Texel Industries Ltd Management Discussions

Pursuant to Regulation 34(2) (e) and Schedule V of SEBI (LODR) Regulations, 2015 Your Directors have pleasure in presenting the "Management Discussion and Analysis Report" for the Financial Year ended 31^st March, 2024

A. OVERVIEW OF THE COMPANY "TEXEL INDUSTRIES LIMITED":

Established in 1989, Texel Industries Limited ("Texel") is engaged in the business of manufacturing geosynthetic textile products with over 35 years of experience in the industry with many firsts to its credit. The company has proven its capabilities in manufacturing a wide range of Geosynthetic Textile products which includes geomembranes, geotextiles and ground covers among others. Our products are used in agriculture, aquaculture, horticulture, animal husbandry, civil engineering, water harvesting, water conservation and disaster relief, landscaping, transportation, pollution control and waste management.

Texel is having total installed manufacturing capacity of 13,600 metric tones at its Santej facility and 10,080 metric tonnes at its Kheda facility. The total practical capacity is 9,000 metric tonnes at its Santej facility and 10,080 metric tonnes at its Kheda facility.

The Company also undertakes research and development activities to reduce costs through more efficient production processes, to develop new products and to enhance its products, services, technologies, processes etc.

Your Company has always made the best efforts to maintain the trust of its stakeholders and is continuously making its best efforts to increase the turnover and profits of the Company.

The demand for Companys products is good in the domestic as well in international market and the Company is working towards achieving better profitability and a diverse product offering, through which the Company anticipates stabilizing its economic situation..

B. OVERVIEW OF THE GLOBAL ECONOMY:

According to the IMF, the baseline forecast is for the world economy to continue growing at 3.2 percent during 2024 and 2025, at the same pace as in 2023. A slight acceleration for advanced economies—where growth is expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025 will be offset by a modest slowdown in emerging market and developing economies from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025. Global inflation is forecast to decline steadily, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies. Core inflation is generally projected to decline more gradually. The global economy has been surprisingly resilient, despite significant central bank interest rate hikes to restore price stability. Oil prices have also been steady of late, and range bound, which will also help to decelerate the inflation, which in turn will help in boosting growth globally.

C. OVERVIEW OF THE INDIAN ECONOMY:

United Nations revised its earlier forecasts and said that Indias economy is expected to grow by 6.9% in 2024 and 6.6% in 2025. According to the report the growth will primarily driven by robust public investment and resilient private consumption. This will be mainly driven by strong public investment and resilient private consumption. Although subdued external demand will continue to weigh on merchandise export growth, pharmaceuticals and chemicals exports are expected to expand strongly," said World Economic Situation and Prospects as of mid-2024. Further, supply chains are expected to move slowly towards many emerging economies, India being one of them. This will help to boost growth.

D. OPPORTUNITIES AND THREATS:

Globally, geosynthetics have played a key role in infrastructure development. The need is for India to develop its own ability and capability to make the best use of its huge underlying potential. The technical textiles industry is at a nascent stage in India and hence holds immense potential for growth. With the governments plans to create world-class infrastructure in the country, and implement several policies and schemes, technical textiles are poised to grow.

2024-25 is predicted to receive bountiful rainfall, which will create a good demand for the Companys products, especially products that have applications in the agricultural sector.

Further, the new applications for the Companys products have been gaining acceptance gradually and your Company is expecting a healthy demand for its products in various segments.

It has been predicted that the supply chains are slowly shifting to other developing countries like India due to China +1 policy of the developed countries. This will create opportunities for your Company in the international markets.

As for all businesses your Company can face the threat and factors such as geopolitical tensions which may leads to wars, inflation, high interest rates, effects of wars on shipping channels and freight rates etc.

The Risk Management and Control Systems are considered to be in balance with your Companys risk profile and appetite, although such systems can never provide absolute assurance. Necessary insurance policies are in place to take care of all the assets to minimize losses if any during business operations.

E. PRODUCT-WISE PERFORMANCE:

Your Company continues to be innovative and pioneering in its Geo-synthetic products in India by offering best-in-class products to its customers and increasing its geographical reach of services.

The product wise performance of the Company is briefly described herein below.

• Geomembranes

The use of Geomembranes as agricultural pond liners has been on the rise due to growing concern about the need to conserve valuable sources of water. Geomembranes are fully impervious to seepage and leakage and it also prevents any type of contamination from the ground. Geomembranes are ideally suitable for the landscaping purposes such as decorative ponds, golf course, pools etc. and are chemical resistant, puncture resistant, tear resistant and have high hydrostatic resistance.

During FY 2023-24, the Company registered Annual Sales of about Rs. 4545 Lakhs, thereby contributing about 38.78% to the total turnover of the Company.

• Tarpaulins

The other product of your Company is the HDPE Tarpaulin, highly versatile waterproof plastic sheets of various thickness which have multiple uses.

> Agro Sheets- They are used in daily requirements of agricultural sector viz. covering, storage, protection etc.

> General Purpose - it caters to the needs of various industries like FMCG, construction, transportation etc.

Agro Sheet caters to the need of Farmers for their agricultural activity which is supplied to the farmer under various Government Schemes and the General Purpose Sheet caters to the need of various industries in retail segment.

Globally, Tarpaulins are used in the fields of agriculture, building & construction, energy, transport camping & recreation, infrastructure and disaster relief including others.

During FY 2023-24, the Company registered Annual Sales of about Rs. 2180 Lakhs, thereby contributing 18.95% to the total turnover of the Company.

The technical textile products being manufactured at the new manufacturing facility at Kheda by your Company have been steadily gaining traction in sales.

• Other Products

Your Company is also manufacturing following products, namely:

> Geotextiles- It is used as an underlay in construction and reinforcement of roads;

> Ground covers: It is used for protection of the soil from frost and other elements of nature and also to prevent growth of weeds.

> Lumber covers: It is used for covering lumber which is used in construction.

> Metal wrap: It is used for preventing corrosion of metal coils.

> Geo Tank - It is a portable structure that facilitates for aquaculture and water storage;

> Azolla Bed - used for azolla fern cultivation in animal husbandry, dairy industry and also used in aquaculture industry;

> Vermibed - used for organic farming;

> Grow Bags - used in terrace gardening or nursery and also for vegetable cultivation;

> Geo Tube or Lay Flat tube - used for water supply and water conveyance;

> Water Proof Membrane - used for preventing the ingress of water into roofs, walls and basements.

Your Company is focusing on increasing sales of these products also.

F. OUTLOOK:

Your Companys growth is linked to overall economic activity, inflation trends and disposable income. To overcome the challenges and competition, we have taken various initiatives to reduce the operational cost, development of innovative value added products and exploring new markets based on certain parameters, to achieve better margins in the future.

Your Company is focused on growing its business across all products, regions and formats and will continue to pursue its strategy of targeting growth while maintaining financial discipline.

Your Company aims to continue spearheading water conservation measures, which has been its forte in all these years. Your Company also aims to stabilize its operations and profitability by adding to its range of products and entering new territories for the sale of its products. We are focused to achieve healthy annual growth in the coming years and are working towards strategies and execution that will help us achieve this goal. As the revenue grows, we expect our EBITDA margins also to improve in the coming years..

G. RISKS AND CONCERNS:

Risk is an integral to any business activity. The Company has laid down a Risk Management Policy which defines the process for identification of risks, its assessment, mitigation measures, monitoring and reporting. There are various types of risks that threaten the existence of a Company like Strategic Risk, Business Risk, Finance Risk, Foreign Exchange Risk, Environment Risk, Personnel Risk, Operational Risk, Reputation Risk, Regulatory Risk, Technology Risk, Political Risk, etc. As part of the risk assessment and management, the Audit Committee of Board of Directors of the Company reviews the risk management system of the Company.

H. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has aligned its current system of internal financial control with the requirements of Companies Act, 2013. This system intended to increase transparency and accountability in an organisation. Adequate system of internal controls to ensure that all the assets are safeguarded and are productive. Necessary checks and controls are in place to ensure that transactions are properly verified, adequately authorized, correctly recorded and properly reported. The Internal Auditors of the Company conduct audit of various departments to ensure that internal controls are in place and are submitting quarterly reports to the Audit Committee. The management maintains adequate internal financial control systems encompassing its entire business operations, statutory compliances and Financial Reports.

I. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

During F.Y. 2023-24, the revenue from operations was Rs. about 9489.35 lakhs. The Company reported a Loss of Rs. 841.11 lakhs during the year against loss of Rs. 1088.64 lakhs in the previous year.

This is mainly due to the high finance cost, extremely high prices of the raw materials, which reached a record high in the year under review. This impact was also due to low sales from the Kheda plant, as the above circumstances resulted in a slow-down of demand of the Companys products in the market. Further, severe effects of the monsoon slowed down domestic sales of the products of the Company. In spite of having made reasonably good revenue, the Company could not register profits due to external factors as mentioned above. Your Company is working towards achieving better financial performance in the years to come. The financial performance of the Company has been summarized in the Directors Report under the heading Financial Performance.

J. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES AND INDUSTRIAL RELATIONS FRONT:

The Company considers its people to be its biggest asset and credits its sustained improvements to their ethics, dedication and energy. It is its endeavor to offer a work environment and HR processes that promote creativity, teamwork, meritocracy, learning and leadership. The Human Resource Management continues to be focused on improving employee productivity, reducing employee cost and building necessary skill sets whilst building employee motivation through varied employee engagement initiatives.

Your Company is confident that its Human Capital will effectively contribute to the long term value enhancement of the organization. The Company continuously nurtures this environment to keep its employees highly motivated, result oriented and adaptable to changing business environment. There exist peaceful and amicable relations with staff and workers at office and plant. As on 31.03.2024, there are total 92 (Ninety Two) employees working on the pay roll of the Company and there are 211 (Two Hundred and Eleven) workers working on contract basis.

K. THE KEY FINANCIAL RATIOS ARE GIVEN BELOW:

In accordance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations 2018, the Company is required to provide details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations.

Key Financial Ratios	FY 2023-24	FY 2022-23	% Change
Debtors Turnover Ratio	6.31	6.09	3.61%
Inventory Turnover Ratio	3.57	2.49	43.37%
Interest Coverage Ratio	0.71	1.41	-49.65%
Current Ratio	0.83	0.84	-1.19%
Debt Equity Ratio	4.90	2.18	124.77%
Operating Profit Margin (%)	16.08	9.30	72.90%
Net Profit Margin (%)	-8.86	-10.92	18.86%

Inventory Turnover Ratio: The higher ratio indicates the increase in turnover of inventory due to better demand of the Companys product. Interest Coverage Ratio: Earning have increased but due to high input cost the interest outflow has been increased.

Debt Equity Ratio: Due to losses the other reserves & surplus has decreased resulting into change in debt equity ratio.

Operating Profit Margin (%): The Operating Profit Margin has increased because of better demand of the Companys products.

L. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THERE OF:

Particulars	FY 2023-24	FY 2022-23
Return on Net Worth (%)	-51.09	-43.78

The Net worth as on 31^st March, 2024 has decreased to Rs. 1645.63 Lakhs as compared to Rs. 2486.53 lakhs in the previous year, so the Return on Net Worth is (-) 51.09 % as compared to (-) 43.78 % in the previous year.

Due to establishment of new production facility wherein new products have been developed. The process of customers acceptance of the new products was ongoing in the last year which did not materialise in increased sales in the year under consideration. The expenses built in new plant were not commensurate to the sales generated so the losses increased . Further there was considerable increase in the depreciation because of which losses increased.

M. CONCLUSION:

The Management Discussion and Analysis Report ("this Report") has been prepared on the basis of available data as well as certain assumptions as to the economic conditions, various factors affecting raw material prices, selling prices, consumer demands & preferences, governing laws, political factors and other incidental factors. The Companys actual results, performance may differ considerably from those presented herein. The Companys performance is dependent upon global and national economic conditions, the price of commodities, business risk, change of Governments rules and regulations and other incidental factors over which the Company do not have any direct/indirect control.

	For and on behalf of the Board
	JASMIN VHORA	SHAILESH R. MEHTA
	Independent Director	Managing Director
	DIN:07173838	DIN: 01457666
Date: 13th July, 2024	Place: Prantij, Gujarat	Place: Ahmedabad