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Texel Industries Ltd Management Discussions

Jul 16, 2024|12:00:00 AM

Texel Industries Ltd Share Price 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 31st March, 2023


Established in 1989, Texel Industries Limited ("Texel") is engaged in the business of manufacturing geosynthetic textile products with 34 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 under utilization of capacity was due to the after effects of the pandemic as well as effects of the Ukraine war wherein economies globally were severely affected and took time to get back on their feet, economic crisis and excessive rains during the period under review, due to which the installation process of our Geomembrane products were affected extensively.

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.


When the global economy seemed to be at the cusp of witnessing green shoots of recovery after leaving the worst of the COVID-19 pandemic behind, despite uncertainties associated with subsequent waves of infection and rising global inflationary pressures, the Russia-Ukraine crisis escalated. Consequently, prices of crude oil and gas, food, and several other commodities have shot up, due to which the revenue and profitability of the Company was impacted.

Effect on sales was due to extended monsoons in the year under review and due to effect of La- Nina weather phenomena. Due to La-Nina effect the country experienced extended monsoon and very heavy rainfall right upto the month of October because of which there was a widespread damages to the crops. The farms were flooded with water, which deterred the farmers from buying our product.

The fluctuations in crude oil prices directly affect the price of the raw materials required for the Companys products, which increased significantly and reached a record high in the period under review and severely affected the profitability 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. Further, the raw material prices are now stabilizing, which is expected to impact the Company positively in the coming months.

It has been forecast by whether bulletins and meteorological department that this year the La-Nina occurrence will be substituted with El-Nino which will bring scattered rains due to which the farmers are likely to be spending more to create farm ponds on their farms for water harvesting and water storage.


According to the IMF, the war in Ukraine has triggered a costly humanitarian crisis that demands a peaceful resolution. At the same time, economic damage from the conflict has contributed to a significant slowdown in global growth in 2022 and add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable populations in low-income countries hardest. Global growth is projected to slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023.


According to the World Bank, in FY22/23, Indias real GDP expanded at an estimated 6.9 percent. Growth was underpinned by robust domestic demand, strong investment activity bolstered by the governments push for investment in infrastructure, and buoyant private consumption, particularly among higher income earners. The composition of domestic demand also changed, with government consumption being lower due to fiscal consolidation.

Since Q3 FY22/23, however, there have been signs of moderation, although the overall growth momentum remains robust. The persisting headwinds - rising borrowing costs, tightening financial conditions and ongoing inflationary pressures - are expected to weigh on Indias growth in FY23/24. Real GDP growth is likely to moderate to 6.3 percent in FY23/24 from the estimated 6.9 percent in FY22/23.


The geosynthetics industry is continuously growing year on year. While geosynthetics provide overall benefits in terms of faster speed of construction, lower maintenance requirements and environment conservation, their adoption in India has been quite low. Some of the key reasons are low awareness of the benefits; lack of technical expertise and trained engineers, absence of technical standards and adequate research on the application of such products as per local conditions.

To continue to deliver value, your Company, along with managing the effects of the global geopolitical and weather crises, has been working on adopting a new approach to be able to sense and respond dynamically to customer demands, market opportunities and external threats.

The industry in which your Company operates is highly competitive. The organized players in the industry compete with each other by providing high quality products. Due to the vast potential within the industry, the number of players are also increasing which contributes to the competition.

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.

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.


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 for lining aquaculture ponds offers disease free harvest of aquatic animals and it is highly beneficial when used with the Biofloc technology. 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 2022-23, due to the effect of pandemic and geopolitical crisis and excess rainfall there was decrease in demand of the product, the Company registered Annual Sales of Rs.4661.10 Lakhs, thereby contributing 46.74% to the total turnover of the Company.

• Tarpaulins

The other core product of your Company is high quality 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 2022-23, the Company registered Annual Sales of Rs.1962.07 Lakhs, thereby contributing 19.67% 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.

> 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 alsofor 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.


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.


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.


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.


During F.Y. 2022-23, the revenue from operations was Rs.9972.12 lakhs. The Company reported a Loss of Rs.1088.64 lakhs during the year against Net Profit of Rs.128.78 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.


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 exists peaceful and amicable relations with staff and workers at office and plant. As on 31.03.2023, there are total 210(Two Hundred and Ten) employees working on the pay roll of the Company and there are 80 (Eighty) workers working on contract basis.


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 2022-23 FY 2021-22 % Change
Debtors Turnover Ratio 6.09 7.31 16.69
Inventory Turnover Ratio 2.49 2.70 3.39
Interest Coverage Ratio 1.41 1.52 7.24
Current Ratio 0.84 1.09 22.94
Debt Equity Ratio 2.18 2.83 22.97
Operating Profit Margin (%) 9.30 15.94 41.66
Net Profit Margin (%) -10.92 1.42 869.01

The Operating Profit Margin and Net Profit Margin have been affected due to very high cost of raw materials and reduction in demand of products due to recession in the overall economy.


Particulars FY 2022-23 FY 2021-22
Return on Net Worth (%) -43.78 3.60

The Return on Net Worth has decreased due to a loss of Rs.1088.64 Lakhs in the current financial year against Net Profit of Rs.128.78 lakhs in the previous year.


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
Independent Director Managing Director
DIN:07173838 DIN: 01457666
Date: 29th May, 2023 Place: Prantij, Gujarat Place: Ahmedabad

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