medium-sized enterprises.
However, the country has been facing the challenge of dealing with inflation. The
combined efforts of the Government and the Reserve Bank of India, coupled with a decline
in global commodity prices, helped retail inflation to fall below the RBIs upper
tolerance target. Despite these daunting challenges, Indian economy achieved a growth rate
of 7.2% in 2022-23.
GDP Growth Rate (%)
2018-19 |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
6.5 % |
3.7 % |
6.6 % |
8.7 % |
7.2 % |
The anticipated growth of the Indian economy is a testament to its resilience, with
private consumption driving growth instead of relying on export incentives. This increase
in private consumption has also stimulated production activity, resulting in higher
capacity utilisation across several sectors. Additionally, the Indian Governments focus
on infrastructure has been noteworthy. The introductions of the National Infrastructure
Pipeline (NIP) in 2019, and the
National Monetisation Pipeline (NMP) in 2021, have laid a strong foundation for
infrastructure development in India, presenting multiple opportunities for foreign
investment and collaboration.
Indias economic growth prospects are expected to improve due to several factors. These
factors include the normalization of supply chains and the return of capital flows to
India, supported by a stable domestic inflation rate that is below 6%. These developments
are likely to increase private sector investment and boost business confidence. As a
result, the survey predicts a baseline real GDP growth rate of 6.5% for 2023-24
(Source: https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf)
INDUSTRY OVERVIEW
GLOBAL TEXTILE AND APPAREAL INDUSTRY
The textile industry is a major sector that encompasses various activities associated
with the design, production, and distribution of textiles and clothing. It includes a wide
range of products, such as fabrics, yarns, apparel, home textiles, and technical textiles.
The projected compound annual growth rate (CAGR) of 5.67% for the worldwide textile
industry during the period 2022-2027 indicates a promising growth trend. This growth is
expected to be driven by various factors, such as increasing population, rising disposable
income, and changing fashion trends. The demand for textiles and clothing is anticipated
to rise with an increase in population, especially in emerging economies, such as India
and China.
Global textile market, forecast market size, 2022-27 (in USD Billion)
2022 |
2023 |
2024 |
2025 |
2026 |
2027 |
573.45 |
611.11 |
646.73 |
681.83 |
717.66 |
755.58 |
In the apparel sector, the industry has been driven by factors, such as increasing
disposable income, a growing global population, and the rise of e-commerce. Online
shopping has become increasingly popular due to its convenience, a wider range of options,
and lower prices, which have been further accelerated by the Covid-19 pandemic.
Consequently, the online channel has experienced growth and now accounts for 15.9% of the
industrys total value, with expert online retailers leading the way.
Additionally, the textile and apparel industry is also witnessing a shift towards
sustainable and eco-friendly practices. This shift is further driving the growth of the
industry. Consumers are becoming more conscious of the environmental impact of clothing
production, and they are now opting for sustainable clothing options. This transition
towards sustainable practices has also resulted in the emergence of new markets,
especially within the eco fashion sector.
(Source: https://www.indiabudget.gov.in/economicsurvey/doc/echapter.pdf)
INDIAN TEXTILE AND APPAREAL INDUSTRY
The textile industry plays a critical role in Indias economy and export industry,
covering a wide range of activities, from traditional hand weaving to modern textile
mills. India has long been recognised as a manufacturing hub for the textile and apparel
industry, ranking sixth globally in terms of exports. In addition, Indias technical
textiles market is valued at around USD 16 Billion, constituting approximately 6% of the
global market. China is the only country that produces more man-made fibres (MMF) than
India, making India the second-largest MMF producer in the world.
The textile and apparel industry makes a significant contribution to Indias economy,
accounting for 2.3% of the countrys GDP, 7% of industrial production, 12% of exports, and
21% of total employment. This sector is primarily dominated by small-scale players due to
the economic feasibility of apparel manufacturing at various scales. The industrys
competitive advantages reside in its skilled workforce and cost-effective production
methods.
Indias major textile and apparel export destinations are USA, EU-27, and UK, which
comprise approximately 50% of the countrys exports in this sector. The country holds a
4.6% share in the global trade of textiles and apparel. In terms of employment, the
textile and clothing industry is the second-largest employer in India, with over 45
Million individuals employed directly and an additional 100 Million employed indirectly in
related industries.
According to a recent report by IMARC, the Indian textile and apparel industry has
reached a market size of USD 172.3 Billion in 2022. It is expected to reach a compound
annual growth rate (CAGR) of 14.59% in 2028, with an estimated market value of USD 387.3
Billion in 2028. This impressive growth can be attributed to several factors, such as the
increasing demand for high-quality clothing and footwear, the Governments implementation
of schemes to empower weavers, and the growing popularity of ethically sourced sustainable
materials.
(Source:https://www.imarcgroup.com/indian-textilesapparelmarket#:~:text=The%20Indian%20textile%20and%20
apparel % 20 market%20 was,US%24%20172.3%20Billion%20in%202022.)
Man-Made Fiber
After China, India ranks as the worlds second-largest producer of man-made fibres. The
man-made fibre value chain in India is vertically integrated, encompassing upstream and
downstream linkages that span from raw materials to finished goods. The majority of
Indias domestic man-made fibre (MMF) industry is made up of polyester and viscose,
accounting for approximately 94% of the industrys volume. Demand for MMF is expected to
increase due to factors, such as its use in non-wovens and technical textiles, changing
consumer trends, and the rising popularity of fitness and hygiene products.
Although Indias traditional emphasis is on cotton textiles, there is a rising global
demand for MMF, necessitating the need for the countrys textile industry to adapt.
Indias exports of MMF textiles and apparel were USD 9.56 Billion for 2021-22, and have
further potential to grow. To support the growth and employment potential of the MMF
sector, the Production Linked Incentive (PLI) Scheme for textiles has been implemented
with an approved outlay of ^ 10,683 Crore over five years. This scheme aims to promote the
production of MMF apparel, fabrics, and technical textile products in India to improve the
sectors competitiveness. The increased availability of MMF and MMF yarn is expected to
contribute to the overall growth of Indias textile industry using mixed fibres and yarn.
(Source:https://texmin.nic.in/sites/default/files/English%20Final%20MOT%20Annual%20Report%202022-23
%20 %28English% 29_0.pdf)
Cotton Yarn
Cotton is the predominant segment of Indias yarn industry, accounting for over 50% of
its market share. The growth of the textile sector is expected to have a positive impact
on the yarn market, particularly in the cotton yarn segment, which holds a major share of
the apparel industry. With the population increasing and purchasing power strengthening,
the apparel industry is anticipated to expand further. This is further projected to create
a higher demand for cotton yarn in the textile manufacturing industry. Consumers in Tier-I
and some Tier-II cities are increasingly seeking innovative designs, styles, and
comfortable fits. To keep up with this demand, there has been an increase in innovative
manufacturing that incorporates the latest fabrication technology. Established players in
the market are facing competition not only from unorganised players catering to 60-65% of
total demand but also from new and emerging brands.
(Source:https://texmin.nic.in/sites/default/files/English%20Final%20MOT%20Annual%20Report%202022-23
%20 %28English %29_0.pdf)
GOVERNMENT INITIATIVE
The textile and apparel industry holds immense socioeconomic significance in the Indian
manufacturing sector. It is one of the largest employment generators and a significant
contributor to the countrys foreign earnings. Due to its
strategic importance to the Indian economy, the Government of India has implemented
various initiatives to bolster its growth.
The Indian Government has been actively promoting the growth of the textile industry
through various initiatives and schemes. These initiatives and schemes include Make in
India, Production Linked Incentive (PLI), National Technical Textiles Mission, Government
e-Marketplace (GeM), Mega Textile Parks, Skill India, Womens Empowerment, and Rural Youth
Employment, among others. The objective of these schemes is to encourage technology
upgrades, infrastructure creation, skill development, and overall sectoral development in
the textile industry.
The Scheme for Capacity Building in Textile Sector (SAMARTH) was created to
address the skilled workforce requirements of the textile industry. The scheme was
developed in line with the Skill India initiative and aligned with the Ministry of Skill
Development and Entrepreneurships skilling programme framework. SAMARTH has been approved
for implementation until March 2024.
The Amended Technology Up gradation Fund Scheme (ATUFS) was launched in January
2016 to promote the promote ease of doing business in India, generate employment, and
encourage exports through the Make in India initiative. The scheme provides a
creditlinked Capital Investment Subsidy (CIS) to units in the textile sector (excluding
spinning) for the purchase of benchmarked machinery. The goal is to achieve Zero effect
and Zero defect in manufacturing.
The Pradhan Mantri Mega Integrated Textile Region and Apparel (PM MITRA) Scheme
was approved by the Indian Government to establish seven textile parks in greenfield and
brownfield sites, with an outlay of ^ 44.45 Billion over a period of seven years, up to
2027-28. The goal of PM MITRA is to enhance the competitiveness of the Indian textile
industry, attract significant investment, and boost employment generation. The most recent
edition of the scheme aims to build a total of 65 textile parks in India.
The Production Linked Incentive (PLI) Scheme has been introduced to promote the
production of MMF apparel, MMF fabrics, and technical textile products in India. The
schemes goal is to create 60-70 global players, attract fresh investment of approximately
^ 190 Billion, and generate almost 750,000 new employment opportunities in the country.
The Indian Government has approved the continuation of the Rebate of State and Central
Taxes and Levies (RoSCTL) for apparel/garments, and made-up exports at the same rates as
issued by the Ministry of Textiles until 31st March 2024. This decision aims to provide a
tax rebate on outbound shipments to garment exporters, thereby boosting the
competitiveness of the labour-intensive textile industry.
Free Trade Agreement: The Ind-AUS ECTA is expected to boost Indias textile and apparel
exports significantly, with projections indicating an increase to USD 1,100 Million within
the next three years. This agreement is poised to positively impact the Indian textile
industry by facilitating increased trade between India and Australia.
KEY GROWTH DRIVERS
• Basic materials, including cotton, wool, silk, and jute, are widely available.
• Exports demand is on the rise for the Indian textile industry globally.
• India enjoys a comparative advantage in terms of skilled workforce and cost of
production, relative to major textile producers.
• The Indian textile industry has been investing in technology and modernising its
operations to improve efficiency, productivity, and quality.
• The Indian Government has approved 100% FDI in the textile industry under an
automatic route
• Domestic demand for the industry has been stimulated by a growing population,
rising per-capita income, and evolving tastes and lifestyles.
ANNUAL REPORT 2022-23
COMPANY OVERVIEW
The manufacturing facility of the Company is situated at F-483 to F-487, RIICO Growth
Centre, Hamirgarh, of Bhilwara District in Rajasthan State (Unit/Plant-1) and B-24 to 41,
Industrial Area, Jhanjharwada, of Neemuch District in Madhya Pradesh State (Unit/Plant-2).
The Company has at present installed 123 Air Jet Looms having capacity to produce 22.5
million meters of fabric per annum in Unit-1. We have continuously expanded and modernized
our facilities in line with industry trend. The plant is equipped with modern and
automatic plant and machinery. The level of advancement determines the productivity of
machines and labour, which in turn, determines the production operating cost and
profitability of the Company.
During the year 2022-23 the Company commenced the commercial production of denim &
finishing processing plant at Jhanjharwara, Neemuch, Madhya Pradesh (Unit-2), with annual
capacity of converting approximately 21.75 million metric meters of denim fabric, which is
the forward integration of its existing business. The above plant is currently running at
its optimum capacity, due to which the Company has been able to spread their business
nationwide, the results of which seen clearly in the turnover for the financial year end
on 31st March, 2023.
OPERATIONAL PERFORMANCE
• The Company has recorded total revenue from operations during the Financial year
2022-23 of Rs. 21,929.19 Lakh against the total revenue of Rs. 12883.15 Lakh in the
previous financial year 2021-22.
• The Total expenses of the Company during the financial year 2022-23 is
Rs.21,231.39 Lakh against the expenses of Rs. 12320.81 Lakh in the previous financial year
2021-22.
• The Profit after tax is Rs.553.71 Lakh for the financial year 2022-23 as compare
to Rs. 457.31 Lakh Lakh in the previous financial year 2021-22
OPPORTUNITIES Growing global demand
India is a major exporter of textile and apparel products, with increasing demand from
countries, such as USA, Europe, and Japan. This presents opportunities for businesses to
expand their exports and tap into the growing global market. This is supported by the
Governments signing of economic cooperation and trade agreements with countries like
Australia and the UAE, where now exports face zero duty.
Skilled workforce
India has a comparative advantage in terms of a skilled workforce in the textile and
apparel sectors. The availability of skilled labour at a lower cost presents an
opportunity for manufacturers to produce quality products at a competitive price.
Rising per capita fiber consumption
The demand for environmentally friendly fibres has experienced exponential growth,
coupled with a surge in their per capita usage. This can be attributed to the increasing
average disposable income of households, evolving textile trends, and the global
urbanisation phenomenon. These factors have resulted in higher demand for high-quality
fibres and textiles. Furthermore, both consumers and retailers are seeking a broader
variety of fibres and yarns to meet their diverse needs.
THREATS
Fluctuating demand
The demand for textile and apparel products can be volatile, particularly in response
to changes in fashion trends, economic conditions, and consumer preferences. This can
impact businesses that are not able to adapt quickly to changing market conditions.
Unfavorable Natural Conditions
A huge amount of raw material in the textile industry comes from agriculture. Thus,
unfavourable climatic conditions like floods, droughts, and unseasonal rains affect the
availability, quality, and prices of raw materials, which adversely affects the industry.
Environmental Compliance
Globally, the textile industry is the second-largest consumer of water, following the
agricultural sector. Moreover, the industry extensively uses harsh chemicals that are
non-biodegradable and environmentally hazardous. As a result, the trend towards
sustainability and eco-friendliness has been gaining momentum, with Governments imposing
stringent regulations to ensure compliance with environmental standards.
Fragmented Unorganized Sector
The Indian textile industry is highly fragmented, with the unorganised sector and small
to medium-sized businesses as the dominant players. Unlike its neighbour Bangladesh, where
the average factory houses 500 machines, the average size of a textile unit in India is
only 100 machines.
RISK AND CONCERNS
The Textile Industry is extremely labour intensive. The availability of labour
continues to be challenging for the industry, across the value chain. Furthermore, the
rigid labour laws and increasing wages are also a hindrance.
Indian weaving industry apart from profitability pressure, high cotton price would
increase yarn prices and it will translate into higher working capital requirements and
hence borrowings and it will translate into weaker credit metrics. Cost of power is
another vital component to impact on overall profitability of the Company. Apart from
these, the Company is also surrounded by other risks like economic downturn, quality risk,
availability of skilled personnel, competition risk, technology risk etc.
The Company believes that an effective, consistent and sustainable risk management
framework is essential part of the work culture. Risk management must be fully integrated
into the organizations governance policies. A well- defined risk management mechanism
covering the risk mapping and trend analysis, risk exposure, potential impact and risk
mitigation process is in place. The objective of the mechanism is to minimize the impact
of risks identified and taking advance actions to mitigate it. The mechanism works on the
principles of probability of occurrence and impact, if triggered. A detailed exercise is
being carried out to identify, evaluate, monitor and manage both business and non business
risks.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUECY
The Company has put in place an adequate system of internal control commensurate with
its size and nature of business to safeguard and protect from loss, unauthorized use or
disposition of its assets. All the transactions are properly authorized, recorded and
reported to the Management. The Company is following all the applicable Accounting
Standards for properly maintaining the books of accounts and reporting financial
statements. The internal auditor of the Company checks and verifies the internal control
system and monitors them in accordance with the policy adopted by the Company. The Audit
Committee of the Board of Directors, Statutory Auditor and Department Heads are appraised
of the internal audit finding and corrective ac@on is taken thereon. The audit
observations and the managements responses are placed before the Audit Committee. We
believe that our internal financial control system provides reasonable assurance that our
internal financial control is designed effectively and is operating as intended.
SEGMENT WISE AND PRODUCT WISE PERFORMANCE
The companys primarys business segment is manufacturing of denim/synthetic/cotton
fabric although the company engaged in trading of yarn, Grey & Finished Fabric and
weaving on job work basis. The Company has no activity outside India hence the total
revenue of the Company is Domestic revenue
(Rs. in lakh)
Revenue from operations |
2022-23 |
2021-22 |
Grey Sales |
43.07 |
10428.73 |
Finish Fabric |
17,721.23 |
936.83 |
Yarn Sales |
2,235.05 |
14.52 |
Sale of Service (Job Work) |
1929.94 |
1503.07 |
HUMAN RESOURCES AND INDUSTRIAL RELATIONS
The Company had cordial and harmonious industrial relations at all levels of
organizations. The company believes that the industry has the tremendous potential to
impact the society, nation and the world positively. Its employees are major stakeholders
and their efforts have direct stake in the business
prospectus of the organization. The employees have extended a very productive
cooperation in the efforts of the management to carry the company to greater heights. The
Company considers employees as their biggest competitive advantages. The Company takes
initiative like training and development for its people to increase the performance. The
Company has taken various steps to improve and enhance skill of its people. The industrial
relations remained cordial in our plant. The Company has continued to give special
attention to human resources and overall development. The strengths of the Companys
workplace at the end of financial year was 514. This includes both skilled and
unskilled manpower.
KEY FINANCIAL RATIO
Pursuant to Schedule V to the SEBI Listing Regulations, details of significant changes
(i.e. a change of 25% or more as compared to the immediately previous financial year) in
Key Financial Ratios and any changes in Return on Net Worth of the Company (on standalone
basis) including explanations therefore are given below:
Particulars |
31.03.2023 |
31.03.2022 |
Debtors Turnover |
06.20 |
09.46 |
Inventory Turnover |
04.46 |
04.23 |
Interest Coverage Ratio |
02.43 |
03.93 |
Current Ratio |
01.26 |
02.59 |
Debt Equity Ratio |
01.72 |
01.22 |
Operating Profit Margin |
07.38% |
07.05% |
Net Profit Margin |
02.52 % |
03.55 % |
Return on Net-worth |
08.41% |
07.58% |
CAUTIONARY STATEMENT
Certain statement made in this report describing Companys Objective, Projects,
estimates and expectations may be forward looking statement within the applicable laws and
Regulations. Actual results may differ from such expectations and forward looking
statement due to various risk and uncertainties. Several factors affecting companys
operation like economic condition affecting demand and supply, Government regulations and
Tax Laws, Competitions prevailing at the relevant time, natural calamities etc. The
Company assumes no responsibility to publicly amend, modify or revise any of these
statements on the basis of any subsequent developments, information or events
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