Vandana Knitwear Ltd Management Discussions

Your Directors are pleased to present the Management Discussion and Analysis Report for the year ended 31^st March, 2024.

ECONOMIC AND INDUSTRY OVERVIEW GLOBAL ECONOMY

Global Economy

The global economy demonstrated remarkable resilience in 2023, particularly following a period of receding inflation. This resilience was evident across several key indicators, including steady employment rates and rising incomes, both buoyed by favourable demand conditions. The overall economic landscape was further enhanced by increased government spending, robust household consumption, and higher labour force participation, collectively contributing to a positive economic outlook. The year 2023 saw substantial government spending aimed at revitalising various sectors, which played a pivotal role in stabilising the economy. Household consumption remained strong, supported by rising incomes and increased consumer confidence. Additionally, higher labour force participation indicated a more engaged and productive workforce, further enhancing economic activity. As a result, the global economy achieved a growth rate of 3.3% for the year. Looking ahead, the global economy is projected to maintain a steady growth trajectory, with expectations of a 3.2% increase in 2024 and a 3.3% rise in 2025. These projections suggest a moderate but consistent pace of expansion, highlighting the opportunities for continued economic resilience. However, the dynamic global landscape presents several challenges that must be navigated carefully to sustain this growth. Factors such as evolving geopolitical tensions, potential shifts in fiscal and monetary policies, and ongoing productivity concerns will play significant roles in shaping the future economic outlook.

Indian Economy

India continues to assert its position as the fastest-growing major economy, driven by robust domestic demand and supportive policies. The Indian economy recorded an impressive growth rate of 8.2% in 2023-24, up from 7.0% in 2022-23, showcasing its resilience and dynamism. This significant growth could be attributed to several key factors. Firstly, there was a substantial increase in capital expenditure on infrastructure development, which laid a strong foundation for long-term economic growth. Additionally, there was a notable rise in private corporate investment, reflecting growing business confidence and expansion plans. Furthermore, improved consumer confidence spurred spending and investment, further enhancing economic momentum. This positive growth trajectory is expected to continue into 2024-25, underpinned by several favourable trends. Improved goods exports are anticipated to drive economic activity, benefiting from a more competitive manufacturing sector and stronger global demand. Additionally, increased manufacturing productivity is expected to enhance the efficiency and output of the industrial sector, while higher agricultural output will support rural incomes and consumption.

The Government of Indias enhanced focus on public capital expenditure, particularly in infrastructure projects, will continue to stimulate economic activity. Increasing private capital expenditure indicates growing business investment in capacity expansion and modernisation. The demand for credit is also rising, reflecting greater economic activity and business expansion. Moreover, moderating inflation is expected to support consumer spending and business investment, while low corporate debt levels and deleveraged balance sheets are likely to enhance financial stability and investment capacity. These factors collectively create a robust foundation for sustained economic growth. Consequently, the Indian GDP is projected to grow by 7.2% in 2024-25, reaffirming the countrys status as a key driver of global economic growth and a promising destination for investment and business development.

Global Textile Industry

The textile market size has experienced robust growth in recent years, forecasted to increase from USD 638.03 Billion in 2023 to an expected USD 689.54 Billion in 2024, at a Y-o-Y growth of 8.1%. This growth is likely to be driven by factors such as global population increase, rising demand for manmade fibres, supportive government initiatives, strong economic growth in emerging markets, and a ban on plastic usage. Looking ahead, the market is projected to reach USD 903.45 Billion by 2028, at a CAGR of 7.0% from 2024 to 2028. The anticipated growth can be attributed to continued global population growth and urbanisation, rapid e-commerce expansion, rising leisure spending, increased retail penetration, and greater internet and smartphone usage. Additionally, the demand for contactless delivery solutions is expected to propel market growth further.

Key trends shaping the future of the textile market include the adoption of digital textile printing inks, non-woven and organic fibres, sustainable practices, blockchain technology in manufacturing, and digital platforms in supply chain management. Moreover, there is a growing focus on smart fabrics, robotics, automation, artificial intelligence, and strategic partnerships to develop innovative products.

Companies in the textile industry are well-positioned to capitalise on these trends by expanding their online presence, leveraging e-commerce platforms, and integrating advanced technologies.

OPPORTUNITIES AND THREATS AND FUTURE OUTLOOK GLOBAL ECONOMIC CONDITIONS

Opportunities: The Indian textile industry is witnessing a growing emphasis on sustainability, transcending beyond organic cotton and improved working conditions. Companies are now overhauling their entire value chain, from raw material sourcing to production, supply chain management, and waste recycling, shifting from a linear to a circular model. This comprehensive strategy addresses both pre- and post-consumer waste, positioning sustainability as a fundamental element of the industrys future.

The technical textiles sector is making strides by producing advanced fabrics through the application of cutting-edge technology to both natural and synthetic fibres. Emphasising durability, insulation, and heat resistance, fabrics like Nomex, Kevlar, and Spandex are finding applications across healthcare, automotive, construction, and security sectors. The growing demand for technical textiles, especially in medical, eco-friendly, industrial, sports, healthcare, automotive, and housing applications, is set to shape the future trajectory of the textile industry.

Threats: The industry is grappling with high material prices, which have been a persistent issue. Fluctuations in the costs of essential raw materials, such as cotton and synthetic fibres, can lead to increased production expenses, affecting profit margins.

A notable decline in export demand has been observed, with textile and apparel exports registering a decrease of 3.24% in 2023-24 compared to the previous year. This downturn is attributed to various global economic factors, including geopolitical tensions that affect international trade dynamics.

The ongoing geopolitical conflicts, particularly the situation stemming from the Russia-Ukraine war, have disrupted supply chains and created uncertainties in the global market. These conflicts contribute to a slowdown in demand for goods, further impacting the textile sector.

BUSINESS OVERVIEW

India is expecting another year of solid economic performance. The investment momentum was solid through the fourth quarter and should continue this fiscal, driven by public investments and a gradual pick-up in private investments aided by the PLI scheme. Government Capex, led by infrastructure, is budgeted for a sharp rise. This fiscal, private consumption is expected to continue to face crosscurrents. While lower inflation will be supportive, higher interest rates may curtail sectors such as automobile and housing. The economists predict growth to slow in FY25 as global conditions weigh down the economy. Growth is likely to moderate, in part, due to normalization of base effect.

RISK MANAGEMENT

The Board of Directors of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Committee considers the risks that impact mid- to long-term objectives of the business, including those reputational in nature. The Company has an elaborate risk charter and risk policy defining risk management governance model, risk assessment and prioritisation process. The Risk Management Committee reviews and monitors the key risks and their mitigation measures periodically and provides an update to the Board on Companys risks outlined in the risk registers. The Audit Committee has additional oversight in the area of financial risks and controls. Additionally, a third-party organisation has benchmarked the Companys risk management practice with various companies in India and globally and pronounced it as a leader in FMCG category.

Date: 05/09/2024	By Order Of The Board
Place: Bhilwara	For Vandana Knitwear Limited
	Sd/-
	Naresh Kumar Gattani
	DIN: 00125231
	Managing Director