Hisar Spg. Mills Management Discussions

An economic review:

Global Economy: After a dismal performance in 2020, the global economy rebounded aggressively with the world GDP registering a 6.1% growth in 2021. The growth was contributed by most nations although the extent of growth was uneven between advanced economies and emerging economies. This difference was primarily on account of the large fiscal stimulus announced by Governments of advanced nations and the thrust on vaccination. As per the estimates of the latest UNIDO World Manufacturing Report, production in developing and emerging industrial economies grew by 4.3%. Industrialized economies on the other hand have exceeded their pre-pandemic production level since the first quarter of 2021 and have shown a stable year-over-year growth of 3.2%. As the recovery in global tirade gained momentum from the first half of 2021 and continued in the second half of the year. It increased by about US$ 200 billion to US$ 5.8 trillion. Service trade increased by US$ 50 billion to US$ 1.6 trillion, slightly higher than pre-pandemic levels. This resurgence has got tempered down owing to the Russia-Ukraine crisis which the board. This is expected to significantly affect vulnerable populations in low-income countries very hard. Global growth is projected to slow to 3.6% in 2022 and 2023.

Indian economy:

Aligned to the global trend, India witnessed a sharp resurgence in economic activity and output. Indias GDP rebounded from a negative growth of 6.6% in FY21 to positive growth of 8.7% in FY22. Despite the second wave of the pandemic at the start of the fiscal, a determined India flattened the lethal pandemic curve with grit and determination. Thereafter, it was a one way movement as commercial activity gained steam in all segments of the economy. As per the Economic Survey, the uptick in the economy was led by 11.8% growth in the industrial sector and 8.2% growth in the services sector. The agriculture sector growth is seen at 3.9% In PY22.

The Centre beat all its estimates of revenue collection in FY22, aided by better indirect tax mop-up, strict compliance measures, and recovery in most sectors. Indias gross revenue collection soared to a record high of Rs. 27.07 trillion in FY22, while the tax-to- GDP ratio jumped to an over two-decade high of 11.7%. The total mop-up was 34% more than the Rs. 20.27 trillion collected in FY21. About 49% growth was registered in direct tax collection and 20% in indirect tax collection in FY22.

The economic resurgence was cut short owing to the geopolitical crisis which resulted in a huge spike in commodity prices, fuel prices, supply-chain disruption and logistical costs. In keeping with this reality, various agencies - external and government - have factored this negative and pared its estimated GDP growth for FY23 to about 7%-plus. This number, in reality though, will depend on the duration of the war and the outcome of debilitating sanctions that the western world has imposed on Russia - it will have its set of opportunities and challenges for India Inc. in FY23.

The sectoral space:

Global Textile and Apparel: Increasing demand for apparel from the fashion industry coupled with the growth of e- commerce platforms is expected to drive the market growth over the forecast period. The industry works on three major principles, designing, producing and distributing different flexible materials, such as yam and clothing.

The textile and apparel industry has witnessed changes in the last few decades. Over the years, a major part of the industry has moved away from developed countries like the US, the EU and Japan to destinations like China, South Asia and South-East Asia. The two most vital variables which brought about this move were the availability of low-cost manpower and the abundance of raw materials in Asian countries. India, among the Asian countries, is one of the most competitive textiles and apparel manufacturing centers today.

The more recent trend: Covid-19 has triggered the redistribution of global trade shares and a recalibration of sourcing patterns ("China plus one" sourcing). Before the pandemic, the global textile trade was dominated by China owing to its huge scale leading to cost competitiveness and duty-free access to large markets like the European Union (EU) and the US.

The pandemic has adversely impacted this position. Supply chain disruptions and travel restrictions to China were key factors in this dent. So the ‘China plus-one* strategy aims to cut down on an exclusive dependence on Chinese supply chains and do business with more countries.

Chinas market share in the $1 trillion global textiles trade is estimated at between 30-36%. A 1 % market share shift will imply a $10-billion market opportunity. This shift is accelerating the growth of other textile hubs across the world.

Over the horizon: The global textile market size was valued at USD 993.6 billion in 2021 and is anticipated to grow at a CAGR of 4.0% from 2022 to 2030.

As population growth and prosperity increase, so does the consumption of fibres across the globe. While this holds for all staple fibres, the use of man-made fibres such as cellulosic staple fibres and synthetic staple fibres is growing particularly quickly. The consumption of cellulosic staple fibres is expected to double to 10 million tons by 2030. Additionally, there is a growing demand for online shopping which was further intensified by the pandemic and will continue to drive the global textile market. Furthermore, the market is expected to strengthen in light of the increasing demand for technical textiles due to the industrial sectors growth, technological advancements, and increased innovations by key industry players.

Smart Textile - A new trend

There has been an increasing trend of smart textiles in the market that use optical fibres, metals, and various conductive polymers to interact with the environment. These help in detecting and reacting to various physical stimuli, such as mechanical, thermal, chemical & electric sources. This is expected to propel the growth of the technical application segment in the market in the coming decade.

Indian Textile and Apparel: The textile sector of India is one of the oldest industries in the economy, it is also one of the most unique industries owing to its close linkage with the agricultural sector (for raw materials such as cotton) and the ancient traditions of the country. This sector can produce a variety of products suitable for different market segments within India and across the world.

Strong raw material base, years of ample experience, variety of local cultures, large and growing domestic market, stable, low-risk business backed by traditional methods and the efficient operating process has enhanced the labour strength of textile companies in India. Currently, textile companies in India employ over 6 crore people in the allied sectors, inclusive of women and the rural population and over 4.5 crore people in direct employment.

FY22 in retrospect: The year 2021 could be termed as a significant year for the Indian textile industry. During the year, the industry across the value chain has recovered quite well post the pandemic related challenges. The last few years have been quite sluggish for the industry.

Indias textile industry saw phenomenal sales and EBITDA growth in FY22 over pre-COVID levels, (As per the recent Wazir Textile Index compiled by Wazir Advisors for the year FY22). The index based on the analysis of 10 companies highlights, overall grew by 18% Y-o-Y since 2020.

india recorded its highest-ever textiles and apparel exports in the financial year 2021-22 at $44.4 billion. The exports tally, which also includes handicrafts, indicates a substantial increase of 41% and 26% over corresponding figures in FY21 and FY20, respectively. The US was the top export destination for the countrys textile textiles and apparel shipments accounting for 27% share, followed by the European Union (18%), Bangladesh (12%) and UAE (6%),

Over the horizon: Covid-19 gave a golden opportunity for Indian textiles to stage a turnaround and regain a leadership position as a top exporting economy. According to a report by the Confederation of Indian Industry (Cli) and global consulting firm Kearney, Indias textile exports, backed by the China plus one sentiment globally, are expected to grow by 81% to $65 billion by 2026 from the pre-Covid level of around $36 billion in 2019. This jump is likely to generate 7.510 million new jobs. This, coupled with growth in domestic consumption, could propel domestic production to reach $160 billion.

Other key areas where the growth is expected to include fabrics where the target is a $4 billion jump by positioning India as a regional fabric hub, starting with cotton wovens and then extending to other sub-categories.

In home textiles too, the target is an increase of $4 billion by building on existing advantages to expand the global customer base. On man-made fibre and yarn, a $2.5 billion to $3 billion jump is expected with a focus on gaining share in MMF (manmade fibre) products.

On the other hand, in technical textiles around $2 billion jump Is targeted by building capabilities in select key subsegments on the back of potential domestic demand growth.

Indian spinning sector: Spun yam spinning industry is one of the few industries in India which has gained global eminence for many factors which include scale, productivity and quality standards, share in global yam trade, dependable supplier of quality products, etc. India has the second largest spinning capacity but is the market leader in global yarn.

Indian spinning industry has also the unique capability of offering the entire range of yams right from the coarsest count like 6s Ne to the finest count like 300s Ne both for domestic as well as export markets.

FY22 in retrospect: Indias cotton yarn exports reached US$5.21 billion in FY22 as compared to US$2.71 billion in FY21, tapping 92.32% growth on yearly basis. Bangladesh topped the list as it accounted for 41.65% of total cotton yam shipment from India. Valuing US$2.17 billion, Indias cotton yam export to Bangladesh upped by a whopping 234.35% in FY22.

The inclusion of all cotton yarn exports under the Remission of Duties and Taxes on Exported Products (RoDTEP) scheme from January 2021 onwards (as notified in August 2021) has also supported margins as well as price competitiveness of domestic spinners in the international markets.

Moreover, the Indian spinning sector is looking to add huge capacity to meet global demand. As per an estimate, domestic spinning mills have been adding around 200,000 spindles every month in the last 6-8 months and the process is likely to continue in the coming months.

With the Indian textile industry expected to experience significant growth, the yarn sector, which is the backbone of the textile industry, will experience some of its better years over the medium term.



A strong internal control is pervasive in the Company. The Company has a well established framework of internal control in all areas of its operations, including suitable monitoring procedures, competent and qualified personnel. The Internal Audit department also assesses the opportunities for improvement in business processes, systems and controls, provides recommendations, designed to add value to the Company, In addition to statutory audit, the financial controls of the Company at various locations are reviewed by the Internal Auditors, who report their findings to the Audit Committee of the Board. The Audit Committee actively reviews the adequacy and effectiveness of internal control system and suggests furthering strengthening the same, if so required. The Committee meets to review the progress of the internal audit initiatives, significant audit observations, planning and implementation of follow up action required. The Company conducts its business with integrity and high standard of ethical behavior and in compliance with the applicable laws and regulations that govern its business.


The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention of Sexual Harassment at Workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Management of the Company has also constituted an Internal Complaints Committee at Its workplaces to consider and redress the complaints of Sexual Harassment. During the year under review, the Company has not received any complaint on sexual harassment.


Business risks exist for every Company having national and international exposure. Your Company also faces some such risks, the key ones are unfavorable raw material price, financial & liquidity & unexpected changes in regulatory framework. To ensure long-term success, it is therefore essential that risks be effectively identified, analyzed and then mitigated by means of appropriate control measures.

We have a comprehensive risk management system/policy in place, which enables us to assess, mitigate and to monitor the different risks exposed to the industry in which the Company operates and to take the appropriate action, where ever required.


The Company has health and workplace safety programs in place and has established policies and procedures aimed at ensuring compliance with applicable laws/legislative requirements. The Company believes that the health and safety of the workers and the persons residing in the vicinity of its plants is fundamental to the business. Commitment to the identification and elimination or control of the workplace hazards for protection of all is utmost importance.


The permanent employee strength of Company as on March 31,2022 was Ninety Three. The Company recognizes the importance and contribution of its human resources for its growth and development and is committed to the development of its people. The Company has been adopting methods and practices for Human Resources development. With utmost respect to human values, the Company continues to develop its human resources, through appropriate trainings, workshops, motivation/leadership techniques and employee welfare activities at regular intervals.


Particulars FY 2021-22 FY 2020-21 *

Explanation for Significant Change

Debtors Turnover (times) 12.81 10.73
Inventory Turnover (times) 3.72 3.90
Interest Coverage Ratio (times) 76.45 29.99

Due to improved profitability

Current Ratio 2,53 2.83
Debt Equity Ratio 0,27 0.13

Higher ratio due to fresh non-current borrowings during the year for acquisition of Property, Plant and Equipment improvement in business operations.

Operating Profit Margin {%) 15.42% 7.41%
Net Profit Margin (%) 11.89% 5.23% There is an improvement in profitability due to increased net margin which has led to increase in net profit ratio
Return on Net Worth (%) 24.41% 11.47% Improved earnings, leading to the improvement in ratio.