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 2018.


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 13 per cent 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 textile industry employs about 105 million people directly and indirectly. Indias overall textile exports during FY 2017-18 stood at US$ 37.74 billion.

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.

Market Size

The Indian textiles industry, currently estimated at around US$ 150 billion, is expected to reach US$ 230 billion by 2020. The Indian Textile Industry contributes approximately 2 per cent to Indias Gross Domestic Product (GDP), 10 per cent of manufacturing production and 14 per cent to overall Index of Industrial Production (IIP).

The production of cotton in India is estimated to increase by 9.3 per cent year-on-year to reach 37.7 million bales in FY 2017-18. The total area under cultivation of cotton in India is expected to increase by 7 per cent to 11.3 million hectares in 2017-18, on account of expectations of better returns from rising prices and improved crop yields during the year 2016-17.

Indian exports of locally made retail and lifestyle products grew at a compound annual growth rate (CAGR) of 10 per cent from 2013 to 2016, mainly led by bedding bath and home decor products and textiles.#


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$ 2.82 billion during April 2000 to December 2017.

Some of the major investments in the Indian textiles industry are as follows:

- 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.

- Future Group is planning to open 80 new stores under its affordable fashion format, Fashion at Big Bazaar (FBB), and is targeting sales of 230 million units of garments by March 2018, which is expected to grow to 800 million units by 2021.

- Max Fashion, a part of Dubai based Landmark Group, plans to expand its sales network to 400 stores in 120 cities by investing Rs 400 crore (US$ 60 million) in the next 4 years.

- In May 2018, textiles sector recorded investments worth Rs 27,000 crore (US$ 4.19 billion) since June 2017.

Government Initiatives

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.

Initiative will be taken into consideration by Government of India.

- The Union Ministry of Textiles, Government of India, along with Energy Efficiency Services Ltd (EESL), has launched a technology upgradation scheme called SAATHI (Sustainable and Accelerated Adoption of Efficient Textile Technologies to Help Small Industries) for reviving the powerloom sector of India.

- The Government has planned to connect as many as 5 crore (50 million) village women to charkha (spinning wheel) in next 5 years with a view to provide them employment and promote khadi and also, they inaugurated 60 khadi outlets which were renovated and re-launched during the completion of KVIC s 60th anniversary and a khadi outlet.

- The Textiles Ministry will organise ‘Hastkala Sahyog Shivirs in 421 handloom-handicrafts clusters across the country which will benefit over 1.2 lakh weavers and artisans.

- The Gujarat governments decision to extend its textile policy by a year is set. It is believes to attract Rs 5,000 crore (US$ 50 billion) of more investment in sectors across the value chain. The government estimates addition till now of a million units of spindle capacity in the spinning sector and setting up of over 1,000 units in technical textiles.

- The Textile Ministry of India earmarked Rs 690 crore (US$ 106.58 million) for setting up 21 ready made garment manufacturing units in seven states for development and modernisation of Indian Textile Sector.

Some of initiatives taken by the government to further promote the industry are as under:

- 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.

- The Government of India plans to introduce a mega package for the powerloom sector, which will include social welfare schemes, insurance cover, cluster development, and upgradation of obsolete looms, along with tax benefits and marketing support, which is expected to improve the status of power loom weavers in the country.

- The Government of India has taken several measures including Amended Technology Up-gradation Fund Scheme (A-TUFS), launch of India Handloom Brand and integrated scheme for development of silk industry, for the strategic enhancement of Indian textiles quality to international standards.

- The government is also planning to conduct roadshows to promote the countrys textiles in non-traditional markets like South America, Russia and select countries in West Asia.



- 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 measuring 25909 sq. yards 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 2017-18 to be growth oriented as it will enable the textile manufacturing sectors to grow at a faster rate. M Senthilkumar, chairman, The Southern India Mills Association (SIMA) said that the cluster approach for contract farming would greatly benefit the predominantly cotton based textile industry.

- 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 Scheme0, 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.


Being implementation of Composite Scheme of Amalgamation/Arrangement approved by the Honble National Company Law Tribunal order dated 31.01.2018. Consequence of the Approved Scheme that Presently your Company has no subsidiary in the name & style of Sybly International FZE at Sharjah rather which has been transferred to the Resulting Company (Space Incubatrics Technology Limited) in order to Your board can concentrate on the main focus area i.e. manufacturing of Polyester Yarn in India. Further to achieve the desired focus area it was decided that the financial assets & liabilities of the company (including subsidiary i.e Space Incubatrics Technology Limited) be hived off into a separate company. So that the concentration to be made on its core activities.

Further as per the Composite Scheme, The Whole business and undertaking of Vartex Fabrics Private Limited (Transferor Company-1) and Dux Textiles Private Limited (Transferor Company-2) has been merged with Sybly Industries limited (Demerged Company).

According to the Second Motion Petition under 230/232 of the Companies Act,2013, The Registrar of Companies, Kanpur has stated in its report about the share exchange ratio which are given below as under :


"The resulting company (Space Incubatrics Technologies Limited) shall, without any further act or deed and without any further payment, issue and allot equity shares in the ratio of 85 Equity Shares of Rs.10/- each at par in Space Incubatrics Technologies Limited for every 100 Equity Shares of Rs.10- each held by them in Space Industries limited.



"Transferee Company shall,issue and allot to eachof the shareholders of Transferor CompanyNo.1 shares in Proportion of 501 Equity shares face value of Rs.10/- each in Transferee Company for every 100 Equity Shares of Rs.10- each held by them in Transferor Company-1 pursuant to scheme of Amalgamation.

"Transferee Company shall,issue and allot to eachof the shareholders of Transferor CompanyNo.2 shares in Proportion of 262 Equity shares face value of Rs.10/- each in Transferee Company for every 100 Equity Shares of Rs.10- each held by them in Transferor Company-2 pursuant to scheme of Amalgamation.

Further the ROC, Kanpur observed that Demerged Company Sybly Industries Limited is a listed Company. The Company Vartex Fabrics Private Limited has taken a Corporate Guarantee in favour of Sybly industries Limited a holding Company of Vartex Fabrics Private Limited to Bank of Baroda to secure credit facility of Rs 950/- lacs to Sybly Industries Limited. It was further notice that Company has received on 27.06.2018 for trading of 61,07,899 Equity Shares of Rs10/-each bearing distinctive Nos. 1 to 61,07,899 issued pursuant to scheme of reduction and 30,48,754 Equity Shares of Rs.10/- each bearing distinctive Nos. 6107900 to 9156653 issued pursuant to Scheme of Arrangement from BSE vide letter No. DCS/AMAL/TP/PB/ 7075/2017-2018 dtd. 27.06.2018.

As per the Composite Scheme, the issued, subscribed and paid up capital of the Company post amalgamation is Rs 9,15,66,530/-consisting of 91,56,653 Equity Shares of Rs.10/- each.

Such Amalgamation/Arrangement/Demerger has result in following benefits:

- Financial strength and flexibility for the Transferee Company, which would result in maximizing overall shareholder value, and will improve the competitive position of the combined industry.

- Achieve greater efficiencies in operations with optimum utilization of resources, better administration and reduced cost. Benefit of operational synergies to the combined entity in areas such as sourcing of materials, product planning and development and increased revenue generation through increased sales as well as optimization, cost efficiency and business logistics, which can be put to the best advantage of all stakeholders.

- Cost savings are expected to flow from more focused operational efforts, rationalization, standardization and simplification of business processes, productivity improvements, and the elimination of duplication, and optimum rationalization of administrative expenses and utilization of human resources.

- It is believed that approve scheme will enhance value for shareholders as there would be absolute clarity to the investors in the business profile of the Demerged Company and the Resulting Company.

- Improved organizational capability and leadership arising from pooling of financial, managerial and technical resources. The Scheme has been implemented from 3.03.2018 in the Company after the approval of the Honble NCLT dated 31.01.2018 and the order has been placed on the website of the Company.


It is expected that the tax rate under GST would be higher than the current tax rate for the textile industry. Natural fibers (cotton, wool) which are currently exempt from tax, would be taxed under GST. Despite this, the textile industry as a whole would benefit from the introduction of GST due to following changes:

- Break in Input Credit Chain

A significant portion of the Textile Industry in India operates under the Unorganized Sector or Composition Scheme, thus creating a gap in flow of input tax credit. Input Tax Credit is not allowed if the registered taxpayers procure the inputs from composition scheme taxpayers or the unorganized sector. GST would enable a smoother input credit system, which would shift the balance towards the organized sector.

- Reduction in Manufacturing Costs

GST is also likely to subsume the various fringe taxes like Octroi, Entry Tax, LuxuryTax etc. which would help reduce costs for manufacturers in the textile industry.

- Input Credit allowed on Capital Goods

Currently, the import cost of procuring the latest technology for manufacturing textile goods is expensive as the excise duty paid is not allowed as input tax credit. Whereas under GST, there will be input tax credit available for the tax paid on capital goods.


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 infrastructure industry and may impact the long term planning of the Company. It is heartening to note that Union Budget 2016-17 envisages infrastructure reforms with focus on development of critical infrastructure removing structural bottlenecks in projects and industry.

- 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 zones might not be able to reap the benefits as originally enshrined in the SEZ act. Same risk may get 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 RESOURECES: 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 31-03-2018 there were 181 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.


ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND AS): Your Company has adopted Indian Accounting Standards (Ind AS) with effect from April 1, 2017 pursuant to Ministry of Corporate Affairs notification of the Companies Rules, 2015. For year 2017-18, company has completed the assessment of impact of changes to Ind AS for relevant periods. The Company has modified accounting and reporting systems to facilitate the changes.

by order of the Board
(Nihsant Mittal)
Managing Director
DIN: 02766556
Residential Address: Flat No.603, Tower-2,
Place : Muradnagar Orange County,Ahinsa Khand-1,
Date : 13stAugust, 2018 Near Aditya Cinemas, Indirapuram,
Registered Office: Pawan Puri, Shipra Sun City, Ghaziabad 201014,
Muradnagar Distt. Ghaziabad (U.P.)– 201206 Uttar Pradesh