Economy Overview:
The textile industry in India is a vast and dynamic sector, playing a
significant role in the countrys economy. With a rich history of textiles that dates back
millennia, India continues to be a major producer and exporter of fabrics, clothing, and
home textiles. At present, India holds a 4% stake in the worldwide trade of textiles and
apparel. It is predicted that Indias textile and apparel sector will expand at a rate of
10% per annum from 2019-20 to 2025-26, taking the industrys value to US$ 190 billion. The
industry employs millions of people, from farmers and spinners to weavers and tailors, and
is considered a key driver of economic growth and development. In recent years, the
textile industry in India has undergone significant modernization, with investment in new
technology and infrastructure. This has allowed Indian textile companies to improve their
competitiveness on a global scale and increase their exports to markets around the world.
The Indian textile and apparel industry has welcomed the new Foreign Trade Policy 2023.
The industry is especially upbeat as Special Advance Authorisation Scheme has been
extended to exports of the Apparel and Clothing sector under para 4.07 of HBP on a
self-declaration basis also to facilitate prompt execution of export orders; benefits of
Self-Ratification Scheme for fixation of Input-Output Norms has been extended to 2 star
and above status holders in addition to Authorised Economic Operators at present; license
fees have been lowered for MSMEs, the export turnover has been lowered for a 5-star export
house. Such steps will go a long way in boosting Indias exports.
India is one of the worlds top nations that contributes considerably to the global
textile industry. India is the biggest exporter of cotton and the worlds most extensive
fiber producer away from China. Through the years Its garment and textile (T&C)
exports have consistently increased.
GOVERNMENT INITIATIVES
The Indian textile sector is set to benefit from the governments priorities outlined
in the budget 2023. The budget indicates the governments commitment to enhancing the
textile sectors competitiveness, employment opportunities, and exports.
The government has set aside substantial funds for the textile industry, including Rs.
10,000 crore for the production-linked incentive (PLI) scheme for textiles, Rs. 500 crore
for the Indian Technical Textiles Mission, and Rs. 1,000 crore for the National Technical
Textiles Mission. These measures are expected to boost the sectors production and
exports, as well as create more employment opportunities for people in the country.
In addition, the government has announced several other initiatives to support the
textile sector, including establishing mega textile parks, providing infrastructure
development support, increasing support for the Handloom sector, and supporting the growth
of the jute sector.
The textile sector is a significant contributor to Indias economy, and the
governments focus on it in the 2023-24 budget is expected to have a positive impact on
the sectors growth and development. The governments commitment to the textile sectors
development is also in line with its goal of making India a global manufacturing hub and
boosting its exports.
The new budget for 2023-24 contains a sizeable increase in grants for the textile
industry, with a total allocation of Rs. 4,389.34 crore. These and other features of the
budget show the governments priorities for the textile industry.
Other Initiatives taken by Government of India are:
• From an allocation of Rs. 650 crore for ATUFs in 2022-23, this figure has
increased to Rs. 900 crore in 2023-24; this will enable quicker payment processes for any
pending cases.
• To help with the productivity of extra-long staple cotton, there will be a
cluster based and value chain approach using public private partnerships, providing raw
material security for the garment industry. Additionally, five new HS Codes have been
identified for further classification of cotton as per staples length. The support from
the Cotton Corporations Price Support Scheme has been withdrawn but they are yet to
predict the full impact of this action.The Increased allocation to both RoDTEP and RoSCTL
have also been increase as well as a corpus of Rs 9,000 crore revamping credit guarantee
schemes which aims provide collateral free guaranteed credit worth RS 2 lakh
crore.Furthermore, an interest equalization scheme (IES) has been implemented with an
allocation of Rs 2376 crore in 2022-23 increasing to Rs 2932 crore in 2023-24.
• Efforts are also being put into creating a green infrastructure that will reduce
our carbon footprints while making apparel facilities sustainable too.
• This efforts to promote sustainability within the textile industry as well as
technology such as Industry 4/0 courses including coding, AI and robotics via Pradhan
Mantri Kaushal Vikas Yojana 4.0 show great promise in creating a credible workforce adept
at current manufacturing jobs quickly and skilling countrys youth for international
opportunities through Skill India Centres.
• Lastly, states are encouraged to set up Unity Malls promoting and selling ODOPs
(One Distrcit One Product), GI products and other handicraft products locally and from
other states too encouraging local produce on a larger scale than before.
• Additionally, a cluster-based value chain approach with Public Private
Partnership (PPP) is being implemented to enhance productivity of extra-long staple (ELS)
cotton by connecting farmers, states, and industries together through sources, services,
and market linkages.
• The government has allocated a 38% increase in the allocation of Technology
Upgradation Funds (ATUFs), going from Rs.650 crore in 2022-23 to Rs.900 crore in 2023-24.
Outlook:
The Textile Market (2023-2025) features an extensive analysis of the markets various
types [Cotton, Jute, Silk, Synthetics, Wool] and applications [Apparel, Industrial
Textile, Medical Textiles, Home Textiles], providing valuable insights into the market
conditions, growth factors, and competition analysis. Our report includes 105 pages and
tables, along with figures that present the most valuable data for the forecast period up
to 2025.
The global textile machinery market size is expected to grow considerably in the
upcoming years. Strong demand from the clothing industry and rising investments in cotton
ginning are expected to propel market progress. In the realm of textiles, there are three
trends in particular that are poised to make a significant impact in 2023. These trends
represent a mix of new innovations and time- honored techniques that are poised to shape
the future of the textile industry in India.
Especially in India, when we have the golden opportunity of G20 presidency. In fact
this is an occasion to show the Indias strengths in textile trade, right from our rich
heritage of handloom and handicrafts to industrys stronghold on sustainable practices.
Apart from the events or initiatives led by the Government during the G-20 presidency,
Trade bodies, as well as companies, should come forward to use this opportunity with their
overseas partners. This can be a good platform to convey Indias capabilities to global
brands and have better business relations, explore more business opportunities with new
companies as well.
Indias economy stayed strong in March despite declining exports and rising
unemployment. Bloombergs activity tracker, which follows eight high-frequency indicators,
showed that Indias economy remained stable during the month. The Reserve Bank of India
has paused rates for the first time in months in order to assess the impact of higher
interest rates on economic activity. While the readings are positive, concerns remain due
to a slowdown in demand for manufacturing goods and services. Additionally, the
unemployment rate has increased to 7.8% Indias economic activity stayed resilient in
March though the weakening pace of exports and an increase in unemployment dimmed the
outlook for the country thats surpassing China as the most populous nation.
Top players in the sector are attaining sustainability in their products by
manufacturing textiles that use natural recyclable materials.
The future of 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.
Risks and concerns:
The textile sector is one of the critical sectors of the Indian economy, accounting for
more than two per cent of the total GDP and more than 12 per cent of the manufacturing
sector gross domestic product (GDP). The sector is also the second largest provider of
employment in India, after agriculture. It provides employment to an estimated 45 million
people directly and to another 60 million indirectly through allied activities. Not only
is the textile sector highly labour intensive, it also employs unskilled and semiskilled
labour force and is also an important source of employment for women.
The textile industrys lack of access to the newest and most advanced technologies, as
well as its inability to fulfill global export market criteria, represents a further
difficulty. In addition to these concerns, the Indian textile sector also confronts
obstacles such as child labor, competition from neighboring nations in the area of
low-cost clothing, and personal safety regulations.
Inconsistent/unpredictable government policies and fast-changing market/trade dynamics
result in Indias textile industry facing challenging times as international consumers
reduce spending on non-essential items, leading to a contraction in import orders for
textiles and garments worldwide.
This has left the sector vulnerable, and reports suggest that the industry, which is
worth $200 billion and employs over 45 million people, is facing a crisis.
Despite Indias relatively strong overall economy that is outperforming major
economies, the textile sector is struggling, and orders indicate that the downturn is
expected to continue into 2023, increasing the risk of layoffs/Lack of skilled workforce.
There are some areas of concerns, which need to be stated here. Along-with recovery,
the textile industry is also facing increase in input prices in sync with the global
trends and appreciating rupee. The issues textile industry of India is facing like:
• Shortage in supply of raw materials
• Increase in the cost of raw materials
• Environmental problems
• Infrastructure bottlenecks
• Impact of GST
• Shortage of laborers due to a mass return
• The decline in Apparel export.
• Industry has unfavorable labor Laws.
• India has disadvantage in terms of Geographic Locations. Because of this there
is Global Logistic Disadvantage as shipping cost is higher.
• There is uneven supply chain model and inbound freight traffic is low which
affects cost of shipping.
• India lacks in various trade memberships, which restrict to tap potential
market.
• Inappropriate energy supplies to rural and sub-urban areas.
• Industry needs to compete on the basis of Price, Quality and Delivery for the
different segments.
Companys Business
The company has established its brand name "VALSON" in polyester texturised
yarn since 1983. Today we are one of the leading manufacturers of Polyester Texturised
& Twisted Yarn and Processors of Cotton, Polyester and other Fancy yarns in India with
Customers having diverse uses its end-users comprise players from the shirting, suitings,
label, upholstery, hosiery, furnishings, automative and ready-made garments industries
etc. Quality Products and Services has been our top most priority and after continuous
research, we have ventured into the dyeing of various qualities of yarns. We have more
than 65000 shades in our data bank.
The Company is into manufacturing and exporter of Polyester Dyed Yarn and processors of
Cotton and other fancy yarn. It has activities like Texturising, Twisting, Coning and
Dyeing Plants to produce Quality Polyester Texturised Twisted Yarn and other fancy yarn.
The Manufacturing process is as under:
The basic raw material used for texturising is Partially Oriented Yarn popularly known
as POY It is fragile, weak, delicate and easily breakable. POY does not have any
purposeful use as it lacks the stability, strength, and therefore it cannot be directly
used for weaving or knitting.
The term texturising means the production of a permanent crimp in the initially
straight fiber or filament yarn. It increases the bulk and improves the elasticity of
yarn. This activity fully draws POY yarn to comply with the market requirement and
therefore it is different commercial commodity. The POY after the texturising process is
known as "Weft Yarn". The twisted crimp yarn is hard, strong and not easily
breakable. It gives the yarn a feel of natural like cotton or wool.
The "Weft Yarn" is further twisted for the purpose of imparting the required
strength, which is necessary to withstand the high-speed run-on looms for the purpose of
weaving. The twisted yarn is known in commercial parlance as "Warp Yarn".
The Texturised and twisted yarn is properly washed and thereafter is dyed under quality
parameters to get Colour Strength, Tone, Dispersion and Sublimation fastness.
The Dyed Yarn is wound around standard size cones before they are packed for dispatch.
The Company has established its brand as reputed manufacturer of quality, polyester
dyed yarn and processors of cotton and other fancy yarn. It has been supplying its
products through the network of agents in market. There are about 10 to 15 major agents
spread over in Maharashtra, Delhi, Punjab, Northern and Southern India.
There scope of activity of agents will also include the following: -
1) To book the orders and to render various incidental services including the
monitoring of the follow up of the same.
2) To obtain the general market information and acquaint the Company from time to time.
3) To receive the payment and statutory forms for and on behalf of the Company in
respect of direct invoice raised on the customers for supply of material delivered as per
their instruction at anywhere in India.
The Company is exploring new avenues to increase the export base and has chalked out
strategic growth plan for the potential market in Middle East, U K, Egypt, Russia and
other European markets.
We are getting incentives like duty drawback for export of our goods and have covered
our products under RODTEP Scheme declared by Ministry of Commerce as an additional
incentive to increase the export and capture global market.
Opportunities:
The Indian textile and apparel market size reached US$ 172.3 Billion in 2022. Looking
forward, IMARC Group expects the market to reach US$ 387.3 Billion by 2028, exhibiting a
growth rate (CAGR) of 14.59% during 2023-2028. The increasing demand for premium quality
clothing and footwear items, rising number of schemes launched by the Government of India
to empower weavers, and the growing ethically sourced sustainable materials represent some
of the key factors driving the market.
A textile industry SWOT analysis offers the best possible opportunities for the textile
industry. This will clearly show which part of the sector could be so much better with a
little push.
Buyer attention on the Asian market: Many of the international buyers are being
more interested in the Asian section of the market. This may be a golden opportunity for
the Asian industries to take the market by storm. It will also be a huge turning point for
this industry in general.
Open costing facility for the international buyer: Many international customers
find their interest in this field being renewed by the open costing facility. This gives
them a huge advantage to draw more buyers in.
Government and non-government training programs: There are a lot of people who work
in this field. Even though they have curiosity, they often lack the skills that are
needed. So, these government and non-government training programs can help them to enhance
their skill-set. This provides the chance of improvement to this sector.
Buyer initiatives for productivity: In this field, many times buyers take
responsibility to initiate the push for productivity. This shows that the buyers are
actually interested in the said products. So, this gives a huge boost to the morale.
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. High economic growth has resulted in higher disposable
income. This has led to rise in demand for products creating a huge domestic market. o
Growth rate of Domestic Textile Industry is 6-8% per annum. o Large, Potential Domestic
and International Market. o Product development and Diversification to cater global needs.
o Elimination of Quota Restriction leads to greater Market Development. o Market is
gradually shifting towards Branded Readymade Garment.
o Increased Disposable Income and Purchasing Power of Indian Customer opens New Market
Development. o Emerging Retail Industry and Malls provide huge opportunities for the
Apparel, Handicraft and other segments of the industry. o Greater Investment and FDI
opportunities are available.
The future for the Indian textile industry looks promising, buoyed by both 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.
Threats:
Indian Textile Industry is highly fragmented Industry that is lead by several
small-scale industries. Because of this, there is lack of Industry Leadership. These small
companies do not have fiscal resources to invest in technological up-gradation and they
are not able to generate economies of scale. This leads to inability to establish a
world-class competitive player. Despite many policies, Industry is bound with historical
regulations that are reason for Complex Industry Structure. Though Industry has cheap and
skilled manpower but they are less productive. There is lack of technological up-gradation
in various steps of value chain that affect the quality, cost and distribution.
The textile-clothing sector is highly globalized. The sector was at first affected by
the supply chain disruptions caused by the pandemic. It now faces supply chain
bottlenecks, resulting from the lack of capacity in the transport sector. As a result,
transportation costs surged through 2021, and the increase is likely to persist in the
beginning of 2022. This affects textile-clothing companies operating costs and consumers
may face increased prices in 2022.
There are strong uncertainties surrounding the evolution of the pandemic and the
emergence of new variants (at the time of writing, the latest is the Omicron variant) that
could lead to a new set of restrictions and the closure of clothing stores, dampening the
recovery of the sector.
Indian textile exporters are facing stiff competition and they lack policy and labour
law reforms. But the Company through its quality production upgradation of technology
(automation) work hard to competes and do well with other players in this sector.
The issues textile industry of India is facing like:
• Shortage in supply of raw materials
• Increase in the cost of raw materials
• Environmental problems
• Infrastructure bottlenecks
• Impact of GST
• Shortage of laborers due to a mass return
• The decline in Apparel export.
• Fear of Job cuts Segment-wise performance:
The Companys business activity falls within a single business segment viz. Yarns and
the sales substantially being in the domestic market, the financial statements are
reflective of the information required by Accounting Standard 108 "Segment
Reporting", notified under the Companies (Indian Accounting Standards) Rules, 2015.
Human Resources:
Valson recognizes that nurturing and developing human resources by recruiting the best
talent is vital to the long-term success of the company. Employees are provided with
continues opportunities for active learning and development, which are viewed as the key
drivers of our growth and thereby contributing to the success of the Company. The
remuneration structure is linked directly with performance and reward.
The Company acknowledges that human resources are its biggest asset and hence who have
been nurtured and strengthened over the years.
Insurance:
Valson Industries Limited has insured its assets and operations against all insurable
risks including fire, earthquake, flood, and etc. as part of its overall risk management
strategies.
Safety, Health and Environment:
At Valson, safety is considered a high priority and all efforts are made to ensure safe
working environment for employees. All probable incidents are analyzed and corrective
actions are taken. Employees are trained in safe practices to be followed at work places
at all the times.
Environmental Preservation:
Quality of human life is the most important factor to sustain life and this could be
achieved through preservation of natural environment. The Companys R & D Department
continues to develop new shades in an environmentally sustainable manner. The Company
always consumes eco-friendly dyes, colours and chemicals. The Company has also installed
an Effluent Treatment plant for proper treatment of wastewater. Your companys strength
lies in consistent quality consciousness and eco-friendly awareness.
Material developments in Human Resources / Industrial Relations:
The company has always considered human resources as the driving force for progress and
success and they are the main assets of the company. Management is of the firm belief that
the growth of the company is due to the continuous contribution from its manpower. The
company has the required number of skilled and semi-skilled persons and it constantly
tries to improve their quality and productivity and provides a congenial working
environment for them. The company is committed for continual improvement in all aspects of
social standard, business and employees welfare to grow as an ethical business. We
believe that harmony amongst employees, employer and business leads to socio economic
improvement. The industrial relations continued to be extremely cordial during the year.
Internal control systems and their adequacy:
The Company has adequate system of internal controls to ensure that all the assets are
safeguarded and are productive, the prevention and detection of frauds and errors, the
accuracy and completeness of the accounting records, and the timely preparation of
reliable financial information. Necessary checks and controls are in place to ensure that
transactions are properly verified, adequately authorized, correctly recorded and properly
reported. The scope and authority of the Internal Audit (IA) function is defined in the
Internal Audit Charter.
The Internal Audit department carried out audits in different areas of your Companys
operations. Post audit reviews were carried out to ensure that audit recommendations were
implemented and they monitors and evaluates the efficacy and adequacy of internal control
system in the Company, its compliance with operating systems, accounting procedures and
policies at all locations of the Company. Based on the report of internal audit function,
process owners undertake corrective action in their respective areas and thereby
strengthen the controls. Significant audit observations and corrective actions thereon are
presented quarterly and yearly reports to the chairman of Audit Committee of the Board to
maintain its objectivity and independence.
The Audit Committee reviewed the audit program and findings of the Internal Audit
department and the Company when needed takes corrective actions.
Discussion on financial performance with respect to operational performance:
During the year 2022-2023, the company has performed very well the topline was
increase almost 14.05%. The company has done a well and it comes in the profit lots of
fluctuation in the crude prices which affected the POY, Dyes & Chemicals price and
steep rise in price of coal and also due to shortage of container the freight prices has
increase very sharply, in last two quarters company has done reasonably well and try to
control the cost and other expenses.
The highlights financial performances of your Company during the financial year 2022-2023:
Year Ended March |
2023 |
2022 |
Operating Profit /(Loss) |
3.33% |
2.29% |
Gross Profit / (Loss) Margin |
2.36% |
1.29% |
Interest / Sales |
0.97% |
1.00% |
Net Profit / (Loss) after Tax |
0.01% |
(1.02)% |
Return of Net worth (RONW) |
0.07% |
(4.54)% |
Debt / Equity Ratio |
0.68 |
0.68 |
Current Ratio |
1.28 |
1.15 |
Inventory Turnover Ratio |
11.0 |
11.0 |
Interest Coverage |
3.7 |
2.1 |
Debtors Period (in Days) |
26.18 |
27.27 |
1. There is a growth of 3.24% in Texturising production (6126 MT) compared to last year
(5928 MT).
2. There is a growth of 13.40% in Twisting production (2620 MT) compared to last year
(2310 MT).
3. There is a growth of 4% in Sales (6594 MT) compared to last year (6342 MT).
4. There is a growth of 19.42% in Dyeing production (4531 MT) compared to last year
(3794 MT).
5. There is a growth of 14.05% in terms of Revenue from operations (Rs. 13042.28 Lakhs)
compared to last year (Rs. 11435.13 Lakhs).
6. During the year there is marginally increase in finance cost to Rs. 127.34 Lakhs
from 114.02 Lakhs.
7. The staff cost to has marginally increased 3.41% to Rs. 1195.82 lakhs compare to
last year Rs. 1156.36 Lakhs.
8. The companys power cost has increased substantially to Rs. 1465.94 Lakhs compared
to Rs. 1058.63 Lakhs due to increase in rates at UT Dadra & Nagar Haveli and Diu &
Daman.
9. Depreciation is Rs. 272.65 Lakhs is decreased in comparison to last year (Rs. 282.38
05 Lakhs).
10. The Operating Profit/(Loss) (P/(L)BOIDT) before other income and Interest and
Depreciation and Tax has increased by 98.37% Rs. 385.68 Lakhs as compared to last year
amount of Rs. 194.42 Lakhs.
11. Earnings before Interest, Tax, Depreciation (EBITDA) has increased by 67.16% Rs.
437.24 Lakhs as compared to last year amount of profit Rs. 261.58 Lakhs.
Your company has implemented a new CAPEX of Rs. 215.90 Lakhs at their Silli and
Vapi unit. The said CAPEX has been partly financed way of term loan from by HDFC Bank (i.e.
Rs. 100.00 Lakhs).
The Company shall direct all its efforts and resources towards a strong and healthy
shareholders wealth creation.
|
For and on behalf of the Board of Directors |
|
of Valson Industries Limited |
|
Suresh N. Mutreja |
Place: Mumbai |
Chairman & Managing Director |
Date: May 26, 2023 |
DIN:00052046 |
+91-9892691696
