VIP Clothing Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

CAUTIONARY STATEMENT:

The statements in the "Management Discussion and Analysis Report" describe the Companys objectives, projections, estimates and expectations which may be "forward-looking statements" within the meaning of the applicable laws and regulations. The actual results could differ materially from those expressed or implied, depending upon the economic and climatic conditions, government policies, taxation and other laws and other incidental factors.

ECONOMIC OVERVIEW

Global textile industry:

The global textile industry comprises textile manufacturing, refining and retail clothing. A multi-billion dollar manufacturing sector, the global textile business consists of production, refining and sale of synthetic and natural fibres. As of 2024, the textile market size is estimated at USD 748 billion and is expected to reach USD 889 billion by 2029, growing at a CAGR of 3.5% between 2024 and 2029. The textile industry is a dynamic market with key players being China, European Union, US and India. China is the largest textile producing and exporting country in the world. On the other hand, the European Union comprises Germany, Spain, France, Italy and Portugal at the forefront with a value of more than one-fifth of the global textile industry. India is the third-largest textile manufacturing industry and is responsible for more than 6% of the total textile production globally.

With rapid industrialisation and the advent of technology, textile industry is incorporating modern installations to increase the production of textiles. The industry is also observing a paradigm shift towards natural fibers such as cotton, silk, linen, wool, hemp, jute, and cashmere. These fibers are favored for their low density and high strength compared to conventional fibers, leading to a rise in demand for fiber fabrics. Additionally, postpandemic awareness of hygiene products has contributed to the growing popularity of natural fiber fabrics in the textile industry.

INDIAN ECONOMY OVERVIEW

India Textile Market was valued at USD 240.8 Billion in 2024 and is expected to reach USD 475.7 Billion by 2033, at a CAGR of 6.84% during the forecast period 2024 - 2033. Textiles are woven or non-woven materials used to create clothing, upholstery, and other flexible goods.

As one of the largest textile industries in the world, the Indian textile industry contributes approximately 2.3% to the countrys GDP, 13% to industrial production and 12% to total exports earnings. India is one of the largest producers of cotton and jute in the world. It is also the 2nd largest producer of silk, with 95% of the worlds hand-woven fabric comes from India. Indias total textile exports are expected to reach USD 65 Billion by FY2026 and is expected to grow at 10% CAGR 2019-2020 to reach USD 190 Billion by 2025-2026.

The textiles and apparel industry in India has strengths across the entire value chain from fibre, yarn, fabric to apparel. The Indian textile and apparel industry is highly diversified with a wide range of segments ranging from products of traditional handloom, handicrafts, wool and silk products. India has been observing a robust trade in technical textile products and the country has been a net exporter. The government has also launched the Production Linked Incentive Scheme with an approved outlay of H 10,683 crore to promote production of Man-Made Fibre Apparel, Man-Made Fibre Fabric and products of Technical Textiles in the country.

Men innerwear industry:

In parallel, the mens inner & comfort wear segment is making significant strides, with a substantial 30% market share. The market is projected to realize a CAGR of 11.5%, translating to a market value of Rs 26,952 crores by 2025. The evolving fashion consciousness and an increasing focus on comfort contribute to the segments rapid expansion.

Women innerwear industry

At the heart of the market growth lies womens inner & comfort wear, commanding the lions share of the total market at 60%. This segment is not only reshaping the industry landscape, with Mid and Premium segments expected to grow faster than others, but is projected to sustain a CAGR of 13%, reaching an estimated Rs 55,535 crores by 2025. The surge in demand is attributed to shifting preferences, bolstered by higher disposable incomes and a fervent desire for comfortable yet stylish innerwear.

Kids wear industry:

The kids inner & comfort wear segment accounted for 10% of the market in 2023, it is set to grow with a projected CAGR of 8.5%, reaching Rs 8,819 crores by 2025. This segments potential is fuelled by changing parental attitudes, placing equal emphasis on comfort and style for their children.

Brands are beginning to establish their presence in this segment, signalling a shift toward quality-conscious consumerism.

INDIAN TEXTILE AND APPAREL INDUSTRY OVERVIEW

Through embracing innovative strategies, leveraging technological advancements, facilitating retail expansion, employing better sustainable practices and improving employee engagement, the Indian fashion and lifestyle industry is poised for dynamic growth. The revenue in the apparel market in India is projected to reach USD 105.5 Billion in 2024. The reported year marks an opportunity for brands to expand their geographical footprint. In addition to retail expansion, brands have also established a strategic focus on various niches, including e-commerce, omnichannel approaches and incorporating advanced technology, especially Artificial Intelligence. The Indian fashion industry is observing a paradigm shift towards sustainability, paving the path for a greener future. With increasing awareness about environment, brands and retailers are recognising the need to embrace sustainability. The growth of ethical fashion market is a testament to this shift. Furthermore, Indias burgeoning population, increasing disposable income and evolving fashion trends are anticipated to bolster the growth of Indias apparel market. The government has also launched certain initiatives such as the Amended Technology Upgradation Fund Scheme and the Advance Authorisation Scheme that are focused on strengthening and increasing the production of textile and apparel products in the country. Government of India has also approved the continuation of the Rebate of State and Central Taxes and Levies scheme (RoSCTL) till March 31,2026.

Removal of anti-dumping duty: To boost exports in man-made fibre (MMF) sector, the government removed antidumping duty on PTA (Purified Terephthalic Acid), Viscose Staple Fibre and Acrylic.

PM MITRA scheme: The government approved setting up of Seven Pradhan Mantri Mega Integrated Textile Region and Apparel (PM MITRA) Parks in Greenfield/Brownfield sites with an outlay of ?4,445 crore for a period of seven years up to 2027-28. These parks will enable the Indian textile industry to become globally competitive, attract large investment and boost employment generation, according to the ministry of textiles.

PLI scheme: The government approved the Production Linked Incentive (PLI) scheme for textiles, with an approved outlay of ?10,683 crore, to promote production of MMF apparel, MMF fabrics and products of technical textiles in the country. This is expected to enable Indias textile sector to achieve size and scale and to become competitive

Domestic Intimate Industry

Intimate wear has come a long way from being only a functional basic necessity to becoming the next big style statement. Intimate wear is one of those unique products that fall in the category of both a necessity and a luxury. From traditional market with poor production and marketing infrastructure today a lot of experimentation is happening in terms of product design, style, colors & fabrics. Many domestic and international brands have forayed into the segment seeing its huge potential. This article discusses about the current scenario intimate wear scenario in India and abroad and way ahead for India to emerge as a strong player in intimate wear manufacturing.

Indian Intimate Wear Scenario - Manufacturing & Retail Perspective

Intimate wear is an integral segment of apparel manufacturing. It is estimated that around 10% of a consumers expenditure on garments constitute of shopping for intimate wear. Although globally intimate wear manufacturing has reached new heights, Indian intimate wear manufacturing sector is still at its nascent stage. India has yet to realize its full potential in the same.

Indian Intimate wear market has been growing rapidly since last few years. The current market size is estimated to be US$ 4.8 Bn. which is an 11% increase since 2014. Share of intimate wear market is approx. 8 % of Indias domestic apparel market. The market for intimate wear is expected to grow at a healthy pace in the coming years. By year 2025, the market is estimated to reach US$ 13 Bn.

In terms of product segmentation, intimate wear in India can be categorized into three major segments, viz., Womens innerwear. Mens inner wear and Kids innerwear. Indian intimate wear market is dominated by womens inner wear which occupies a little over 50% share of the market. The value of womens inner wear market is estimated to be around US$ 2.4 Bn. This is followed by mens inner wear segment accounting for 38% share of the market with an estimated market size of US$ 1.8 Bn.. Kids inner wear segment is surprisingly low in terms of value of US$ 0.5 Bn. with market share of only 10%. Womens wear is predicted to be the highest growing category out of the three and is expected to reach 60% market share by 2025.

Growth of Innerwear Segments in India upto 2025 (US$ Bn.)

THE EVOLUTION & GROWTH OF INNERWEAR MARKET IN INDIA

The Indian innerwear market has undergone significant evolution and growth over the years, driven by changing consumer preferences, increasing disposable incomes, and rising awareness about personal hygiene and comfort.

Heres an overview of the evolution and growth of the innerwear market in India:

Evolution:

• Traditional to Modern: Shift from traditional loincloths (dhotis) and undershirts to modern innerwear like briefs, bras, and panties.

• Cotton to Synthetic: Transition from cotton to synthetic fibers like polyester, nylon, and spandex for better comfort and durability.

• Basic to Fashionable: Innerwear evolved from basic, functional products to fashionable, trendy, and stylish offerings.

Growth Drivers:

• Increasing Disposable Incomes: Rising incomes led to increased spending on personal care and hygiene products, including innerwear.

• Growing Awareness: Greater emphasis on personal hygiene, comfort, and health drove demand for good- quality innerwear.

• Changing Lifestyle: Busy lifestyles, increasing participation in sports and fitness activities, and growing acceptance of Western wear fueled innerwear sales.

• Demographic Changes: Growing young population, urbanization, and increasing number of working women contributed to market growth.

Trends and Opportunities:

• Digitalization: Online sales and e-commerce platforms are gaining traction.

• Sustainability: Growing demand for eco-friendly and sustainable innerwear.

• Innovation: Introduction of new products, fabrics, and technologies like moisture-wicking and antimicrobial properties.

• Premiumization: Increasing demand for premium and luxury innerwear.

OPPORTUNITIES

Indias demographics are indeed attractive, with a large youth population that offers significant opportunities for the innerwear market.

• Young Population: India has a median age of 28.4 years, with over 65% of its population below the age of 35.

• Growing Middle Class: The middle class is expected to grow to 535 million by 2025, driving consumer spending and demand for innerwear.

• Urbanization: Over 34% of the population lives in urban areas, with increasing adoption of Western wear and modern innerwear.

• Working Women: The number of working women is increasing, driving demand for comfortable and functional innerwear.

• Rising Disposable Incomes: Disposable incomes are growing, allowing consumers to spend more on personal care and hygiene products, including innerwear.

These demographic trends create a fertile ground for the innerwear market to grow, with opportunities to cater to the needs of:

- Young adults seeking fashionable and comfortable innerwear

- Working professionals requiring functional and high-quality innerwear

- Health-conscious consumers looking for innovative and sustainable innerwear options

The Indian innerwear market is expected to grow at a CAGR of 10.5% during the forecast period 2022-2027. The growth of the market is attributed to a number of factors, including:

S Increasing health consciousness among consumers has spurred demand for innerwear made from breathable materials.

S Rising disposable incomes have led consumers to invest in premium branded innerwear that matches their preferences.

S Fashion trends showcased on various channels including social media have fueled a preference for innerwear that reflects personal style.

S Additionally, urbanization is amplifying these trends, particularly in tier 2 and tier 3 cities, highlighting the markets potential.

For the textiles and apparel sector, the Budget proposes allocation of ? 900 crore for Amended Technology Up gradationl Fund Scheme (ATUFS) for 2023-2024 as against ?650 crore for 2022-2023.

USEFUL MEASURES TAKEN BY THE GOVERNMENT FOR THE INDIAN TEXTILE INDUSTRY

1. PM MITRA: Pradhan Mantri Mega Integrated Textile Region and Apparel

2. Production-Linked Incentive Scheme

3. Samarth Initiative

4. National Technical Textiles Mission (NTTM)

RISK AND CONCERNS

The Company is exposed to various types of risks associated with business of the Company, which will be internal as well as external risk. One of the key risks faced by the Company in todays scenario is the fluctuations in the price of raw material. Any increase in prices of raw materials could create a strain on the operating margins of the Company. We operate in a highly competitive market with competitors who may have better ability to spend more aggressively on advertisement and marketing and more flexibility to respond to changing business and economic conditions.

Further, there are regional or smaller competitors who have certain advantages over us. An increase in the amount of competition that we face could have a material adverse effect on our market share and sales.

The Company has in place Risk Management procedure to identify and evaluate the risk on a regular basis. The Company has the Risk Management committee, who brain-storm on the various risks associated with the Company. The details of risk committee have been mentioned in the Corporate Governance report.

INTERNAL CONTROL SYSTEM AND ADEQUACY

The Company has implemented adequate procedure and internal controls which provide reasonable assurance regarding reliability of financial reporting and preparation of financial statement. The Company has a regular check on expenses including capital expenditure. The Management considers and takes appropriate action on the recommendations made by the Statutory Auditors, Internal Auditors and the Audit Committee of the Company.

In addition, the software solutions such as SAP, Distributor Management System, field assistance and number of other robust system provides the Company to control over various business processes, increases productivity, better inventory management, promotes quality, reduced material cost, effective human resources management, reduced overheads boosts profits, plan its sales, production and monitor and control the processes in case any deviation.

HUMAN RESOURCE & INDUSTRIAL RELATIONS

As on March 31, 2024 the Company had 1047 people (375 Permanent and 672 Contracts) working directly and indirectly with the Company. The industrial relations in all units of the Company continue to be cordial. The skills, experience and passion of our people facilitate deeper customer understanding and engaging relationships and strengthen our brand value as a preferred employer. We continue to step up efforts to accelerate our value-based growth strategy and the overall development of human capital. We nurture our people by investing in their empowerment through learning and development, wellness, and safety besides providing contemporary workplace facilities.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE.

The Company operates in single segment i.e., Hosiery. The results of the Company under review depict business growth during the period.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE.

Details of significant changes in key financial ratios (i.e. change of 25% or more as compared to the immediately previous financial year):

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

Change in Return on Net Worth as compared to the immediately previous financial year is due Increase in net loss during the year.

		(Rs. in Lakhs)
Particulars	2023-24	2022-23
Revenue from operation	18,327.55	20,063.97
Profit before Interest & finance charge, Depreciation & Income Tax	(432.23)	1,435.54
Less : Finance Cost	908.83	911.84
Less : Depreciation	271.78	306.22
Add : Other Income	43.12	174.25
Profit/(Loss) Before exceptional item and Tax	(1,612.84)	217.48
Profit /(Loss) for the year (excluding OCI)	(1,265.12)	663.68
Profit/(Loss) for the year (including OCI)	(1,284.87)	648.47

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR):

Particulars	2023-24	2022-23	Change (%)
Return on Net Worth (%)	(9.29%)	4.29%	(316.54%)
Return on Capital Employed (%)	(5.00%)	10.00%	(150.00%)
Basic EPS (after exceptional items) in ?	(153)	0.80	(291.25%)
Interest Coverage Ratio	0.77	1.24	(162.55%)
Operating Profit Margin (%)	(2.59%)	6.29%	(141.26%)
Net Profit Margin (%)	(6.90%)	3.31%	(308.46%)

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF.

Financial year	2023-24	2022-23
Return on net worth (%)	(9.29%)	4.29

Change in Return on Net Worth as compared to the immediately previous financial year is due Increase in net loss during the year.

Registered Office:	By order of the Board of Directors
C-6, Road No.22, M.I.D.C.,	For VIP Clothing Limited
Andheri (East), Mumbai - 400 093
CIN: L18101MH1991PLC059804
	Sunil J. Pathare
Place: Mumbai	Chairman & Managing Director
Date: August 14, 2024	(DIN: 00192182)
Email:investor.relations@viporg.com
Website: www.vipclothing.in