Sybly Industries Ltd Management Discussions.
Pursuant to the Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,your Directors have pleasure in presenting the Management and Analysis Report for the year ended on March, 31st 2019.
An Overview Indian Textile Industry
Indias textiles 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 with approximately 15% of total exports. The textiles industry is also labour intensive and is one of the largest employers. 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.
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 Indian textiles industry, currently estimated at around US$ 150 billion, is expected to reach US$ 223 billion by 2020.It contributed two per cent to the GDP of India and employs more than 45 million people in 2018-2019.The sector contributed 15 per cent to the export earnings of India in 2018-19.
Textile and apparel exports from India are expected to increase to US$ 82 billion by 2021. Exports of textiles and apparels from India reached US$ 31.65 billion in FY19 (up to Jan 19). Manmade garments remain the largest contributor to total textile and apparel exports from India.
The textiles sector has witnessed a spurt in investment during the last five years. The industry (including dyed and printed) attracted Foreign Direct Investment (FDI) worth US$ 3.12 billion during April 2000 to March 2018.
Some of the major investments in the Indian textiles industry are as follows:
In May 2018, textiles sector recorded investments worth Rs 27,000 crore (US$ 4.19 billion) since June 2017.
The Government of India announced a Special Package to boost exports by US$ 31 billion, create one crore job opportunities and attract investments worth Rs 800.00 billion (US$ 11.93 billion) during 2018-2020. As of August 2018, it generated additional investments worth Rs 253.45 billion (US$ 3.78 billion) and exports worth Rs 57.28 billion (US$ 854.42 million).
Under Union Budget 2019-20, Government of India allocated around Rs 5,831.48 crore (US$ 808.24 million) for the Ministry of Textiles.
The Indian government has come up with a number of export promotion policies for the textiles sector. It has also allowed 100 per cent FDI in the Indian textiles sector under the automatic route.
Initiatives taken by Government of India are:
The Directorate General of Foreign Trade (DGFT) has revised rates for incentives under the Merchandise Exports from
India Scheme (MEIS) for two subsectors of Textiles Industry - Readymade garments and Made ups - from 2 per cent to 4 per cent.
As of August 2018, the Government of India has increased the basic custom duty to 20 per cent from 10 per cent on 501 textile products, to boost Make in India and indigenous production.
The Government of India announced a Special Package to boost exports by US$ 31 billion, create one crore job opportunity and attract investments worth Rs 80,000 crore (US$ 11.93 billion) during 2018-2020. As of August 2018 it generated additional investments worth Rs 25,345 crore (US$ 3.78 billion) and exports worth Rs 57.28 billion (US$ 854.42 million).
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.
The Cabinet Committee on Economic Affairs (CCEA), Government of India has approved a new skill development scheme named Scheme for Capacity Building in Textile Sector (SCBTS) with an outlay of Rs 1,300 crore (US$ 202.9 million) from 2017-18 to 2019-20.
Rising government focus and favourable policies is leading to growth in the textiles and clothing industry. The Ministry of Textiles is encouraging investments through increasing focus on schemes such as Technology Up-gradation Fund Scheme (TUFS). Under the Union Budget 2018-19, Rs 2,300 (US$ 355.27 million) crore have been allocated for TUFS and Rs 30 crore (US$ 4.63 million) for the Scheme for Integrated Textile Parks, under which there are 47 ongoing projects.
India is one of the largest producers of cotton in the world and is also enjoys abundant supplies of polyester, silk, viscose,among others.
Low labour charges means that the manufacturing cost rarely spins out of control.
India has availability of abundant raw material which helps to control the costs and reduces the lead time.
Availability of large varieties of fibre and has a fast growing synthetic fibre industry.
Industry has large and diversified segments that provide wide variety of products.
Indian textile industry is a self-reliant industry which has complete value chain from the procurement of raw materials to the production of finished goods.
The Companys own quality control department equipped with latest computerised machines and personnel also adds to the strength of the Company.
The Company owns land at Muradnagar, District Ghaziabad, Uttar Pradesh, India, which is also sufficient to meet future expansion plans of the Company.
Lack of technological development affects productivity and other activities across the value chain.
The Indian industry falls short on the economies-of-scale front therefore unable to compete with nations like China.
Indian Textile Industry is highly Fragmented Industry.
Rigid & unfavorable labor Laws.
Lack of Trade Membership, which restrict to tap other potential market.
Lacking to generate Economies of Scale.
Use of outdated technology resulted in low productivity & production capacities as compared to China.
Comparatively high expenses like indirect taxes, power & interest.
A number of initiatives have been announced to support the handloom and powerloom industries.
A number of e-marketing platforms have been developed to simplify marketing issue.
Greater Investment and FDI opportunities are available.
Large, Potential Domestic and International Market.
Product development and Diversification to cater global needs.
Elimination of Quota Restriction leads to greater Market Development.
Market is gradually shifting towards Branded Readymade Garment.
Low-cost players like Pakistan and Bangladesh may hinder Indias exports prospects.
Another disadvantage is Indias geographical distance from major global markets of US, Europe and Japan in contrast to its rivals like Mexico, China, among others which are comparatively nearer. This results in high shipping expenses and lengthy lead times.
Polyester manufacturers struggled to pass on high raw material costs due to sluggish demand and declining cotton prices.
Continuous Quality Improvement is need of the hour as there are different demand patterns all over the world.
Threat for Traditional Market for Power loom and Handloom Products and forcing them for product diversification.
Geographical Disadvantages relating to Export & Import of goods.
To make balance between price and quality in order to compete with cheaper imports.
The Company wishes to capture the growth in Textiles & plans to grow by investing mainly in blended Textiles & to intend to be leader in the segment.
The Indian textile sector considers the Union Budget 2019-20 to be growth oriented as it will enable the textile manufacturing sectors to grow at a faster rate.
With a view to support the "Make in India" initiative, the Central Government Launched ATUFS (Amended Technology
Upgradation Fund Scheme) in place of the existing RRTUFS (Revised Restructure Technology Upgradation Fund Scheme), for technology upgradation of textile industry with one time capital subsidy for eligible machinery.
It is the endeavor of the Company to improve its performance by adopting new techniques of production, improve product acceptability and cutting/reducing costs wherever possible.
Financial & Operational Performance
Risks And Concerns: Your Company has established a strong risk management structure. Under this structure, the risks are identified across all business processes of the organization on continual basis. The Company endeavors to mitigate the risks on an ongoing basis by evaluating the progress of the projects being undertaken on a regular basis and close monitoring.
Liquidity Risk: The Company is into a highly capital intensive industry segment. Non availability of funds or increased cost of funding will result in pressurized margins. The Company requires a substantial amount of long term/short term funds to meet its requirement for various Infrastructure/Construction projects. To manage this, the Company proactively manages the debt levels from banks to provide adequate liquidity for its operations.
Government Policy Risk: There could be unfavorable regulatory measures in Government policies towards the textile industry and may impact the long term planning of the Company.
The MAT (Minimum Alternate Tax): Regime if not taken out of the SEZs might create difficulties in the sector as SEZs and the companies in the zonesmightnot benefitsas originally enshrined in the SEZ act. Same risk may get abletoreapthe augmented if the SEZs are not allowed to sell in the Domestic Tariff Area in tandem with the Free Trade Agreements with some countries
Competition Risk: The top management of the Company reviews the risk from time to time and as a measure of risk mitigation your Company has decided to focus only on the core competency area so as to ensure that it is constantly moving up the value chain. Human Resources: Human Resource Management is one of the key functions of the Company. Your Company aims to create a working environment that attracts and retain the best people, enhance their capability and provide enough motivation to ensure highest level of productivity. The employees are encouraged to remain involved and contribute for the growth of the Company. The industrial relations during the year continued to be cordial and peaceful. As on 31-03-2019 there were184 permanent employees in the company.
Cautionary Statement: The Management Discussion and Analysis Report contains forward looking statements based upon the data available with the Company, assumptions with regard to global economic conditions, the Government policies, etc. The Company cannot guarantee the accuracy of assumptions and perceived performance of the Company in future.
|by order of the Board|
|For SYBLY INDUSTRIES LIMITED|
|Chairman &Managing Director|
|Place : Muradnagar||Residential Address:|
|Date : 29thAugust, 2019||Flat No.603, Tower-2, Orange County,|
|Registered Office:||AhinsaKhand-1, Near Aditya Cinemas,|
|PawanPuri, Muradnagar||Indirapuram,Shipra Sun City|
|Distt. Ghaziabad (U.P.) 201206||Ghaziabad, 201014, Uttar Pradesh|