Uniworth Ltd Management Discussions

INDUSTRY STRUCTURE & DEVELOPMENT

In 2023-24, the global economy exhibited remarkable resilience by holding steady growth amid supply chain disruption with ongoing geopolitical tensions. The Russian-Ukraine war and the war situations in other regions also triggered a global energy and food crisis, with a considerable surge in inflation for the short tenure. Despite such challenges, the global economy avoided recession and inflation returned to normal with measures taken by central banks. Developed economies showcased resilience, as their central banks took proactive measures to stabilize the inflation. Emerging economies except China, have been buoyant with capital inflows, resulting in a surge in equity valuations and ease in financial conditions. Global GDP growth is expected to remain stable at 3.2% for 2024 and 2025. Furthermore, latest projections from the IMF indicate that India is poised to maintain its position as a favorable contributor to global economic growth, despite prevailing global headwinds. Growth in India is projected to remain strong at 6.8% in 2024 and 6.5% in 2025.

India is witnessing robust economic growth driven by continuing strength in domestic demand, a rising working age population and proactive government policy measures. According to the RBI, domestic economic activity continues to expand at an accelerated pace, supported by fixed investment and improving global environment. Despite its relative resilience and continued growth, the country continues to face challenges with the escalation in the geopolitical hostilities, overall slowdown in the global demand and persistent food price pressure from extreme weather-related disturbances. To address these challenges, the Government is actively involved in diplomatic efforts, implementing strategies to enhance the resilience of the external sector and acceleration in private investment spurred by government’s continued capex push.

OPPORTUNITIES AND THREATS

Deeply rooted in a rich heritage and centuries-old legacy, the Indian textile sector stands as a fundamental pillar of the nation’s economy. In India, the domestic apparel and textile industry contributes approx 2.3% to GDP, 13% to industrial production and approx 12% to exports. India has a 4% share of the global trade in textiles and apparel. The overall textiles and apparel industry in India is the second-largest employer in the country providing direct employment to 45 Million people and 100 Million people in allied industries. The textiles and apparel industry in India has strengths across the entire value chain from fiber, yarn, fabric to apparel, and the industry is diversified with segments like traditional textiles, branded garments, technical textile products, traditional handlooms, handicrafts, wool, and silk products. Over the past decade, India’s textile industry has witnessed a remarkable growth, propelled by various factors, including proactive Government policies. In our country, various state governments and central government procure goods in a multitude for social welfare schemes running for its citizens, priority sector businesses and low-income groups. These procurement efforts play a pivotal role in the successful implementation of welfare programs and elevating the quality of life for people in various states. Product categories like uniform, health and hygiene products and IT-enabled infrastructure are a part of essential budgetary allocation for all the state governments.

The Company’s business activities fall within a single primary segment of Textile Yarns, viz.

Wool/Worsted/Silk/Silk Spun/Noil Yarns etc.

Turnover of the Company during the year was Rs. NIL as against Rs. NIL in the previous year. There was a loss of Rs. 115.84 Lakhs before Interest, Depreciation and Taxes against Loss of Rs. 256.99 Lakhs in the previous year. Plant closure due to violent labour unrest has led to temporary suspension at the Company’s plant at Raipur resulting into no turnover during the year.

There was a Cash loss to the tune of Rs. 115.84 Lakhs as against Cash Loss of Rs. 256.99 Lakhs before interest and depreciation in the previous year. Overall performance of the

Company has been impacted by the temporary suspension at Company’s plant at Raipur.

Demand for textile products have been on the fall for the higher end products like Silk & Wool rich products due to global recession and have been the reason for reduction in top line. Coupled with this, high inflation costs and sporadic fiscal instability in certain global markets was a cause of concern. Overall performance of the Company has been impacted by the temporary suspension at Company’s plant at Raipur. However, the Company is hopeful of managing these challenges and continuing its vigorous efforts to do better in the current financial year.

The primary risk for the Company is with the volatile Export markets and the uncertainty prevailing in the Global Economy. Having to compete with low cost producers from countries like China and Korea is always a concern. There are no significant current borrowings and thus the company seems isolated from financial risks and concerns, especially in the face of increasing interest rates and cost of Capital.

The Company has adequate system of internal controls to ensure that all assets are safeguarded and protected against loss and that all transactions are authorized, recorded and reported correctly. The systems are designed to support the reliability of the financial and other records for preparing financial statements and other data. The Statutory Auditors also discuss their comments and findings with the management as well as with the audit committee.

The Company has also regularly placed before the Board, Internal Audit Reports, Financial Results with Provisional Balance Sheets, Performance Review Report of various Units together with Executive Summary, Current Workings and all Current matters of commercial importance and various other information as generally required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Company continues to recognize the importance of good human relations in the smooth working of the organization.

The facts and views mentioned in this report on Management Discussion and Analysis describing the Company’s views about the industry or otherwise, and the forecasts made, are entirely based on opinion formed by the Management of the Company, and actual position or results may differ from those implied therein. Important factors that could make a difference include economic developments within India and outside, and also the economic performance of other countries with which the Company conducts business, as well as availability of raw materials and prices and other incidental factors.