united leasing industries ltd Management discussions

United Leasing and Industries Limited is having a manufacturing unit of embroidered fabrics in Gurugram and has significant holding of land parcel in the district of Gurugram in Haryana, India.

The Company is well positioned in terms of capacities, capabilities and established relationships to capitalised on market opportunities. While market conditions will be competitive, we see incremental opportunities in both domestic and overseas market.

TEXTILE, CLOTHING AND FIBRE INDUSTRY GLOBAL SCENARIO

Indias textile 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. It has two broad segments. First, the unorganised 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 Indian experience in fighting the spread of novel corona virus disease (COVID-19) has developed a great understanding of the pandemics profound impact on around a billion people. With various measures in place to contain the spread of the virus, the time has now come to focus on getting the wheels of our economy rolling.The process so far has not been smooth given the staggered opening and the instinct to "go home" that has gripped the migrant labour force due to the extended lockdown and the ensuring economic hardships. Even the "in-house" labour force wants to return home at the first sign of normalcy, before committing to return to work. As regard the COVID VIRUS, the challenge before the State & District Authorities is to guard against any community spread and move to flattening the curve, as quickly as possible. In the case of the Lockdown, a clearly defined roadmap moving swiftly away from the system of "passes and permissions" can help us plan our return to normalcy. The industry on its part would have o ensure a pandemic resilient manufacturing environment with functional exchange of people and goods. This process will help us to quickly realign ourselves with the global and domestic economies. In addition, strategic use of inventory locations should be planned. The Government on its part needs to rethink existing bilateral and multilateral treaties and look at strengthening bilateral trade relationships, especially with the countries that are less impacted by the global pandemic.

GOVERNMENT POLICES-TEXTILE SECTOR

The Government is active to industry expectations to avail of un-interrupted benefits under the Foreign Trade Policy 2015-20 which has now been extended till March, 2021. As the spread of Corona Virus is picking up speed, Government is not only preparing the strategies to combat COVID-19 but also effectively plan for life after the virus. IMF has already suggested that one of the measures to fight against COVID-19 must include a plan for recovery that will reduce potential scarring effects of the pandemic through policy action. Government is exploring new financial lending institutions to support small-scale units.

BUSINESS OUTLOOK

Nobody expected that a small virus originating in Wuhan City, Capital of Hubei province in China would cause so much havoc across the world putting lives and livelihoods at stake. Now that is upon us and is on the verge of peaking and fading away, albeit not fully, we need to look ahead, pick up the pieces and move on. Innumerable challenges confront us as we move towards restoration of normalcy but they need to overcome with forbearance and fortitude. The path is not easy. It has been mentioned that these are trying times as country are waging a war against COVID-19 pandemic as well as the economic instability caused by it. It is expected to work in tandem and urged the industry to maintain a positive attitude during this time to tide over this crisis.

OPPORTUNITIES, THREATS, RISK & CONCERNS

On exports front, there are both positive and negative factors. Positive factors include the weak currency and decreasing cost competitiveness of China that are likely to give positive impetus to the Indian exports. At the same time, factors like slowdown and uncertainty in the global markets, volatile foreign exchange rates and increase in cotton and yarn prices are likely to negatively affect growth and profitability for the textile exports. Interest expenses are part of the finance costs, therefore any major upward fluctuations in the Interest rates leads to increase in the cost of debt of the Company. The interest rate risks are mitigated to an extent through fixed interest rates on the non-convertible debentures.

The biggest challenge facing the Indian textile industry is competition from the other low cost neighboring countries which attract more business from the international market because of lower production costs, ease in doing business and easier trade routes, according to an industry expert.

Other challenge faced by the Industry is that approx. one third of the production Capacity is lying idle due to sluggish Exports, poor domestic demand and growing imports from Bangladesh and Sri Lanka. Textile and Clothing segments are presently undergoing a deep crisis due to uncompetitive prices, declining exports, un-competitiveness of the products in international markets, taxes not getting refunded.

The novel corona virus disease is holding the world in a vice-like grip. It is uncertain and hard to predict whether the containment measures will be effective or not. If international borders continue to be closed for too long, the situation will become catastrophic for many countries in the world. The global economy is heading in execrably into recession. The volume of world trade can shrink by 13-32 per cent in 2020, as projected by the World Trade Organization. The deteriorating global economic conditions, including foreign and fiscal exchange constraints, have already effected supply chains, prevailing trading patterns need to be reviewed. Efforts should be taken to accelerate the trading engagements with local, regional distribution channels rather than only the global supply chain networks. Considering the scale of impact on business, the economy and trade, the Government has been announcing relief measures which are a mix of credit guarantees, liquidity infusions into Banks and other financial institutions rather the economy per se.A package of relief measures for SMEs has also been announced including changes in the definition. Apart from investment, the criteria of turnover has also included in the definition.

RESEARCH & DEVELOPMENT (R & D)

Your Company continues to derive sustainable benefit from the strong foundation and long tradition of Research & Development (R&D), which differentiates it from many others. New products, processes and benefits flow from work done by the team of in house designers. This allows us to enhance quality, productivity and customer satisfaction through continuous innovation. In order to successfully carve a niche of our own we need to develop a vital competitive edge in the design development to stay ahead of the competition.

HUMAN RESOURCE DEVELOPMENT/ INDUSTRIAL RELATION.

HR function is at the core of the Company and plays a major role in nurturing, enhancing and retaining talent through job satisfaction, management development programme, etc. The Company has an induction process and Goals/Deliverables are in place for employees based on which appraisals are done.

The primary objective of ULIL ("the Company") is to bring about organizational effectiveness by helping employees achieve their personal goals in a manner that enhances the overall performance of the Company.

The fundamental driver of any Company is its people and Industry there has always been extended focus on the Management of Human Resources. It is widely recognized that the Companys employees are the most valuable asset to the organization and will play a pivotal role in helping the business overcome its present challenges. The belief is that with a well-motivated and energized work force, nothing is impossible.

ENVIRONMENT, OCCUPATIONAL HEALTH SAFETY

Companys Environment, Health & Safety (EHS) strategies are directed towards achieving the greenest and safest operations by optimizing natural resource usage and providing a safe and healthy workplace. Systemic and structured efforts continue to be made towards natural resource conservation by continuously improving resource-use efficiencies.

As we continue to bring about energy efficiencies in our operations, we also strive to substitute our energy consumptions with increased component of renewable energy. The Plant of the Company is eco-friendly and do not generate any harmful effluents. Safety devices have been installed wherever necessary.