Tuni Textile Mills Ltd Management Discussions.


COVID-19 pandemic and subsequent lockdown had compelled Government across nations to quarantine their citizens at their homes during the initial months of FY 2020-21. The unprecedented event brought world trade to a halt and plunge global demand impacting the global GDP growth. The slow unlocking of the global economy along with stimulus packages introduced by the governments across countries to support its industries has facilitated growth recovery for the remaining part of FY 2020-21. As per World Economic Outlook released by IMF in April 2021, Global growth is projected at 6 percent in 2021, moderating to 4.4 percent in 2022. The projections for 2021 and 2022 are stronger than in the October 2020 WEO. The governments additional fiscal support in a few large economies, the anticipated vaccine powered recovery in the second half of 2021, and continued adaptation of economic activity to subdued mobility were the key factors for upward revision of growth. Compared with the global economies, the Indian economy has responded very well and made a strong rebound from one of the steepest falls witnessed in its GDP during the second quarter of the financial year 2020-21. According to the latest IMF Report, Indias economy is expected to grow by 12.5 percent in the financial year 2021-22 and then moderate to 6.9 percent by the financial year 2022-23. As per the IMF forecast, India is poised to be the fastest growing large economy in the world and the only economy that is projected to grow double digit in the financial year 2021-22. The resurgence of the COVID-19 cases in the country could be the only downside risk to Indias GDP growth.


Indias textiles sector is one of the oldest industries in the Indian economy, dating back to several centuries. The industry is extremely varied, with hand-spun and hand-woven textiles sectors at one end of the spectrum, while the capital-intensive sophisticated mills sector on the other end. The decentralised power looms/ hosiery and knitting sector forms the largest component in the textiles sector. The close linkage of textiles industry to agriculture (for raw materials such as cotton) and the ancient culture and traditions of the country in terms of textiles makes it unique in comparison to other industries in the country. Indias textiles industry has a capacity to produce wide variety of products suitable for different market segments, both within India and across the world. Textiles industry has around 4.5 crore employed workers including 35.22 lakh handloom workers across the country. Cotton production is expected to reach 36.0 million bales and consumption is expected to reach 114 million bales in FY21 13% growth over the previous year. Exports of textiles (RMG of all textiles, cotton yarn/fabrics/made-ups/handloom products, man-made yarn/fabrics/made-ups, handicrafts excl. handmade carpets, carpets, jute mfg. including floor coverings) stood at US$ 26.08 billion, as of February 2021. The future for the Indian textiles industry looks promising, buoyed by strong domestic consumption as well as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and Next into the Indian market. High economic growth has resulted in higher disposable income. This has led to rise in demand for products creating a huge domestic market.


The post-Covid era has provided a big opportunity for the online textile industry. The sales in the online textile industry witnessed a jump in various cities and states of India due to the lockdown that was imposed to curb the spread of coronavirus-caused Covid-19 pandemic. It goes without saying that cloth is one of the basic needs and requirements after food. It is nothing less than any essential commodity, and thats why even during lockdown online textile industry witnessed a boom in sales. Lockdown failed to leave any negative impact on the online textile industry because of its operations in the virtual space leaving no room for human or physical contact to further spread coronavirus in the country. The online textile industry even registered an increasing trend in sales due to no dependency on the offline industry for example wholesalers, semi-wholesalers, retailers, middle persons, etc.

Moreover, technology can play the role of big brother in reviving, rejuvenating, and reinvigorating the Indian textile industry. Undoubtedly, tech support is vital to any sector but when it comes to textile, it becomes even more important due to the integral role of machines right from sourcing raw material to giving final shape to the products that eventually consumers are going to get. Further, the Indian textile industry is expected to witness some new trends in the future - increased demand for natural fibers, shifting focus towards non-woven fabrics to name a few. In the year 2021, e-retailers will prove to be a big game-changer by playing a pivotal role recovery of the Indian economy in the post-Covid era. Indian textiles and apparel industry have contributed 2.3 percent to the GDP of India, 13 percent to industrial production and 12 percent to export earnings. Post Covid-19 pandemic, when the Indian economy is showing green shoots of recovery, the future of the online textile industry looks promising in the wake of increased domestic consumption after a lockdown in addition to export demand playing an important role.


Currently the biggest threat is COVID 19 and its impact. It is expected that overall textile business will be severely affected which would result in various job losses across the value chain. The year 2020 has been the most challenging year in our lifetimes. What started as a promising year for our industry quickly turned into a difficult one. COVID-19 pandemic brought the entire world to a standstill, equitably affecting markets and supply chains globally. Consumer purchase of textile and apparel were hit badly due to the global lockdowns and economic recession. The global apparel consumption is estimated to have shrunk by 22% in 2020. However, 2021 looks brighter given the onset of vaccination drives, growth in e-commerce sales of apparel, and resumption of global supply chains. The industry faced a complete shutdown for around 2-3 months, while a few manufacturers who dedicated their production systems for PPE manufacturing were permitted to function. However, most of the units operated at suboptimal utilization levels for next several months. Lockdown restrictions across the country resulted in a slump in the retail sales of apparel for at least 4-5 months. Moreover, the festive and wedding season sales were deeply impacted. All the above have seriously affected the production, working and Cash Flow of the Company. The cancellation of several orders by buyers and stuck of raw material and finished goods added fuel to the capability of the Company.


Tuni Textile Mills Ltd. (TUNI) has exposures in the business of Textile Segment. TUNI are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, competition risk, credit risk, liquidity and interest rate risk, human resource risk, operational risk, information security risks, regulatory risk and macro-economic risks. The level and degree of each risk varies depending upon the nature of activity undertaken by them.


The Company is exposed to liquidity risk principally, because of lending and investment for periods which may differ from those of its funding sources. Management team actively manages asset liability positions in accordance with the overall guidelines laid down by various regulators. The Company may be impacted by volatility in interest rates in India which could cause its margins to decline and profitability to shrink. The success of the Companys business depends significantly on interest income from its operations. It is exposed to interest rate risk, both as a result of lending at fixed interest rates and for reset periods which may differ from those of its funding sources. Interest rates are highly sensitive to many factors beyond the Companys control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and international economic and political conditions and, inflation. As a result, interest rates in India have historically experienced a relatively high degree of volatility. The Company seeks to match its interest rate positions of assets and liabilities to minimize interest rate risk. However, there can be no assurance that significant interest rate movements will not have an adverse effect on its financial position.


The Company takes pride in the commitment, competence and dedication of its employees in all areas of the business. The Company has a structured induction process and management development programs to upgrade skills of managers. Your Company believes in the potential of people to go beyond and be the game-changing force for business transformation and success. This potential is harnessed by fostering an open and inclusive work culture that enables breakthrough performance and comprehensive development of employees through the three pillars of Leading Self, Leading Teams and Leading Business.


The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable to the Company.


The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company is continued to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

The Company has complied with all requirements of regulatory authorities. No penalties/strictures were imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital market during the last three years.

Mumbai, June 29, 2021 By order of the Board
Registered Office : Narendra Kumar Sureka
Suite 267, Bldg. 5B, 2nd Floor, Mittal Industrial Estate DIN : 01963265
Andheri Kurla Road, Andheri (E), Mumbai 400 059 Managing Director