Uniworth Textiles Ltd Management Discussions.


Industry Structure & Development

The Indian economy started fiscal year 2020-21 with a challenging economic scenario. The COVID-19 pandemic affected the global economies, including India severely disrupted the domestic as well as the global supply chains and created significant volatility and disruption in financial markets. Our Central Government, as well as the state and local governments took various far-reaching measures to mitigate the spread of COVID-19, including travel restrictions, stay-at-home orders, restrictions on public gatherings, social distancing measures, mandated closures of non-essential businesses, occupancy limits, and other public health related safety measures during the first quarter of fiscal year 2020-21.

India reported a GDP de-growth of (-) 24.4% in the first quarter compared to 5,4% growth for the same quarter, previous year However, with easing of the restrictions, the economy started recovering slowly and GDP Growth improved to negative (-) 7.3% during the second quarter followed by 0.4% in third quarter. Quarter four of fiscal year 2020-21 witnessed encouraging growth in economic activities as the rapid spread of the COVID-19 pandemic subsided, and both business activities and consumption started reviving to pre-pandemic levels, The growth in GDP during 2020-21 is estimated at negative (-) 8% as compared to 4% in 2019-20 as per second advance estimates released by the Central Government.

Opportunities and Threats

The textile sector largely depends on discretionary spending of the consumer, and consumer spending was severely affected during the fiscal year 2020-21 in the wake of the pandemic. The industry witnessed significant contraction of demand in both domestic and international markets, till the second quarter. However, consumption and production improved during the latter half of the year on account of the pent-up demand as economy started to revive. The year 2020-21 also witnessed the US - China trade disputes, worldwide anti-China sentiments and ban of Xinjiang (China) Cotton and cotton made products over violation of human rights. This development created some space in the global textiles market, primarily in the home furnishings category. This provided a boost to the yam and cotton players in India as well,

Segment wise Performance

The Companys business activities fall within a single primary segment of Textile Fabrics, viz. Wool/Poly-wool,

Financial Performance

Turnover of the Company during the year was Rs. NIL as against Rs NIL in the previous year, The turnover has been NIL due to situation of closure in Nagpur and Raipur Unit compared to the previous year, Profit before interest, depreciation and taxes were Rs, 11.61 Lakh.

Operations, Management Discussion and Analysis

The Company continues to witness crisis in Textile markets and closure of units in Nagpur and Raipur has resulted in NIL Turnover in the current year as against Rs NIL in the previous year However, the Companys effort is to revive the units of Nagpur and Raipur

Business Outlook

The American and European Economic crisis is continuing to affect the order situation. The Company is tapping new markets in Japan and Middle-East countries. The on-going competition with China is also making it difficult to generate fresh business in countries where China was making its presence felt in big way. To be more competive in the domestic market, the management is pursuing with the government authorities for De-Bonding of its processing Unit.

Risk & Concerns

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.

Internal Control System

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 the various Stock Exchange Listing Agreements.

Human Resources

The Company continues to recognize the importance of good human relations in the smooth working of the organization. Up gradation of the skills of the employees is pursued by the Company through regular on-the-job training sessions.

Cautionary Statement

The facts and views mentioned in this report on Management Discussion and Analysis describing the Companys 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.