vaxtex cotfab ltd share price Management discussions

1. Industry structure and developments

The Textile Industry is facing exceptional and unprecedented challenging conditions. There is a rise of demand for low-cost products having sustainable and environment - friendly production processes. Consumers are seeking products that are made from renewable materials and from sustainable manufacturing processes. Further, rising importance of digital technology in textile products, 3D modelling and other technologies are enabling manufacturers to create more innovative and customized products while improving production efficiencies and reducing waste. Hence, there is an optimism that post geopolitical stabilization, textile sector will show positive trends due to new opportunities and technological innovations supported by domestic & global demand, investment incentives (PLI) and strong balance sheets of companies. Further, China plus one policy adopted by USA / Europe will give a boost to Indian Textile Sector.

2. Opportunities and Threats Opportunities:
1. China plus one policy, Economic collapse / volatility in Sri Lanka, Myanmar, Bangladesh,

and Pakistan has played out in favour of India as the world has started looking at India as reliable partner for their requirement.

2. Rising demand for low cost, sustainable and eco-friendly products. This presents an opportunity for textile manufacturers to develop new products that are made from renewable materials and produced using sustainable manufacturing processes. Cost can be reduced by blending with cheaper man-made fiber.
3. Emergence of new Markets: FTA with Australia, Comprehensive Economic Partnership Agreement (CEPA) with UAE and expected favorable trade agreements with UK / Europe present an opportunity for textile manufacturers to expand into new markets and diversify their customer base.

Threats:

1. The biggest threat to cotton products is competition from other low-cost man-made fibers. Consumers are shifting their focus to low-cost products which has led to intense competition and pricing pressure in the global textile industry.
2. There is a high cost to comply with environmental, social and labour regulations which can be costly and time - consuming.
3. Further the textile industry is highly sensitive to global economic conditions and can be significantly impacted by global demand and pricing.

1. Outlook

The coming year will be challenging with respect to pricing. We have to focus more on offering new products and meeting customer retail price points. Also focus will be on blending with manmade fibers that can fit into the price bracket acceptable to buyers. Overall, the textile market is sombre and expected to take around one quarter to stabilize. Further, we must navigate the challenging period by differentiating ourselves through innovation and quality. The manufacturers who will be able to address these challenges, while also differentiating themselves through innovation and quality, are likely to be successful in times to come.

2. Risks and concerns

There is propagation in cotton prices which cannot be absorbed in finished goods prices. Preference is shifting from Cotton fibers to manmade fibers i.e. synthetic, polyester etc. which are available at lower prices. This is putting pressure on margin.

3. Internal control systems and their adequacy

The Company has a proper and adequate internal control system to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and those transactions are authorised, recorded and reported correctly. Internal control is exercised through documented policies, guidelines and procedures. It is supplemented by an extensive program of internal audits conducted by in-house trained personnel. The audit observations and corrective actions are periodically reviewed by the audit committee to ensure the effectiveness of the internal control system. The internal control is designed to ensure that the financial and other records are reliable for preparing financial statements and other data, and for maintaining accountability of persons.

4. Discussion on financial performance with respect to operational performance

The financial performance of the Company for the Financial Year 2022-23 is described in there as a part of Board of Directors of the Company.

5. Material developments in Human Resources / Industrial Relations front including number of people employed

The Companys HR philosophy is to establish and build a high performing organization, where each individual is motivated to perform to the fullest capacity to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realize the full potential of our personnel. The Company has designed and implemented performance management system of employees that helps in achieving its goals. Industrial relations are cordial and satisfactory.

6. Segment-wise or Product-wise performance

The Company operates in single Segment i.e. Garments and Apparels.